Gains from Doha Round

The WTO Ministerial meeting in Bali in December this year will be crucial with regard to the seemingly never-ending Doha Round. If agreement cannot be found in all areas, if at least in a few areas agreement could be concluded, it could be considered an achievement.

In the context of the inability so far to conclude the Round, some view the Round as of no importance to global trade. However, a report prepared by the Peterson Institute for International Economics indicates that instead of abandoning the Round as a lost cause, seven agreements which could be concluded in 2013 and ratified in 2014 could have substantial payoffs.

The authors of the report use three metrics to quantify potential payoffs for the world: export gains, jobs supported (which is not the equivalent of ‘jobs added’) and GDP gains (or losses averted.)

The report analyses seven agreements which if accepted could have significant impact on job creation and global trade expansion and GDP gains. They are: trade facilitation agreement, international services agreement, international digital economy agreement (idea), duty-free quota-free market access for least developed countries, phase out of agricultural export subsidies, freer trade in environmental goods and services. According to the report, the largest relative global impact would be from finalising the two agreements on trade facilitation and services.

Since the World Economic Forum in January this year, when a series of meetings took place on the sidelines, there have been some moves towards having some outcomes at the Bali meeting in December. One area where there appears to be positive movement is in a trade facilitation agreement, and agreements on issues related to agriculture and least developed countries. Therefore, this report analyses areas where agreement appears feasible and which can be expedited and attempts to provide a set of options for what they term as a ‘WTO Recovery Package’. The researchers of the report stress that by using the term ‘package,’ they do not suggest that it is an all or nothing package, but could use the variable architecture outlined therein to move forward.

As the writers correctly point out, the draft texts of some of these agreements capture years of skilled work and most of the remaining differences are political and not technical agreements. Much can be harvested from these drafts, either individually or as packages. Some of these texts might need a few amendments, but some could be accepted as they are.

It is widely accepted that reducing trade transaction costs through trade facilitation measures by moving goods around the world quickly and cheaply can yield enormous gains. Better customs procedures, more efficient ports, etc., increase a country’s trade volume. The report substantiates this fact with empirical evidence which shows that according to estimates, every dollar spent on trade facilitation in aid-for-trade countries by simplifying procedures leading to better customs procedures, efficient ports, etc. could increase a country’s trade volume by $ 6.37 annually.

In the present world of integrated global supply chains, any country wanting to remain competitive needs to ensure that every stage of the supply chain is fast and efficient. Border administration, telecommunications, transport infrastructure, etc. need to be improved in this regard, the results of which would be translated to world export of goods increasing by trillions. An argument in favour of concluding this agreement is that while implementation costs are small, the payoffs are large.

The international services agreement according to the report is another agreement, which if concluded could have potential benefits. Expanded services trade is expected to drive the world over the next two decades. According to the report, the actual services trade lags far behind potential trade mostly due to the non-tariff barriers. For example, immigration restriction in many countries foreclosed the temporary movement of skilled professionals from other countries. If barriers to services trade are dismantled, the authors estimate that world GDP increase could be valued in trillions.

In January 2012, negotiations were launched among 16 countries (counting the 27 EU members as one) towards an International Services agreement. The number of participants has now increased to 19 WTO members. As these 19 WTO members account for a sufficiently large share of the services world trade and that they might extend liberalisation to other WTO members, the conclusion of this agreement would benefit global trade.

The WTO Ministerial Meeting this year is crucial. If this meeting can conclude with agreement on at least the above mentioned agreements, then the reputation of WTO could still be salvaged. As a previous report had suggested, the WTO Secretariat needs to be proactive in this regard to push the members with ideas to conclude at least some agreements.WTO members also need to look at these agreements positively and attend the Bali meeting with a positive outlook.



(Manel de Silva holds an Honours Degree in Political Science from the University of Ceylon, Peradeniya and has engaged in professional training in Commercial Diplomacy at ITC and GATT. She has served as a trade diplomat in several Sri Lankan Missions overseas and was the first female Head of the Department of Commerce as Director General of Commerce.)