Doha Round: Report of the Experts Group

Heads of Governments of Germany, Indonesia, UK and Turkey set up an Experts Group in November 2010 to report on the priority actions needed to be taken to combat protectionism and boost global trade. The group was co-chaired by Jagdish Bhagwati and Peter Sutherland.

They observe that the failure to conclude the Doha Round with the package already on offer, which would result in hundreds of billions of new trade annually, would seriously damage the credibility of the WTO and multilateralism. Yet, compromises on specifics seem to inhibit decision making in the general, national and international interest.

Giving reasons for Doha’s slow progress, the report points out the changing nature of the WTO and the states it represents as much as to any specific details of the negotiations. At the previous negotiations, developed nations formed the majority and the negotiations were between self-identified ‘liberalised,’ mainly industrialised nations.

The developing countries were insignificant and were not expected to cut tariffs, but benefited from the cuts offered by the developed nations and this systemic free riding which was critical to building consensus in the earlier rounds was justified under the Special & Differential (S&D) treatment. But the21st century economic realities changed this situation.

The rapid growth of emerging economies – due also in no small measure to the GATT’s success in lowering industrial tariffs – has changed the relationship between the developed and the developing nations. Emerging markets today are big enough to rule out free riding. China, for example, is now the world’s largest exporter and second largest importer and India is following closely behind.

Expansion of negotiations into areas such as agriculture which are important to many developing as well as developed countries has also aggravated the situation.

Among the benefits of the early conclusion of the Doha Round as pointed out in the report are new market access and reinforcement of the WTO system, market access would be provided through tariff reductions and the contraction of the markets of countries whose agriculture subsidies will be withdrawn.

Even in the current unfinished form, the Doha Round is said to represent the most ambitious package of trade liberalisation ever negotiated multilaterally. A proper package of new market access in services and trade facilitation when added to agriculture is expected to bring about substantial new trade.

The conclusion of the round would protect the WTO and the multilateral trading system itself .The round, explicitly designed to integrate the emerging economies into the multilateral trading system and give many developing countries a stake in the system’s success, is at stake if the round is not concluded.

The permanent collapse of the round would increase the number of preferential trading agreements, resulting in fragmenting rather than integrating the multilateral trading system. The WTO’s function as a legitimate body for resolving trade disputes will also be affected if the RTAs signed by the more important countries establish their own such mechanisms through the RTAs.

Although the benefits of concluding the Doha Round are many, whether the conclusion would come soon is still in doubt. Last week, the former EU Trade Commissioner Leon Brittan at a meeting at the WTO said: “With governments already in agreement on 80 to 90 per cent of what will constitute the final deal, failure to conclude an accord could have defining consequences on governments’ capacity to tackle challenges collectively.” It would also indicate whether governments could cooperate on more complex geopolitical and environmental challenges.

However, the US President’s trade policy agenda for 2011 released last week gave a different view when it warned that the Doha Round negotiations risked irrelevance if they failed to open up markets of large developing countries like India, China and Brazil.

The US President’s report reiterates what the US stand has been when it states that the “world has changed” since the mandate for the Doha Round negotiations was fixed in 2001. The report said the “remarkable growth of emerging economies like China, India and Brazil has fundamentally changed the landscape” and called on these emerging economies to “accept responsibility commensurate with their expanded role in the global economy”.

It stated further: “Our key requests of key emerging economies will continue to be based on the reasonable proposition that countries with rapidly expanding degrees of global competitiveness and exporting success should be prepared to contribute meaningfully towards trade liberalisation.”

This reflects the US stand for the past two years at the negotiations that the key emerging economies must open up their markets for manufactured goods, farm products and services and the emerging economies have not agreed with this stand.

The emerging economies have so far taken the position that the US requests are disproportionate to the reforms the US is willing to undertake, especially on farm subsidies. The US report makes no mention of cuts in farm subsidies which the emerging economies have been asking the US to do.

In such a situation, whether the Doha Round will be concluded this year is yet uncertain.

(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.)