Unfinished Business? The WTO’s Doha Agenda

The recent G-20 Communiqué called for “fresh, credible approaches” to the decade-long Doha round of global trade talks, presenting trade ministers an opportunity to critically assess what’s on the table and define a new way forward. As they prepare to meet next month at the World Trade Organization’s Ministerial Conference, a timely new book, Unfinished Business? The WTO’s Doha Agenda (CEPR and World Bank), provides an empirical basis for informed choices.

Edited by two well-known World Bank trade economists, Will Martin and Aaditya Matoo, the book addresses all possible scenarios. What benefits does each element of the Doha Development Agenda currently offer individual participants? What are the implications of proposed modifications to the Doha drafts? And what have we learned from Doha about “fresh, credible approaches” to trade negotiations and the new challenges for the multilateral trade system?

 “The Doha Development Agenda is still as relevant as ever to achieve trade and development, and thus this body of work comes at a timely juncture as we search for a way forward in these very important negotiations,” says Mari Pangestu, until recently Indonesia’s trade minister. “I recommend this book for all those who are serious about achieving the end game, especially the middle D in DDA — development.”

Research featured in the book, for example, shows that the current Doha proposals – even after allowing for flexibilities, such as for sensitive and special products – would cut applied tariffs on agricultural and non-agricultural goods by around 20 percent.

That alone, by a conservative estimate, would bring global income gains of about $160 billion per year. The real gains would be larger, because the proposed cuts in bound tariffs (an average of 26 percent in agricultural and 46 percent in non-agricultural goods) would reduce the uncertainty associated with the current large gaps between applied and bound tariffs. In addition, the agricultural proposals include abolition of export subsidies, as well as sharp reductions in maximum domestic support, especially in the European Union and the U.S.

In services negotiations, current Doha offers are less impressive. They improve on countries’ previous commitments by about 10 percent, but do not capture the significant unilateral liberalization of services markets in the last decade, the authors say. Even with the expected further improvement of offers in later stages of the negotiations, Doha will likely bring modest improvements in securing market access, rather than creating substantial new market access.

The volume also presents lessons on the methodology and scope of negotiations. It doesn’t make sense, for example, to have ambitious liberalization goals but to stick to business-as-usual in negotiations. Achieving greater trade liberalization, the authors say, requires a radical reform of how negotiations are conducted in manufacturing, agriculture and services. First, in negotiating cuts in tariffs, larger cuts in countries and sectors with high tariffs sound good in theory but generate huge political resistance. Less aggressive rules, such as proportional cuts, may lead to better results. In agriculture, better outcomes could be achieved if negotiators address food security issues explicitly and consider not only import barriers but also export restrictions. In services, more could be achieved by addressing regulatory weaknesses in developing countries, and promoting international regulatory cooperation in areas such as financial services, data flows and labor mobility.

The new G-20 Communique gives ministers the opportunity to define a negotiating agenda based on the realities of the 21st century, instead of a mandate inherited from the 20th century. In the decade since Doha was launched, some issues have become more significant, such as food security, the trade and trade policy implications of climate change mitigation, exchange rate management, and oil and energy security. Not all of those issues belong in the WTO talks, but all of them require multilateral cooperation.