For reasons that are too well known to be repeated, the WTO finds itself at the crossroads. Decisions to be taken in the next few weeks will determine whether it can steer its way to a successful conclusion of the Doha Round in the near future. Failing this, the Round will continue to hang like an albatross around the WTO’s neck preventing it from delivering the promised boost to least developed nations and freezing its ability to address new challenges to the global trading system. All countries would suffer from such an outcome, but especially the world’s poorest and most vulnerable.
The cost of a never-ending Doha Round
The adverse implications of a continuing Doha impasse on the future role of the WTO are too compelling to be dismissed offhandedly.
Several trade-linked global problems require global cooperation. Food security, energy security, trade-related aspects of climate change, labour mobility, commodity price volatility, and integration of regional liberalisation into the multilateral system are problems that can only be solved with global cooperation.
For example, if food exporters continue to impose export barriers when prices rise, food importers may respond with import barriers to boost self-sufficiency. This sort of protectionist reverberation could lead the world to a situation in which all the players are worse off, but none can improve the situation unilaterally. Avoiding this sort of outcome would require global agreements. There are very few global institutions that could manage such cooperation, indeed the WTO might be the only one. A WTO locked in endless Doha debates cannot be the centre of the rules based global trading system.
There are many thinkers who believe that the structure of WTO rules is robust enough to withstand a Doha failure. It is true that the sky will not fall if Doha is terminated without a conclusion. Such analysts, however, tend to underestimate the significant structural changes taking place in the global economy and the trading system. The WTO is working on a set of rules agreed upon in 1994 that were based on an agenda set almost a quarter of century ago. These are still useful and relevant for much of world trade – but not all. For instance, the rules were not designed for the technology-driven fragmentation of the manufacturing process and the distribution of the product value chain across several geographical locations, the intertwining of production with related services, the embedded intellectual property rights in components and sub-components, or the multiplicity of rules of origin. All these require a different approach to rule making.
A WTO that remains preoccupied with the Doha Round cannot be expected to focus on such issues. Therefore, the continuing relevance of the WTO and its primacy in the global trading system are contingent upon a successful and early conclusion of the Doha Round. Notwithstanding this urgency, it is now clear that a Doha package cannot be wound up in 2011 along the lines agreed by G20 leaders in November 2010. To prevent this from tying the WTO in knots for years to come, it is necessary to think creatively about ways forward.
Ideas for moving beyond the impasse
Any effort to deal with the impasse in the negotiations needs to be based on a holistic appreciation of the systemic implications of a continuing stalemate as much as on the negotiating positions of various members. The efforts for a solution acceptable to all members therefore need to focus on issues in the Doha mandate as well as on issues for a post Doha situation.
Within this framework, four constraints need to be borne in mind:
- A “Doha Lite” of reduced ambition will not work. The outcome has to reflect a decade’s efforts of the global community. Ambition, however, cannot be defined to suit the convenience of a few members. It must touch all aspects of the Doha mandate.
- Aspects of the Doha mandate that are more relevant to the development dimension have to be ambitiously addressed and fast tracked.
- WTO needs to start work on a new work programme to address new challenges.
- The Doha Round cannot be completed in 2011. A down payment is necessary from the Doha Round this year to convince the world that the WTO can deliver.
A three-track approach
These constraints require the WTO to adopt a three-track approach during the next few months leading up to the ministerial meeting in December 2011.
Track 1: Identification of a list of issues that specially address the trading interests of smaller developing countries and relatively less contentious issues, for fast tracked finalisation before the ministerial meeting.
Track 2: Identification of a package of the more contentious issues for continuing consultations with clear terms of reference.
Track 3: Identification of appropriate terms of reference for a work programme on WTO institutional reform, and the forward-looking agenda.
A possible timeline
These three tracks, taken as a package, would provide a way forward that respects all four constraints. Achieving consensus on them would be difficult – and require months of preparatory work and negotiations.
If the WTO membership starts immediately, however, there is still time to get the package ready for finalisation by ministers at the December 2011 ministerial meeting. For this to happen, it is essential that discussions on such a package begin this month so that its contents can be finalised by the end of June 2011. This would leave about four working months before the ministerial meeting to complete negotiations on the selected areas.
What the three tracks might contain
The first track would contain the Doha down-payment package. As with any WTO package, the contents would need to be negotiated, and it might require complementary policies such as technical assistance initiatives.
Such a list must include items that speak to development aspects of the Doha mandate, such as:
- The Implementation of the Hong Kong decision on duty-free, quota-free treatment for less developed countries;
- A ministerial decision on the Monitoring Mechanism for Special and Differential Treatment provisions;
- A ministerial decision on the issues raised by the Sub-Saharan African cotton exporters (the group known as the C-4); and
- The finalisation of a less-developed-country (LDC) waiver in services so that preferential treatment can be provided to LDC’s in services without extending it to others.
It should also include areas of the negotiations that engage the interest of all members such as:
- Trade Facilitation;
- All aspects of export competition in agriculture including export subsidies;
- The Transparency Mechanism for regional trade agreements (RTAs);
- The non-tariff barriers (NTBs) package in non-agricultural market access (NAMA); and
- A ministerial decision on interactions and relationships between the WTO’s rules and its committees, on the one hand, and existing multilateral environmental agreements, on the other (e.g. the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes, and the Montreal Protocol on Substances that Deplete the Ozone Layer).
While some members would like to exclude some of these areas from a fast tracked process in the hope of using them for trade offs in the final stage, it is important that the package is as comprehensive as possible.
Track two: Items for further negotiation
The second track would gather all remaining items currently under negotiations. This would include:
- All aspects of market access in industrial goods, agriculture and services;
- All aspects of subsidies in agriculture;
- Various aspects of rules, including fisheries subsidies;
- Environmental goods; and
- Issues related to trade-related aspects of international property rights (TRIPS) regarding the protection of Geographical Indicators, and the protection of traditional knowledge and folklore that were are mentioned in the Convention on Biological Diversity1.
The need for a balanced package deserves emphasis. It is often assumed that there is a straight trade-off between agricultural subsidies and market access. The situation however, is more complex. The interest of countries like India, China, and Indonesia in agricultural reform is more systemic than export related. For them other incentives, within the mandate, will be required.
Track three: Looking ahead
The underlying theme for the work programme would be an appraisal of the entire negotiating and decision-making process in the WTO in the context of the present realities both within and outside the organisation. The objective would be to prepare the WTO to address new challenges to the global trading system concurrently with the ongoing work on the remaining parts of the Doha mandate.
Closing remarks
The above proposals constitute a basic template for addressing the Doha conundrum. To what extent they are actually embraced will depend on how much political capital the major members of the WTO are prepared to invest in moving the Doha Round forward. There is much scepticism about whether such political will exists. It is time for governments to prove the sceptics wrong.
1 Specifically, as specified in paragraphs 18 and 19 of the Doha Declaration.
