VoxEU Column International trade

Salvaging Doha

Multilateral trade talks known as the Doha Round are on the edge of a failure that would have unpredictable but potentially dire consequences for global cooperation. This column – written by India’s ex-WTO Ambassador – suggests a way out of the crisis. World leaders should turn their attention to salvaging Doha by segregating the most contentious issues for continuing consultation, finalising stand-alone agreements in the less contentious areas, and initiating a work programme on WTO institutional reform.

Some influential observers are prepared to perform the last rites of the Doha Round of multilateral trade talks. Sceptics argue that governments are simply avoiding being the first to state an inconvenient truth. However, the events over the last few days in Geneva have demonstrated that governments are not prepared to throw in the towel yet.

Nevertheless, the fact remains that regardless of the value you put on the Doha Round outcomes, a decision to abandon a Round which remains technically doable, can have unpredictable consequences for the global trading system and the future of multilateralism.

If we cannot muster the political will to agree on certain elements of the Doha Round today, where is the certainty that we can agree on the terms of engagement for a new WTO initiative after the Round is abandoned?

This is not to argue that the WTO’s business model of mega Rounds under the canopy of the Single Undertaking is workable anymore. That is clearly not the case. But the post-Doha scenario can be best addressed in an atmosphere of goodwill created by the successful conclusion of the Round, not amidst the rancour of its abandonment.

How can Doha be salvaged?

There is growing recognition in Geneva that “business as usual” is no longer the option. A proposal for a suspension or timeout has also been mooted. Pascal Lamy tried that in 2006. It didn’t work at that time and there is no reason to believe it will work now.

The sharply divergent growth trajectories of the emerging economies and developed economies will have an inevitable impact on the negotiating dynamics in the WTO. The longer we wait, the more complex it gets. If the Round does not make significant progress this year, it could be mothballed for years.

At the same time, it is clear that no one is blinking at this moment.

  • Given the difficulties involved in selling a Doha package to its Congress, the US Administration cannot be expected to back off from its demands for new market access in all areas.
  • Nor can we expect the emerging economies to concede these demands in the context of their development priorities.

Not much in the way of expectations can be attached to the compromise proposal that the EU tabled at the end of April in an effort to bridge the gap in on particularly difficult area (deep tariff cuts in key industrial sectors such as machinery, chemicals and electronics).

Essential features of any solution to the impasse

Any approach which seeks to break this impasse has to rest on 3 pillars – ambition, development, and reform. Reducing the ambition is not an option as an outcome with reduced ambition will be unsellable for some. Diluting the development deliverables will make it impossible to get buy-ins from the large majority of Members. Reform of the WTO and its negotiating processes is urgently required to retain its relevance to the global trading system.
Based on this broad understanding of the situation, a three pronged approach needs to be explored:

  • Seriously contentious issues like the Market Access issues, Agricultural Subsidies, and Rules may be segregated for continuing consultations under agreed terms of reference.

The segregated package has to be internally balanced to allow for incentives and trade offs for all players.

  • Stand alone agreements to be finalised on less contentious issues.

The areas for focus are fairly obvious to those close to the negotiations.1

  • The third component would be a Ministerial decision to initiate a work programme for institutional reform in the WTO.

The WTO needs to confront the reality of regionalism and discuss how regional liberalisation can be integrated with the multilateral system. 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 within and outside the organisation.

In case such an approach is considered acceptable by Members, work would need to be intensified so that the Ministerial Conference in December 2011 can take the necessary decisions.

Concluding remarks

These proposals are obviously of a preliminary nature and will undergo substantial mutations once there is serious engagement. Given the mood of silent despair in Geneva, it would be extremely naïve to pretend that they will be readily embraced. But the WTO is clearly running out of options and time.

1 Specifically, Trade Facilitation, all aspects of Export Competition in Agriculture including Export Subsidies, Transparency Mechanism for RTA’s, LDC Waiver in Services, NTB’s package in NAMA, Ministerial decisions on Para 31(i) and 31(ii) of the Doha Ministerial Declaration, Implementation of the Hong Kong decision on Duty Free Quota Free treatment for LDC’s, a Ministerial decision on the Monitoring Mechanism for S&D provisions, as well as a Ministerial Decision on the issues raised by the C-4 on Cotton.

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