The Doha Round of the World Trade Organization (WTO) negotiations has been stalled since July 2008. To try to end this impasse, the leaders of the G-20 pledged at their summit in Seoul in November 2010 that negotiations should be concluded by the end of 2011. Since a consensus among the G-5—the European Union, Brazil, the People’s Republic of China (PRC), India, and the United States—would be required for this to happen, the negotiations fell mainly into the hands of these members. However, much to the disappointment of the rest of the World Trade Organization (WTO) membership, in April 2011 the G-5 announced that their differences were too wide and that they would stop looking for a breakthrough. As a result, the target of concluding the Doha Round by the end of the year was not met.
There are several reasons why the Doha Round negotiations have stalled, but I will refer to only two here. First, the negotiations took place against a background of a deep financial crisis and high food prices. While agriculture continues to be the centrepiece of the negotiations, for many exporters the problem of market access took second place to supply capacity issues in the light of increasing demand. Second, the rise of the emerging economies, principally the PRC, led the US and others to require more concessions in non-agriculture market access from the emerging economies than had been anticipated 10 years earlier. For once, it was not agriculture but industrial tariffs that were the stumbling block, and for once, Europe did not bear the main responsibility.
To illustrate this, it had been envisaged that developing countries would use a formula with a coefficient of somewhere between 19 and 22, meaning that no industrial tariffs would be above the coefficient (although some flexibility was allowed). By 2011, for some developed countries this was not enough and further liberalization was sought from the emerging economies in certain sectors. This was where the negotiations got stuck. The key players felt that they did not have enough political support to compromise, and the PRC argued that it had made more than enough concessions during its accession to the WTO 10 years previously.
To conclude the Doha Round, a common vision of the multilateral trading system is required, in other words members must want to achieve results, particularly in problematic areas that can only be dealt with multilaterally, such as agriculture support, fisheries subsidies, and antidumping provisions, most of which elicit domestic resistance. Consequently, enough trade-offs must be found across the areas under negotiation to make any results balanced and politically palatable.
In the context of a deep political crisis in the negotiations, several voices have called for institutional reform. I disagree with most of the proposals that have been made. For example, some have suggested changes to the consensus rule that is the basis for decision-making in the WTO. However, consensus gives legitimacy and credibility to decisions that define legal rights and obligations, True, it means that any member can veto a decision, but I believe that this veto power has not been abused over 60 years of the multilateral trading system. The Doha Round impasse is not because there are 156 members and growing, but because of political problems affecting not more than five members.
I believe that the main priority for reform should be a boost to the WTO’s analytical capacity. The WTO secretariat has a very small team of 11 researchers who do excellent work that exceeds by far what could be expected from such a small team. To do more and to do it better, we are seeking collaboration with other academic institutions, think tanks and international agencies.
The world trading system constantly needs to incorporate new perspectives, ideas, and approaches. In particular, more inputs and visions are needed from Asia, to address the specificities, dynamics, and geopolitics of the region.
The WTO must provide the analytical capacity that many governments lack because they do not have the resources or information. This would allow member states to be better informed and prepared when they are challenged to address new trade issues. If countries cannot perform a credible impact analysis, or do not have the proper information to evaluate the costs and benefits of a trade proposal, their default reaction is to be defensive. It is safer to refuse engagement than to negotiate something that is not well understood.
Better analytical capacity at the WTO should help the political process. For example, how many more jobs would there have been had the Doha Round been concluded two years ago? This would help politicians make the case to their constituencies to conclude the negotiations.
Similarly, the system has to face new challenges and to negotiate more and better international rules and cooperation governing investment; competition policy; subsidies, especially in the context of climate change; and export duties and restrictions, among others. All of these areas need more research and analysis.
The Asian Development Bank Institute (ADBI) could be the catalyst that connects Asia’s think tanks and research institutes. ADBI could also play a key role in connecting the regional development banks, which could then act as a conduit to diffuse state-of-the-art in literature from various parts of the world.
Photograph courtesy of WTO.