The Doha Round, launched in September 2001, is yet to conclude. The stalemate is largely over developed countries' reluctance to make considerable reductions in their trade-distorting agricultural subsidies and unbalanced proposals for further reductions in industrial tariffs. After several failed attempts to revive the Round and bring it to an end, there is still hope that it could be saved, with the G-20 leaders, at the November 12, 2010 Summit (held in Seoul, Republic of Korea), giving a strong commitment to direct negotiators to engage in across-the-board talks to bring the Doha Development Round to a successful, and balanced, end, consistent with the mandate of the Doha Development Agenda, and build on the progress achieved. They recognised that 2011 is a critical window of opportunity, albeit narrow, and that engagement among different groups and countries must intensify. They also reaffirmed their commitment to resist all forms of protectionist measures.
Similarly, APEC leaders, at their November 14, 2010, Summit (held in Yokohama, Japan) reaffirmed their strong commitment to bring the Round to a prompt and successful conclusion. They agreed to take steps to roll-back trade- distorting measures introduced during the global financial crisis and extended their commitment to resist all forms of protectionist measures.
Gains from the deal
Further, at the November 30, 2010, informal meeting of the Trade Negotiations Committee, the WTO Director-General, Mr Pascal Lamy, outlined a process for translating the leaders' commitments into the Doha Round negotiations in Geneva. Mr Lamy urged the WTO members to operate on a tight deadline to conclude the Round by the end of 2011. To this end, he proposed the following work programme for the first quarter of 2011: From January 10: The Rules, Trade Facilitation, Trade and Environment, TRIPS and Development groups to begin intensive sessions; from January 17: Agriculture, NAMA, Services and Dispute Settlement groups to begin intensive sessions.
But why is the Doha Round so important and are we anywhere near striking a deal? The conclusion of the Doha round is necessary for several reasons. First, the agreement is expected to provide a cushion against future protectionism by consolidating the large amount of unilateral liberalisation that has taken place since the Uruguay Round in the 1990s. Second, the deal would bring in large-scale reforms in farm trade by binding subsidy levels in the developed world and eliminating export subsidies. Third, it is estimated that the gains from the conclusion of the Round are around $ 360 billion and, if the deal is struck, it could be one of the most ambitious packages of trade liberalisation negotiated multilaterally.
Last and most important, the conclusion of the Doha round would protect the WTO and the multilateral trading system itself, which could be damaged by the failure of a Round, especially one explicitly designed to integrate the emerging economies into the multilateral trading system and give many developing countries a stake in the system's success. According to Prof Bhagwati, the permanent collapse of the Doha Round is likely to provoke a wave of preferential trading agreements that would fragment, rather than integrate, the multilateral trading system. The efficacy of multilateral institutions, especially the WTO, is at stake and everything depends on the successful conclusion of the Doha Round.
Re-starting talks
In this backdrop, the importance of re-starting the talks and negotiations at the earliest cannot be overlooked. One, it is going to determine the future role of the WTO as a facilitator of a multilateral trading regime. And, two, it will also determine the role of developing countries in world trade.
In spite of the all the furore over the success and future role of the WTO and the inability of the member countries to conclude the Round, there is no doubt that the WTO has gained in traction over the years. The number of countries waiting to seek accession and become members corroborates this.
The WTO Annual Report 2008 indicates that its total membership stands at 153 and a further 20-plus countries, most of which are LDCs, are negotiating accession. These countries account for nearly 90 per cent of world trade. In another WTO Annual Report 2005, it is said that elimination of barriers to merchandise trade in both industrialised and developing countries could result in welfare gains of $250-620 billion annually.
WTO, the right platform
A more rapid growth associated with a reduction in global protection could reduce the number of people living in poverty by as much as 13 per cent by 2015. It proves that trade liberalisation and poverty reduction go hand in hand. Therefore, it is clear that for the small and poor countries, the WTO is the right platform to go ahead with reforms and pursue their goals of economic development through enhanced trade liberalisation.
Differences between the rich and developing nations have been a stumbling block in the conclusion of the talks. India and other developing nations are defending their agricultural markets to protect millions of subsistence farmers from easy imports that may result from the multilateral agreement. The US and other developed countries, however, seek more market access in developing nations, including India. It is important that the countries intensify the talks and hold negotiations with an open mind.
Unless both the developed and developing move from their established positions, it would be difficult to conclude the Round. 2011 is being touted as the make or break year for the Doha Round. But in the meantime, it is essential that developing countries such as India continue to follow unilateral trade policies suited to their domestic needs but within the framework of the changing international trade environment. Hopefully, ‘Doha' won't prove a jinxed venue for the WTO but the name for a landmark agreement in the history of multilateral trade.
(The author is Fellow, National Council of Applied Economic Research.)