Monday, October 4, 2010

Past and present of the Doha Round

Pascal Lamy, Director-General of the World Trade Organization (WTO), explains:

Previous negotiations have also attempted to deal with a lengthening list of issues in a single “package” — with the aim of giving every Member an interest in its overall success.  That is why the Uruguay and Doha rounds have been “single undertakings” — where nothing is agreed until everything is agreed.  But this approach can also complicate negotiations — especially for poorer, capacity-constrained countries. And it can mean that progress on uncontroversial and solvable issues is held hostage to progress on more difficult and intractable ones.

Finally, in the past, transatlantic leadership was central to moving negotiations forward.  But trade power is shifting, and the days — last seen during the Uruguay Round — when the US and Europe could essentially strike a deal on behalf of the entire Membership are long gone.  It is not just that established powers need to accept to share the centre stage; emerging powers also need to recognize their responsibility for a system in which they now have a major (and growing) interest.  The old North-South divide seems increasingly outdated when so much of the future trade agenda will be played out among developing countries.

It is not just the composition of leadership that needs to evolve.  The WTO's impact now goes far beyond the traditional scope of trade policy touching on core national and international interests. Yet despite repeated statements of support and of engagement, world governments seem incapable of marshalling the policies and political will needed to move the multilateral agenda forward.  A worrying leadership vacuum has opened that has — so far — proved difficult to fill.   Let's hope that the G20 can help provide an answer.

[..]But the central priority remains concluding the Doha Round — and here too we need to be realistic about the magnitude both of the challenge and of what is at stake.  Early GATT rounds which focused on tariff cutting among a small group of countries, could be wrapped up in a matter of months.  But with expanding issues and participants, and more effective and active dispute settlement, trade rounds have inevitably become more difficult and drawn-out.  The Kennedy Round — which started grappling with development issues and involved 60 countries — took three years to complete.  The Tokyo Round — which addressed “non-tariff” barriers and involved 102 countries — lasted six years, twice as long.  And the Uruguay Round — which created the WTO and involved 133 countries — turned into a negotiating marathon lasting eight years.

With 153 Members now at the table and the most ambitious negotiating agenda yet, the only thing surprising about the length of the Doha Round is that anyone is really surprised.  Not without reason does the term “trade round” takes its inspiration from the boxing ring!

What is at stake is more than the economic benefits that would flow from a successful Doha deal.  The real issue is the relevance of the multilateral trading system itself.  With its global Membership, comprehensive rules, and “world trade court”, the WTO is more central than ever to international economic relations. But this also means that the costs of failure are higher — with ramifications that could be felt more widely. Bringing the Doha Round to a successful conclusion would send the strongest possible signal that the WTO is relevant to today's new world economy, that it remains the focal point for global trade negotiations, and that it will be a key forum for international economic cooperation into the future.  But if Doha stumbles, then doubts will grow, not just about the WTO, but about the future of multilateralism in trade.

In many ways,  the Doha Round marks a transition from the old governance of the old trade order to the new governance of a new trade order.  Covering classic trade issues such as the reduction of import tariffs and subsidies, as well as innovative new chapters on trade facilitation and fisheries subsidies, the Doha Round is a turning point for the system. 

The politics of this Round have had to adjust to the changes that happened since it was launched in 2001. And we all know we need to conclude it in order to address tomorrow's challenge.