Preventing failure of Doha Development Agenda

Shanghai Daily, August 02, 2011
Doha Round: the best tool
The News, Pakistan, July 31, 2011

Doha Round is best aid for trade tool; Pascal Lamy must mobilise members to negotiation table
Economic Times, July 25, 2011

Doha Round is the best ‘aid for trade’ tool
The Financial Express, Bangladesh, July 25, 2011

By Pradeep S Mehta

One of the critical issues in the international trading system is the Aid-for-Trade (AFT) programme. This aid programme is to help poor countries to enable them to access gains from trade liberalisation through financial and technical assistance as a standalone programme without mixing it with other aid programmes . The elaborate third review conference on AFT was organised at Geneva last week. The event was impressive and attended by a large number of countries, intergovernmental and non-governmental organisations. Thanks to WTO head Pascal Lamy’s enthusiasm, vision and determination.

The meeting was addressed by the heads of international lending institutions UNDP and OECD, and a large number of ministers and diplomats. Surprisingly , the head of Unctad was missing, though the UN secretary general Ban Ki-moon also addressed the conference. What was sadly not mentioned in the big meeting was that the Doha Development Agenda, or DDA, by itself is the best way forward to assist the poor to trade their way out of poverty. After all, the DDA was designed to deliver development gains to all developing countries by addressing the imbalances in the Uruguay Round Agreements. Alas, the DDA calculus continues to boggle minds about its non-progress , but one never knows what lies in future.

Bob Zoellick, the head of the World Bank and former US chief trade negotiator, who launched the DDA in 2001, in his remarks at the opening session, launched a broadside against the US government for ‘dumbing down’ the ongoing and largely-stalled Doha round of world trade talks. “The whole discussion has become very defeatist. I draw out the US, because the US should still be world leader.” Zoellick did not even spare his former boss George W Bush for the impasse, and did not wish to appear that he was blaming Obama alone. He also criticised emerging economies such as Brazil, China and India for being a part of the problem. “None of the major trading nations are talking ambitiously about how to lower trade barriers – particularly for the less developed countries on which the bank’s work focuses.”

Expectedly, the US reacted against the dumbing-down criticism and, as always, shifted the blame to big developing countries like China and India for not doing enough. Former Indian ambassador to the WTO, Ujal Singh Bhatia, in an electronic debate on the CUTS Trade Forum, reminded us that the Doha mandate provides for special and differential treatment to developing countries, and less-than-full reciprocity for developing countries. “If the US and others who played a strong role in designing the Doha mandate had reservations about the status of developing countries, they should have said so at that time. You do not change the rules when the game is coming to a close.” Be that as it may, the fireworks at the AFT event at Geneva last week have raised the ante on the DDA again .

In my article on this page, Time for a Big Push at Doha (May 30, 2011), on Plan B for Doha, I had raised several important points, but let me revisit just two of them to envision if the Plan A can be resurrected . First, one does not know what the Plan B would entail. Second, to address the demands of the US, I had argued that for India, it defies economic logic to maintain bound rates 4-5 times higher than the average applied rates in some farm goods.

The international community has been discussing Plan A for 10 years, and is now descending to a lighter Plan B, and one does not know even if that will be a smooth road. Imagine the huge cost of the decade-long talks, and some have started linking the failure of DDA talks as something that will affect the WTO itself. This is a highly mistaken notion because countries are bound to the WTO discipline for the agreements already in force, save and except the contentious ones that need to be amended or progressed towards better balance. The main reason behind the non-progress of the Doha Round of negotiations by WTO members is that there is no clear, committed constituency behind it in most countries. Neither the political leadership nor the business is interested in concluding the DDA.

On the other hand, there is a committed constituency in favour of the multilateral trading system, i.e., the WTO. Unfortunately, the latter has not strengthened the former . Now, there is a danger that the lack of commitment on the former seeps into the latter. It is not necessary to equate the DDA and its positive outcomes with the vitality of the WTO. The success of the Plan B or even Plan A will depend on decoupling of these two issues. While an early and positive outcome of the Doha Round would have strengthened the WTO, should the opposite be necessarily true? The Doha Round should be taken off WTO’s back by putting it on a track that is not organically linked to WTO’s core strengths, i.e., the dispute settlement system, among others. The relevance, vitality and utility of the WTO are not wholly dependent on conducting rounds of negotiations.

Is there lack of interest on the part of business to push their governments to conclude the Doha round? Since 60% of manufactured goods trade is mainly intra-industry , the business appetite to get a deal on Doha is not attractive, while most countries are vigorously pursuing non multilateral deals. The CUTS trade forum debate addressed this issue too, when some argued that companies need to be supported by their governments to enable smooth global supply chains. Some disagreed that this should be the only role of the government. Ujal Bhatia set it right by saying that it is not business that can be blamed for the Doha impasse, but the governments’ apathy.

The challenge for the never say-die Lamy is to cajole governments to bury their apathy and move ahead on Plan A. Only time will tell whether he would succeed like Robert Bruce of Scotland, after he relaunched his attack on England in the 14th century when inspired by a spider who went through on its ninth attempt, and won.

(The author is the Secretary General, CUTS International)

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