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Doha’s Last Gasp for 2008?

Can the Doha Round of Trade Negotiations Be Salvaged? Does It Matter?

SOURCE: AP/Keystone, Salvatore Di Nolfi

U.S. trade representative Susan Schwab speaks during a press conference after the opening of the World Trade Organization ministerial summit in Geneva, Switzerland, on July 21, 2008.

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Trade ministers from 30 countries will converge on the World Trade Organization’s idyllic headquarters in Geneva today for this week’s ministerial meeting where they will be seeking a much-needed breakthrough to the moribund Doha round of international trade negotiations. Success is far from assured, and seems increasingly unlikely. Yet any success—no matter how modest—is an outcome well worth fighting for at the WTO this week.

The trade ministers are under pressure to make tangible progress against the backdrop of a sputtering world economy, an emerging global financial crisis, growing inflation concerns, volatile energy costs, and rising food prices. The ministers would be well-advised to leave at home the fiery “blame game” rhetoric and finger-pointing that has dogged the negotiations to date. With U.S. presidential elections just over the horizon, this week is the last chance for Doha in 2008, and may be the last opportunity for progress for quite some time.

The United States must take a leadership role, accompanied by the European Union and Japan, to infuse the negotiations with the all too rare political will necessary to achieve success. And all countries—including Brazil and India—will need to make some sacrifices, commensurate with their levels of development, to move the negotiations forward.

Expectations for the Doha round have diminished as the negotiations have meandered in fits and starts since beginning in Doha, Qatar in 2001. The World Bank has estimated that a successful Doha round—with far more ambitious targets than those currently on the table—would boost the global economy by only $96 billion by 2015. Other recent analyses say that an uptick of 0.1 percent of global GDP would be a favorable outcome. Modest success this week could translate into meaningful efforts to keep the negotiations on track and preventing any further slippage backwards.

Are these crumbs of success worth the effort? The short answer is, yes. Progress this week is important to the WTO as an international institution and would provide a small boost to multilateralism in general. The WTO’s system of voting by consensus and making decisions under the principle that “nothing is agreed until everything is agreed” can be unwieldy, but it gives smaller nations an opportunity to voice their concerns on the same playing field with larger economic powers. A small victory this week for multilateralism is necessary and welcome in a world that is confronting a host of immediate global challenges, from climate change to human health crises to global poverty.

Unfortunately, there are very good reasons to not hold your breath waiting for Doha. The seven-year-old Doha round of trade negotiations are ostensibly aimed at liberalizing trade by reducing subsidies and tariffs in agriculture and manufactured goods. Yet they were supposed to be about much more.

At the launch of the negotiations, the rich countries made a commitment to the world’s poorest nations that they would make development a centerpiece of trade, reform the trading system to enable poorer countries to compete in their areas of relative strength, and allow the full participation of all countries in the international trade regime. Yet progress on the so-called “Doha Development Agenda” has been minimal, and negotiations have so far missed every self-imposed deadline.

Key trading countries and blocs still disagree on significant issues, and the trade negotiators themselves are weak. President Nicolas Sarkozy of France, fearing the wrath of French farmers, has lashed out somewhat incoherently at the negotiating positions of Peter Mandelson, the EU’s trade commissioner. And the U.S. Congress has not renewed Trade Promotion Authority—the process through which trade agreements are voted up or down and not amended—which casts doubt on whether Congress would seek to amend any deal the Bush administration agreed to in Geneva. There is little time left in 2008 to transform any blueprint agreed to this week into final negotiation language for submission to national legislatures for approval.

At the same time, global public confidence in the international trading system appears to be eroding. A growing number of Americans do not believe that international trade regimes like the WTO reflect their core interests, and support for trade has fallen by 25 percentage points since the Doha round began, according to the Pew Research Center.

Despite these challenges, the contours of a potential deal are in place. In the nebulous realm of technical negotiating language, the various sides are not that far apart—although all negotiators will need to convince their constituencies that overall progress in some areas will involve the need for flexibility in other areas.

The United States and the European Union have an opportunity to break the current stalemate over agriculture in the Doha round by immediately agreeing to reduce trade-distorting subsidies, grant greater market access, and reduce tariffs on agricultural products from developing countries by a set date. Japan and others must follow suit. Brazil, India, and other members of the World Trade Organization must make significant good faith efforts to grant improved market access for U. S. manufacturing, services, and agriculture products at a pace commensurate with their level of development.

All countries must do more to encourage trade between developing countries and support the original goals of the Doha Development Agenda. Developing countries should receive assistance to promote “behind-the-border” capacities such as education, transportation infrastructure, and access to private capital. A robust “Aid for Trade” program should focus on initiatives to achieve broader economic growth in addition to trade efficiency-oriented measures such as new technology for customs and inspection. And the least developed countries should immediately receive duty-free and quota-free access for exports; small-scale farmers in developing countries should, in return, be eligible to have specific crops exempt from full and immediate liberalization.

Agriculture remains one of the most distorted sectors in the global economy, and the current global food price crisis underscores many of the challenges confronting Doha negotiators. Several of the key issues driving the food price crisis, such as export restrictions, high energy costs, and increased demand, are not explicitly part of the Doha agenda, but the trade ministers can use this moment to send an important signal to the global food system that all countries must strive to end the distortions in world markets that drive up prices and reduce supplies. At a time of record farm income, the developed world has a particular responsibility to dramatically reduce its unjustifiable subsidies and tariffs in agricultural products, as well as barriers to trade between developing countries.

All countries with available food stockpiles should release those reserves onto the open market. Export bans must be discouraged. A recent study by the International Food Policy Research Institute indicates that eliminating export bans would reduce grain prices by an average of 30 percent. Liberalizing trade in agriculture and a completed Doha round will bring modest immediate economic gains to several, but not all, developing countries.

Open markets must be accompanied by investment in infrastructure such as roads, and efforts to increase agricultural productivity. UN Secretary General Ban Ki-Moon has called for a “second green revolution” to increase food output by 50 percent by 2030 and the need for $15 billion to $20 billion a year to finance such efforts as new seeds, irrigation, and fertilizer distribution to small farmers.

Modest success in the Doha round will not eradicate global poverty or deliver absolute gains to all. Nonetheless, in an increasingly fragile global economy, this week’s ministerial meeting represents an opportunity to encourage progress and deliver a tangible result in the name of multilateral cooperation. We cannot squander the moment.

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