Next Steps:
Getting Past the
Doha Round Crisis
Edited by Richard Baldwin and Simon Evenett
A VoxEU.org eBook
Next Steps: Getting Past the
Doha Round Crisis
A VoxEU.org eBook
Centre for Economic Policy Research (CEPR)
Centre for Economic Policy Research
3rd Floor
77 Bastwick Street
London
EC1V 3PZ
UK
Tel: +44 (0) 20 7183 8801
Fax; +44 (0)20 7183 8820
Email: [email protected]
Web: www.cepr.org
© Centre for Economic Policy Research 2011
ISBN (eBook): 978-1-907142-37-6
Next Steps: Getting Past the
Doha Round Crisis
A VoxEU.org eBook
Edited by Richard Baldwin and Simon Evenett
Centre for Economic Policy Research (CEPR)
The Centre for Economic Policy Research is a network of over 700 Research Fellows
and Affiliates, based primarily in European Universities. The Centre coordinates the research activities of its Fellows and Affiliates and communicates the results to the public
and private sectors. CEPR is an entrepreneur, developing research initiatives with the
producers, consumers and sponsors of research. Established in 1983, CEPR is a European economics research organization with uniquely wide-ranging scope and activities.
The Centre is pluralist and non-partisan, bringing economic research to bear on the
analysis of medium- and long-run policy questions. CEPR research may include views
on policy, but the Executive Committee of the Centre does not give prior review to its
publications, and the Centre takes no institutional policy positions. The opinions expressed in this report are those of the authors and not those of the Centre for Economic
Policy Research.
CEPR is a registered charity (No. 287287) and a company limited by guarantee and
registered in England (No. 1727026).
Chair of the Board President Chief Executive Officer S
Research Director Policy Director Guillermo de la Dehesa
Richard Portes
tephen Yeo
Mathias Dewatripont
Richard Baldwin
Contents
Foreword
The Doha dilemma: An introduction to the issues and possible solutions
Richard Baldwin and Simon Evenett
vii
9
There is no Plan B – only Plan A: Towards completing Doha
Mari Pangestu
19
Acknowledge Doha’s demise and move on to save the WTO
Susan Schwab
27
Next Steps: Getting past the Doha Round crisis
Ujal Singh Bhatia
33
Next Steps: Is an early harvest still possible?
Zhenyu Sun
41
Getting past the Doha Round crisis: Moving forward in the WTO
John Weekes
47
The good ship Doha: Salvage-and-abandon-ship or repair-and-wait?
Stuart Harbinson
51
Keeping the WTO on track: A Doha down payment plus more
Richard Baldwin and Simon Evenett
61
Foreword
Doha is deadlocked – the members of the WTO are unable to give up and unable to go
forward.
In this eBook the contributors propose several démarche that consider various
combinations of 4 initiatives that offer a way out of the current impasse:
• Deliver a down payment
• Ditch the current process of negotiating in “silos” – it doesn’t work
• Develop a new and forward-looking agenda for the WTO
• Demonstrate some leadership:
The down payment is straightforward. All the contributors suggest a number of area
where agreement is already close, and which could be wrapped up in time for the
December Ministerial. After a decade of negotiations, it hardly seems right to call this
“an early harvest”, but a set of measures that focus on the needs of the least developed
nations seems right for a “Development Round”.
The current approach to negotiations is clearly not working and offers no way forward.
Why not try new approaches? A number of contributors suggest abandoning the current
“silo approach”. The December Ministerial, they argue, should adopt a new approach,
abandoning modalities and emphasising horizontal negotiations. One contributor, exUSTR Susan Schwab, suggests abandoning the Round altogether and starting from
scratch.
While much of the energy in the Doha negotiations has been expended on traditional
issues such as agriculture, and market access for goods and services, there is a long list
of new issues that will only grow in importance over time. Several contributors advocate
a programme of analysis and discussion that will help members better understand issues
such as competition policy, climate change, and government procurement.
vii
VOX
Research-based policy analysis and commentary from leading economists
The current Doha deadlock is largely due to the absence of leadership from the major
players. Expecting leadership now from any of the Big 5 is unrealistic. Baldwin and
Evenett, drawing on their discussions with a wide-range of WTO delegations, suggest
that one demarche that could help unblock the impasse is a bold move by the middlepower WTO members. They could seize the initiative by adopting a set of unilateral
measures to offer to liberalise trade. The new commercial opportunities this would
provide would remind exporters what they have to gain from the conclusion of the
Round.
Richard Baldwin and Simon Evenett have acted with their usual speed and efficiency,
assembling at short notice a distinguished group of authors whose essays identify
solutions to Doha Deadlock. And as always, they have been very ably supported by
Team Vox, in particular by Bob Denham, Samantha Reid, Anil Shamdasani and PierreLouis Vézina. We are grateful to them all.
Stephen Yeo
Chief Executive Officer
May 2011
viii
The Doha dilemma: An introduction
to the issues and possible solutions
Richard Baldwin and Simon Evenett
Graduate Institute, Geneva and CEPR; University of St Gallen and CEPR
World leaders must make important decisions concerning the future of the Doha Round
for the 31 May 2011 meeting of the WTO membership. This essay introduces the issues
and summarises contributors’ suggestions for “Next Steps”. It argues that the best
outcome would be for WTO members to agree to work towards a small package of
deliverables for December 2011 and push the rest of the agenda items into the future
– perhaps with specific instructions for changing the basic negotiating protocols used
to date.
Global leaders face a dilemma over the WTO multilateral trade negotiations known
as the Doha Round. The talks are dead in the water; both movement forwards and
movement backwards seem blocked. How did we get here? Current and former trade
policy officials typically emphasise two points.
• Ten years of talks have made some progress but it now must be taken as a hard fact
that the Doha Round in its entirety will not finish this year.
• No government is willing to announce publicly that they want to abandon the Round.
The sources of unwillingness vary. Some argue that abandoning the Round would throw
away genuine progress, such as the ultimate phase-out of agricultural export subsidies.
Others wish to maintain attention focused on particular problems in the trade system.
Yet others simply fear that they’ll be blamed for delivering the bad news.
9
VOX
Research-based policy analysis and commentary from leading economists
Next Steps: Saving the WTO from the Doha Round
World leaders must now decide how to tackle this dilemma at the WTO’s next key
meeting on 31 May 2011. Logically, there are only 3 roads ahead:
• Road 1: Declare failure and call for a period of reflection;
• Road 2: Buy time by suspending the Round; or
• Road 3: Think creatively about work-around solutions that avoid acrimony and lock
in some of the progress to date.
This eBook on “Next Steps: Getting Past the Doha Round Crisis” gathers the thinking
of a handful of the world’s most experienced Doha experts, namely: former US Trade
Representative Susan Schwab, India’s former WTO Ambassador Ujal Singh Bhatia,
China’s former WTO Ambassador Zenyu Sun, Canada’s former WTO Ambassador
John Weekes, and Hong Kong’s former WTO Ambassador Stuart Harbinson – all of
whom spent years directly engaged in Doha negotiations.
Road 1: The pitfalls of declaring failure
Susan Schwab argues strongly that declaring Doha’s demise is essential to allowing
the WTO to move on. John Weekes likewise argues: “It would be damaging to invest
more resources and credibility in something that can’t be done.” Ujal Singh Bhatia, by
contrast, argues that Road 1 could lead to unpredictable results. Zenyu Sun notes that
declaring the Doha Round to be dead would be easy, but then what? “Would such an
announcement inspire people to inject more energy into the work of the organisation?
Would it serve the purpose of strengthening the multilateral trading system? I rather
doubt it”, he writes.
These judgements on the medium- to long-term ramifications differ, but the shortterm fallout is clear. Declaring the Round “dead” would invite an immediate storm of
recrimination among WTO members. A great deal of hope and effort has been invested
in the Round by nations across the globe. Most WTO members are still looking for the
10
Next Steps: Getting Past the Doha Round Crisis
Doha Round to effect critical adjustments to the world trading system – especially a
rebalancing of the level of openness to agricultural versus industrial trade (Nassar and
Perez 2011). If one or more of the Big-5 reject a deal that most members still think is
doable, the blame game could get very nasty.
There is a great danger that this level of ill-will could undermine multilateral trade
cooperation for years. It could lock in the growing perception that the WTO is not a
place where serious negotiations can be conducted. The US in particular is likely to
be subject to severe criticism in a way that might have the unintended consequence of
convincing US Congressional and private sector groups that the WTO is not a forum
where America can do business. Such an outcome would serve no one’s interests.
Despite the clear logic of Schwab’s and Weekes’ arguments, the pitfalls highlighted
by Bhatia and Sun find resonance with most world leaders. This is why almost every
WTO member opposes Road 1. As a consequence, it is extremely unlikely that WTO
members will decide to declare Doha dead any time soon.
Road 2: The pitfalls of suspension
Suspension is certainly the most politically expedient choice for the Big-5, and it
is superficially attractive. The logic is well expressed in the old story about a man
– condemned to death by his Emperor – who obtains a year’s stay of execution by
promising to teach the Emperor’s horse to sing. “Much could happen in a year,” the man
reasons. “The Emperor could die, I could die, the horse could sing.”
But the usual merits of muddling through don’t apply to Doha. Suspensions have been
tried so often that everyone would know that suspension is just a circuitous means of
killing the Round; Road 2 is just the long route to Road 1. All the pitfalls of Road 1
therefore also apply to Road 2.
But suspension would be even worse in many ways. The world of trade is changing more
rapidly than negotiating positions, so each delay seems to make a compromise based on
11
VOX
Research-based policy analysis and commentary from leading economists
the existing elements even less likely. Worse still, a suspension would strengthen and
spread the belief that the WTO is not an appropriate venue for multilateral negotiations.
As Ujal Singh Bhatia writes: “the Round will continue to hang like an albatross around
the WTO’s neck, preventing it from addressing new challenges to the global trading
system.” This would be particular worrisome since the world economy is moving into a
phase of great stress. It is facing new challenges that will require multilateral solutions
– issues like food security, natural-resource export restrictions, and trade in goods,
services and technology that are essential to climate-change adaption and mitigation.
Road 3: A small package followed by a big package
The third road seems the most likely way to move past the Doha dilemma of not being
able to move forwards or backwards on the broad agenda. The idea here is that the
agenda would be sorted into “do-able” and “not yet do-able” piles. Nations would move
forward on a small package of do-ables for December 2011 while agreeing to discuss
the bigger issues later under revised ground rules that would be more likely to permit
the trade-offs necessary to make the big package acceptable to all members.
As Stuart Harbinson puts it, Doha is like a ship run aground; a small package of
deliverables for December 2011 would act as a “patch” to keep the “good ship Doha”
afloat until the high tide comes in and lifts the ship off the rocks. “In this analogy the
‘high tide’ would be a change in the global economic and political seascape, enabling
the major trading economies to settle their differences and bring the ship safely into
harbour”, he writes.
Choices to make on the small package
All five experienced trade negotiators contributing to this eBook – and most of the WTO
delegations with whom we spoke – believe that it is worth trying to lock in agreement
on a small number of areas by the end of 2011. There are two critical issues to decide:
12
Next Steps: Getting Past the Doha Round Crisis
1. How much time should be spent on negotiating the small package?
2. Which items should be in the small package?
The contributors disagree over the first issue. Susan Schwab argues for giving it not
more than 2 weeks; others suggest longer. They all, however, recognise that a prolonged
and contentious negotiation on a small package – especially one that ultimately proved
fruitless – would solve nothing and might harm the system.
There is far more agreement on the second issue – possible composition of the small
package. All the contributors, and most of the WTO delegations with whom we spoke,
suggest that some items on Doha’s massive negotiating agenda are close to conclusion.
Indeed, the lists are remarkably similar despite the vast differences in the contributors’
perspectives. They all point out, however, that striking even a very restrained list of
agreement will require abundant goodwill and hard negotiating.
Suggestions for the small-package items include:
• Some sort of accord on duty-free, quota-free treatment for least developed nations;
• A waiver that allows WTO members to provide preferential access to services trade
from least developed nations;
• An agreement to reduce distortions in cotton to the benefit of least developed nations;
• A package of measures that promote “trade facilitation”, i.e. reducing barriers to
imports stemming from excessive red-tape barriers in customs, inferior port infrastructure, and other non-trade-policy impediments to trade;
• An agreement on a monitoring mechanism for special and differential treatment;
• An agreement to make permanent the transparency mechanism for regional trade
agreements that has been operating successfully for years;
• An agreement on certain non-tariff barriers;
13
VOX
Research-based policy analysis and commentary from leading economists
• An agreement formalising cooperation between the WTO and various multilateral
environmental agreements.
Other issues may ultimately prove tractable or necessary to provide balance. Those most
often mentioned include a standstill agreement on fisheries subsidies, certain aspects
of the less controversial rules negotiations, and export subsidies. Such a package could
also include other DDA matters for which the negotiations could be completed quickly
or non-DDA matters where the WTO membership is at one, such as the promising
negotiations to upgrade the WTO’s Agreement on Government Procurement.
The final issue is what to call the small package; this is not a trivial matter.
• One option is to just boldly call the small package the “Doha Round” – to declare
victory and move on.
While this would clearly disappoint many, it speaks to the objective of not letting the
Round drag down the WTO – not allowing the WTO’s credibility to be further damaged
by endless discussions that can never led to a happy ending.
Of course, this option would leave unsolved the core Doha issues – reducing distortions
in and improving market access for industrial goods, agricultural products, and services
trade, and updating the rules. But it might allow members to re-craft the parameters of
the negotiations in a way that would be more likely to lead to success. This is clearly
the view taken by Susan Schwab and John Weekes. As John Weekes puts it: “Not
completing the Doha Round would be a serious setback to the WTO and the multilateral
trading system. However, if it is clear that the Round cannot be concluded successfully,
it is better to admit that and work constructively to develop an agenda for the future
work of the organisation.”
Another option would be to wrap up the collection of small agreements into a package
called the “Doha down payment” or “Doha deliverables”, or “Doha early harvest” as a
way of stressing that all the Doha agenda items are still on the table.
14
Next Steps: Getting Past the Doha Round Crisis
A third option would be to view the individual items as standalone agreements to be
agreed by the ministers of WTO members at the December meeting without clear
reference to what comes next.
This brings us to the next major element of the Road 3 pathway: What to do with the
rest of the agenda?
Choices to make on the big package
Albert Einstein once defined insanity as doing the same thing over and over and
expecting different results. This makes it clear that any complete plan for a way past the
Doha dilemma must change something in the way the negotiations have been operating.
Any multilateral trade negotiation involves choice on a series of negotiating rules
or conventions. The Doha Round has accreted an odd constellation of these. Some
are fundamental and therefore extremely difficult to change. These include the idea
that everything must be agreed by all before anything is agreed (the so-called singleundertaking principle) or the choice to focus on the particular tariff-cutting formula
known as the Swiss formulas. But many of the choices are less central, such as the exact
way in which flexibilities on tariff-cutting are to be decided.
The ramifications of these procedures on the negotiating dynamic were not well
understood years ago when the original decisions were taken. The lack of understanding
is even deeper when it comes to the joint operation and interaction among the
conventions.
For these reasons, the set of negotiating conventions that guide Round may no longer be
optimal. Consideration of the pros and cons of alternatives might identify other ways of
finding a package of trade-offs that is acceptable to all.
15
VOX
Research-based policy analysis and commentary from leading economists
The forward-looking agenda
A number of contributors suggested that the process of rebuilding momentum and
confidence in the ultimate outcome could be boosted by agreeing to launch work
programmes (not actual negotiations) on how the WTO could address 21st-century
trade issues that have come to the fore since the Doha agenda was set in 2001.
Here, there are two basic lines. The first would consider WTO institutional reform; the
second would consider new issues, such as new disciplines to underpin the increasing
convergence of trade, investment, and services (as is now routinely done in regional
trade agreements), setting limits on acceptable national climate policies with trade
implications, or export restrictions.
There certainly seems merit to these idea. If nothing else, it would interject new
dimensions to discussions that have been going on for a decade. It would also make
it clear that we need to safeguard the WTO as a forum for multilateral discussions on
critical 21st-century issues.
Concluding remarks
Many decent, hard-working public servants have committed plenty of energy to the
Doha Round since its inception. At this critical time, any temptation for recriminations
or lapses into bitter disappointment should be set to one side to let governments chart a
new path for the WTO. The circumstances facing WTO members in the middle of 2011
are hardly ideal, and the set of options that stand any chance of acceptance is narrow. In
times like these, it would be a mistake to make the perfect the enemy of the good. It is
time to think creatively and cooperatively about getting the WTO past the Doha crisis.
A decision, or non-decision, that led to several more years of drift – years that will be
complicated by elections and changes in governments in some of the leading trading
powers – could turn out to be the beginning of the end for the WTO’s role as leader
of the global trading system. The alternative – uncoordinated developments led by the
16
Next Steps: Getting Past the Doha Round Crisis
Big-5 in their own systems of regional trade agreements – is a very plausible outcome
at this stage, but not one that will ultimately serve anyone’s long-run interests.
References
Andre Nassar and Carlos Perez (2011). “Why WTO members should not give up the
Doha Round: The case of agricultural trade”, in Richard Baldwin and Simon Evenett
(eds.), Why World Leaders Must Resist the False Promise of a Doha Delay, VoxEU,
April.
17
There is no Plan B – only Plan A:
Towards completing Doha
Mari Pangestu
Minister of Trade, Indonesia
Doha is stalled by gaps that are unbridgeable today. Indonesia’s Trade Minister argues
that we need to be guided by priorities and pragmatism. We should develop a set of
stepping stones that will help us complete the Doha Round eventually. We should
identify the areas that are achievable in the very near future but which have an impact
on development while building confidence for the continued journey to a successful
Round. We should never lose sight of the final goal – completing the Doha Round as a
single undertaking. In short, we are not looking for a “Plan B”; we are looking for a
new way to execute Plan A.
The importance of completing the Doha Development Agenda sooner rather than later
goes beyond bringing gains of $360 billion of additional trade with substantial benefits
for industrialised and developing economies (HLTE 2011). The importance also goes
beyond what pragmatic soothsayers who are telling us: “Why are you worried, the
WTO system will continue to be robust whether we conclude Doha or not. Companies
and countries will continue to trade”. As a developing country policy maker – and I
believe I speak for many other developing countries – I am greatly worried about the
costs and opportunity lost of not completing Doha.
The costs of not completing Doha
I will point to four costs of not completing the Doha Round.
• First is what it could achieve for food security.
19
VOX
Research-based policy analysis and commentary from leading economists
During the 2008 food crisis, imbalances between supply and demand were partly
attributed to distorted agriculture prices caused by trade-distorting export subsidies
and domestic-support schemes. The agriculture package in Doha will go some way to
address this. In today’s situation of high commodity prices, now is the perfect time to
address the removal and elimination of such trade-distorting policies. Removing these
distortions can only be achieved through multilateral negotiations, not through bilateral
or regional agreements.
Most importantly, the winners would be the billions of hungry and poor people all over
the world; correcting the system and ensuring the future supply of food and greater
price stability is very much in their interests. For example, in Indonesia a 10% increase
in the price of rice, without any change in income, would lead to a 1% increase in
poverty.
• Second keeping protection at bay.
During the depth of the crisis benign protectionism was the order of the day, according
to the self-reporting surveillance mechanism established by the WTO at the request of
G20 Leaders. This allowed the rebound of trade to become one of the costless ways for
the global economy to recover. It is ironical that in the recovery, the latest report (WTO
2011) shows that there has been a slight increase in protectionism causing an estimated
impact of 0.6% to G20 exports.
The main increase has been due to tariff increases, automatic licenses, and other
restrictions including export restrictions. Whilst this is still “small”, it is nevertheless
double from the previous period. Restoration of the confidence in the world trading
system through clear signals that we are progressing on completing the Round is crucial
to keeping protectionism at bay. Developing countries such as Indonesia have a great
interest in this because only the multilateral trading system will provide the fair, rulesbased trading system for us to face large and more developed partners on a fair and
equal standing.
20
Next Steps: Getting Past the Doha Round Crisis
• Third the lack of progress on the Doha Round already has, and will continue to raise
the pressure to undertake bilateral and regional free trade negotiations.
In the ASEAN region there are already FTAs between ASEAN and all six of its dialog
partners (Australia, China, India, Japan, Korea, New Zealand), and numerous bilateral
FTAs. The EU has just completed negotiations with Korea, which has put pressure
for the Korea-US FTA to be ratified as soon as possible. The EU has also completed
negotiations with India, and is negotiating with Singapore, Malaysia, and preparing
to do so with other ASEAN countries. Recently China, Korea and Japan announced
revitalization of their FTA initiative. Furthermore we have the Trans-Pacific Partnership
initiative between 8 members of APEC.
It is not the bilateral and regional free trade agreements which are problematic per
se; it is negotiating them in the absence of a robust WTO system – a system which is
seen as meeting the needs of the current and future trade-linked issues. Bilateral and
regional agreements can only work towards complementing the multilateral trading
system when they are “WTO-plus”, not “WTO-instead”.
• Fourth the potential dampening effect on unilateral reforms.
The political economy of openness in trade policy and institutional reform have always
functioned better within the framework of international commitments. Multilateral
rules impose an important caveat on what countries can or cannot do. In a country like
Indonesia this has worked to our advantage in the way we frame our reforms, and in fact
has functioned in the past to put bad policies to rest.
For instance in the famous National Car case in the mid 1980s, which violated the
MFN principle by allowing duty-free imports of cars only from one source country, the
domestic politics at the time did not allow for policymakers to remove this policy. The
policy was finally ended through the WTO’s dispute settlement mechanism. It would
be too bad for reforms if the process is undertaken within weakened confidence of
multilateral trading system, or one which will eventually not be relevant to the evolution
of 21st century trade issues.
21
VOX
Research-based policy analysis and commentary from leading economists
The Way Forward: No Plan B
Despite G20 Leaders’ commitments, and all the good intentions and intensive work in
Geneva that came after the push given by trade ministers during their informal meeting
in Davos in January 2011, it proved impossible to arrive at a draft text by the end-ofApril milestone. There remains “unbridgeable gaps” in a number of main negotiating
groups, namely non-agriculture market access.
Given this situation, trade ministers met first during the APEC Ministers of Trade
Meeting in Big Sky Montana, and then on the fringes of the OECD meeting in Paris.
Fortunately all have agreed that we all remain committed to completing Doha as a single
undertaking. However, there was a sense of realism as to the timing and pathways to
achieve this desirable outcome in a timely way.
From an Indonesian perspective there is no “Plan B”. We do not support a “Doha
Light”, and we remain committed to a comprehensive, ambitious, and balanced package
building on what we have achieved to date.
After almost 6 years of negotiations since the key Hong Kong WTO Ministerial, I
believe we are more than 50% or some would say 80% of the way done. A realistic way
forward is to identify the sequence of steps that would take us to the final outcome; this
is necessary to avoid the costs and lost-opportunities I outlined above.
This is not about an early harvest or “cherry picking” and then stopping. It is about
identifying the steps forward in a meaningful way towards the final goal of the single
undertaking of Doha.
Identifying stepping stones to a final Doha Round
conclusion
There are areas within the negotiations that could be seen as steps towards the final
package. Of course work and political will is still needed to find ways to bridge the
22
Next Steps: Getting Past the Doha Round Crisis
unbridgeable gaps. In identifying the areas where we could find convergence, a number
of priorities stand out.
• First and foremost is areas of negotiations that will contribute and deliver to development objectives such as the Least Developed Countries package and/or an effective aid-for-trade, and facilitation package; this is, after all, a Development Round.
• Second areas where there would be clear benefits for development and the private
sector in facilitating and ensuring the benefits of trade are greater; we need stakeholders to be cheerleading the way forward.
• Third there could be areas where we would be able to address the food-security
challenge.
One could also foresee that, within each current area of negotiations, there could be
items which could be wrapped up without disturbing the overall balance of elements
in that particular area. It is important that we do not go into “new” negotiations in
identifying which areas. We should go into the mode of identifying these pathways and
steps with the mindset and political will of win-win.
We need to be guided by priorities and pragmatism. That is, to identify the areas that are
doable and achievable in the very near future, but which have an impact on development
and increasing the benefits of trade, while at the same time building confidence for us to
continue our journey to the final package. Most importantly, we should never lose sight
of the final goal of the single undertaking.
Looking forward
It is also important to provide the signal in what we say and do elsewhere. Beyond
talking about Doha, we must ensure continued confidence in and implementation of the
rules-based, open trading system.
23
VOX
Research-based policy analysis and commentary from leading economists
• This would mean the commitments of G20 Leaders and others on refraining from
protectionism going beyond words; the good intentions need to be strengthened
with commitments and actions.
• It also has implications for how we undertake bilateral and regional agreements;
these should be done in a way that is not an alternative to, and does not detract from
the multilateral trading system. We should pursue regionalism in a way which is
going to contribute to and complement the system.
Concluding remarks
In conclusion, we should not underestimate the costs of not doing all this. We will
need to draw upon the strength of our individual and collective political commitment.
We need to call on the ability of some major economies to look beyond pure national
interests, and to look at the impact and costs on the global system and economy. And we
need to remember that there are many countries and billions of people – many of which
are impoverished – who are waiting for the Doha deliverables.
References
HLTE (2011), “World trade and the Doha round”, final report of the High-Level Trade
Experts Group chaired by Jagdish Bhagwati and Peter Sutherland.
WTO (2011). “Reports on G20 trade and investment measures (mid-October 2010 to
April 2011)”, WTO Secretariat, 24 May.
About the author
Mari Pangestu is Indonesia’s Minister of Trade since 2004, having served as Executive
Director of the Jakarta-based think tank, the Center for Strategic and International
Studies, and a lecturer in the Faculty of Economics at the University of Indonesia. From
1991 to 1998, Dr. Pangestu was the coordinator of the Trade Policy Forum of the Pacific
24
Next Steps: Getting Past the Doha Round Crisis
Economic Cooperation Council, and serves on the Board of the Overseas Development
Council; World Gold Council; and the Asian Journal of Business from The University
of Michigan, Ann Arbor.
She has published widely on a range of subjects including matters pertaining to
Indonesia as well as regional (i.e. Asian and Asia Pacific) and global issues. She earned
her B.A. and M.A. in economics from Australian National University, and a Ph.D. in
economics from the University of California, Davis.
25
Acknowledge Doha’s demise and
move on to save the WTO
Susan Schwab
University of Marlyand; former U.S. Trade Representative
The Doha Round has failed, according the former US Trade Representative Susan
Schwab. This essay argues that prolonging Doha jeopardises the multilateral trading
system and threatens future prospects for WTO-led liberalisation. Negotiators should
salvage whatever partial agreements they can from Doha, and quickly drop the rest
to ensure the December ministerial meeting focuses on future work plans rather than
recriminations over Doha.
The Doha Round has failed. It is time for the international community to acknowledge
this sad fact and move on. Prolonging the pretence that the Doha Round will succeed
is now a greater threat to the WTO and the multilateral trading system than facing the
truth.
A great many smart, hard-working and well-intentioned individuals have worked over
many years to realise Doha’s potential to contribute to global economic growth and
development. But what is on the table in Geneva has failed to deliver any outcome,
let alone a meaningful one. It is time for a swift, clean break from the past and to
lay the groundwork for a future where the WTO and its members revive WTO-led
liberalisation and reform.
End Doha’s stranglehold and build towards near-term wins
To keep the multilateral trading system healthy, it is necessary to end the Doha
Round’s stranglehold on the system. This should happen quickly in order to ensure
that the December 2011 ministerial meeting focuses on future work plans, rather than
27
VOX
Research-based policy analysis and commentary from leading economists
recriminations about a Doha Development Agenda that has struggled through one failed
encounter after another.
Negotiators should refocus their efforts on near-term wins and on building the next
Round – which need not be another behemoth, but perhaps a “rolling round” of reforms
and new market access, or a few highest-common-denominator plurilateral, or WTOplus deals. Ultimately, these should lead to a broader-based market access and rules
agreement under the multilateral auspices of the WTO.
The small package possibility
In my recent Foreign Affairs article (Schwab 2011), I suggested that negotiators should
try to salvage whatever partial agreements they can and then walk away from the rest.
I mentioned a number of potential candidates, such as trade facilitation and the largely
completed agricultural-export pillar (comprising proposed agreements on export credits,
food aid, state-trading firms, and the elimination of export subsidies). Negotiators
might also try to complete two environment-related agreements, one cutting subsidies
to industrial fishing fleets that are overfishing the world’s oceans, and the other ending
tariff and nontariff barriers to ”green” technologies in major producing and consuming
countries. Taken together or individually, each of these would benefit countries across
the spectrum of economic development.
I am, however, sceptical that even these small agreements are achievable in the current
climate of mistrust and entrenched positions. A troubling development during the course
of the Round has been how often countries seem to forget or forfeit their own economic
interests – let alone the greater good – in the face of peer pressure and group-think. In
the current environment, even these smaller deals might prove impossible to achieve.
It is certainly worth trying to achieve a few deliverables by taking a run at a small
package, but negotiators should not spend too much time on it. They already know
exactly what the options are; if they cannot get to “yes” in, say, two weeks, they should
28
Next Steps: Getting Past the Doha Round Crisis
give up and move on to the real challenge of launching a new series of multilateral
negotiations under WTO auspices.
Getting past Doha
How to conclude the Doha Round? One option would be for the Director-General and
a representative sample of WTO Ambassadors to come together in the interest of the
institution and to offer a declaration of Doha’s demise, along with their pledge to begin
building the future. That would enable leaders at the November G20 meeting to pledge
their support for the rules-based trading system, the WTO and its next steps, rather than
for the ever elusive “balanced and ambitious” Doha outcome.
After a short period of grieving over the death of Doha and an opportunity to get
beyond the anger, lead trading nations should refocus on getting the WTO back into
its mainstream business of negotiating mutually advantageous market opening, and
updating the global ”rules of the road”. This approach offers the best promise of a
meaningful “development” outcome as well.
How might this be achieved?
It seems unrealistic to think WTO members would agree to launch another massive
all-or-nothing round in the near future. Such broad negotiations, however, will be
necessary to tackle some of the world’s most important market access challenges in
services, manufacturing, and agriculture, along with such issues as farm subsidies.
There are ways to build-up to the big-round model again, where countries once more see
economic self-interest in the use of broad-based negotiations and trade-offs to achieve
both new market access and market reforms. First, however, we must re-establish trust
and regain momentum.
One way forward would be for ministers to agree to launch a number of confidencebuilding negotiations. For example, ministers in December could decide to open talks
29
VOX
Research-based policy analysis and commentary from leading economists
on expanding the 1997 Information Technology Agreement; a number of nations
seem interested and the US Administration already has the authority to implement an
enhanced agreement. If negotiators fail to work through the 850 brackets in the current
Doha trade facilitation text, that could also be tackled as a stand-alone agreement, since
each nation would benefit from more efficient movement of goods and services across
borders.
Another confidence-building measure might be a merger of sectoral agreements geared
toward a widely-shared objective, such as cheaper, better healthcare. A package that
included pharmaceuticals, medical devices, and healthcare services might attract
support from the broad array of WTO members across the development spectrum. Given
the high-level of public interest in and awareness of environment issues, a sectoral
negotiation on environmental goods and services might be another confidence-building
deal, once it is removed from the straightjacket that Doha has become.
Lessons from Doha for next steps and the next round
Confidence building agreements would offer modest economic and social contributions,
and serve to prepare the atmospherics for launch the next Round. This brings me to my
last topic – the lessons we should draw from a decade of Doha talks.
One thing that is quite clear from years of struggling with the basic structure of Doha
is that the combination of formula and self-selected flexibilities has not worked. It
resulted in a situation where every negotiator had to assume the worst case – knowing
the political costs they would pay for their own liberalisation, but expecting their trading
partners to use flexibilities to negate any meaningful new market-access. It is possible
to draw from the best of the Doha formulas – such as the higher the barrier, the greater
the cut – while still creating real negotiations around them through requests and offers
delivered using above- and below-formula cuts.
30
Next Steps: Getting Past the Doha Round Crisis
Another key lesson is that lumping the world’s very diverse economies into three
basic categories – developed, developing, and least developed – is a practice that no
longer fits 21st century economic and trade realities. Nor is it a structure conducive to
negotiations and real progress based on an exchange of market access among nations
with large markets. Yes, the advanced economies should be expected to do more than
those at lesser stages of economic development, but expectations should also reflect
the fact that many emerging economies are characterised by both poverty and sectors
where they are globally competitive trade powerhouses.
The emerging economies have large markets, represent over half of global GDP growth,
and stand to be the biggest winners from any major trade agreement. They should be
expected to contribute to the next Round accordingly. Major trade agreements generally
take at least 12 years to implement from the time they are initially concluded. What
should the world trading system look like in 2025 in terms of the absolute and relative
responsibilities of key trading nations?
Concluding remarks
I am optimistic when it comes to the multilateral trading system and the WTO’s central
role in its governance. The optimistic scenario is that we put the Doha Round behind
us. Facing facts can invigorate and strengthen the trading system. If we fail to act, the
WTO risks losing its relevance.
The Doha Round – which in my view cannot be concluded as it is conceived today –
should not be allowed to continue draining the WTO’s credibility and potential progress
on the multilateral front. Now is the time to liberate the would-be trade liberalisers from
the Doha straightjacket and move on.
31
VOX
Research-based policy analysis and commentary from leading economists
References
Schwab, Susan (2011). “After Doha: Why the negotiations are doomed and what we
should do about it”, Foreign Affairs, May/June.
About the author
Ambassador Schwab has been a Professor at the University of Maryland School of
Public Policy since January 2009 and a strategic advisor to Mayer Brown, LLP (global
law firm) since March 2010. Ambassador Schwab served as U.S. Trade Representative
from June 2006 to January 2009 and as Deputy U.S. Trade Representative from
October 2005 to June 2006. Prior to her service as Deputy U.S. Trade Representative,
Ambassador Schwab served as President and Chief Executive Officer of the University
System of Maryland Foundation from June 2004 to October 2005, as a consultant
for the U.S. Department of Treasury from July 2003 to December 2003 and as Dean
of the University of Maryland School of Public Policy from July 1995 to July 2003.
Ambassador Schwab serves on the boards of Boeing Company, Caterpillar Inc. and
FedEx Corporation.
She holds a B.A. in Political Economy from Williams College, a Masters in Development
Policy from Stanford University (Food Research Institute), and a Ph.D. in Public
Administration and International Business from The George Washington University.
32
Next Steps: Getting past the Doha
Round crisis
Ujal Singh Bhatia
Formerly India’s Ambassador and Permanent Representative to the WTO
Hopes for finishing Doha in 2011 are fading fast. This essay suggests a three-track
approach for moving beyond the Doha crisis. 1) Identify a package of “deliverables’ –
parts of the Round that could be agreed by December 2011. 2) Assemble a package of
contentious issues for ongoing negotiation with clear terms of reference. 3) Establish
a work programme to consider WTO institutional reform and forward-looking issues.
For reasons that are too well known to be repeated, the WTO finds itself at the crossroads.
Decisions to be taken in the next few weeks will determine whether it can steer its
way to a successful conclusion of the Doha Round in the near future. Failing this, the
Round will continue to hang like an albatross around the WTO’s neck, preventing it
from delivering the promised boost to least developed nations and freezing its ability
to address new challenges to the global trading system. All countries would suffer from
such an outcome, but especially the world’s poorest and most vulnerable.
The cost of a never-ending Doha Round
The adverse implications of a continuing Doha impasse on the future role of the WTO
are too compelling to be dismissed offhandedly.
Several trade-linked global problems require global cooperation. Food security, energy
security, trade-related aspects of climate change, labour mobility, commodity price
volatility, and integration of regional liberalisation into the multilateral system are
problems that can only be solved with global cooperation.
33
VOX
Research-based policy analysis and commentary from leading economists
For example, if food exporters continue to impose export barriers when prices rise,
food importers may respond with import barriers to boost self-sufficiency. This sort of
protectionist reverberation could lead the world to a situation in which all the players
are worse off but none can improve the situation unilaterally. Avoiding this sort of
outcome would require global agreements. There are very few global institutions that
could manage such cooperation; indeed the WTO might be the only one. A WTO locked
in endless Doha debates cannot be the centre of the rules based global trading system.
There are many thinkers who believe that the structure of WTO rules is robust enough
to withstand a Doha failure. It is true that the sky will not fall if Doha is terminated
without a conclusion. Such analysts, however, tend to underestimate the significant
structural changes taking place in the global economy and the trading system. The
WTO is working on a set of rules agreed upon in 1994 that were based on an agenda
set almost a quarter of century ago. These are still useful and relevant for much of
world trade – but not all. For instance, the rules were not designed for the technologydriven fragmentation of the manufacturing process and the distribution of the product
value chain across several geographical locations, the intertwining of production with
related services, the embedded intellectual property rights in components and subcomponents, or the multiplicity of rules of origin. All these require a different approach
to rule making.
A WTO that remains preoccupied with the Doha Round cannot be expected to focus
on such issues. Therefore, the continuing relevance of the WTO and its primacy in
the global trading system are contingent upon a successful and early conclusion of
the Doha Round. Notwithstanding this urgency, it is now clear that a Doha package
cannot be wound up in 2011 along the lines agreed by G20 leaders in November 2010.
To prevent this from tying the WTO in knots for years to come, it is necessary to think
creatively about ways forward.
34
Next Steps: Getting Past the Doha Round Crisis
Ideas for moving beyond the impasse
Any effort to deal with the impasse in the negotiations needs to be based on a holistic
appreciation of the systemic implications of a continuing stalemate as much as on the
negotiating positions of various members. The efforts for a solution acceptable to all
members therefore need to focus on issues in the Doha mandate as well as on issues for
a post Doha situation.
Within this framework, four constraints need to be borne in mind:
• A “Doha Lite” of reduced ambition will not work. The outcome has to reflect a decade’s efforts of the global community. Ambition, however, cannot be defined to suit
the convenience of a few members. It must touch all aspects of the Doha mandate.
• Aspects of the Doha mandate that are more relevant to the development dimension
have to be ambitiously addressed and fast tracked.
• WTO needs to start work on a new work programme to address new challenges.
• The Doha Round cannot be completed in 2011. A down payment is necessary from
the Doha Round this year to convince the world that the WTO can deliver.
A three-track approach
These constraints require the WTO to adopt a three-track approach during the next few
months leading up to the ministerial meeting in December 2011.
Track 1: Identification of a list of issues that specially address the trading interests
of smaller developing countries and relatively less contentious issues, for fast tracked
finalisation before the ministerial meeting.
Track 2: Identification of a package of the more contentious issues for continuing
consultations with clear terms of reference.
Track 3: Identification of appropriate terms of reference for a work programme on
WTO institutional reform, and the forward-looking agenda.
35
VOX
Research-based policy analysis and commentary from leading economists
A possible timeline
These three tracks, taken as a package, would provide a way forward that respects all
four constraints. Achieving consensus on them would be difficult – and require months
of preparatory work and negotiations.
If the WTO membership starts immediately, however, there is still time to get the
package ready for finalisation by ministers at the December 2011 ministerial meeting.
For this to happen, it is essential that discussions on such a package begin this month
so that its contents can be finalised by the end of June 2011. This would leave about
four working months before the ministerial meeting to complete negotiations on the
selected areas.
What the three tracks might contain
The first track would contain the Doha down-payment package. As with any WTO
package the contents would need to be negotiated, and it might require complementary
policies such as technical assistance initiatives.
Such a list must include items that speak to development aspects of the Doha mandate,
such as:
• The Implementation of the Hong Kong decision on duty-free, quota-free treatment
for less developed countries;
• A ministerial decision on the Monitoring Mechanism for Special and Differential
Treatment provisions;
• A ministerial decision on the issues raised by the Sub-Saharan African cotton exporters (the group known as the C-4); and
• The finalisation of a less-developed-country (LDC) waiver in services so that preferential treatment can be provided to LDC’s in services without extending it to
others.
36
Next Steps: Getting Past the Doha Round Crisis
It should also include areas of the negotiations that engage the interest of all members
such as:
• Trade Facilitation;
• All aspects of export competition in agriculture including export subsidies;
• The Transparency Mechanism for regional trade agreements (RTAs);
• The non-tariff barriers (NTBs) package in non-agricultural market access (NAMA);
and
• A ministerial decision on interactions and relationships between the WTO’s rules
and its committees, on the one hand, and existing multilateral environmental agreements, on the other (e.g. the Basel Convention on the Control of Transboundary
Movements of Hazardous Wastes, and the Montreal Protocol on Substances that
Deplete the Ozone Layer).
While some members would like to exclude some of these areas from a fast tracked
process in the hope of using them for trade offs in the final stage, it is important that the
package is as comprehensive as possible.
Track two: Items for further negotiation
The second track would gather all remaining items currently under negotiations. This
would include:
• All aspects of market access in industrial goods, agriculture and services;
• All aspects of subsidies in agriculture;
• Various aspects of rules, including fisheries subsidies;
• Environmental goods; and
• Issues related to trade-related aspects of international property rights (TRIPS) regarding the protection of Geographical Indicators, and the protection of traditional
37
VOX
Research-based policy analysis and commentary from leading economists
knowledge and folklore that were are mentioned in the Convention on Biological
Diversity1.
The need for a balanced package deserves emphasis. It is often assumed that there
is a straight trade-off between agricultural subsidies and market access. The situation
however, is more complex. The interest of countries like India, China, and Indonesia
in agricultural reform is more systemic than export related. For them other incentives,
within the mandate, will be required.
Track three: Looking ahead
The underlying theme for the work programme would be an appraisal of the entire
negotiating and decision-making process in the WTO in the context of the present
realities both within and outside the organisation. The objective would be to prepare
the WTO to address new challenges to the global trading system concurrently with the
ongoing work on the remaining parts of the Doha mandate.
Closing remarks
The above proposals constitute a basic template for addressing the Doha conundrum.
To what extent they are actually embraced will depend on how much political capital
the major members of the WTO are prepared to invest in moving the Doha Round
forward. There is much scepticism about whether such political will exists. It is time
for governments to prove the sceptics wrong.
1
38
Specifically, as specified in paragraphs 18 and 19 of the Doha Declaration.
Next Steps: Getting Past the Doha Round Crisis
About the author
Ambassador Bhatia Singh joined the Indian Administrative Service in 1974, holding
several senior positions in provincial administration in Orissa State between 1976 and
1995. He served as Joint Secretary, Ministry of Commerce and Industry between 19952000, in which capacity he handled a number of bilateral, regional and multilateral trade
negotiations. From 2004 to his retirement in 2010, he served as India’s Ambassador and
Permanent Representative to the WTO in Geneva.
39
Next Steps: Is an early harvest still
possible?
Zhenyu Sun
China Society for World Trade Organization Studies
Doha is deadlocked. This essay argues that the options are: i) to declare the negotiations
dead, ii) to suspend them until after the US elections, or iii) to negotiate an earlyharvest agreement for the end of this year. The author strongly believes that the early
harvest is worth the extra efforts – for both the WTO and the world’s poorest.
I am greatly interested in the discussions among experts and professors recently on the
future of the Doha Round. While I can feel their strong sense of frustration about the
deadlock, I don’t see any real possible solutions for the problems at hand. I don’t have
one either. The lack of a solution is probably due more to political problems than to
technical problems.
Next steps
To announce that the Doha Round is dead would be easy. But then what? Would such
an announcement inspire people to inject more energy to the work of the organisation?
Would it serve the purpose of strengthening the multilateral trading system? I rather
doubt it.
After dropping the Round, what could be done next? Just continue with business as
usual? Should members only focus on trade policy reviews, on regular meetings in the
bodies under the General Council, and on dispute settlement cases? Should they take
it for granted that the panellists and Appellate Body members will be able to fill in
the gaps of writing new rules for the world trading system? This does not sound very
attractive.
41
VOX
Research-based policy analysis and commentary from leading economists
The need for progress and the difficult options
If the WTO is to remain relevant, its members must negotiate new rules. How could
they do this? Could there be a completely new round sometime later? Or could there
be new rules or amendments of the old ones adopted at each and every council or
committee separately?
One option would be to launch a new round. To start a new round post-Doha, however,
could be even more difficult than the Doha Round itself. People have tasted the
failure of Seattle. In any new round members could not ignore the built-in agenda of
agricultural subsidies, or discussing the tariff-cutting formula on agricultural and nonagricultural products, or services trade, and rules. It may still be difficult to cover labour
and environmental standards. In any case, the hard bargaining over the past 10 years
would not disappear with the start of a new round.
Another option could be to rule out all rounds after Doha. To not even to talk about the
“single undertaking” any more, i.e. to abandon the negotiating principle, heretofore
respected, where all WTO members must agree to all aspects of the final package. This
option would just let the councils and committees continue with their normal functions,
setting new rules and amending old ones on their own. I personally believe this option
might be feasible, but it is not in line with 60 years of WTO common practice. Members
may not like this option because it could rule out trade-offs across interests in other
areas.
Early harvest as the way forward
If dropping the Round is not an attractive option, and if waiting till after the next US
election is likewise unappealing, the only option left is some kind of ”early harvest” to
be adopted at the December 2011 ministerial meeting.
I am fully aware that some members are strongly against the idea of an early harvest.
Even if they could eventually negotiate a duty-free quota-free agreement for the world’s
42
Next Steps: Getting Past the Doha Round Crisis
poorest nations, an agreement on cotton, and an agreement on trade facilitation, they
are unlikely to agree to implement them now because they will need to use these issues
to negotiate trade-offs with their other interests. I would like to make an appeal to those
members.
Guarding the future of the multilateral trading system
It is high time that people gave more considerations to the future of the multilateral
trading system and less to their short-term national economic interests. As the APEC
leaders reiterated at a recent summit:
“We uphold the primacy of the multilateral trading system and reaffirm that this
strong, rules-based system is an essential source of sustainable economic growth,
development, and stability. We take considerable satisfaction in the success of
the WTO, its existing framework of rules, and its consultative mechanisms in
contributing to the beginnings of global economic recovery. The WTO has amply
proven its worth as a bulwark against protectionism during a highly challenging
period.”
I do hope that people take this statement seriously. This means giving thought to ways
to save the credibility of this organisation, to deliver the promise of a development
round, and to make sure that this organisation is still relevant to 21st century trade
matters. Safeguarding the future of the WTO is particularly important at a time when
the world has experienced the global financial and economic crisis, the upheaval in the
Middle East, and when we face great uncertainties.
Content of the early harvest
Certainly there could be more detailed discussions on what issues should be included in
the possible package. If members are willing to move along that line, there is still time
to finalise the content. My friend Ujal Singh Bhatia (WTO Ambassador from India until
43
VOX
Research-based policy analysis and commentary from leading economists
2010) has indicated some areas where members could try to build consensus and adopt
a decision at the December 2011 ministerial meeting (Bhatia 2011). I strongly believe
that it is worthwhile to make some extra efforts along the lines he has proposed.
• In any case, duty-free-quota-free treatment for LDCs and the issue of cotton have to
be included in the package.
These are decisions taken at the Hong Kong Ministerial Meeting; its immediate
implementation would be conducive to addressing the great concerns of the poorest
countries and thus very much in line with the principle of the Doha Development Round.
• Trade facilitation could bring benefit to all members.
It could help trade expansion enormously and bring even more benefit to trade than
would further reduction of tariffs. It could also help President Obama achieve the goals
of doubling US exports in the next 5 years and substantially increasing employment at
home.
• The date for expiration of export subsidies at 2013 was adopted at the Hong Kong
ministerial meeting and should be included in the package.
The EU may want to bring in some other issues to balance its interests. Personally, I
believe it is doable through adding some issues of their interest, such as environment
products, to the package.
Concluding remarks
When they meet in Geneva this December, I am sure that members would prefer to have
their trade ministers making some kind of substantive decisions. An early package for
the Doha Round is probably a suitable one for the ministers to consider and to deliver
at their meeting later this year.
44
Next Steps: Getting Past the Doha Round Crisis
References
Singh Bhatia, Ujal (2011), “Salvaging Doha”, VoxEU.org, 10 May.
About the author
Zhenyu Sun, the Chairman of China Society for World Trade Organization Studies,
served as the Ambassador and Permanent Representative of China to the WTO from 2002
to 2010. He served as vice minister of Moftec (Ministry of Foreign Trade and Economic
Relations, which later became Mofcom, Ministry of Commerce) from November 1994
till 2002 when he went to Geneva as WTO Ambassador. Born in Fengnan County
of Hebei Province in March 1946, Mr. Sun Zhenyu graduated from Beijing Foreign
Languages Institute in July 1969. From 1973 to 1985, he served successively as staff
member, Deputy Director and Director in the Third Department for Regional Affairs of
the Ministry of Foreign Trade. During this period, he worked on bilateral trade relations
between China and UK, later between China and European Community. From 1985 to
1990, he worked as Vice President of China National Cereals, Oil and Foodstuff Import
and Export Corporation (COFCO), focusing on the company’s business with Japan and
South-east Asian Countries.
In 1989, he attended one year program of Management Training Course for senior
executives sponsored by UNDP in cooperation with University of British Colombia,
Canada and Manchester University UK. From 1990 to 1994, he served as Deputy
Director General and Director General of Department of American and Oceanic Affairs
of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC), working on
bilateral trade relations with U.S., Canada, Australia, New Zealand and Latin American
countries during this period. He participated on separate occasions in Sino-US bilateral
negotiations on Market Access, Textiles and Intellectual Property Rights.
45
Getting past the Doha Round crisis:
Moving forward in the WTO
John Weekes
Bennett Jones LLP
The Doha Round is stuck. This essay argues that finishing Doha would be best, but
if this is impossible, we should admit it and move on. Investing more resources and
credibility in a failure would only damage the WTO and multilateral cooperation.
Leaders should turn their energies towards building an agenda for the WTO’s future
work that responds to 21st century interests. Getting this right is critical; the WTO
cannot afford another failure if Doha dies. An early harvest is an excellent idea, but
only if it can be done quickly.
Bringing the Doha negotiations to a successful conclusion is by far the best course of
action. The valuable contribution that such a development would make to strengthen the
trading system has been examined at length elsewhere. No single achievement would
be more valuable than binding in the WTO rulebook the current level of trade protection
maintained by its members in all three areas of market access – industrial goods,
agriculture, and services. This action would permanently capture the considerable
liberalisation that has taken place since the effective conclusion of Uruguay Round in
1993. It would also set a new start line for the launch of any subsequent negotiations,
which will surely come before too long.
If Doha cannot be completed …
Not completing the Doha Round would be a serious setback to the WTO and the
multilateral trading system. However, if it is clear that the Round cannot be concluded
successfully, it is better to admit that and work constructively to develop an agenda for
47
VOX
Research-based policy analysis and commentary from leading economists
the future work of the organisation. It would be damaging to invest more resources and
credibility in something that can’t be done.
The WTO itself remains an extremely valuable institution. Its worth has been proven
by the role it played in discouraging its member governments from taking protectionist
actions during the recent global economic crisis. The continued accession of new
members to the organisation is a further indication of just how valuable it is to the
international community. In a world of global supply chains, business needs a set of
multilateral rules within which to operate – now more than ever.
Avoid the blame game
If the members decide that the Round cannot be brought to a successful conclusion
it will be important to avoid recrimination. One thing is clear; a major and sustained
effort has been made by all the members to try to deliver a successful outcome. While
avoiding recrimination, WTO members should spend some time reflecting on the
reasons for the current difficulties.
One common mistake is to argue that the WTO as a whole is too big. Many outside
observers suggest that, with 153 members, the WTO is too unwieldy an organisation
to address the challenges of 21st century trade, particularly when decisions are taken
on the basis of consensus. It is important to note, therefore, that blockages preventing
conclusion of the Round are not the large number of members, but rather differences
among the largest and most powerful trading countries, who would need to be party to
the conclusion of any major trade negotiation.
One reason for Doha’s problems is that the preparatory process for the Round was
inadequate. While the built-in agenda that emerged in Marrakesh led to useful work
and provided a good basis in some areas, it did not permit the sort of broad thinking
that should have gone into preparations for a major negotiating effort. After the failure
48
Next Steps: Getting Past the Doha Round Crisis
in Seattle, launching the Round as a political act in the face of terrorist threats in 2001
was not an adequate foundation.
Develop the WTO’s future work programme over the next
two years
WTO member governments should now begin to plan the future work programme of the
WTO. The last major work programme undertaken in the multilateral trading system
began at the fractious GATT ministerial meeting in 1982. The work then undertaken in
the GATT was supported by efforts undertaken in other international organisations and
domestically by the various ‘contracting parties’ (as members were called back then).
The product of those efforts became the basis for launching, and then concluding, the
Uruguay Round negotiations. Obviously the world of 2011 is very different from that of
1982. Global supply chains and the seamless connections between trade in goods, trade
in services, and investment present a series of new challenges for the trading system.
Members should start to plan the future work now. But this is work that should be done
properly and not in haste. One of the problems with the 1990s built-in agenda was that
it was very difficult to introduce any new items into the discussion, even including
consideration of further tariff liberalisation. In order to avoid such difficulties, it would
be useful to develop the future agenda over a two-year period. Ministers at December’s
ministerial conference could ask the General Council and the Director-General to
consider the matter and come forward with suggestions for the future work of the
organisation at the next ministerial conference in 2013.
Do we need Doha “down payments”?
Many “players” and observers have raised the question of what might be salvaged or
harvested if the Doha Round cannot be finished this year. This is an excellent idea
provided it can be done quickly and efficiently. If, however, it is going to take, say, more
than six months, the effort should be abandoned. I suspect it will not be easy to agree
49
VOX
Research-based policy analysis and commentary from leading economists
on which parts of the Doha Round should be salvaged given the different priorities of
WTO members. The effort would also serve the purpose of testing whether the WTO
can negotiate agreements outside the context of a round. It would be very useful to have
an answer to that question.
Concluding remarks
If the Doha Round is not successful, the WTO cannot afford another failure. Building
a solid agenda for the future work of the WTO that responds to the real interests of its
members needs to be a central task of the organisation.
About the author
John Weekes is senior international trade policy adviser at Bennett Jones LLP with
a long experience in trade diplomacy and trade policy. He was Canada’s Ambassador
to the WTO from 1995 to 1999, and Chair of the WTO General Council in 1998. He
was instrumental in the creation of the Committee on Regional Trade Agreements and
served as its chair from its inception in 1996 until he became Chair of the General
Council. Prior to that, he was Canada’s Chief Negotiator for NAFTA (1993 to 1995),
and Canada’s Ambassador to the GATT during the last multilateral trade negotiations
(Uruguay Round). He was a member of Canada’s negotiating team to the Tokyo Round
of GATT negotiations in the 1970s. He is on the Board of the Washington-based Cordell
Hull Institute, and Chaired the Management Board of the Advisory Centre on WTO
Law in Geneva.
50
The good ship Doha: Salvage-andabandon-ship or repair-and-wait?
Stuart Harbinson
Sidley Austin LLP
The core Doha goals – better market access and rules for agricultural, industrial, and
services trade – still matter, but Doha is a ship run aground. This essay argues that the
choices are: i) to abandon ship and try with a new ship later, or ii) to patch up the holes
by delivering some progress in December 2011 and then wait for a high tide to carry us
off the rocks. Only the latter is likely to achieve the core goals.
The good ship Doha is well and truly stuck on the rocks. Let’s make no mistake – the
rocks are substantial and there is no magic solution that will instantaneously get us off
them. The choice now facing us is to salvage what we can and abandon ship, or to patch
up the holes, wait for a high tide, and sail on.
While the agenda is 10 years old and showing its age in some respects, few are currently
advocating its abandonment. This is because the issues at the heart of the Round still
matter – namely, market access and rules for trade in agriculture, industrial products,
and services. The critical test for deciding on immediate next steps should be whether
they would facilitate or complicate ultimate resolution of these difficult issues.
Salvage and re-launch new negotiations: An option that
won’t work
With a ministerial conference coming up in December, attention has turned to what
some call “salvage”. A salvage operation implies that the vessel is no longer seaworthy;
we should just grab what we can and leave the ship to smash itself to pieces on the
rocks. We would then have to look for another ship. One of the problems with this
51
VOX
Research-based policy analysis and commentary from leading economists
scenario is that it would take quite a while to design and construct a new vessel suitable
for WTO negotiations. Even then, the new ship will have to negotiate its way around
many of the same rocks. The problems we face in agricultural and industrial market
access, for example, will not simply disappear.
It’s tempting to think that we can simply salvage a few things, forget about Doha, and
start all over again with a better chance of success. The reality would surely prove to
be quite different.
Repair and carry on
This leaves us with the option of repair-and-carry-on (though not necessarily in the same
way as in the past). We would thereby acknowledge, as Ujal Bhatia Singh eloquently
put it recently, that we are “lashed to the mast of Doha” (Bhatia 2011). This, however,
should not be interpreted to mean that the WTO as an institution is locked in a death
embrace with the Doha Round.
“Deliverables” for the ministerial conference could constitute a patch to keep the ship
afloat until the high tide comes. In this analogy the “high tide” would be a change in the
global economic and political seascape, enabling the major trading economies to settle
their differences and bring the ship safely into harbour.
Admittedly there is an element of hope in this, but on balance it does not seem likely
that the present, highly inimical environment (recession, unemployment, exchange
rate issues, major domestic policy preoccupations, etc.) will persist indefinitely.
Furthermore, as a result of intensive work in recent months, key members are now
much clearer about the remaining gaps and what it would take to bridge them – a very
useful position from which to restart at the right time.
52
Next Steps: Getting Past the Doha Round Crisis
The Doha Round is durable for a reason
That the Doha Round persists after the vicissitudes of over nine years of negotiations
is testimony to its robustness. The widely held view that it was launched off-the-cuff in
reaction to the tragic events of 9/11 without substantive business or political backing
is not borne out by the historical record, nor does it tally with my own experience as
Chairman of the General Council at the time.
In the first place, it is inconceivable that such a complex undertaking could have
been agreed in the space of two months. Efforts to launch a round in fact began well
before the ill-fated Seattle Ministerial Conference in 1999. These efforts received
considerable reinforcement from the failure of the Uruguay Round “built-in agenda”
negotiations on agriculture and services to deliver results. Recall that the Agreement
on Agriculture refers to the “Continuation of the Reform Process”, a process to which
many governments and industries were – and still are – strongly committed. Many
services industries, stimulated by the WTO’s successes in moving forward in financial
services and basic telecommunications in the late 1990s, were similarly champing at the
bit. While it is true that there was also some opposition, the history of the preparatory
process in 2001 shows clearly that, well before 9/11, the working hypothesis for the
Doha Ministerial Conference was the launch of a new round.
As the first chairman of the Doha agriculture negotiations commencing in 2002, I can
also testify personally to the intense business and political interest at that time. If such
interest has subsided, this could be ascribed to the apparent lack of movement in the
negotiations and the changing political and economic dynamics since the Round was
launched.
53
VOX
Research-based policy analysis and commentary from leading economists
Deliverables would be welcome – as long as expectations
are reasonable
Given the extremely strong commitment displayed by WTO members both in launching
the Round and resolutely pushing it forward over an extended period, as well as the
high-level political commitment restated only six months ago, a concerted effort to
identify a decent number of “deliverables” for the eighth ministerial conference in
December would certainly be welcome.
Nevertheless it might be prudent not to invest too much expectation in this process.
There is a danger that such an exercise would involve multiple “shopping lists” which
would prove in a number of instances to be irreconcilable. The last thing the WTO
needs at present is to have a lengthy and acrimonious discussion about “deliverables”
culminating in a paltry agreement or, worse still, no agreement at all.
Possible deliverables
The emphasis on “deliverables” should be on the rules elements of the Round since
market access remains highly contentious and linkages make it unlikely that partial
results could be delivered. Even within rules, few issues come without caveats attached.
Among the candidates (concentrating on Doha issues, in no particular order) appear to
be the following:
• Trade facilitation is most often mentioned, although substantive issues remain to be
resolved, including technical assistance.
It is questionable if an agreement should be rushed into if it involves too many
compromises. However, if it can be delivered, this would be a major boost.
• An agreement on the export competition pillar in the agriculture negotiations would
also be a very substantive contribution.
Whether the political will exists to settle this in advance of the remainder of the
agriculture package is a question that will need to be answered.
54
Next Steps: Getting Past the Doha Round Crisis
• Domestic regulation in services may be considered as another significant possibility.
However this item is linked with market access and the stumbling block of the “necessity
test” issue remains, so the chances may not be great.
• Non-tariff barriers: There should be a trawl through the negotiating issues in an attempt to identify possible “deliverables”.
Realistically, an agreement on transparency may be the most likely.
• The least-developed country waiver in services is more feasible though its utility is
limited without services commitments.
• Progress building on the “duty-free-quota-free” (DFQF) market access commitments for least-developed country agreed at the Sixth Ministerial Conference would
be highly desirable.
However, there are political issues to be overcome. Reviews of Generalised System
of Preferences (GSP) schemes in the US and EU may be a complication, and dutyfree-quota-free raise the tricky issue of rules of origin; there is a very real issue to be
resolved here and concerns over circumvention must be addressed.
• Cotton also falls into the highly desirable category.
Political realities in the US may still prove to be an insuperable obstacle in 2011,
although it may be possible to grapple with these at a later date with a new US Farm
Bill and especially if the Round as a whole is concluded.
• Agreement on a monitoring mechanism for “special and differential treatment”
would be useful.
Though perhaps not in itself a major achievement, this would constitute a welcome
confirmation that the development component of the Round is not sliding off the deck.
• Definitive implementation of the transparency/monitoring mechanism on regional
trade agreements.
55
VOX
Research-based policy analysis and commentary from leading economists
This would be a strong signal that the WTO is developing its surveillance functions in
this area.
• Considerable difficulties persist in the negotiations on fisheries subsidies.
It seems highly unlikely that these could be resolved in time to deliver an agreement in
December. One possibility may be to aim for a “standstill” arrangement so that existing
levels of subsidies would not be increased pending an agreement.
• On trade and the environment, it should be possible to deliver on paragraphs 31(i)
and (ii) of the Doha Ministerial Declaration – the relationship between WTO rules
and Multilateral Environmental Agreements including information exchange between the WTO and the Multilateral Environmental Agreements such as the Montreal Protocol.
Desirable as it is, any agreement on reducing barriers to trade in environmental goods
and services seems unlikely, since this is closely linked with negotiations on market
access for industrial products.
• In trade-related aspects of intellectual property rights (TRIPS), the register of Geographical Indications for wines and spirits might be doable in isolation but linkages
to the extension of additional protection to other Geographical Indications and to
agriculture may prove to be a major complication.
Overall, there is a reasonable prospect of constructing a respectable package, especially
if trade facilitation and export competition can be included.
56
Next Steps: Getting Past the Doha Round Crisis
What to call the deliverables and what to do with the rest
Whether WTO members should have the gall to characterise any such agreements
as “early harvest” is another question. In any case, the idea would be to activate the
mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial
Declaration1. Even if the eventual list were modest, it would be a positive contribution
and a sign that Doha has not sunk.
As regards the remaining issues – the great bulk of the Doha negotiations – members
should once again recommit themselves to completion of the agenda as soon as possible.
In practice, that is likely to be when the global economic and political climate is more
conducive. While this might provoke yawns in some quarters, it is preferable to other
alternatives such as formal suspension or attempting a fundamental reconfiguration,
which could result in a complete unravelling. One might recall Winston Churchill’s
frequently uttered response to repeated adversity – “we must just keep buggering on”
(which he often shortened to the acronym “KBO”).
Moving the WTO forward while Doha is waiting for a high
tide
Over the coming weeks and months, in my view, the WTO should not stop with a repairand-wait strategy. While the non-negotiating functions of the WTO – usually described
as dispute settlement and monitoring/surveillance – are in reasonably good shape, they
are not sufficient in current circumstances, especially given the state of the Round, to
convince sceptical outsiders that the organisation is as functional as it should be.
If in 2012 (and possibly 2013) Doha is going to assume a lower profile, the opportunity
should be taken to exploit some of the other strengths of the WTO that have fallen out
1
Paragraph 47 reads: “With the exception of the improvements and clarifications of the Dispute Settlement Understanding,
the conduct, conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single
undertaking. However, agreements reached at an early stage may be implemented on a provisional or a definitive basis.
Early agreements shall be taken into account in assessing the overall balance of the negotiations.”
57
VOX
Research-based policy analysis and commentary from leading economists
of the limelight in recent years. Members could, for example, agree to reinvigorate and
give higher priority to the deliberations of the regular councils and committees. These
bodies were relatively vibrant in the period 1995 to 2000. Some still are, but others are
no longer being as fully exploited.
This might also offer an avenue to answer, to some extent, critics who argue that the
WTO is locked in an outdated agenda and not addressing new areas of concern.
Why should some of these “new” issues not be discussed in the regular (non-negotiating)
machinery? This is already beginning to happen to some extent – for example the
recent discussion in the working group on trade, debt and finance on the relationship
between trade and exchange rates, and the agriculture committee’s discussions of food
security. There are numerous other candidates for similar treatment, some controversial
perhaps but others less so. Could relevant WTO bodies discuss some of the supplychain issues frequently mentioned by businessmen? That might offer a welcome means
of reconnecting the WTO with the business community. The Trade Policies Review
Mechanism might also be overhauled. What has happened to the work programme on
e-commerce?
Discussion of current issues in the regular machinery might in some cases lead
nowhere. In others, it could lead to some strategic thinking about the future shape of
the multilateral trading system and prepare the ground for further developments.
Conclusion
To summarise, it does not seem to be necessary to abandon the good ship Doha in order
to start moving forward into as yet uncharted waters.
References
Singh Bhatia, Ujal (2011), “Salvaging Doha”, VoxEU.org, 10 May.
58
Next Steps: Getting Past the Doha Round Crisis
About the author
Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLP’s Geneva
office. He joined Sidley Austin after gaining extensive trade policy experience in
several high-level positions in the United Nations, World Trade Organization, and Hong
Kong Government.
When Permanent Representative of Hong Kong, China to the WTO, Mr. Harbinson
chaired the General Council in 2001-2002, overseeing preparations for the Doha
Ministerial Conference. He subsequently served as the first chairman of the agriculture
negotiations. He was Chief of Staff to Director-General Dr. Supachai Panitchpakdi
from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005
to 2007.
59
Keeping the WTO on track: A Doha
down payment plus more
Richard Baldwin and Simon Evenett
Graduate Institute, Geneva and CEPR; University of St Gallen and CEPR
After 10 years of much progress and much frustration with the Doha Round, it is time
to find a new approach to bring the negotiations to a successful conclusion. This essay
argues that success would require four things implemented simultaneously: i) a Doha
down-payment package agreed this year, ii) an understanding of how to reorganise
continuing talks on the most contentious issues, iii) commencement of a WTO work
programme on 21st-century trade issues, and iv) a bold initiative by middle power WTO
members to try to unblock the talks.
World leaders are in a bind over the Doha Round. Carrying on with business as usual is
no longer an option – the impasse that has emerged cannot be solved with a few more
negotiating sessions. Abandoning the Round has been ruled out by almost all WTO
members, nor is there much appetite for suspending the Round. This quandary has trade
ministers and diplomats casting around for creative solutions.
Getting the WTO past the Doha crisis
After talking with ambassadors and senior officials from a wide range of delegations in
Geneva, and a few from national capitals, we pulled together the elements of a plan that
might suggest a way forward. The plan has four dimensions.
61
VOX
Research-based policy analysis and commentary from leading economists
1. What to do for the December 2011 ministerial meeting
While finishing Doha this year is impossible, the WTO could have something to show
for its 10 years of work. This progress could be locked in. A small package or set of
stand-alone agreements could be finalised this year – what some call “early harvest”
results and others call “Doha deliverables”, or the “Doha down payment.”
The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a
natural focal point for finalising these results.
Although these agreements would not constitute a major economic breakthrough, it
would be a wise, political response to the Doha crisis. It would demonstrate that the
WTO is alive, that it is forum where things can get done.
The nature of the package is dictated primarily by practicality – we can think of
including only those items where agreement is already close. There would also be great
merit, both politically and economically, to focusing on issues that benefit the world’s
poorest countries. The failure of the largest trading nations to find a compromise that
suits them shouldn’t be allowed to hold up sensible progress for the least developed
nations.
The other essays in this eBook discuss the possible items that might be included in a
Doha down payment. We have not been at the cutting face of the negotiations, so we
cannot form an independent judgement of what is practical. Canvassing opinions in
Geneva, however, the most likely items seem to be:
• An accord on duty-free, quota-free treatment for least developed nations;
• A waiver that allows WTO members to provide preferential access to services trade
from least developed nations;
• An agreement to reduce distortions in cotton to the benefit of least developed nations.
62
Next Steps: Getting Past the Doha Round Crisis
• A package of measures that promote ‘trade facilitation’, i.e. reducing barriers to
imports stemming from excessive red-tape barriers in customs, inferior port infrastructure, and other non-trade-policy impedances to trade;
• Agreement on a monitoring mechanism for special and differential treatment,
• Agreement to make permanent the RTA Transparency Mechanism that has been
operating successfully for years; and
• An agreement on certain non-tariff barriers such as the Horizontal Mechanism and
textile labelling.
Other issues may ultimately prove tractable or necessary to provide balance. Those
most often mentioned include a standstill agreement on fisheries subsidies, certain
aspects of the less controversial rules negotiations, and export subsidies.
2. What to do with the rest of the Doha agenda
The small package that might be ready for December 2011 would not solve the WTO’s
first order negotiating challenge. A vast range of economic interests are still counting on
the Round to deliver major progress on market access for industrial goods, agricultural
products, and services. If we are to maintain a semblance of cohesion among WTO
members, there will have to be an agreement to continue negotiations on the core issues.
But the principal negotiating processes used to date haven’t worked. Efforts by the
Big 5 – as they are sometimes called – failed to find a compromise among themselves.
There are many explanations for this failure, but one thing is clear – not all trade-offs
were explored. In particular, the process has this year fixated very much on trade-offs
within industrial goods liberalisation (NAMA). Trade-offs with other areas (services,
antidumping rules, and others) weren’t considered.
This suggests that the December 2011 meeting could reorganise the process in a way
that is more likely to bear fruit. Here are some elements that resonated with many WTO
members with whom we spoke.
63
VOX
Research-based policy analysis and commentary from leading economists
• Have a real negotiation under multilateral control with a “conductor” acting as an
impartial player with responsibility of assisting members to reach agreement.
This suggests that an essential question will be the choice of the conductor (more on
this below).
• The negotiations must be horizontal.
Except for some issues in particular areas where useful work can still be done regardless
of results in other areas (fisheries subsidies, for example) the negotiations should be
horizontal. All areas should be on the table without a priori sequencing. Thus a package
can be built with trade-offs across the board.
• Forget “modalities.”
The original sequencing of the talks – known in WTO-ese as modalities – has not
worked.1 Perhaps this should have been obvious from the start, but now it is clear to
all. No government can be expected to agree to formulae and other elements without
knowing the full impact of such an understanding.
For example, by common agreement, nations get to choose a limited number of products
to exclude from tariff cutting. As nations know better where they themselves will apply
the flexibility, we have a situation where nations know what they are conceding on
tariffs, but they don’t know what their exporters will be getting in exchange. Only when
countries bring their national tariff schedules to the bargaining table will we know
what the formulae will actually mean tariff line by tariff line – the level that ultimately
interests business.
This is one of the things the December ministerial meeting could decide. It could set
a date for the submission of schedules (for industrial goods, agricultural products, and
services). This would unleash a process of real negotiations.
1
64
The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA, with this conditioning
discussions on sectorals and the remaining areas.
Next Steps: Getting Past the Doha Round Crisis
These changes need to be made explicit. What momentum exists comes from a decade
of negotiation groups working in silos. This momentum needs to be redirected by a
ministerial decision. One part of this that would be critical to keeping the process in
some sort of order would be to grant a sort of “conductor’s role” to the WTO DirectorGeneral in his role as chair of the Trade Negotiations Committee. It was a good idea to
try to let the Big 5 find their way to an accord, but it did not work.
3. Keeping the WTO relevant to 21st-century trade issues
Members should look beyond the 10-year-old Doha agenda and agree to a work
program to begin a discussion and analysis (not necessarily a negotiation) of other
issues relevant to today’s economic relations. Some of these could be:
• Investment
Trade and investment have long been linked, but internationalisation of supply chains
has greatly strengthened the link. For most WTO members, a pro-trade policy requires
a pro-foreign-investment policy. This has blurred the line between what is a trade policy
and what is a domestic or investment policy.
For example, during the global economics crisis, many countries set up protectionist
measures on investment. Indeed, these went up even among members of the EU.
The demand for mutually advantageous disciplines can be seen by the popularity of
investment measures that are covered in 21st-century free trade agreements. Frequently
these include investment chapters guaranteeing national treatment and most-favourednation treatment on a reciprocal basis.
• Competition policy
Now more than ever there is a greater appreciation of the harm that exercising monopoly
power can have on international trade and developing countries. Ask any developing
country farmer who has had to bargain with large foreign supermarkets or has had to
pay extortionate prices for its produce to be transported to the local port or airport.
65
VOX
Research-based policy analysis and commentary from leading economists
Access to foreign markets is impaired as well as the gains from globalisation
compromised by anti-competitive practices. The spread of competition law enforcement
around the globe has put in place one building block, now the challenge is to develop
international collaboration between enforcement agencies to tackle specific cases of
anti-competitive conduct.
• Climate change
Attempts to arrive at multilateral agreements on climate-change policies failed last year.
Nations are thus pursuing uncoordinated national policies aimed at climate-change
mitigation and adoption. Taxes, subsidies, and regulations are part of these plans, and
this brings them potentially into conflict with WTO rules that were designed without
climate-linked policies in mind. WTO members could usefully address the question
of whether the present rules are sufficient and/or appropriate to meet this 21st-century
policy challenge. Is there a need to devise special disciplines and increase transparency?
Is there a need to define acceptable limits or complementary policies?
• Export restrictions and duties
Whether on food, raw materials, or other goods, the present disciplines are quite weak
as the GATT/WTO rules were written in an era where imports (exports) were almost
universally viewed as a political bad (good). Rules on export restrictions simply weren’t
necessary. The 21st century, however, has witnessed frequent imposition of such
measures. As these can lead to a classic ‘prisoners’ dilemma”, they are naturally suited
for WTO-like disciplines that help maintain a win-win situation in the face of unilateral
incentive to undermine cooperation. Just as with tariffs, the point would not be to ban
such restrictions. They may be necessary and indeed useful in certain circumstances,
but multilateral disciplines would be useful to prevent their application from leading to
unintended consequences.
66
Next Steps: Getting Past the Doha Round Crisis
• Revisit some of the WTO Agreements
The world of trade has changed radically since the WTO Agreements were struck
in 1994. Some, such as the Agreement on Safeguards, could probably due with an
updating.
• Enhanced transparency
Current transparency practices could certainly be improved to the benefit of all. Now
they are based on notifications by members with the result that they are very often
incomplete and late. The suggestion here is to discuss ways of improving this, perhaps
leveraging new information technology.
• Government Procurement Agreement
Governments buy a very large slice of the world’s goods and services. Moreover, there
is an increasing realisation that open procurement is beneficial to taxpayers by lowering
costs and to consumers by boosting competition and quality. Indeed, procurement is
frequently the subject of ambitious free trade agreements. All this suggests that revisiting the market access provisions of the Government Procurement Agreement in
future negotiations might produce mutual gains for a wide range of WTO members.
• Institutional reform
The Marrakesh Agreement, signed in 1994, was the last time the organisation’s structure
was examined in its entirety. Since then, the world of trade has shifted radically – most
obviously in terms of the trade weight of some developing nations but also in terms
of how the internationalisation of supply chains has blurred the distinction between
trade policies and domestic policies. This suggests that a cooperative and construction
evaluation might reveal improves that could attract widespread support.
4. A bold initiative from the middle powers
This is a round where the biggest players failed to provide leadership. There may be
many reasons for this, but the fact is not in dispute. The Big 5 gave up trying to work
67
VOX
Research-based policy analysis and commentary from leading economists
out a compromise (although at the last minute, the EU made an unsuccessful attempt to
find an approach to bridge one of the gaps). This failure, perhaps reinforced by a lack
of trust among the biggest players, created a vacuum.
One idea that could help unblock the broader talks is a bold unilateral move by the
middle trading powers. These WTO members have often been a source of terrific ideas
in the past; this time around they might demonstrate their additional commitment to
the multilateral trading system precisely when so many commentators and business
interests appear to have discounted the WTO. Such a bold step could encourage other
WTO members to follow suit, injecting a further liberalising dynamic.
While middle powers cannot realistically expect much from “holding out” for bigger
concessions, a simultaneous set of unilateral moves by this group could generate
commercial opportunities that influential business lobbies would notice. Not to mention
that a welcome injection of competitive pressure would keep producers and traders in
the middle powers on their toes.
The middle trading powers could, for example:
• Offer to bind their tariffs at the applied level, even if the application of a formula
doesn’t go below the bound level;
• Offer to bind 100% of tariff lines on NAMA. If a tariff line is unbound, bind at the
applied level;
• Table improved offers on services that reflect unilateral liberalisation undertaken
to date;
• Freeze all harmful fisheries subsidies and offer to reduce them by 10% in the first
year provided a critical mass of members do the same;
• Offer some additional restraints on the use of flexibilities presently available in the
Agriculture and NAMA draft modalities;
• Implement trade facilitation even before it becomes a legal obligation;
68
Next Steps: Getting Past the Doha Round Crisis
• Implement improvements in transparency obligations under the Antidumping and
the Subsidies and Countervailing Measures Agreements;
• Provide duty-free, quota-free treatment for 100% of products for least developed
countries with flexible rules of origin;
• Offer tariff concessions on environmental goods.
Concluding remarks
After 10 years of much progress and frustration with the DDA programme, it is time
for a new approach to bringing negotiations to a successful conclusion, doing so in a
way that enhances the contemporary relevance of the WTO. Such an approach – like
the others described by contributors to this eBook – imply that the current impasse is
not inevitable.
Here we have outlined a four-part approach, which WTO members could take up
over the summer of 2011 and have tangible results to show for the WTO Ministerial
Conference in December 2011. Such “a Doha down payment” would demonstrate
that the WTO can deliver; it would build confidence. Work on many other items –
including the remaining elements of the DDA – would go beyond that time. Should
further momentum develop, no doubt other initiatives could be taken on board. Partly
through action, partly through reflection a renewed WTO would emerge as this process
unfolded over time.
About the authors
Richard Baldwin is Professor of International Economics at the Graduate Institute,
Geneva since 1991, Policy Director of CEPR since 2006, and Editor-in-Chief of Vox
since he founded it in June 2007. He was Co-managing Editor of the journal Economic
Policy from 2000 to 2005, and Programme Director of CEPR’s International Trade
programme from 1991 to 2001. Before that he was a Senior Staff Economist for the
President’s Council of Economic Advisors in the Bush Administration (1990-1991), on
69
VOX
Research-based policy analysis and commentary from leading economists
leave from Columbia University Business School where he was Associate Professor.
He did his PhD in economics at MIT with Paul Krugman. He was visiting professor at
MIT in 2002/03 and has taught at universities in Italy, Germany and Norway. He has
also worked as consultant for the numerous governments, the European Commission,
OECD, World Bank, EFTA, and USAID. The author of numerous books and articles, his
research interests include international trade, globalisation, regionalism, and European
integration. He is a CEPR Research Fellow.
Simon J. Evenett is Professor of International Trade and Economic Development at
the University of St. Gallen, Switzerland, and Co-Director of the CEPR Programme
in International Trade and Regional Economics. Evenett taught previously at Oxford
and Rutgers University, and served twice as a World Bank official. He was a nonresident Senior Fellow of the Brookings Institution in Washington. He is Member of the
High Level Group on Globalisation established by the French Trade Minister Christine
LaGarde, Member of the Warwick Commission on the Future of the Multilateral Trading
System After Doha, and was Member of the the Zedillo Committee on the Global
Trade and Financial Architecture. In addition to his research into the determinants
of international commercial flows, he is particularly interested in the relationships
between international trade policy, national competition law and policy, and economic
development. He obtained his Ph.D. in Economics from Yale University.
70
The Doha Round confronts world leaders with a dilemma. Concluding the Round this year is
impossible, but there is strong opposition to terminating the Round. There is also strong opposition
to suspending the Round as suspension is widely seen as a roundabout means of killing it.
This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some
of the world’s most experienced Doha experts. Contributors include former US Trade Representative
Susan Schwab, India’s former WTO Ambassador Ujal Singh Bhatia, China’s former WTO Ambassador
Zenyu Sun, Canada’s former WTO Ambassador John Weekes, and Hong Kong’s former WTO
Ambassador Stuart Harbinson – all of whom spent years at the “cutting face” of Doha negotiations.
They identify the 3 ways past the crisis:
•
•
•
Road 1: Declare failure and call for a period of reflection;
Road 2: Buy time by suspending the Round; or
Road 3: Think creatively about work-around solutions that avoid acrimony and lock in some
of the progress to date.
The contributors disagree on the best way forward but all believe that Road 3 is the one worth
trying first.
Centre for Economic Policy Research
77 Bastwick Street, London EC1V 3PZ
Tel: +44 (0)20 7183 8801 Fax: +44 (0)20 7183 8820
Email: [email protected] www.cepr.org