Next steps for the Doha Round: Introducing a new eBook

Richard Baldwin, Simon J Evenett 28 May 2011

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Global leaders face a dilemma over the WTO multilateral trade negotiations known as the Doha Round. The talks are dead in the water; all movement forwards and backwards seems blocked. Current and former trade policy officials typically emphasise two points on how we got here:

  • 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 publically that they want to abandon the Round.

Why the reluctance to admit that it’s dead? Some argue that this would throw way 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 giving up.

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. The eBook “Next Steps: Getting Past the Doha Round Crisis” gathers the thinking of a handful of the world’s most experienced Doha experts, namely:

  • Indonesian Trade Minister Mari Pangestu;
  • 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 were personally involved for years in WTO negotiations.

The contributors identify 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.

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 writes that doing Doha this year would be best, but if it is not possible then we should face the facts. “It would be damaging to invest more resources and credibility in something that can't be done”, he writes.

Mari Pangestu disagrees with the Schwab view: “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.” Ujal Singh Bhatia argues that Road 1 would lead to unpredictable results. While the medium-long ramifications are unpredictable, the short term fallout is clear. 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.

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 WTO members. Most WTO members are still looking for the Doha Round to effect critical adjustments to the world trade system – especially a rebalancing of the level of openness of agricultural versus industrial trade (Nassar and Perez 2011).

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.

These pitfalls are obvious to most world leaders. 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 to the work of the organisation? Would it serve the purpose of strengthening the multilateral trading system? I rather doubt it”, he writes.

These are the reasons 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, 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 path to Road 1. All the pitfalls of Road 1 therefore also apply to Road 2.

But suspension is 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 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.”

Road 3: A small package followed by a big package

The third road seems the most likely way 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 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 member.

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 float us 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, the big package and more

The outlines of Road 3 are still very hazy. All contributors 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:

  1. How much time should be spent on negotiating the small package?
  2. Which items should be in the small package?

The contributors disagree on the first issue, but there is far more agreement on the second issue. 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. The declare-victory options, however, would leave unsolved the core Doha issues.

The choices on the big package are even less clear. At the very least, the detailed organisation of the negotiations would have to change if a deal is to be struck. The negotiating conventions used so far have manifestly failed. Some contributors think that no amount of tweaking will lead to a happy ending, but others make some specific suggestions, noting that the full range of trade-offs have never been tried, as the talks have proceeded in silos.

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.

Concluding remarks

The Doha deadlock is a crisis due to high hopes and pent-up frustrations. If the situation is not handled with aplomb, a truly vicious exchange of allegations could ruin the atmospherics for multilateral trade cooperation for years. This is a clear and present danger since WTO trade talks are not the only option. The big WTO members are actively pursuing free trade agreements, and many view these as a perfectly good, or even superior option, to multilateral negotiations in the WTO.

The alternative – uncoordinated developments led by the 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.

This is why it is critical to resist the temptation for recrimination by setting to one side bitter disappointments in order to 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.

References

Baldwin, Richard and Simon Evenett, eds (2011). Next Steps: Getting Past the Doha Round Crisis, a VoxEU eBook.

Nassar, Andre 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.

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Topics:  International trade

Tags:  WTO, Doha Round, Next Steps Doha

Professor of International Economics, Graduate Institute, Geneva; Director of CEPR; VoxEU.org Editor-in-Chief

Professor of International Trade, University of St. Gallen and Member of the Warwick Commission on the Future of the Multilateral Trading System after Doha. Co-Director of the CEPR Programme in International Trade and Regional Economics.