Saving the WTO from the Doha Round

Simon Evenett 17 April 2011

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The recent news from Geneva on the Doha Round is depressing (WTO 2011, Callus 2011). The US tried to organise agreement to suspend the Round among the leader group of nations (the so-called G11, i.e. the US, EU, Japan, Canada, Australia, China, India, Brazil, Argentina, South Africa and Mauritius); this was rebuffed. WTO Secretary-General Pascal Lamy is holding bilateral meetings with all the big players (US, EU, Brazil, India and China are the linchpin players now). Depending on what he hears, he may alter the official timetable for concluding the Round by the end of 2011.

At this point, it is worth taking stock of the basic issues to see if there is any hope.

It is said that Robert Zoellick – when he was President Bush’s US Trade Representative – used to ask this question on any ongoing or potential negotiation "What is the basis of the deal?" This is a useful place to start.

As I have been writing since 2007 (Evenett 2007), as far as the Doha Round is concerned, I see no basis for a deal. Rather than needlessly pick on the Americans as some observers have, I would put the point differently.

  • There are a small number of countries (notably the US) who can't do a low-ambition deal; and
  • A large number of countries that can't do a high-ambition deal.

Domestic developments in the main trading parties account for this outcome – until they change, the impasse continues. I am not a big believer in "political leadership" – politicians only act when it serves their interests, like the rest of us. Their actions are determined primarily by political incentives. Courage doesn’t come out of thin air.

  • Even if the Doha Round has not formally failed, for all but the most committed trade policy types it has already.

Recall the scathing Economist cover page: Doha-ha-ha. Also, former President Bush caught on microphone referring to the "Doha thing" at the G8 St Petersburg summit in 2006. Whatever sweet talk goes on at these G20 meetings, given the track record of impasse, how many smart advisers to heads of government are going to waste any capital recommending to their boss "one last push on Doha"? Once a prime minister or president has been around the block for a couple of years, they've probably come to the conclusion that the Round is "all hat and no cattle" as they say in Texas (translation: "all talk and no action"). After all, if anyone understands domestic political constraints, it is heads of government.

Why not let the Doha Round linger in limbo?

The damage done to the credibility of the WTO of this ongoing impasse should not be discounted. It is time, as Ernesto Zedillo argued a few years ago, to save the WTO from the Doha Round (Zedillo 2007). The impasse is undermining the perception that the WTO is a place where governments can do serious business. Whether the WTO has sunk yet to the level of UNCTAD is, for me, an open question. With that in mind, I would offer the following suggestions:

  • Salvage what we can from the Doha Round.

Surely the trade facilitation negotiations can be wrapped up and implemented. This is not a call for an Early Harvest because there won't be a Final Harvest. Think of it as like "triage" after one of those long-fought World War I battles. As for the rest of the negotiations, if no one has the guts to pull the plug on them, then let them wither on the vine.

  • Identify and encourage "bottom-up" negotiations on areas where enough WTO members want to move forward.

We need to understand why, for example, the negotiations on government procurement have done so well (outside of the Doha Round setting) and whether similar negotiations in other areas of government policy can be encouraged. With the spread of regional trade agreements, there may be provisions in those accords that, when implemented, don't violate most-favoured-nation tariffs and could be included in a plurilateral or multilateral accords. Some of the "multilateralising regionalism" literature had useful things to say here (Baldwin and Low 2009).

  • Review whether the deliberative functions of the WTO could be extended.

Director-General Lamy refers to this as the "missing middle" of the WTO, and I think he always had a good point here. These functions could be a very useful way to inject the trade policy perspective into significant international and national policy debates (for some specific ideas here see Evenett 2009).

This will not be all plain sailing. The Aid-for-Trade discussions and the deliberations over the Singapore Issues showed some of the pathologies trade diplomats will have to overcome if they are to make the deliberative functions work best. Again, there is plenty for analysts and ambassadors to think through here.

  • Enhance the collection and dissemination of data on contemporary trade policies and trade flows.

These global public goods orient discussions around facts and less around perception. Plus, these facts provide an important basis upon which policy-relevant analysis can be conducted. Some scholars raise issue of the value of tariff bindings, about which we know very little empirically speaking (Hoekman and Saggi 2007). Quite frankly, beyond tariffs, our knowledge of the incentives created by trade policy instruments is desultory. If you doubt this, pick up any survey of the literature on non-tariff barriers. For far too long trade negotiators have gotten ahead of the underlying knowledge base (which is as much of a criticism of the producers of such knowledge as it is the users.)

Now, for trade diplomats and scholars whose views are influenced by the Uruguay Round outcome, the above suggestions seem a far cry from "how we do business in the WTO." This is true. But I must confess that for far too long I bought the arguments about the singular importance of binding legal obligations. The extent to which governments circumvented the rules during the global economic crisis (especially in the areas of discriminatory subsidies, discriminatory government procurement, discriminatory export finance etc) has taken the shine off binding accords for me.

Indeed, perhaps the Doha Round is such a disappointment precisely because the Marrakesh accords were so grossly oversold. The once-dominant legal-contractual view has not served us well; it has blinded us to the necessary political foundation for trade reform.

It is time to recognise contemporary realities. Much trade reforms have happened; trade rules are being written; and nations are cooperating on trade liberalisation – just not in the WTO. It is time to start thinking about changing the way the WTO does business to reflect the circumstances of the 21st century.

References

Baldwin, Richard and Patrick Low (ed.) (2009), Multilateralizing Regionalism, Cambridge University Press.

Callus, Andrew (2011), “World trade boss triggers Doha rescue timetable”, Reuters, 12 April.

Evenett, Simon (2009), “Options if the Doha Round talks stall”, VoxEU.org, 4 September.         

Evenett, Simon (2009). “Aid for Trade and the “Missing Middle” of the World Trade Organization,” Global Governance. July-September.

Hoekman, Bernard and Kamal Saggi (2007), "Tariff bindings and bilateral cooperation on export cartels", Journal of Development Economics, 83(1):141-156, May.

WTO (2011). “Think of cost of Doha Round failure, Lamy urges members as deadline looms”.

Zedillo, Ernesto (2007), “Save the WTO from the Doha Round”, Forbes, 21 May.

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Topics:  Global governance International trade

Tags:  Doha Round, World Trade Organisation

Professor of International Trade, University of St. Gallen; Research Fellow, CEPR

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