Beijing Institute of Technology ­

University of Paderborn

Coursework ­ International Trade:

IS THERE STILL HOPE FOR THE

DOHA ROUND?

Submitted to:

- International Trade -

Beijing Institute of Technology

School of Management and Economics

Author:

Manuel Simon

Master in Asian Studies in Business and Economics

(Master in International Economics)

Due Date: 14th December 2006

Approximately 3989 words

Abstract

This paper analyses the reasons for the failure of the Doha Round negotiations which started

in 2001 and offers prospects for Doha′s future. The sticking points of the current World Trade

Organization (WTO) talks are serious negotiating differences in agriculture, manufactures and

trade in services. New policy circumstances due to the increased number of WTO member

countries and new orientation of the major negotiating partners such as the United States of

America and the European Union towards regional trade agreements make a favourable

outcome quite severe. It seems that political issues overlap economic rationality. However,

member countries have to realise that there is still a lot of potential for further trade

liberalisation via multilateralism and, hence, economic and social gains to the world′s society.

The motivation of OECD countries to overcome their protectionist lobbies and to accept

reduced protection and support for agriculture will be crucial for the success of Doha.

Equally, developing countries have to agree to open their markets for labour-intensive goods

and services from developed countries.

Table of Contents

TABLE OF CONTENTS I

LIST OF FIGURES AND TABLES II

1. INTRODUCTION 1

2. THE DOHA DEVELOPMENT AGENDA 2

2.1 THE DOHA DECLARATION EXPLAINED ­ RESULTS OF THE 4TH MINISTERIAL CONFERENCE ..2

2.2 STATUS QUO OF THE CURRENT DOHA NEGOTIATIONS 4

2.2.1 Results of the 5th Ministerial Conference of Cancún 4

2.2.2 Results of the 6th Ministerial Conference of Hong Kong 5

3. REASONS FOR THE FAILURE OF THE DOHA ROUND 6

3.1 NEW POLICY CIRCUMSTANCES 6

3.2 MULTILATERALISM VERSUS REGIONALISM 7

3.3 ECONOMIC SELF-INTEREST 10

4. PROSPECTS FOR DOHA′S FUTURE 11

5. CONCLUDING REMARKS 13

REFERENCES 15

I

List of Figures and Tables

Figure 1

Regional Trade Agreements (RTAs) by date of entry into force reported the WTO

(1948

­

2006) 8

Table 1

Real-income effects from liberalisation of world trade in agricultural and non-agricultural

products in USD billion in 2015 12

II

1. Introduction

The GATT/WTO is arguably the personification of multilateralism and the most successful

institution of international economic cooperation since post-1945. The General Agreement on

Tariffs and Trade (GATT) which was signed by 23 countries in Geneva, Switzerland, in

October 1947 has tried to give an early boost to trade liberalisation. Most important principle

to promote liberal trade is the so-called most-favoured-nation (MFN) treatment. If one

country grants another a special favour (such as a lower customs duty rate for one of their

products), the country has to do the same for all other WTO members. Since 1947 the GATT

initiated eight rounds of trade negotiations which ended with the Uruguay Round in 1994.

The final act of this round was the establishment of the more extensive World Trade

Organization (WTO) which came into being on January 1, 1995. Today the WTO has 150

member countries and a much larger number of trading rules. The present low tariffs on most

traded manufactures are the result of the past GATT negotiations. Moreover, during the

Uruguay Round (1986-1994) liberalisation in non-manufactures made much progress. This

included agreements on agricultural trade (more or less efficient) and on trade in services.

Furthermore, special conditions on textiles and clothing and on a range of non-tariff

restrictions were agreed during that time. Particularly important was the establishment of a

system to govern the settlement of disputes between members. So far the past WTO

negotiations seem small in comparison what was achieved under the GATT. Negotiations on

agriculture and other sectors which are of interests to developing countries, made less

progress in past years and still remain a major problem for the Doha Round negotiations

which began in 2001.

This paper analyses the prospects of a successful complementation of the Doha Round and is

structured as follows. In the second part the main content of the Doha Development Agenda

and its historical development will be presented. The analysis will reveal that the Doha talks

are quite problematic. The third section will investigate why Doha is struggling. Furthermore,

the fourth part offers prospects for the future of the Doha Development Agenda and finally

some concluding remarks will be given in the last paragraph.

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