Is there still hope for the Doha Round?

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 4 TH MINISTERIAL CONFERENCE  ..2

2.2  STATUS QUO OF THE CURRENT DOHA NEGOTIATIONS  4

2.2.1  Results of the 5 th Ministerial Conference of Cancún  4

2.2.2  Results of the 6 th 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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2. The Doha Development Agenda

The Doha Ministerial Conference in Qatar in November 2001 which met only a few weeks after the 9/11 terrorist attacks was characterised by political unity to launch new trade negotiations after the failure of the Seattle meeting in 1999. It encouraged the countries of the Organisation for Economic Co-operation and Development (OECD) to agree on an agenda and to demonstrate their resolve that terrorism would not ruin international cooperation. Especially this statement motivated developing countries to play an active role in getting their interests on top of the agenda. Hence, the media quickly declared it ‘the development round’.

2.1 The Doha Declaration explained – Results of the 4 th Ministerial Conference

In making trade rules fairer for developing countries it was once more agriculture which was regarded as one of the major discussion points. It was agreed to establish a fair and market- orientated trading system by programmes of fundamental reform. This means strengthened rules, in particular on government support and protection for agriculture. Crucial aim is the correction and prevention of restrictions and distortions in world agricultural markets. Moreover, member countries commit themselves to reduce all forms of export subsidies with a view of phasing them out. Additionally, domestic support that distorts trade has to be reduced as well (WTO, 2006a).

In the service sector significant progress was already reached under the WTO General Agreement on Trade in Services (GATS) which was initiated in January 2000. The purpose of the negotiations on trade in services is to promote economic growth of all trading partners and in particular that of developing and least-developed countries (LDCs) by reducing trade barriers.

Concerning market-access for non-agricultural products the ministers agreed that tariffs for these products have to be reduced or as appropriate to be eliminated. This includes tariff peaks, high tariffs, and tariff escalation, as well as non-tariff barriers. Especially tariffs on products of export interest to developing countries have to be reduced respectively eliminated.

Much emphasise was also laid on the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement). This agreement comprises support in public health

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