In the prevailing paper, I will argue that the current institutional structure of the multilateral trade negotiations is the decisive factor that limits considerable progress in the liberalization of international agricultural markets. WTO members face a growing institutional complexity which does not allow for substantial liberalization steps. Rather, countries need to find alternative ways to improve their individual trade balance. My examinations will base on the insights of the New Institutional Theory (NIE), which puts its scientific interest on institutions. Since institutions serve as a direct interface of societal processes, including economical as well as political characteristics, its application provides an appropriate attempt to approach multilateral trade negotiations – a subject that indeed touches both areas.
Table of Contents
1 Introduction
2 The World Trade Organization
2.1 General Guidelines of International Trade
2.2 Multilateral Trade Negotiations
2.3 The Way to Doha
2.4 The Doha Development Agenda
2.4.1 The Special Role of Agriculture
2.4.2 The Commitments of the Doha Development Agenda in Agriculture
2.4.3 Progress of the Doha Development Agenda so far
3 New Institutional Economics Theory
3.1 Institutions Matter
3.1.1 Theoretical Assumptions
3.1.2 Major Research Approaches
3.1.2.1 Transaction Cost Theory
3.1.2.2 Property Rights Theory
3.1.3 Why Having Chosen the NIE?
3.2 Libecap’s Analytical Framework
4 Institutional Analysis of Agricultural Negotiations
4.1 What Can Be Gained from Liberalizing Agriculture?
4.1.1 Market Access
4.1.1.1 Tariffs
4.1.1.2 Tariff Rate Quotas
4.1.1.3 Potential Market Access Gains
4.1.2 Domestic Support
4.1.2.1 Green Box and Blue Box
4.1.2.2 Amber Box Payments and the “De-Minimis-Clause”
4.1.3 Export Subsidies
4.1.3.1 Direct Export Subsidies
4.1.3.2 Export Credits
4.1.3.3 State Trading and Food Aid
4.1.4 Total Size of Potential Gains
4.2 How Many Different Interests Are Concerned?
4.2.1 Defining Interest Groups
4.2.2 Civil Society and the WTO
4.2.3 Traditional Interests in the Agricultural Market
4.2.4 Modern Interests in the Agricultural Market
4.2.4.1 Consumer Groups
4.2.4.2 Environmental Groups
4.3 How Heterogeneous Are the Contracting Parties?
4.3.1 The WTO Decision-Making Process
4.3.2 Reasons and Categories for WTO Coalitions
4.3.3 Coalitions during the Uruguay Round
4.3.4 Coalitions in the Doha Round
4.3.4.1 The Bargaining Position of the European Union
4.3.4.2 The Bargaining Position of the United States
4.3.4.3 The Bargaining Position of the G-20
4.4 Evaluation of the Institutional Analysis
4.4.1 Results of the Institutional Analysis
4.4.2 Transaction Cost Theoretical Examination
5 Conclusions and Implications
Research Objectives and Thematic Focus
The thesis explores why multilateral trade liberalization within the Doha Round faces significant stagnation despite the promise of substantial welfare gains. The primary research goal is to investigate whether the current institutional framework of the World Trade Organization is the limiting factor for progress, utilizing New Institutional Economics (NIE) to analyze negotiation processes, specifically within the agricultural sector.
- The role of the World Trade Organization and the historical context of the Doha Development Agenda.
- Application of New Institutional Economics theory to analyze international trade negotiations.
- Institutional analysis of the agricultural sector, focusing on market access, domestic support, and export subsidies.
- Examination of interest groups, including traditional producer lobbies and modern consumer and environmental advocates.
- Evaluation of bargaining positions of key actors (EU, US, G-20) and the impact of increasing heterogeneity on consensus building.
Excerpt from the Book
4.1 What Can Be Gained from Liberalizing Agriculture?
When raising the question of whether negotiations on property rights will be successful or not, one has to elaborate upon how much potential gains are at stake. According to Libecap, institutional changes are only accessible when there is a sufficiently high share that can be distributed between the contracting parties.94 The reason is that these additional gains have to allow potential winners of the new arrangement to compensate potential losers while still staying in an improved welfare position. If this were not the case, the losers could simply block the new arrangement. Regarding the current trade negotiations Das describes the situation as follows:
“To be sure, crafting an Agenda is not a trivial exercise because all of the economies participating in the MTNS [Multilateral Trade Negotiations] should be able to ‘take home’ some of their negotiating priorities - some of which may well be far-fetched - otherwise they will perceive the Round as a failure from their perspective.”95
When examining how much can be gained from liberalizing the agricultural sector it is important to realize that although international trade of agricultural goods accounts for only 7.2 percent of total trade flows96, the highest liberalization gains are still expected in this sector. No other market is as protected as the agricultural one and offers so many potential welfare gains. The reasons for this are various. First, the deeply rooted autarky attitude of some western countries has to be mentioned and second the economic dependence of developing countries on agricultural sales or tariff revenues. Regardless of the different motives, analyzing what exactly could be reached when tearing down trade distorting barriers; one has to know the different measures that can be applied. In the field of agriculture a quite complex system is actually concerned.
Summary of Chapters
1 Introduction: Provides an overview of the Doha Development Agenda, stating the core research question regarding the stagnation of multilateral trade negotiations and identifying agriculture as the focal point of the thesis.
2 The World Trade Organization: Reviews the history, foundations, and guidelines of the WTO, detailing the evolution of trade rounds and the specific challenges of the Doha negotiation process.
3 New Institutional Economics Theory: Introduces the theoretical framework, specifically focusing on institutions as rules of the game and presenting Libecap’s analytical framework for studying institutional change.
4 Institutional Analysis of Agricultural Negotiations: Applies the institutional framework to evaluate the potential gains of agricultural liberalization, the influence of diverse interest groups, and the impact of heterogeneous contracting parties on negotiation outcomes.
5 Conclusions and Implications: Summarizes the study's findings, concluding that rising institutional complexity and high political transaction costs contribute to a likely standstill in the current agricultural liberalization process.
Keywords
World Trade Organization, Doha Development Agenda, Agricultural Liberalization, New Institutional Economics, Transaction Cost Theory, Property Rights, Interest Groups, Trade Policy, Market Access, Domestic Support, Export Subsidies, Multilateralism, G-20, Collective Action, Institutional Change.
Frequently Asked Questions
What is the core subject of this thesis?
The work examines the current negotiation process of the Doha Round, specifically focusing on why multilateral trade liberalization is encountering significant difficulties and progress has slowed down.
Which economic theory is applied to the research?
The thesis utilizes New Institutional Economics (NIE), particularly the works of Douglass North and Gary D. Libecap, to explain how institutional structures influence negotiation outcomes.
Why was the agricultural sector chosen for this analysis?
Agriculture is identified as the most protected and central issue in the Doha Round. Because progress in other trade areas is linked to a compromise in agriculture, it serves as the key determinant for the success or failure of the entire round.
What primary scientific method is used?
The author performs an institutional analysis based on Libecap’s framework, assessing three specific factors: aggregate expected gains, the number of competing interests, and the heterogeneity of contracting parties.
What is the main finding regarding the Doha Round?
The research concludes that the Doha Round is unlikely to achieve far-reaching, sustainable liberalization due to rising institutional complexity and increasing political transaction costs, which act as a stabilizer for the status quo.
What key terms summarize the work?
The work is characterized by terms such as WTO, Doha Development Agenda, Agricultural Liberalization, New Institutional Economics, and Transaction Costs.
How do interest groups influence WTO negotiations according to the author?
Interest groups, ranging from traditional farmer lobbies to modern environmental and consumer groups, exert pressure on national politicians, who in turn navigate these competing demands during international negotiations.
What role does the G-20 play in the Doha Round?
The G-20, a coalition of developing countries, represents a significant shift in WTO dynamics by challenging the traditional EU-US dominance and insisting on interests that prioritize developmental needs, thereby increasing the complexity of consensus building.
How does the "Consensus Principle" impact the negotiation process?
While the consensus principle ensures high legitimacy for decisions, it significantly complicates the decision-making process by allowing individual members to block outcomes, especially as the number of WTO members continues to grow.
- Quote paper
- Torsten Anke (Author), 2006, The liberalization efforts of the Doha Round from an institution economical perspective, Munich, GRIN Verlag, https://www.grin.com/document/64684
