The WTO’s Doha Round

The Doha Round still limps along.

You know the WTO is in trouble when…
… The Financial Times says negotiations are dead. In 2008 they argued that leaders should admit the talks are over. They haven’t really been optimistic since.
… We start to argue that an assassination will save it. Jagdish Bhagwati, one of the great spokesmen for concluding the Doha negotiations, starts grasping at straws. For instance,his letter to the Financial Times on May 6th, argues that Osama bin Laden’s assassination provides just the opportunity that is needed to restart the round.
… We say we should kill the talks in order to save them. That is the logic that Bhagwati claims they are using when his (and Sutherland’s) High-level Expert Group on Trade advises that the Doha Round be abandoned if there is no agreement this year. “Our idea,” he states, “was that just as the prospect of an imminent hanging concentrates the mind, the deadline and prospective death of the Doha Round would galvanize the world’s statesmen behind completing the last mile of the marathon.”

Should we narrow the agenda and what are the obstacles to doing this?
The Financial Times has editorialized on the progress of the talks a number of times.This past April, they suggested the WTO should move away from its current all-or-nothing approach to negotiations. It is important, they argued, that the WTO show it is a “rule making system [that] can adapt and renew itself.”

That concern and approach has driven WTO Director-General Pascal Lamy’s move to conclude a limited version of a Doha deal this year. However, “Doha Lite” seems to be hitting roadblocks as well. (“Doha lite runs into rough weather”, June 10). The US is at the center of this. Alan Beattie reports (“WTO scrambles to savage Doha talks” FT, June 12.) that the US is a major stumbling block to progress on the Doha Round. As I write in my book manuscript, African countries have been able to wield significant influence in the round by reasonably demanding that the US change its support for one commodity: cotton. Indeed, cotton–and other agricultural issues–remains a major issue.

Why should we save the Doha Round?
While I was on vacation, Sutherland and Bhagwati’s Trade Experts Group published their important report, “World Trade and the Doha Round.” You can download it here. In it they argue that the Doha Round should definitely be saved. Some of the highlights:

  • There is a moral argument, as well as an economic argument, that needs to be considered: “Indeed before the twentieth century the conventional case for trade was a moral one: that it promoted economic integration and therefore peace, and that the efficient allocation of resources that it encourages pushes down prices for clothes, food and consumer goods. The argument that open trade damages the interest of workers in developed countries too often misses completely the fact that it has rendered the goods they buy cheaper, more diverse and in many cases more sophisticated than at any previous point in human history.”
  • And then there are the familiar economic reasons for open trade: competition promotes efficient specialization, open trade is linked to economic growth, etc.
  • The WTO is under threat: PTAs and other regional agreements, the lack of political will on the part of country leaders today, and the continuing struggle to accommodate the wishes of emerging powers are all part of this.

Other ad hoc solutions for governing global commerce are not better. I agree with Bhagwati, for the most part, when he says that Preferential Trade Agreements are starting to take over the rule-making agenda (also one of the conclusions made in the report above).

We also don’t want to have 1930s-style destructive economic competition. As Pascal Lamy and others have warned, the recent financial crisis already has increased protectionism around the world but that sort of policy can lead to mistrust and threaten not just the global economy but also global security. As a recent report from Roubini Global Economics (gated) suggests, the WTO has played an important role in stemming such problems.

Finally, if the “we” in my question above is the United States, then there might be an even more poignant reason to act and try to conclude the Doha Round now. We may not get the agreement we most desire (we definitely will not, nor will anyone else) but it is even less likely that we will get a deal we like in the future. The American economy may recover from its recent crisis and begin to grow again, but all signs point to our gradual relative economic decline. This could be our last great shot at putting our mark on global economic governance and ensuring that an institution we created survives the inevitable change in the distribution of power.

On that note, I keep thinking I should write a post (or something) on this theme: The United States should act like a great power, but think like a middle power. That is, we should use our power resources which still allow us to dominate on most global issues, but we should be interpreting our interests more and more in terms of how we will like the international system to look when we are no longer so dominant.

The WTO is more than Doha
However, I believe it is too easy for the casual observer to interpret the faltering Doha talks as signs of a weak institution. The WTO still clearly matters a great deal in global economic relations. Countries still expend considerable resources to participate in the daily meetings in Geneva and the dispute resolution system is still one of the most relevant (if not the most relevant) quasi-judicial process the international system has (although there is the occasional concern about its future, such as in this post by Hufbauer and concerns expressed in Elsig and Pollack’s recent piece).

Apparently, Lamy thinks we may know by the end of this month whether a deal this year will be possible (“WTO’s Lamy Says Working on ‘Early Harvest’ Trade Deal”, June 13, Washington Post). I will definitely be watching.

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