Trade Liberalization in a Post-Doha Environment
History tells us that multilateral trade rounds never die, and Doha is no exception. If the negotiations cannot be concluded this year, they will enter a period of hibernation, and things will pick up again when conditions are ripe to engage in a meaningful negotiation (probably during the second half of 2009 at the earliest). We will have to wait for the U.S. election, the nomination of a new USTR, and trade promotion authority from Congress. India’s upcoming elections and changes in the EU presidency will also delay negotiations.
Despite the slow progress, there are a number of good reasons to continue to support a successful conclusion of the Round. First, a strong multilateral trading system is essential for world economic growth, stable international trade, continuing agricultural reform and above all, for defending the interests of developing countries. Second, there are issues that can only be solved in a multilateral context; particularly given the agriculture industry’s challenge of increasing production with limited resources in order to meet growing demand for food, feed and fuel.
Looking ahead, a number of options exist for promoting trade liberalization in a post-Doha environment.
Sectoral Negotiations
When the WTO was created, the idea was for the organization to become a permanent negotiating forum that would successively tackle issues of interest to the Membership. It was to start with the agreements on agriculture and services reached in the Uruguay Round. The recourse to new Rounds of trade negotiations was, at least temporarily, shelved. However, the EU soon made it clear that if there was to be a high level of ambition in the mandated negotiations, particularly in agriculture, Members would have to agree to launch a new Round that would incorporate their interests: industrial products, intellectual property, rules, environmental goods and the so called Singapore issues, namely, investment, competition, government procurement and trade facilitation. This finally occurred in Doha in September 2001.
In light of the difficulties experienced since the launching of the Round, including the recent breakdown, it would be desirable—at least once the Doha Round is completed—to return to the original idea of sectoral negotiations. Reform of trade-distorting policies requires that negotiations in agriculture continue after Doha. In the absence of a new trade round, the only way to proceed would be through the launching, within the WTO, of sectoral negotiations following the implementation phase of the obligations agreed in the Doha Round.
In order to be successful, sectoral approaches should ensure the participation of all Members, regardless of whether they have offensive or defensive concerns on the subjects under negotiation. This is particularly important with regard to agriculture in view of the protectionist and defensive attitudes of so many Members in the WTO (both developed and developing). I am afraid that unless one can have all members on board, one will not be able to properly address important issues such as subsidies, particularly domestic support. Improved market access can more easily be obtained through other means such as bilateral, regional or preferential trade agreements.
Consensus among members on how to achieve the long-term reform envisaged in the Agreement on Agriculture is a prerequisite. For example, priority could be given to the elimination of all distorting forms of domestic support (amber box, blue box and de minimis). A possible approach could be to first eliminate the amber box, say over a period of 8 to 10 years, then proceed with the elimination of the blue box, and so on. Similarly, we could agree on the level of reduction and eventual elimination of tariffs (and expansion until then of TRQ’s)
In order to monitor implementation progress of such agreements, we could have special sessions of the Agriculture Committee or eventually the General Council every two years. Alternatively, progress and compliance with the agreed objectives could be analyzed during sessions of the Trade Policy Review, which should be strengthened for that purpose. If countries are not complying or violating their obligations, a role could be envisaged for the Dispute Settlement Body.
Plurilateral Negotiations
I am not convinced that plurilateral approaches are a convenient way out, although I acknowledge that they would be easier to implement. Plurilateral approaches create different categories of Members, undermine even further the multilateral nature of the WTO, and are likely to discriminate against the interests of developing countries. They could also further marginalize the poorest countries in discussions on major new issues of the international trade agenda.
Preferential Trade Agreements
Regional and bilateral trade agreements may well be the main vehicle for trade liberalization in the foreseeable future. In agriculture, these agreements can provide improved market access for participating countries. They may also improve the situation with regard to some non-tariff barriers such as sanitary and phytosanitary regulations. However, these agreements will not be able to effectively address domestic support issues.
I believe that the proliferation of preferential agreements—with different product coverage, rules of origin, private standards, exceptions, and measures that are not necessarily in line with multilaterally agreed rules and disciplines—will become overly complex and costly for private enterprises involved in international trade. Moreover, trade agreements between major trading partners are likely to involve considerable trade diversion, enhancing tensions, disputes, retaliation, and a return to protectionist practices. These agreements may also further exclude developing countries from the international trading system.
Carlos Perez del Castillo is a member of the International Food & Agricultural Trade Policy Council (IPC) and an independent consultant. He is the former permanent representative of Uruguay to the WTO and was chairman of the WTO General Council in 2003 and 2004.
A joint initiative of The German Marshall Fund of the United States (GMF) and the International Food & Agriculture Trade Policy Council (IPC), this blog collaboration aims to provide insight on concluding the Doha Round and pursuing trade liberalization in the future.