WASHINGTON — The Easter deadline to have the Doha Round endgame in sight has come and gone with no sign that the nearly decade-long stalemate has been broken. The commitment by the leaders of the G20 nations to complete the Round in 2011 now seems out of reach. World Trade Organization (WTO) Director General Pascal Lamy’s entreaties of the leading trading nations to table improved concessions have thus far not generated any meaningful outcomes. Bilateral negotiations between major parties including the United States, the European Union, Japan, Canada, China, Brazil and India have failed to bridge the insurmountable gaps. The “ambitious outcome” from Doha requested by the United States now seems remote. The Round is in a coma and the patient is about to die.
The Doha Round was launched in 2001 to address major challenges faced by the multilateral trading system in the 1990s. It got off the ground thanks to the leadership and determination of the United States and Europe, who put Third-World development at the center of the new negotiations by calling for meaningful concessions by advanced economies, including new disciplines on agricultural policies. But, in the past decade, the Round has stalled several times due to long-standing controversies around agriculture with little progress on reductions of tariffs, trade-distorting export subsidies, and support programs for agriculture.
Recently, negotiations in Geneva have focused more on industrial market access and services, with the United States calling on China and other emerging markets to enhance their commitments in key sectors, such as chemicals. But little has come of this effort.
Pressures from narrow business lobbies and the current sentiment in Congress toward Doha have made it difficult for the Office of the U.S. Trade Representative to accept any deal that does not include further access to China and other major emerging economies. Hence, the United States seeks additional concessions for chemicals, industrial machinery, electronics, and services such as telecommunications, insurance, and other financial services. While the United States is also requesting guarantees for its exports in soya, cotton, rice, and poultry, it does not offer any concessions in return. The United States remains particularly reluctant to cut agriculture subsidies. Dissatisfied with existing offers, Ambassador Ron Kirk opined last week that the Doha Round “doesn’t have to be over” but that WTO members should decide whether a “Plan B” can be sorted out.
However, it would be wise to weigh the gains against the losses before completely abandoning Plan A. Even with what is on the table now, a successfully concluded Doha Round would provide significant benefits for the United States and the world economy. Numerous reports, including a 2008 study by Professor Patrick Messerlin of Sciences Po in Paris supported by the German Marshall Fund, show that, without a Doha deal, emerging economies have the flexibility to more than triple their tariffs on average and still not violate their WTO commitments. Moreover, a successful Doha conclusion based on what has been on the table since 2008 would increase U.S. income by $37.9 billion, while adding 393,000 new jobs to the U.S. economy, according to a study by the Trade Partnership Worldwide, LLC.
Moreover, the death of Doha might have broader political implications than those that can be quantified in numbers. Many low-income economies in sub-Saharan Africa and other parts of the world lack resources and the prospect of financial support to fight unemployment, to feed their entire population, and to maintain their economic, social, and political stability. Without a compromise on a development agenda, governments of low-income countries will not have any motivation to commit to market-based reforms that could provide increased economic opportunities for their citizens. A failure to conclude the Doha Round might thus also spur broader security problems, economic instability, and food insecurity that could trigger floods of economic refugees seeking to enter Europe and the United States illegally.
The failure of the negotiations would moreover tarnish the credibility and even question the relevance of the WTO. If Doha fails, the already-troubled balance between the rule-making (the Doha negotiations), the executive functions performed by Lamy and the WTO secretariat, and the judicial function—the Dispute Settlement Mechanism (DSM)—would completely be upset. The failure would put insurmountable pressure on the DSM and the executive system that must operate at the behest of the members. Additionally, a failure might undermine the well-functioning DSM. Compliance with dispute settlement rulings is likely to suffer since countries would no longer feel the same pressure to comply with adverse decisions in order to gain trust, respect, and concessions in the negotiating arena.
The death of Doha would ultimately give a clear carte blanche to rampant regionalization and further fragmentation of trade rules. Finally, the demise of Doha would be an acknowledgement of the lack of transatlantic leadership in multilateral institutions. And it would be unrealistic to expect much progress on other issues that require burden-sharing such as food security or climate change.
There is still time and opportunity to show political determination for a final push to finish the Doha Round this year. But to achieve an ambitious outcome it will require transatlantic leaders to take the helm from negotiators in Geneva, give further concessions to emerging markets, and breathe life into Doha. This patient does not have to die just yet.
Serdar Altay is a Program Officer in the Economic Policy Program of the German Marshall Fund in Washington.
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