WTO post Doha: trade deadlocks and protectionism

Author:Elimma Ezeani
Position:Aberdeen Business School, Robert Gordon University, Aberdeen, UK
SUMMARY

Purpose – At its inception, the Doha Round offered the hope of a more inclusive World Trade Organisation (WTO); one where developing countries in particular envisioned would allow them the policy space to enable their socio-economic advancement even as they carried out their obligations as Member States of the rules-based international trade system. While the rewards of this novel development round are awaited, WTO Member States are making a marked... (see full summary)

 
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1 Introduction

In the aftermath of the financial crisis of 2008 and significant reductions in domestic employment and global trade statistics, every country is affected by a threat in reduced trading power. The promises of the WTO to enter into “mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade” and to further the “elimination of discriminatory treatment in international trade relations” ( WTO, 1994 ) are giving way to countries' interest to “negotiate trade opening bilaterally, plurilaterally and regionally” ( Lamy, 2013a ). The central theme of the Doha Round, Development, is now at its fringes. Along with it, the WTO development framework is in danger of being forgotten in the stalemate of negotiations. Part 2 of this paper highlights the concerns with the Doha Development Agenda (DDA) which underlie the stalemate in negotiations. This part also evaluates the present development framework of the WTO in the view that legal binding provisions still constitute a veritable part of the development agenda. Part 3 notes the departure from the non-discriminatory principle and considers that there are benefits to the continued sustenance of the open trade concept in the face of globalisation, when countries are able to enter arrangements that are acceptable under the rules-based system and also respond to the needs and concerns of trading partners. While Part 4 draws attention to the emergence of a convergence theory post Doha, it examines whether this is in essence a tacit acknowledgement of the disenchantment with the WTO and multilateralism in trade negotiations. In Part 5, the paper concludes that the emerging “convergence” theory admits the inevitability of new and increased preferential trading arrangements following the Doha stalemate. It however stresses that non-multilateral negotiations and any subsequent agreements from these should not be incorporated into the multilateral framework and that should this happen, it presents a wider question of the authenticity of a multilateral rules-based system.

2 The Doha “Development” stalemate

Twelve years after the Doha Round was initiated, the negotiations are still at a stalemate. Broadly speaking, the polarisation is between developed countries' resistance to allow more concessions to their developed country counterparts on non-tariff barriers (NTBs) to trade, and developing country refusal to concede on issues of trade such as agriculture, wherein they consider their natural advantages are in continued danger of erosion by the strong domestic measures including subsidies, etc. prevalent in developed countries. There is pressure on both sides to reach a deal but to reach a deal with whom? The recent announcement of moves by two strong trading blocs – the United States (US) and the European Union (EU) under the Obama administration – a Trans Pacific Partnership Agreement and an EU-US free trade agreement ( McGregor, 2013 ; Stokes, 2013 ) signify disillusionment but with what – multilateralism in general or the Doha negotiations in particular

These suggestions for alternatives to a concluded Doha Round may in reality be evidence of disenchantment with the ambitious projects set out under the Doha negotiations. Four objectives are set out in the preamble of the Doha Declaration:

[…] we shall continue to make positive efforts designed to ensure that developing countries, and especially the least-developed among them, secure a share in the growth of world trade commensurate with the needs of their economic development. In this context, enhanced market access, balanced rules, and well targeted, sustainably financed technical assistance and capacity-building programmes have important roles to play ( McGregor, 2013 ; Stokes, 2013 , italics for emphasis).

These areas are properly so-called, the “development agenda” of the Doha Round and are central to the deadlock. The objectives of enhanced market access, an essential attribute of the general free trade theory has been brought to a halt with debates about agriculture and non-tariff barriers.

The deadlock is ultimately strengthened by the greater negotiating presence of developing countries, particularly from Asia and Latin America. More generally, in spite of their greater majority in the WTO Membership, the market access benefits of open and free trade still elude the greater number of developing countries. These economies, especially those in sub-Saharan Africa have not made significant economic progress if reliance is to be placed on the various publications of international development indices1. Furthermore, those economies whose economic stability is in doubt either as a result of war, or other natural disasters – what promise does the future of global trade hold for these countries with their limited capacities to engage in competitive global trade? In addition, others are increasingly despondent as to the legal and economic implications of liberalising their markets without a correspondent access to compete effectively with the trade from the developing countries. The gains of a concluded round that augments development concerns is without a doubt, paramount to the economic development of these countries in the context of their future global market presence.

The Hong Kong Conference of 13-18 December 2005, the Sixth Ministerial (decision-making conference) of the WTO, attached great importance to the development dimension relative to the negotiations on market access and other matters relating to development. In the declaration issued at the end of the conference, the ministers set out their intent as follows:

We agree to ensure the parallel elimination of all forms of export subsidies and disciplines on all export measures with equivalent effect to be completed by the end of 2013. This will be achieved in a progressive and parallel manner, to be specified in the modalities, so that a substantial part is realised by the end of the first half of the implementation period2.

The WTO decision of 14 November 2001 ( WTO, 2001 ) on these concerns provide a detailed guide to WTO members in respect of their obligations under specific agreements and set out time scales within which some of those provisions and their applications are to be notified to the General Council. It is helpful to highlight the core “development” issues crucial to the negotiations – agriculture and NTBs, and to examine if briefly, the merits of existing development framework of the WTO; the latter is in itself almost neglected in the current deadlock.

2. 1 Agriculture and NTBs

In agriculture, the DDA in this area aims at: “substantial improvements in market access; reduction of, with a view to phasing out, all forms of export subsidies; and substantial reductions in trade-distorting domestic support”3. Special and differential treatment (SDT) provisions are agreed as an integral part of all negotiations in this regards taking into account the developmental needs of developing countries including food security and rural development. Perhaps, because developing countries have a large number of the labour force engaged in agriculture and see the sector as the main employment and income provider for a larger number of citizens, this sector is one of the most contested areas under the Doha Round4. More comprehensive challenges to altering WTO agreements have not come; developing countries had insisted on amendments to the “Agreement on Agriculture” making an argument for a “development box”5. This proposal was not incorporated as part of the current negotiations under the Doha Round.

However, under the Doha negotiations, developing countries have so far successfully pushed proposals for special products (SP) and special safeguard mechanism as reforms of the agricultural trading arrangements under the WTO. The proposals were accepted as part of the “July 2004 package” by a General Council decision as follows:

Developing country Members will have the flexibility to designate an appropriate number of products as Special Products, based on criteria of food security, livelihood security and rural development needs. These products will be eligible for more flexible treatment. The criteria and treatment of these products will be further specified during the negotiation phase and will recognize the fundamental importance of Special Products to developing countries.

A Special Safeguard Mechanism (SSM) will be established for use by developing country Members ( WTO, 2004 , para 41 and 42; ICTSD, 2005 ).

Nevertheless, negotiations on the modalities for the percentage of produce to be identified as SP as well as the application of safeguard mechanisms under the July 2004 package have formed part of the deadlock in the Doha talks6. For least developed countries (LDCs), in spite of preferential trade agreements (duty-free quota-free market access for LDCs) the strict application of rules of origin which require that all the processes of production resulting in a “finished” good be undertaken in the territory which is granted preferential treatment is fraught with difficulties. LDC's are of the view that simpler and more transparent rules are required in order to benefit from these preferential arrangements including those agreed under Annex F of the Hong Kong Ministerial ( Committee on Agriculture Negotiation Group on Market Access, 2006 ).

It could be argued that recourse to negotiations on special treatment presents a more cogent bargaining medium for solutions to enhanced market access after all, these provisions are already firmly established as part of the WTO rules. We have reservations on the...

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