It is time for the international community to recognize that the Doha Round is doomed. Started in
To be sure, world leaders, negotiators, and commentators have expressed their unanimous support for a successful outcome -- the "balanced" and "ambitious" agreement called for by so many summit statements. But concluding a trade agreement is like pole-vaulting. Everything must come together at once -- after the extensive preparation and the building of momentum, there is that one giant leap -- with the hope that the entire body will sail over the bar. Most trade agreements survive several failed attempts before success is achieved. But the Doha Round keeps crashing into the bar.
To a significant degree,
What this means, simply, is that it is time to give up on trying to "save"
To avoid that outcome, negotiators should salvage any partial agreements they can from the round and walk away from the rest. World leaders and trade policymakers should then immediately redirect all the energy, initiative, and frequent-flier miles devoted to
The initial meetings that led to the Doha Round stumbled before the process could get started, signified by the failed 1999 WTO ministerial summit in
The use of trade liberalization and reform to generate economic growth and help alleviate poverty formed the core of the initiative. Negotiators initially identified 21 subjects for negotiation, including reductions in agricultural trade barriers, the elimination of agricultural export subsidies, cuts in trade-distorting domestic subsidies, major improvements in market access for manufactured goods, and more open trade in services. Although economists have shown that countries would benefit from undertaking such actions unilaterally, most political leaders and negotiators would prefer to trade their own country's market reforms for better access elsewhere.
Participants originally scheduled the
As the many summits and negotiating sessions held over the last decade can attest,
The Bush administration identified three criteria to define success in the Doha Round. First and foremost, any outcome had to contribute to global economic growth and development through the generation of new trade flows, especially between and among emerging and developing economies. With these economies together representing close to half the world's GDP and registering twice the growth rate of the developed world, the administration decided that negotiators could not meet
Second, the administration resolved that the final agreement should increase market opportunities for U.S. exports of farm products, manufactured goods, and services -- particularly in high-potential, high-growth markets such as
ELEPHANTS HIDING BEHIND MICE
When the negotiations collapsed again in the summer of 2008, none of the administration's criteria had been met. From almost the start of the negotiations, the rapidly evolving nature of the global economy had rendered
As they currently stand,
A number of emerging and developing economies -- among them
The dilemma facing
The developed-versus-developing-country framework itself is increasingly anachronistic.
To be sure, advanced economies should shoulder a somewhat heavier share of the burden of any multilateral economic agreement, making their contributions consistent with their more dominant positions in the global economy. After all, even when
The lumping together of all emerging and developing economies in the
In addition, the negotiations' heavy emphasis on rigid formulas for tariff cuts, rather than a looser combination of targets and negotiations over specific openings, has generated "formula and flex" models that undermine both the negotiating dynamic and any potential outcome. This is most evident in the proposed texts associated with the failed
For manufactured goods, these proposals would, by the end of the
The framework has also posed problems when it comes to agricultural trade. The current proposals task the developed countries with eliminating export subsidies, cutting trade-distorting domestic subsidies, and reducing tariff and nontariff barriers to imports. The developing countries are also obligated to reduce trade barriers, albeit to a lesser extent. But although exceptions to the formula cuts enable both the developed and the developing countries to protect some items, the extreme flexibilities given to the developing economies will again enable the emerging economies to negate the bulk of their formula cuts. The 2008 package, for example, would allow
In an effort to move the Doha Round forward, the WTO leadership has worked to establish key agreement parameters through draft texts. These texts have progressively narrowed and in some cases precluded the negotiation of specific and substantive product concessions -- trapping participants in almost a decade of negotiations about negotiations. In fact, the combination in the framework of rigid formulas and ill-defined, largely nonnegotiable flexibilities put all the negotiators in a defensive posture from the outset, left to assume that their own import-sensitive constituencies would face severe tariff cuts but unable to point to the kind of concrete gains in market access necessary to build domestic support for the trade talks. Finally, the dramatic imbalance in the negotiating flexibilities available to the emerging economies as opposed to the advanced economies has left both sides with little room to maneuver. Even if the emerging countries wanted to put more on the table, their offers today would look like unilateral concessions, since the developed countries have nothing of perceived value left to concede in return.
The uneven negotiating field is not the only structural roadblock that has undermined the negotiations. Multilateral trade talks have traditionally called for
The challenges posed by the negotiating structure are compounded by the fact that
The passage of time has also defeated the Doha Round. Over the years, political and economic windows for a deal have opened and closed. The 2007 expiration of TPA undermined the willingness of U.S. trading partners to take risks because they no longer knew whether the
RISKS TO THE MULTILATERAL SYSTEM
Despite all these problems, it is far too soon to give up on multilateral agreements and the global trading system. If any more evidence were needed to demonstrate the WTO's critical importance to the world economy, one need look no further than the recent global financial crisis. Although countries took protectionist measures in the wake of the crisis, the international community avoided a quick deterioration into a spiral of beggar-thy-neighbor actions to block imports. Previous multilateral agreements that reduced permitted tariff levels, WTO-consistent escape valves and enforcement opportunities, and a high-profile G-20 commitment to avoid discriminatory trade actions helped ensure this outcome. The fact that the independent policy research think tank Global Trade Alert began publishing lists of G-20 trade-pledge violations certainly helped as well.
But with the exception of limiting some of the WTO-consistent tariff increases by emerging countries, the Doha Round agreement currently under negotiation would not have precluded most of the discriminatory actions taken. Similarly, the fact that the Doha Round is still officially in progress has failed to stem the proliferation of low-quality bilateral and regional trade agreements. The number of such agreements in place has doubled to over 200 worldwide since the
Although the countries with which
Granted, the phenomenon of bilateral and regional trade agreements has been the result in part of a vicious cycle. Countries have pursued these agreements because
Even if, in the interest of saving the Doha Round, key emerging economies were inclined to liberalize their markets well beyond what the 2008 proposals explicitly mandate, the current negotiating structure and peer pressure would make doing so exceedingly difficult, if not impossible. But any attempt to salvage
In fact, the only readily measurable benefits of the plan currently on the table come from developed-country tariff cuts, since it remains unclear how emerging economies would choose to allocate their flexibilities. Indeed, the 2008 proposals' potential commercial benefits would come primarily from tariff savings in mature-country markets, rather than from any meaningful increase in new trade flows in the fastest-growing economies.
To even approach the more optimistic projections of what a successful
In the case of manufactured goods, creating a negotiation in which the advanced and the emerging countries both had greater flexibility to cut their tariffs more or less than the levels currently dictated by the formulas would move the process forward. In agriculture, the negotiations should only permit new safeguards if they are limited to temporary responses to damaging import surges. And with regard to market access, the emerging economies would have to accept fewer flexibilities. The developed countries could improve their offers on domestic farm support, but the past ten years have made it clear that cuts to agricultural subsidies deliver little in the way of new agricultural- or industrial-market access. Finally, participants would need to engage in a far more serious negotiation about services than anything contemplated to date.
Variations on these and other ideas, designed to prompt real negotiations over specific trade barriers so as to build momentum and pro-agreement constituencies, have thus far failed to gain traction. As long as the current negotiating dynamic remains, there is little reason for influential countries such as
HOW TO MOVE FORWARD
The only way for world leaders to advance a healthy multilateral trading system now is to liberate themselves from the stranglehold of the Doha Round. Another series of draft proposals is not the answer.
Participants must close out the Doha Round in 2011. With leadership and goodwill, several smaller agreements could be salvaged from the existing negotiations. A top candidate for rescue is the trade facilitation package, the subject of a serious negotiation among the advanced, emerging, and developing economies. The package would reduce the costs associated with moving goods across borders, and the
Other areas that might potentially be saved include the largely completed agricultural-export pillar, comprising proposed agreements on export credits, food aid, state-trading firms, and the elimination of export subsidies. Negotiators should also endeavor to complete two environment-related agreements, one cutting subsidies to industrial fishing fleets guilty of overfishing the world's oceans and the other ending tariff and nontariff barriers to "green" technologies in major producing and consuming countries.
These smaller elements of the
Above all, world leaders should not wait to determine whether they can conclude these before laying the groundwork to launch a new series of multilateral negotiations under WTO auspices. The large multilateral trade round format epitomized by
One obvious avenue would be to expand the product coverage in the plurilateral Information Technology Agreement, through which every major producer and consumer in the world of information technology products, save for
The international community could also draw from some of the more practical or innovative elements of existing bilateral or multiparty agreements and seek to multilateralize them. These might include provisions governing investment, transparency, e-commerce, services that contribute to entrepreneurial infrastructure, or even enhanced WTO intellectual property protections. WTO members could also commit to results-based business practice reforms, addressing such international indices as the
To reduce some of the negative effects of bilateral and regional trade deals, WTO members might consider guidelines to ensure that such agreements have built-in docking provisions that allow like-minded countries to join them. Meanwhile, interested members should consider using focused WTO cases and dispute settlements to target poor-quality bilateral and regional trade agreements that fail to meet the letter and spirit of the WTO's requirement that such agreements cover "substantially all trade." This would help reassert the fundamental principles of an open trading system, curb the proliferation of inadequate bilateral and regional trade agreements, and lay the foundation for devising better agreements in the future.
The most significant contribution
Once the dust has settled on the Doha Round,
No future multilateral negotiation will succeed, however, without addressing the very real differences in economic strength, prospects, and capabilities within the so-called developing world. It is worth recalling that one of the WTO's most important characteristics is the inclusion of these developing economies in governance and decision-making from its origins as the General Agreement on Tariffs and Trade in 1948. In private, most emerging and developing countries acknowledge that it is in their interest to bridge the increasingly artificial divide between developed and developing nations when it comes to global issues such as trade, international finance, and climate change. Escaping the confines of the Doha Round could hasten the emergence of new models. These might include multilateral negotiations designed to offer a better balance between benefits and obligations, or they could include plurilateral deals that set a high bar but enable like-minded countries to participate.
SUSAN C. SCHWAB served as U.S. Trade Representative from 2006 to 2009
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