The eighth World Trade Organization (WTO) ministerial conference concluded on 17 December, with the chairman citing an improved atmosphere but no concrete moves forward on the Doha Round trade talks. Honestly, trade ministers of the 153-member club attended the conference without expectations of any positive outcome, other than to welcome Russia, Samoa, Vanuatu and Montenegro as new members. The deadlocked negotiation has caused a crisis of confidence in the global trade body.
The biennial ministerial conference was held against the backdrop of continuing global economic slowdown and a bleak forecast for 2012. Recent reports indicate a rise in protectionism among the Group of Twenty countries (G-20). Efforts to conclude the trade round by the end of 2011 were abandoned earlier this year; this was followed by a similarly unsuccessful attempt to agree on the early harvest of a least developed country focused mini-package. A reportedly 80% complete draft has been in a comatose existence since July 2008. The US, in particular, has argued that the Doha Round cannot be completed on the basis of the current draft text, unless large developing countries such as China and India agree to grant greater market access for US industrial goods and agricultural products. The one success of the conference was a last-minute deal to seal a reform package of the plurilateral government procurement rules.
Illustration: Jayachandran / Mint
On the one hand, the past year also saw the usual entreaties by pro-multilateralism trade commentators such as Jagdish Bhagwati to conclude the Doha Round at the earliest. On the other hand, experts like Mehdi?Shafaeddin contend that the idea of life without the Doha could destroy the hope for fair trade is “pure fantasy”. The business community seems to agree with this latter group; David E. Lewis, vice-president, Manchester Trade Ltd, has argued that, “we need to get a life please and keep things in perspective”. It is interesting to note that the latter two differ in their justifications for the disenchantment while firmly concurring that non-culmination of the Doha Round is not the end of the world as we know it.
The Western business community believes that the outcome of the Doha Round is inconsequential, while trade policy analysts such as Shafaeddin and Dani Rodrik hold that (1) the General Agreement on Tariffs and Trade (GATT)/WTO rules suffer from asymmetries as well as contradictions between the agreed rules and their implementation by the main developed countries, and (2) as far as the Doha Round is concerned, the wealthy nations have not “genuinely” pursued a development agenda despite the fact that the Doha Round was supposed to be a development round. Hence, not only should developing countries not worry about burying the Doha Round, but they should also aim to revise the GATT/WTO agreements to make them development-friendly.
Notwithstanding an official declaration (or lack of it) of the Doha Round’s demise, it has been clear for a while that the status quo in negotiation strategies is not working. The problem, however, is in determining a viable way forward. For decades, many have lamented the extent to which Western countries dominate the global economic system, especially in the governance of multilateral organizations which is seen as favouring Western interests. Despite the talk of reform, industrialized countries have repeatedly countered serious efforts that would result in meaningful erosion of their entitlements. However, while to claim that in the present global economic scenario emerging countries need to step up the plate and take charge of negotiations is justified, the question remains whether the rest of the world, and in particular the industrialized world, is ready to accept their leadership.
For as in the early days of GATT, should China and India (much like the then US and Europe) decide with the other developing countries on a trade package, would the former powers be open to signing on the deal? Would they be agreeable to accepting the consequences of such an economic leadership? For example, will the world accept a global agenda set and run by the emerging economies, where development gets more importance than intellectual property rights and “developmental globalization”, would be a motivating force for trade and welfare gains have greater weight than financial sector profitability? Unlike GATT, WTO is both overtly and covertly more mercantilistic, with negotiations solely focused on reciprocal trade liberalization. It appears that the Western world is not yet ready to embrace this change, and it’s not merely because of the fears of the consequences of a Chinese hegemony in the Asia-Pacific maritime route.
What is the way forward? It is clear that the process requires acceptance of joint leadership by the emerging world as a true and equal partner of the Western powers. Until the global economic and political power play settles in a new equilibrium, it will be futile for ministers to meet for these biennial jamborees.
Suparna Karmakar is senior fellow, CUTS Institute for Regulation and Competition (CIRC) and research adviser, CUTS International
Comments are welcome at email@example.com