A reform meet turned ritual

A reform meet turned ritual
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First Published: Mon, Dec 05 2011. 10 03 PM IST

Jayachandran/Mint
Jayachandran/Mint
Updated: Mon, Dec 05 2011. 10 03 PM IST
Ministers from the member states of the World Trade Organization (WTO) will congregate in Geneva for the eighth ministerial conference next week.
In the past, the biennial WTO ministerial conferences used to be prominent events, for decisions taken there had significant implications for global economic governance. But with the Doha Round of multilateral trade negotiations lying virtually in a state of coma, next week’s event will be no more than a ritual. The ministerial conference is taking place since the Marrakesh agreement establishing WTO stipulates that there “shall be a ministerial conference composed of representatives of all the members, which shall meet at least once every two years”.
The eighth WTO ministerial conference is being held 10 years after the members of the institution had decided in the Qatari capital of Doha to launch a new round of multilateral trade negotiations that would help deepen and widen the trade liberalization agenda. Thus, members decided to initiate negotiations for lowering tariffs and other forms of trade barriers in both goods and services, and to adopt a new set of rules that would not only help in reducing the cost of doing business, but would also reduce the policy-induced barriers. This trade reform agenda was expected to meet the development aspirations of the lesser players in the global economy and, therefore, the agenda provided for the inclusion of special measures that would enable them to do so.
Jayachandran/Mint
The negotiating agenda also included a range of issues on which developing countries and their more advanced counterparts stamped their ownership. While the former pushed for the reform of the regime of intellectual property rights to ensure that medicines are available at affordable prices, the latter sought inclusion of areas that were hitherto outside the remit of WTO, including investment, competition and government procurement.
During the 10 years of Doha Round negotiations, WTO has faced pressures both from within and outside. The pressures from within mounted as the members struggled to meet the time schedules that would have enabled the round to be completed in four years. On hindsight, the tight time schedule was the biggest enemy of the Doha Round. Even in the best of times, trade policy reforms would have taken much longer than the four years that had been stipulated. But few seem to have recognized that the Doha Round was being launched as the global economy was recovering from the twin shocks of the Asian financial meltdown and the events following 9/11. As a result, countries were much more circumspect in giving up the policy instruments that would have enabled them to provide an additional dose of protection to their domestic players in these times of uncertainty. Such tendencies were displayed most prominently by the US and the European Union which were called upon to provide additional market access to developing countries and to, thus, enable the latter to increase their presence in the global markets.
From the point of view of developing countries, the Doha negotiations made little progress in key areas of agriculture and services. In the former, the biggest roadblock was the reduction of the high doses of farm subsidies which, ironically, became even bigger as the negotiations were being conducted.
Liberalization of the services sector was being eyed by many developing countries as an opportunity for them to make big inroads in the global markets through enhanced opportunities for their professionals. But much to their disappointment, the developed countries decided to adopt a cautious approach in the early years of the Doha Round in the matter of opening up of the services sector. With economic uncertainties setting in, services negotiations came to a virtual standstill.
What has made matters worse for the multilateral trade system governed by WTO is that many of its member states have continued to pursue the trade liberalization agenda through ever-increasing reliance on bilateral and regional free trade agreements. Developing countries were slow to get off the blocks, but in recent years, a majority of these countries have got involved in free trade negotiations. India typifies this development—until 2003, India showed its unflinching faith in the multilateral process, but in the more recent years, it has been one of the most active in pursuing bilateral trade deals.
It is quite clear that for WTO to retain its credibility as an effective institution, the member states of the organization would have to find ways of delivering on its promises. This realization seems to have finally dawned on at least a section of its membership; importantly, the most prominent ones belonging to the Group of Twenty. In their recently concluded summit in Cannes, the leaders surmised that the Doha Round will not be completed if the negotiations are conducted in the same manner as in the past. The leaders have emphasized the need to pursue fresh, credible approaches to furthering negotiations.
Backed by this political support from the leaders of the most influential countries, the forthcoming ministerial conference needs to reflect on the ways in which the credibility of WTO as a strong multilateral organization is kept intact. For all its weaknesses with which it is saddled at present, WTO remains as an institution that can help in the orderly conduct of trade and prevent catastrophic trade wars from breaking out.
Biswajit Dhar is director general at Research and Information System for Developing Countries, New Delhi
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First Published: Mon, Dec 05 2011. 10 03 PM IST
More Topics: Biswajit Dhar | WTO | Doha | Trade | Trade Reform |