Doha Development Round: Why did it fail?
©2014
Textbook
27 Pages
Summary
The Doha Development Agenda, may go down in history as the slowest development round of all times. Starting in 2001, negotiations have been going on for 13 years and collapsed on several occasions in the meantime. With regards to its goal to ensure developing countries, and especially the least-developed among them, a share in the growth of world trade, barely any progress was made. To the extent that one may question how legitimate it is to call the Doha Round a Development Round at all. Especially the notorious point of trade liberalization in agriculture has delayed the negotiations. While the WTO member states agreed on cutting tariffs and reducing agricultural subsidies, opinions differ sharply on exemptions for certain products from these broad ruled. In another critical point, services, negotiations have hardly progressed. The WTO negotiators have missed every deadline agreed upon and various observers suggested to drop the entire venture. The aim of this paper is to find the reasons for the slow progress in order to see if the obstacles may be overcome and the Doha Round might be completed successfully.
Excerpt
Table Of Contents
8
Chapter 1: Pre Doha The Uruguay Round
The Doha round is now older than the preceding Uruguay round, which lasted
almost 8 years and seemed at the time an Odyssey itself.
3
The broad mandate
of the Uruguay Round had been to extend the General Agreement on Tariffs
and Trade (GATT). Areas previously exempted from international trade rounds,
such as textiles and agriculture, since they had been regarded as too difficult to
liberalize, were now to be included. Furthermore new topics of increasing
importance such as trade in services and intellectual property should be
brought to the table. The negotiations, which started in 1986, were completed
when the Marrakech Agreement was signed in Morocco in 1994.
4
Another issue in the Uruguay Round were institutional reforms which led to the
creation of the World Trade Organization (WTO). While the demands of
developed countries during the Uruguay Round were largely met, mainly by the
GATS (General Agreement on Trade in Services) and TRIPS (Trade-related
Aspects of Intellectual Property), the demands of developing countries fell
short. Even though the GATT member states formally agreed on tariff
reductions, a gradual opening up of agricultural markets, as well as a reduction
of agricultural subsidies, the implementation of these agreements in developed
countries was strongly criticized.
5
Particularly the Agreement on Textiles and
Clothing (ATC) and the Agreement on Agriculture had been executed in a
manner, as to minimize the liberalization of these strongly protected markets.
6
Developed countries, the EU in particular, have managed to avoid almost all
limitations by adjusting the agricultural support mechanisms to fit the WTO
boxes, by using technical tricks to avoid the minimum access commitments and
by using creative calculation methods in tarrification in order to maintain the
high import barriers - a praxis labeled "dirty tarrification". With the memory of
inadequate or faulty implementation in mind, this was to be a main concern of
developing countries in the Doha Round.
7
3
(Hufbauer, Schott, & Wong, 2010) p.105
4
Cline, W. R. (1995). Evaluating the Uruguay Round. World Economy(18), p.1
5
Ibid p. 2 13
6
Wilkinson, R., & James, S. (2013). Trade, Poverty and Development. New York: Routledge. p.25
7
Ibid p.25
9
Chapter 2: The Doha Round
The Doha Round started off in enthusiastic spirit in 2001 and was planned to be
completed by 2005.
8
The WTO members committed themselves to:
dedicating the utmost importance to the implementation-related issues
and concerns raised by Members.
9
substantial improvements in market access; reductions of, with a view to
phasing out, all forms of export subsidies; and substantial reductions in
trade-distorting domestic support. (regarding agriculture)
10
taking fully into account the special needs and interests of developing
and least-developed country participants (regarding Non-Agricultural
Market Access NAMA and Services).
11
duty-free, quota-free market access for products originating from Least
Developed Countries (LDCs).
12
Furthermore the Doha Round was launched in the immediate aftermath of the
9/11 attacks.
13
The international community felt a need to deepen multilateral
corporations. Policymakers saw a world of free trade as the right answer to
poverty, which feeds terrorism. At the time, US president George W. Bush said:
"By expanding trade, we spread hope and opportunity to the corners of the
world, and we strike a blow against the terrorists who feed on anger and
resentment." Benjamin Mkapa, president of Tanzania at the time, said: "It is
futile, if not foolhardy, to think there is no link between poverty and terrorism."
14
8
Bouët, A., & Laborde, D. (2010). Eight years of Doha trade talks : where do we stand? Pessac: Laboratoire
d'Analyse et de recherche économiques. p.3
9
WTO. (2001). MINISTERIAL DECLARATION WT/MIN(01)/DEC/1. Geneva: World Trade Organisation. p.2
10
Ibid. p.3
11
Ibid. p. 3 4
12
Ibid. p.9
13
Wilkinson, R., & James, S. (2013). Trade, Poverty and Development. New York: Routledge. p.25
14
Bouët, A., & Laborde, D. (2010). Eight years of Doha trade talks : where do we stand? Pessac : Laboratoire
d'Analyse et de recherche économiques.p.3
10
This presumption further strengthened the goal of generating a good outcome
from a development perspective, to create a more balanced system as well as
greater support of domestic stakeholders in developing countries.
15
However after subsequent ministerial meetings took place in Cancún, Mexico
(2003), and Hong Kong (2005) the initial deadline passed. Related negotiations
took place in Paris, France (2005), Potsdam, Germany (2007), and Geneva,
Switzerland (2004, 2006, 2008); and still there was no mayor progress in
sight
16
.
A decade after launching the round, the ambitious agenda of the WTO member
states is still not achieved. If concluding the initial goals is still viable remains
uncertain, even though some progress was made with the Bali agreement
2013.
17
So what is the current stand of the key points of the Doha Agenda:
Implementation, Agriculture + Cotton, NAMA and LDCs?
2.1 The implementation Issue
While developing countries were historically underrepresented in multilateral
trade
18
, the newly created WTO, was out to make a difference, at least
according to non-binding written working papers.
19
In the Uruguay Round, agreements came to be seen as little beneficial for
developing countries and in in some cases (e.g. TRIPS) the perception
emerged that they were highly preferential towards developed countries.
20
Many governments of developing countries were seeing the prospect of new
agreements with great suspicion. The Uruguay Round had increased
15
For more details see: Guha Khasnobis, B. (2004). The WTO, Developing Countries and the Doha
Development Agenda. New York: Palgrave Macmillan.p.10
16
Mbirimi, I., Chilala, B., & Grynberg, R. (2003). From Doha to Cancun Delivering a Development Round.
London: Commonwealth Secretariat.p.1
17
For more details see: Bouët, A., & Laborde, D. (2010). Eight years of Doha trade talks : where do we stand?
Pessac : Laboratoire d'Analyse et de recherche économiques.p.3
18
Guha Khasnobis, B. (2004). The WTO, Developing Countries and the Doha Development Agenda. New York:
Palgrave Macmillan.p. 10
19
WTO. (2001). MINISTERIAL CONFERENCE WT/MIN(01)/17. Geneva: World Trade Organization.
20
For more details see: Finger, J., & Schuler, P. (2000). Implementation of Uruguay Round Commitments. The
World Economy(23), 511 526.
11
awareness of the downside of ill-understood treatments, which have little
backing by domestic stakeholders. Developing countries therefore put special
emphasis on improving their terms of trade in the WTO.
21
In the run-up to the Doha conference, the implementation issues had been
divided in two categories: those to be dealt with before the conference and
those that could still be negotiated during the round. However the ministerial
conference on "Implementation related Issues and Concerns" gave no
meaningful concessions.
22
So that in a number of non-binding best endeavor
clauses the conference "reaffirms the commitment to full and faithful
implementation of the Agreement on Textiles" and "urges Members to exercise
restraint in challenging measures notified under the green box by developing
countries to promote rural development and adequately address food security
concerns."
23
Once the round was launched, developed countries kept postponing the
discussion on implementation issues, so that by the time of the Cancún
Ministerial Conference almost nothing had been agreed on. This was to the
great frustration of the LDCs, who felt the disproportioned amount of human
resources consumed was not matched by any positive outcome.
24
The lack of progress continued in the following years. By the time of the Hong
Kong Ministerial Conference of 2005, so little of substance had been achieved
that it was declared to "redouble... efforts to find appropriate solutions as a
priority to outstanding implementation related issues."
25
At the time of the 2009 Geneva Ministerial Conference the implementation
issue was only briefly raised by the LDCs.
21
Guha Khasnobis, B. (2004). The WTO, Developing Countries and the Doha Development Agenda. New York:
Palgrave Macmillan. p. 11
22
Wilkinson, R., & James, S. (2013). Trade, Poverty and Development. New York: Routledge.p.25
23
WTO. (2001). MINISTERIAL CONFERENCE WT/MIN(01)/17. Geneva: World Trade Organization.
24
Wilkinson, R., & James, S. (2013). Trade, Poverty and Development. New York: Routledge.p. 26
25
Wilkinson, R. (2006). The WTO in Hong Kong: What it really means for the Doha Development Agenda. New
Political Economy(11), pp. 291 304
12
What had been a key requirement to developing countries to enter negotiations
had been swept under the carpet.
26
However the Singapore Issues pushed by developed countries (in particular
EU, Japan and South Korea) were in their majority successfully opposed by
developing countries. The four Singapore issues are working groups set up
during the World Trade Organization Ministerial Conference of 1996 in
Singapore, covering the issues: transparency in government procurement,
trade facilitation (customs issues), trade and investment, and trade and
competition.
27
Due to their opposition to the Singapore Issues, developing
countries had then have to make concessions on other areas, thereby further
emptying the development content of the round. In the end three of the
Singapore Issues were exempt from the negotiations, with only trade facilitation
remaining.
28
Even this "success" of developing countries was largely due to a
lack of dedication from the USA to push for the matter.
29
2.2 Agriculture
With the implementation issues and the Singapore issues out of the way after
Cancun, the main focus of the DDA switched to agriculture.
Agriculture already had taken a special position in GATT times. It had before
the Uruguay Round largely been excluded form multilateral oversight. The DDA
was now facing the challenge to rectify the flaws emerged after the Uruguay
Round.
Agriculture only amounts to 1.8%
of GDP in developed countries and even in
global GDP it's share keeps falling continuously. But because policies affecting
this declining sector are so politically sensitive, there are always self-interested
groups suggesting it be sidelined in trade negotiations.
30
26
For more details see: Wilkinson, R., & James, S. (2013). Trade, Poverty and Development. New York:
Routledge.p. 26
27
Jones, K. (2010). The Doha Blues. Oxford: Oxford University Press. p. 193
28
Wilkinson, R., & James, S. (2013). Trade, Poverty and Development. New York: Routledge. p. 27
29
Ibid. p.26
30
Hart, C. E., & Beghin, J. C. (2006). Rethinking agricultural domestic support under the World Trade
Organization. Agricultural Trade Reform and the Doha Development Agenda, 221 244
13
Distorting agricultural subsidies have a detrimental effect on developing
countries; especially on LDCs. LDCs have generally a larger percentage of
export products, which are subsidized by other WTO member states.
31
Sugar for example is one of the most policy-distorted commodities, frequently
protected by OECD member states with rates over 200%, paying producers
twice the world market price
32
, so that the former three largest importers (the
US, the EU, and Japan) have become net exporters over the last 30 years.
33
Oxfam estimates protectionist policies in developed countries have cost the
sugar exporters Ethiopia, Mozambique, and Malawi $238 million in 2001.
Mozambique lost the equivalent of a third of its development aid from the EU.
Malawi lost more than its budget for primary healthcare.
34
The Doha call for elimination of agriculture export subsidies is clearly of great
importance for Developing Countries. So that in negotiations in July 2006,
before the DDA was again put on ice, the European Union had offered cuts in
aggregate measure of support (AMS) of 75% if the United States would cut by
65%. The US matched with 60% of reduction if the EU and Japan would cut
down to 83%. However what sounds like a great concession at first, becomes
much less impressive after a closer look.
35
The Agreement of Agriculture created three "boxes"
36
to classify subsidies:
Green Box: programs that are considered minimally trade distorting.
Specific guidelines are set out for the structure of such programs but
expenditures by member countries are not limited.
37
They tend to be
programs that are not targeted at particular products, and include direct
31
Guha Khasnobis, B. (2004). The WTO, Developing Countries and the Doha Development Agenda. New York:
Palgrave Macmillan.p.17
32
Guha Khasnobis, B. (2004). The WTO, Developing Countries and the Doha Development Agenda. New York:
Palgrave Macmillan. p.17
33
Virata, G. (2004). Effects of US Sugar Policy on Developing Countries. International Economic Studies Center,
June. p.1
34
Ibid.
35
Wilkinson, R., & James, S. (2013). Trade, Poverty and Development. New York: Routledge. p.27
36
A good overview about the ,,Boxes" is provided in this Fact Sheet of the WTO: WTO. (2001) AGRICULTURE
NEGOTIATIONS: BACKGROUND FACT SHEET accessible:
http://www.wto.org/english/tratop_e/agric_e/agboxes_e.htm
37
Hart, C. E., & Beghin, J. C. (2006). Rethinking agricultural domestic support under the World Trade
Organization. Agricultural Trade Reform and the Doha Development Agenda, pp. 221 244
14
income supports for farmers that are not related to current production
levels or prices. They also include environmental protection and regional
development programs. Some studies suggest that also Green Box
programs are trade distorting, since farmers increasingly become risk-
takers, knowing they will be supported with government subsidies during
crises.
Blue Box: programs that are considered more trade distorting, but go
hand in hand with production limits embedded in them. They are not
currently limited.
38
Amber Box: programs which are considered the most trade distorting
and which are limited.
39
The level of subsidy is directly related to quantity
of the produced good.
40
The Agreement on Agriculture defined a single, quantifiable national indicator of
trade and production-distorting support, the "aggregate measurement of
support" (AMS), which includes the estimated value of only amber box policies.
Developed countries agreed to reduce their AMS levels by 20 percent from a
ceiling calculated as their average annual level of overall support provided in
the peak years 1986-88.
41
38
Hart, C. E., & Beghin, J. C. (2006). Rethinking agricultural domestic support under the World Trade
Organization. Agricultural Trade Reform and the Doha Development Agenda, 221 244.
39
Ibid.
40
Wilkinson, R., & James, S. (2013). Trade, Poverty and Development. New York: Routledge.p. 28
41
Barfield, C. (n.d.). The Doha Round: No more delays. Why World Leaders Must Resist the False Promise of
Another Doha Delay, 43.
15
42
By shifting subsidies out of the Amber Box into the Green or Blue Box, now
there is a huge gap between the AMS bound per annum and the actual amount
reached. Cuts of up to 75% on subsidies would be needed to have any effect at
all.
43
The situation is similar in other developed countries as the US or Japan. The
current US commitment to the AMS limit is $15.5 billion, while the actual
spending on subsidies merely amounts to 8-10 billion per year.
44
The implementation of the Agreement on Agriculture clearly puts emphasis on
the importance of the previously mentioned issue of implementation.
Agriculture: Cotton
Cotton has achieved particular prominence in the Doha negotiations because of
the detrimental effects of high subsidies in the US on world cotton prices. US
subsidies to cotton growers amounted to $3.9 billion in 2002, three times US
foreign aid to Africa. These subsidies lower the world cotton price by ~10%,
cutting the income of farmers in West Africa, Central and South Asia. In West
42
Chandrasekhar, C. P., & Pal, P. (2004, August 17). International Development Economics Associates.
Retrieved March 27, 2014, from WTO: No Cause for Celebration:
http://www.networkideas.org/news/aug2004/news17_WTO.htm
43
Wilkinson, R., & James, S. (2013). Trade, Poverty and Development. New York: Routledge. p. 29
44
Ibid. p.143
Details
- Pages
- Type of Edition
- Erstausgabe
- Year
- 2014
- ISBN (eBook)
- 9783954898176
- ISBN (Softcover)
- 9783954893171
- File size
- 321 KB
- Language
- English
- Publication date
- 2014 (September)
- Keywords
- doha development round
