The Doha Round of the World Trade Organisation (WTO) launched by 143 countries has witnessed eight years and eight months of negotiations. While membership of the Geneva-based multilateral trade body has, over the years, risen to 153, the Development Round has been a bane for negotiators after several deadlines have been missed and a completion now is anticipated to be symbolic and not substantial for world trade if countries do not get down to serious business.
Sandra Polaski of Carnegie Endowment in 2006 in a study “Winners and losers: Impact of the Doha Round on developing countries” stated that, at the aggregate global level, the plausible conclusions to the Round would only produce modest gains, about a one-time increase in world income: Between $40 and $60 billion, which represented an increase of less than 0.2 per cent of world GDP. Things would not be very different even today if countries continue to move along the beaten path in Geneva. To make the Doha Round meaningful, member countries have to quickly identify specific areas for increased market access in a changed global environment.
With the WTO negotiations hitting regular roadblocks, there have been, in the last five years, several free trade agreements signed by many countries — developed and developing — which have contributed to an increase in global trade and investment flows. These agreements have been across regions and among competing partners. India, for instance, has either completed negotiations or is in the process of negotiating about 20 preferential and free trade agreements of which at least five to seven agreements are with leading trade partners, which will impact bilateral trade substantially.
New Delhi has completed an agreement on goods with the 10-member Asean and is in the process of negotiating other areas for making the agreement comprehensive, while it has put in place a comprehensive agreement with South Korea and is in advanced stage of negotiations with Japan. Asean-plus agreements are on the cards with Malaysia, Thailand and Indonesia. The 27-nation European Union and India are negotiating to find a suitable landing zone agreeable to both sides by the end of this year while negotiations with Canada, New Zealand and Australia are on the cards with initial rounds of negotiations completed.
China, on the other hand, has signed about 11 agreements with about 29 partners across Asia, Oceania, Africa and Latin America and is negotiating a few more. Since 2001, Washington has either implemented or has commenced negotiations with about 12 countries including Jordan, Australia, Bahrain, Morocco, South Korea, Malaysia and Colombia.
The impact of the proliferation of free trade agreements has been that despite the sharpest decline in world trade in more than 70 years following the recession in 2008 and 2009, global trade is set to rebound in 2010 by growing at 9.5 per cent, according to WTO estimates. According to these estimates, released in March 2010, shipments from developing economies and the Commonwealth of Independent States (CIS) will grow by about 11 per cent while developed economies exports are expected to rise by 7.5 per cent in volume terms.
The free trade agreements have meant that detailed negotiations in the WTO on how tariffs on industrial goods would be reduced have lost their sheen to some extent. The discussions in this sector are moving towards more Doha-plus aspects, where increased market access from developing countries is being demanded.
However, two areas can make a substantial difference to world trade under the Doha Round. These are services and agriculture which need immediate attention. Countries have to get to the table with some meaningful numbers on reducing subsidies in agriculture as also improve market access. Unfortunately, even the proliferating free and preferential trade agreements have veered away from this politically sensitive subject. For agricultural negotiations to be meaningful, there is a need to cut developed country subsidies below their current levels and open up global trade to some serious competition.
On services, the main issue has to be to identify domestic regulation in several countries which will make any market access agreement worthless. The working party on services has been trying to identify the subsidies and domestic regulations that impede trade in services. These negotiations have to be really strong if services trade has to become free and fair across the globe.
Member countries of the WTO are at an interesting point of negotiations. Not much is expected of the Doha Round if the proliferating FTAs are any pointer. Any strong real market access initiative in the two sensitive sectors of agriculture and services will signal that trade matters for countries even in the face of growing call for protectionism from some quarters domestically.
The author is principal adviser with APJ-SLG Law Offices
