(This article appeared in the Economist of December 2013. The Doha round fate is still hanging in the balance)
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Comments due by Nov. 2, 2014
IT TOOK every bit of the allotted time and then some. In the wee hours of December 6th the members of the World Trade Organisation rose to applaud the successful conclusion of the first multilateral trade agreement negotiated at the WTO. The deal, reached at a ministerial conference on the island of Bali, in Indonesia, is the first fruit to be borne of the long-barren Doha round of international trade talks. But the agreement leaves the future of global talks cloudier than might have been hoped.
Casual observers might be surprised to learn Doha was not already dead, so long and treacherous was the road to the round’s conclusion. Doha, which began in 2001, suffered near-fatal breakdowns in 2003 and 2008. When trade officials worked to resuscitate discussions in 2012 they opted to keep the agenda as simple and attractive as possible. Even so, talks almost collapsed on multiple occasions. Cuba nearly sank an agreement at the eleventh hour, by threatening to oppose any deal that failed to chip away at America’s embargo of the small economy. Over the past few months Roberto Azevedo (pictured above, to the left, with the meeting's host, Indonesia's trade minister), who took over the job of Director-General of the WTO in September, repeatedly warned that this or that disagreement posed a mortal threat to the Bali package. Yet at each turn Mr Azevedo kept the parties at the table until compromise could be reached.
At the heart of the deal is an agreement on “trade facilitation”, or measures to reduce trade costs by cutting red tape in customs procedures. Trade facilitation could cut global trade costs by more than 10%, by one estimate, raising annual global output by over $400 billion, with benefits flowing disproportionately to developing economies. It nonetheless proved a tricky item to settle. Some poorer countries raised concerns about their ability to make the required capacity upgrades, and talks briefly stalled as arrangements for assistance were worked out.
Yet agriculture proved the sorest subject, as ever. Disagreement spanned several issues, the most contentious of which concerned agriculture subsidies. India, its government facing a general election next year, spearheaded an effort to prevent emerging markets from facing challenges at the WTO over subsidies granted to farmers under the aegis of “food security” measures. In the months leading up to the Bali meeting India wrung substantial concessions from rich-world economies, including a four-year “peace clause” that would have granted developing countries protections from such challenges. Not satisfied with that, India later threatened to derail talks unless the issue was reopened. India ultimately won an indefinite waiver, good until a permanent solution can be reached.
Several other disputes received similar papering over. Indeed, while trade facilitation counts as a meaningful achievement, the deal is unlikely to convince sceptics that the multilateral process can produce ambitious reforms—not while those least committed to progress, like India in this case, can threaten to sink an entire agreement unless their demands are met.
Relief at having finally reached a WTO deal will therefore turn quickly to hand-wringing over what should follow. It will fall to Mr Azevedo to read the mood of the membership and chart a course forward. He will emerge from this process with new credibility and a trust in his ability to choose attainable goals. But he will quickly have to make two key decisions: what issues to press and how to achieve them.
Plenty of bullet points remain on the Doha agenda. They include further progress on matters, like the food security waiver, that received inconclusive treatment at Bali, and other long-simmering issues like progress on ending agricultural subsidies altogether. Yet plowing back into such territory risks wasting the momentum of the Bali deal. Mr Azevedo might instead seek to open discussions on fresher subjects. Investment issues provide one possibility; the WTO could work to rein in investment subsidies and set ground rules for when countries can invest across borders without interference. Trade in environmental goods and services, which covers everything from air filters to environmental consulting, is also expected to take centre-stage.
Mr Azevedo will have a more difficult decision in choosing which items to keep on the multilateral docket, for negotiation among all WTO members, and which to let slip into “plurilateral” deals. Plurilaterals can proceed within the WTO, and allow coalitions of willing countries to agree deals that apply only to signatories, and not to all members. Agreements on services and on IT that are now under discussion fall into this category. China’s minister of commerce used a speech in Bali to suggest it supported the use of plurilaterals to move liberalisation forward. It is possible that Bali, while enhancing the role of the WTO as a forum for negotiations, nonetheless reinforced the difficulty in achieving ambitious multilateral reforms.
Still, the landscape for international trade talks looks much different with a Bali deal than without one. The completion of a WTO agreement reflects a broad appetite for trade integration and reduces the risk that regional deals degenerate into a world of Balkanised trade. Not before time.
Doha, which had been undergoing economic downturn for many years, due to the lack of international trade within its country, finally settled a trade agreement and opened up trade with many international countries. With many disputes arising over the settlements conducted in order to reach an agreement, perhaps the most imperative issue that arose was over the issue of agricultural trade. India, which had prevented emerging markets from facing challenges with the World Trade Organisation over subsidies granted to farmers, reached a settlement in their favor in regards to agricultural international trade. These settlements were reached as a temporary solution, until a permanent agreement could finally be reached. Trading costs have been reduced, and Doha can now thrive through international trade.
ReplyDeleteI think it is good for Doha which is in economic downturn for longer years. In fact, this is the first time that I hear about such a place. I have not heard the name of the city before reading this article. However, I just learn through this article that the trade agreement would be very useful for it. I see that agricultural trade issue is highly discussed in that because India faces a general election for the following year and it spread heads and effort to prevent emerging markets from exposing challenges at WTO over subsidies which are granted to farmers under the notion of food security measures. There has been a temporary solution for the disputes. It is good to hear that Doha can be active in international trade.
ReplyDeleteThere are still some other issues that should be pointed because they remain on the Doha agenda. The issues like further progress on matters, food security waiver, progressing and ending agricultural subsidies can be indicated among these matters. It seems to me that temporary solution will not work as desired. Mr. Azevedo may have difficulty in choosing the matter that she would care.
After reading this article and doing some research, I realize how important this is for the economies of developing nations. Doha is an agreement that will lead to less trade barriers, more agricultural development, improvement of market access, and strengthen trading rules and regulations. I think now we will see a serious development and progress in the Doha talk because this can help balance and improve global trading among nations. As for Mr. Azevedo, he has to think about the Bali agreement and about Cuba's benefit as well as if all the other governments will be okay with lowering import tariffs and agricultural subsidies. There is a lot more talk needed among the 157 governments in order to reach an agreement. This will help the overall international trade and the developing nations.
ReplyDeleteThe Doha round of international trade talks has great potential for participating nations to benefit from trade agreements. Trade facilitation can be quite beneficial to developing nations if it is estimated to increase annual output. There is fear that trade facilitation will be disproportionate to the economic growth it will bring, with some similar nations growing far more than others. Many poorer countries lack the financial capital to upgrade their current facilities and infrastructure. I’m not surprised that agriculture is the most unfavorable subject as it is quite complex of an issue for nations to find a common ground as agriculture is the foundation of most country’s economies and issues of food security becomes a human rights issue.
ReplyDeletePassing new treaties for an agreement is often met with difficulty, especially when there are several nations involved, all with different financial and cultural backgrounds and dissimilar goals to achieve. All it takes is one nation to oppose clauses of an agreement for it to fall through. Mr. Azevedo’s duty is to present attainable goals with agreements that all nations can accept. It seems like these talks and agreements never do enough for the developing and underdeveloped nations which need it most.
After reading the article “Doha Round finally delivers”, I came to the conclusion that it will be in the best interest of developing countries to support the Doha agreement. The Doha agreement can help facilitate trade by reducing trading costs and in the long run benefit developing economies. By reducing the challenges farmers face when receiving subsidies from the WTO, trade will become balanced and it will improve global trading. The issue in this case is more about regional disagreement, and it is up to Mr. Azevedo to convince opposing parties (i.e. developed countries) to be on the same side of the trade agreement. There is no such thing as “free trade”, and one major reason is that barriers are made by politicians! If I can give Mr. Azevedo any advice, it will be to form coalitions with Latin American and Caribbean Group (GRULAC) and the Asia-Pacific Group, since both groups are on the same page of the Doha agreement. It is on his best interest to take advantage of the unmoderated causes and raise suggestions as to how developing countries in both the Caribbean and Asia-Pacific can benefit from lower barriers of trade. If he is credible and convincing enough he will have sufficient signatories to bring his solution to the WTO and hopefully after the hearing his solution can be passed.
ReplyDeleteIt's refreshing to see that some progress has been made in what seems to be an everlasting (and perhaps fruitless) discussion. The complexity that comes with this trade negotiation is so striking that one can fathom the gravity of the situation and the extent to which the world is disproportionally divided into rich and less fortunate countries.
ReplyDeleteOne major issue, as cited in the article, that the WTO faces is agricultural subsidies - an extremely sensitive issue for India who provides vast amounts of subsidies to its poor farmers. It is important that the WTO creates a solution to this problem as food security is an imperative factor towards sustainable economic development. I think that the WTO should concentrate on market accessibility and creating sustainable agricultural prices that are resilient to volatile demand and income.
In regards to market accessibility, there should be some effort from both the developing and developed countries to reduce their strictest trade barriers that are of a disadvantage towards a developing country's exports. Many of the trade barriers limit the exportation (from developing countries) of goods that have a great deal of labor embedded into them; (something common in many developing countries) one example are those that are derived from the agricultural sector. How will these countries realize and execute their comparative advantage, if these barriers remain enforced? Some developing countries are guilty of having stricter trade barriers compared to those imposed by developed countries. This is problematic for developing countries to engage in trade with each other, as this impedes growth. These barriers leads to destructive consequences for both the producer who must bare the costs and the consumer who must pay high prices. Once a negotiation has been settled, the WTO should shift their focus on sustainable food prices.
WTO，as an economic organization, plays an essential role in multilateral trade. From this article I know that WTO now gradually improves itself and aims to benefit as many countries as possible, both developed countries and developing countries. The successful conclusion, Bali Ministerial Conference, allow developing countries more options for providing food security, boost least developed countries'trade and help development more generally. What's more,WTO opens its heart to receive all the countries that are willing to join in it, for example, we see Yemen accepted as a new member. And more and more countries dare to speak up, like India in this case,who can threaten to sink an entire agreement unless their demands are met. Because of the globalization, the global market should be more free for countries to trade with each other, and WTO is striving for the goal. like reducing trade costs in this case. We know the systems in WTO are imperfect, but we believe WTO is on the way to be as better as possible.
ReplyDeleteThe road for DOHA to become reality was long and thorny. It took over 10 years and twice it almost collapsed.
ReplyDeleteIt is worth saying that international trade itself is not the only concern of the agreement. It also covers matters of intellectual property.
It was expected to be accepted by 2005, however in 2004 proceeding in Cancun were failing. Especially the BRICS (excluding Russia) countries and some NGO organizations were skeptical about problems in regards of protection of developing sectors and financial regulations.
Obviously a key issue, as mentioned before, were agricultural policies. If there was a really free trade among countries, protectionism and subsidies within countries would be quickly ineffective - it would be expensive, or even impossible to compete with producers of other countries.
Another collapse was in 2008, which was also related to the financial crisis of the time. Until recently it seemed unlikely that the agreement would be actually accepted, especially since 2012 a huge progress has been made.
-S. Franek
The Doha round of international trade talks is the WTO’s attempt to create a an agreement which can reduce trade cost. Increasing trade facilitation has the potential to increase the global output by over $400 billion dollars. The benefits of the trade agreement are set to disproportionately benefit developing economies which may be the reason it took so long to come to an agreement. While it may seem like countries such as India and Cuba are being difficult and demanding they are actually representing the best interest of their economies which are often ignored. The agriculture industry in developed countries has consistently been protected from the low price imports from developing countries. I think that with reduced trade barriers in agriculture developing countries may actually be able to use their comparative advantage in this market. This initially will hurt developed countries but the increased welfare of the global economy should overset these damages and provide more consumers for the goods that developed countries have a comparative advantage in. Factor price equalization theory points out that not everyone will equally benefit, or benefit at all, from free trade which may be the reason why it is so difficult to get every country to agree on a global trade agreements Hopefully, Mr.Azevedo can facilitate trade agreements which promote overall global economic growth and minimize the potential income loss from free trade.
ReplyDeleteThe Doha Round of the World Trade Organization may finally be approaching a conceivable plan, but it seems as though this progression instigates even more planning. This sector of the the international trade agreement was launched in November of 2001, now in November of 2014 the newly appointed Director General of the WTO, Robert Azevedo has finally brought the involved nations to an agreement. At the center of this trade agreement is the promotion of economic growth in developing countries. According to the World Trade Organization, unbalanced trade rules make it very hard for emerging economies and undeveloped economies create a market for exports. The goal of the Doha Round of negotiations is the implement a stronger and more equitable rule-structure for international trade with particular emphasis on helping growing economies. Three important elements of the plan include “increased duty free access for developing countries, tarry reduction (especially on agricultural products, textiles and clothing) and the reduction of trade-distorting subsidies from developing countries” (WTO.org).
ReplyDeleteCurrently, the most frequent disputes during the negotiations revolve around agriculture. India in particular has repeatedly gone against the terms of the agreement, which caused further delays in the agreement. Granted the goal of India’s needs were to protect developing economies from having problems with WTO subsidies. The issues mentioned in the article are a bit vague, especially in relation to trade facilitation. While the article brags that trade facilitation agreements could increase global output by 400$ billion, it also says that benefits would be distributed disproportionately. I was not sure what that meant about the benefits - is the agreement supposed to help undeveloped economies more than emerging economies. It also made me curious as to what the requirements would be…I guess the complicated nature of the issue contributes to the length of time it has taken to even reach a basic agreement.
The World Trade Organization is an economic organization which is such an important role in multilateral trade. From this article, it seems to me that the WTO now progressively develops itself and aims to benefit as many countries as possible for both developed countries and developing countries. What is great is that a boost least developed countries ‘trade and help development more generally is how they are allowing developed countries more options for providing food security. Also, countries are having the courage to speak up in this crucial situations, like India in this case. The WTO is trying to make the global market a freer place because of globalization. There are many systems that have good intentions and strive for the good of people but it will not be perfectly done throughout the journey.
ReplyDeleteThe WTO works to make trade run as smoothly and efficiently as possible. I think that the issues being focused on in the Doha round can really positively impact the way trade is conducted around the world. I think it would be very beneficial to implement certain ideas. I especially like the idea of trade facilitation. By taking away some of the restrictions and allowing trade to occur at a lower cost, it enables developing countries to become bigger players in the trading world. This would very much help them develop further, and better the global output by around $400 billion, like the author points out. I do realize that some smaller countries are worried about how they will increase capacity, but as trade increases they will be able to expand and account for the increase in demand. I know that it is much easier said than done, as are all issues being discussed, but I don't believe that any of the problems listed should completely derail something that, in my opinion, has so much potential.
ReplyDeleteWhile it is great that the World Trade Organization has at long last taken a step forward in regards to the Doha round of international trade talks, however it seems this is the first step of many as Director General of the World Trade Organization Roberto Azevedo must now choose what issues are most important, and how to make progress regarding said issues. Especially regarding agriculture subsidies, a main concern for India, whose impoverished farmers depend upon government subsidies to survive. As the article says "....while trade facilitation counts as a meaningful achievement, the deal is unlikely to convince sceptics that the multilateral process can produce ambitious reforms—not while those least committed to progress, like India in this case, can threaten to sink an entire agreement unless their demands are met." I learned in our Environmental Economics class that poverty and food security are two of the most prevalent issues facing our modern society, and will become an even more pressing issue over the course of the next twenty years (with the growing population). It is thus highly important for the WTO to develop a plan that aids in agricultural subsidies, and thus pushes our world toward a more sustainable economy.
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