Doha Round Negotiations

Introduction

The Doha Development Agreement (DDA) was the latest stage of negotiations piloted by the World Trade Organization (WTO), which was the result of the Uruguay Round in 1995 as a replacement of the General Agreement on Tariffs and Trade (GATT). By the end of July 2008, there were about 153 member countries of the WTO. The WTO is responsible for organizing discussions with the objective of overcoming trade barriers and advancing economic growth. Foreign and national treatment of imports and exports comprise a significant component of round discussions. It frequently takes several years to create an acceptable draft due to the differences over the terms of trade measures. Against such background, current paper discusses the Doha Round of negotiation of the GATT. With respect to it, the paper focuses on the brief history resulting to the Doha Round, main issues and points discussed during Doha negotiations, decisions made and success and failures of the Doha Round.

Brief History of Doha Round

Prior to the Doha Round, negotiations had already been undertaken on trade and agricultural services. According to Bouet & Laborde (2008), the ongoing negotiations had been necessitated under the last round of the multifaceted trade negotiations, the key stage of which had been the Uruguay Round (1986-1994). Nevertheless, certain nations, such as the US, wanted to extend their services and agricultural talks in order to facilitate trade-offs, and therefore, attain more trade liberalization.

The first ministerial conference organized by the WTO, which was convened in Singapore in 1996, formed permanent working groups that focused on four key issues that included transparency in government procurement, trade and investment, trade facilitation and trade and competition (Cho, 2009). Such issues were referred to as Singapore Issues. However, despite the issues being pushed at succeeding conferences by Japan, Korea and the European Union, most developing nations opposed it. Consequently, the developed nations insisted that any trade negotiation or ministerial must include such issues, since no consensus was attained.

The WTO envisioned beginning of the negotiations at the 1999 discussion in Seattle, the USA. The discussions were called Millennium Round (Kerremans, 2004). Nonetheless, due to the protests in Seattle, the negotiations did not take place as envisioned by the WTO. Since the planned Millennium Round failed, WTO decided to postpone the negotiations until 2001 Doha, Qatar Millennium Conference.

Prior to the 2001 Doha ministerial conference, the US witnessed the 9/11 attack. Consequently, some government authorities proposed a greater political unity and perceived trade negotiations as a way towards that end. As a result of the attack, the US economy weakened significantly (Kleimann & Guinan, 2011). Kleimann & Guinan (2011) argued that the government viewed the round multifaceted trade negotiations as savior to the economy significantly weakened by terrorism and recession. The WTO pointed out that lowest development in output was experienced in 2001. Martin & Messerlin (2007) pointed out that world trade declined during 2001 due to the economic recession and terrorism-associated activities. On November 2001, two months after the 9/11 attacks, the Doha Round negotiations on GATT commenced.

Issues Discussed in Doha Round Negotiations

Ambassadorial, governmental and economic difficulties were contained in the Doha Round discussions. Regardless of the special safeguard mechanism (SSM) being the stumbling block at the official conference in Geneva, other concerns about the subsidization and market access were also articulated (Panagariya, 2002). Among the vital subjects in the Doha Round were agriculture, non-agricultural market access (NAMA), services, intellectual property, trade environment, trade facilitation, special and differential treatment, e-commerce, country groupings and dispute settlement.

Agriculture

Talks on agriculture began in 2000, even before the origination of the Doha discussions. Such talks began under the devoted commission formed during the Uruguay Round (Martin & Messerlin, 2007). In relation to agriculture, the goal of the Doha Round was to lessen distortions in agricultural trade, which stemmed from high tariffs. Agricultural discussions also deliberated on the political and social sensitivity in the sector and needs of developing nations (Kleimann & Guinan, 2011). According to Bouet & Laborde (2008), Doha discussions aimed at improving the agricultural trade in three principal areas that included domestic access, market access and export.

Non-Agricultural Market Access

Some of the non-agricultural commodities include manufactured goods, industrial goods, fuels and minerals, textiles, jewelry, footwear, chemicals and fish products. Such products jointly represented about 90% of world exports (Martin & Messerlin, 2007). The objective of the Doha negotiation in terms of NAMA was to decrease or eradicate tariffs. Such objective included the elimination and decreasing of high tariffs, tariff peaks and tariff escalation. The three significant elements in the NAMA negotiation include tariff decreasing, flexibilities for developing nation and special treatment for vulnerable economies. Tariff cutback was based on the general formula, which was also based on coefficient.

Services

Some of the services taken into consideration in the DDA include telecommunication services, insurance, banking, distribution, transport and construction services, which help in the improvement of the economic performance (Bouet & Laborde, 2008). In terms of services, the main aim of the negotiation was to determine if General Agreement on Trade Services (GATS) compel governments to regulate and privatize all services in order to allow foreign competition from multinational corporations. According to Kleimann & Guinan (2011), there was no legal requirement on governments to privatize any service. The negotiation reached consensus that governments privatizing their domestic public services had the right to set the limits on foreign engagement, to set new rules of pursuing other alternative policy and to establish the standards for consumer safety and health.

Trade and Environment

The DDA also focused on greater market opening in environment services and goods. At the negotiation, members agreed on the link between the WTO rules and trade requirements set in multilateral environmental treaties and on the information exchange between such institutions (Cho, 2009). Regarding open market, Bouet & Laborde (2008) argued that the diminution or purging of trade barriers in this area would be advantageous to the environment by augmenting the ability of a country to secure high quality and environment-friendly goods. According to Martin & Messerlin (2007), an open market for environment commodities will empower the access to such forms of goods and reassure improved distribution of environmental commodities at reasonably low costs. Negotiations on open market were also argued to have a positive effect on climate change by increasing the accessibility to technologies and goods that can significantly contribute to the prevention of climate change (Cho, 2009). Some of the commodities regarded in the discussion for environmental commodities open market can be classified into pollution control, waste management, water and wastewater treatment and renewable energy.

Trade Facilitation

With regard to current issue, the aim of Doha Negotiation was to ease custom procedures and trade flows and to enable the movement, clearance and release of goods (Bouet & Laborde, 2008). Specifically, members at the DDA clarified and improved three components of GATT that related to fees, transit, formalities and transit linked to trade and transparency of regulation. Kerremans (2004) suggested that it would be an important addition to the entire negotiation because it would reduce corruption and bureaucracy in customs procedures. In addition, it would also accelerate trade and cheapen it by saving millions of dollars.

Special and Differential Treatment

The Doha negotiations also aimed at establishing special provisions that offer developing nations special entitlement and enable other members to treat them favorably (Bouet & Laborde, 2008). Some of the special treatment in the negotiations included longer period of the implementation agreements, measures of increasing trading opportunities for developing nations, support for assisting developing nation build their infrastructure and provisions linked to the least developed nations. The ministers in the Doha negotiations agreed that all differential and special treatments should be reviewed to strengthen them and make them accurate, operational and effective.

Dispute Settlement

The members stressed how well the dispute system served them as the basis of the entire multifaceted trading system (Bouet & Laborde, 2008). Nevertheless, they also identified various areas to be enhanced. The issues under discussion in relation to dispute settlement included panel composition, remand, third party entitlements, severely confidential information, jointly agreed solutions, timeframes, post-retaliation, interests of developing nations and effective compliances among others (Bouet & Laborde, 2008).

E-Commerce

The WTO defined e-commerce as the advertising, sale and distribution of services or products using electronic media. The discussion on e-commerce began in 1998 and received reinforcement at the DDA in 2001 (Bouet & Laborde, 2008). Other related issues that were investigated at the Doha Negotiations have also been apprised by services, goods and intellectual property councils. Nevertheless, appraisal activities have been slowed in the recent years.

Challenges and Difficulties

The first challenge facing the DDA is trade barriers and dishonoring of promises. Generally, developed nations have been very generous to African nations and other developing countries all over the world (Kerremans, 2004). However, their promises cannot often be considered at face value. In addition, developed countries frequently make aid pledges, which they never honor. According to Kerremans (2004), the fact that donor nations have the upper hand concerning aid, does not equip them with the right to give poor nations promises they never intend to keep.

The second challenge to the DDA is inconsistent subsidy policies from developed nation. For instance, the United States cotton subsidies symbolize the hypocrisy and inconsistency of developed nations’ policies (Bouet & Laborde, 2008). Whereas developed nations, including the US, have found it difficult to eliminate cotton subsidies, they agreed to back the production and development of cotton in African nations, which have suffered the most due to such subsidies. Cho (2009) argued that the help offered by developed nations and multifaceted agencies can positively affect West African nations. Nevertheless, unlike financial assistance that might not even reach rural areas, the elimination of subsidies might positively affect producer prices for African farmers.

The third challenge facing the Doha negotiation is the likelihood of the election in developed nation delaying the negotiations. It is usually until a new administration is established. According to Bouet & Laborde (2008), the new government typically appoints new trade representatives, which results in the possibility of delays in the negotiations. G20 replaced G8 as the Premier Global Economic Forum in 2009. It implied that the likelihood of an election, as a result of the increased number of countries with G20 status, is likely to delay negotiations. In addition, Panagariya (2002) also pointed out that G20 appears better poised to deal with emergencies, rather than long-term negotiations, the outcomes of which would not have an immediate recognizable impact.

Decisions Made

Regarding market access, members of the DDA decided that subtle agricultural commodities would have cuts of about third or two-thirds of the normal cut, but with a quantity at lower quota. According to Panagariya (2002), special agricultural products would also have smaller cuts, while some of them might be completely exempted. In addition, the negotiation also concluded that cuts are made from lawfully bound rates. For instance, if a developing nation has a bound tariff of 100 percent but charges only 25 percent, then the bound tariff would be reduced by 42.7 percent (Cho, 2009). It implied no change in the 25 percent tariff charged, with possibility to double the tariff. With regard to domestic support, the negotiation concluded that support prices would be significantly reduced but not eradicated. In relation to export subsidies, the negotiations pointed out that they would be eradicated by 2013 (Cho, 2009).

With regard to NAMA, the members decided that coefficient would imply that the maximum tariff in developed countries would be less than 8%. Consequently, developed nations have bound tariffs at 3% averagely, and highest tariffs below 8% even on their sensitive commodities. According to Kleimann & Guinan (2011), flexibilities would enable developing nations to make comparative smaller tariffs for a certain portion of their sensitive sectors.  

Besides the open market for environmental goods and services, the decisions also focused on more coherence between environment regulations and trade (Kerremans, 2004). Members made several decisions that highlighted the significance of national coordination between environment and trade experts. Panagariya (2002) pointed out that the proposals also highlighted the value of national sharing of experiences in order to improve the jointly supportive connection between trade and environment authorities.

Several decisions have been made regarding trade facilitation. Some of them have been improved several times and almost ready to become parts of the draft agreement. Various international organizations, such as the World Customs Organizations and World Bank, took part in the negotiations as observers. According to Bouet & Laborde (2008), the World assists developing nations in the identification of their needs with the aim of offering technical help to modernize the administration of customs. Almost all nations are actively engaged in the negation because they are aware of the significance of trade facilitation regarding the increased trade worldwide. 

Various decisions were made by both least developed and developing nations. Most of such decisions were related to the African Group and the Least-Developed Countries (LDC) (Bouet & Laborde, 2008). The nations identified parts of the agreements and proposed new working methods in order to introduce special and differential treatment provisions for developing nation or to strengthen the current ones. They associate with most WTO agreements, such as the GATS, GATT and the agreement of Trade Related Aspects of Intellectual Property Rights (TRIPS) (Bouet & Laborde, 2008).

During the 2001 Doha negotiations, the members also decided on the development and improvement of the dispute settlement system. According to Cho (2009), the members agreed to clarify and enhance the dispute settlement system. The agreements were not formally part of the single undertaking. ROOO argued that it implied that they were not officially linked to the failure or success of other negotiations mandated by the declaration.

With regard to e-commerce, the members decided that the work program on e-commerce should encompass all issues linked to trade that arise from international electronic commerce, such as financial, economic and development needs of developing nations (Kerremans, 2004).

Success

The first success of the Doha Round is the emergence of united and strong grouping of developing nations in the WTO. According to Bouet & Laborde (2008), such grouping is largely represented by the G20 economic forum, though groupings such as G33, LDCs, G90 and Africa Group also have played a significant role in the new strength of the developing economies. Bouet & Laborde (2008) pointed out that the strength of the developing economies transformed the dynamics of the Doha Round and prevented the major superpowers from dominating the outcome as in the past. Developing nations played a significant role in the aspects.

The second success of the Doha Round is the concept of Overall Trade Distorting Support (OTDS). According to Martin & Messerlin (2007), the OTDS limited the trading distorting support. The concepts were developed and suggested by the G20 economic forum and were the foundations for the negotiations on the decrease of production ad trade distorting support. In the existing agreement on agriculture, the OTDS does not have an upper limit.

The third benefit of the Doha Round was the specific rules and disciplines regarding domestic support. According to Bouet & Laborde (2008), such rules prevented the concentration of support on respective products as dictated by the market conditions. One of the countries that have benefited from the product specific rules is South Africa.

The fourth success of the Round was the accommodation of developing nations’ policies, particularly in relation to the domestic supports. Some of the policies include the green box provisions for land reform in South Africa. Bouet & Laborde (2008) argued that the capability of supporting agricultural development would not be reduced. Nevertheless, respective members will be forced to obtain the relevant resources.  

Failures

Firstly, Doha Round failed to construct reconcilable agendas of development and mercantilism. Bouet & Laborde (2008) argued that global trade could play a crucial role in the decreasing of poverty and economic development. The WTO recognized the need for all nations to benefit from the increased opportunities and welfare gains generated by the multilateral trading system. Nevertheless, the original development aim of Doha Round decreased quickly. Certain observers from the developed nations strongly believed that the development label seemed to distance powerful stakeholders, who might have thought that the round was mere charity and, therefore, did not want to take part in it. Such observers argued that developed nations essentially perceived the Doha Round as commercial agreement in which they could lobby for the market opening in developing economies, such as India, China and Brazil (Bouet & Laborde, 2008).

The second failure stems from the sterile environment for trade talks. Combinations of adverse factors continue undermining the odds of a successful round. As noted by Kleimann & Guinan (2011), the recent political situations of key negotiating parties, including the European Union, India and the US, have not agreed on trading concession. It resulted in the general lack of political support for the issue. To worsen things, the Wall-Street-instigated financial crisis quickly spread worldwide and decreased international trade, brewing protectionist sentiments.

The moral failure of Doha Round is also highlighted by the developmentally unreliable outcome of the Uruguay Round. The concessions of developing economies under the Uruguay Round immediately materialized, whereas those of developed nations remained negotiated. According to Martin & Messerlin (2007), the Doha Round was a collective acknowledgement that the WTO system owed something to the developing nations. Consequently, if it failed to address the unfair legacy and it would leave a permanent mark of moral failure on the WTO.

Conclusion

Current study offered the brief history that led to the Doha Round and discussed main issues and points negotiated, decisions made and success and failures of the Round. Similar to other multilateral agreements, DDA had both positive and negative. Doha Round was established as a successor of Uruguay Round. Some of the issues considered by members during the negotiations included agriculture, non-agricultural market access (NAMA), services, intellectual property, trade environment, trade facilitation, special and differential treatment, e-commerce, country groupings and dispute settlement.

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