The View from Europe
By David Jessop

Does the Doha Round have a future?

Will 2011 be the year that the languishing Doha development round finally moves forwards; or will it mark the point at which the members of the World Trade Organisation (WTO) quietly accept that negotiating a single global undertaking on trade liberalisation is unlikely in the foreseeable future? 

For almost a decade, multilateral trade negotiations have been underway in Geneva. Cast in the image of the Washington Consensus and developing countries subsequent reaction, they reflect the view prevailing as the world entered the twenty first century: that freer markets, equitably created, would cause economic growth and that a round should have at its core, trade mechanisms that support the development of poorer nations.

Today, such aspirations seem remote. What was agreed in 2001 as desirable has become blurred by doubts about the role of free markets and capitalism as a consequence of the near collapse of the global financial system in 2008. Moreover, new economic and strategic thinking has emerged as a result of the continuing rise of China, the relative decline of the US, and the inclusion in the G20 of once developing nations such as Brazil and India. Added to this there are new uncertainties surrounding the future role of Russia, rising food and energy prices, and growing political and economic tensions between the US and China. Taken together they are factors that are encouraging protectionism, making it harder than ever to achieve any multilateral agreement by consensus. 

Irrespective, the New Year will see at the WTO a fresh and perhaps final attempt to try to bring the round to a close in its present form. 

In mid-November the G20 group of leading economies met in Seoul and identified 2011 as a critical year as it provided a narrow window of opportunity for concluding a Doha accord given that 2012 will involve US presidential elections.

In December the WTO Director-General, Pascal Lamy, told the body’s members that they needed to ensure that their national representatives were mandated to negotiate during the course of this January. All members, he said, must move into real negotiating mode and be in a position to engage in substance on a without-prejudice basis, under the single undertaking.

As a consequence, on January 10 negotiating groups at the WTO will try to move forward negotiations on issues such as intellectual property rights, market access and trade and the environment. Then on January 17 they will address agricultural and non-agricultural market access (trade in goods), services, and dispute settlement. 

After that on January 26 there will be a small green room meeting of a representative cross-section of member delegations, then an informal meeting of the Trade Negotiations Committee will take place on February 2.

In between, in late January, leaders from the US, EU, Brazil, China and India plus key negotiators will meet in the margins of the World Economic Forum in Davos, Switzerland, to form a political view as to whether the talks can be progressed further. 

The overall objective that WTO members seek is for the chairs of the various negotiating groups to issue new texts at the end of March 2011; a process that will require every WTO member state to compromise on contentious issues and accommodate the needs of delegations from smaller nations,
if the process is to have any chance of success.

All of which is a big ask against a background of the wildly different political pressures that exist inside WTO member states. That is to say in nations virtually untouched by recession (China, Brazil and much of Latin America); nations only slowly recovering and undergoing periods of austerity (many of the nations of Europe); countries whose electorates sense the global economic and political balance of power is changing and are politically radicalising (the US); and small states, such as those in the Caribbean and Africa, that in private, for the most part, know that they will have to compete globally without external support, but do not yet have the critical economic mass that a viable economic integration process brings.

In reality any progress that is made will be decided in a small number of capitals. 

In this context, it is still far from clear whether the US has the political will to approach the negotiations constructively, or how far the US President can go in the face of a hostile House and Senate, with no fast track negotiating authority.  It is also uncertain whether for instance India - which was blamed for the failure of the last set of negotiations - will show any enthusiasm without there being agreement on the issues that concern it.  

For so long as the global balance of economic power is in flux it seems unlikely that there will be much political appetite for a multilateral agreement on market opening; that is to say until a round can be demonstrated to be of benefit to electorates in both nations or regions in relative economic decline and those in the ascendancy.

No one is talking publicly about giving up. However, the present sense of modest enthusiasm could rapidly fade and questions start to be asked about the credibility of the multilateral system if there is no movement this year.

All of which would appear to suggest that the prospect of an all embracing trade deal is some way away and that bilateral and bi-regional trade negotiations will now accelerate, leaving shorter term arrangements to be sewn together at a later date. It also implies that G20 nations will find ways to strengthen their domestic industries by resorting to new forms of subsidy and quasi-protectionist measures.

As for the Caribbean, round or no round, the urgent need remains the same: to complete the single market and economy, either on a regional or sub-regional basis, if nations of the region are ever to be able to sustain a viable agriculture or manufacturing sector.

David Jessop is the Director of the Caribbean Council and can be contacted at [log in to unmask]
Previous columns can be found at www.caribbean-council.org
January 1st, 2011