Sat, Jun 04, 2011 page9

• Life without the Doha Round could destroy hope for fair trade

  • By Jagdish Bhagwati
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  In a recent commentary, I drew on the Interim Report of the High-level Trade Experts Group, appointed by the governments of Britain, Germany, Indonesia and Turkey, which I co-chair, to explain why concluding the WTO’s 10-year-old Doha Round was important. The column was reprinted on a blog maintained by Consumer Unity and Trust Society International, the most important developing-country non-governmental oranization today, leading to an outpouring of reactions from trade experts. The faucet is still open, but the debate has already raised critiques that must be answered.

  Some critics rushed in to declare that Doha was dead — indeed, that they, being smart, had already said so years ago. Presumably, attempts at resurrecting it was pathetic and hopeless. However, if Doha was dead, one had to ask why the negotiators were still negotiating and why nearly all G20 leaders were still issuing endorsements of the talks each time they met.

  Others said that Doha was dead as negotiated or, in the words of former US trade representative Susan Schwab, writing in Foreign Affairs, the Doha talks were “doomed” and ready for burial.

  However, these critics thought that one could pick at the corpse and salvage “Plan B,” though what was proposed in its many variants — always some minor fraction of the negotiated package to date — should more accurately be called Plan Z.

  It sounded like a great idea: better something than nothing. However, in multifaceted talks that straddle several different sectors (for example, agriculture, manufactures and services) and diverse rules (such as anti-dumping and subsidies), countries have negotiated concessions with one another in various areas. Whatever balance of concessions has been achieved would unravel if we were to try to keep one set and let go of another.

  Indeed, as Stuart Harbinson, a former special adviser to WTO Director-General Pascal Lamy, has pointed out, the haggling over what should go into Plan B would be as animated and difficult as the haggling about how to complete the entire Doha package.

  Some of the critics are factually ill-informed. The Bhagwati-Sutherland Report amply documents that much has already been agreed upon in all the major areas. As Lamy has put it, nearly 80 percent of the curry is ready; we need only additional spices from the major players — India, the EU, the US, Brazil and China. These can be provided in politically palatable ways, which also means that the conclusion of Doha is within our reach, not beyond our grasp.

  However, why bother to continue trying? If Doha fails, some say, life will go on. That is true, of course, but that doesn’t make this view any less naive.

  If the Doha Round fails, trade liberalization would shift from the WTO to preferential-trade agreements (PTAs), which are already spreading like an epidemic. However, if PTAs were the only game in town, the implicit constraint on trade barriers against third countries provided by the WTO’s Article 24, which is weak but real, would disappear altogether.

  The WTO stands on two legs: non-discriminatory trade liberalization and uniform rule-making and enforcement. With the former eliminated, the most important institution of global free trade would be crippled.

  This would also affect the leg that survived, because the PTAs would increasingly take over the functions of rule-making as well. This already can be seen in PTAs whose rules on conventional issues such as anti-dumping are often discriminatory in favor of members.

  It is also reflected in the increasing number of non-trade-related provisions being inserted into the PTA treaties proposed by the US and EU, a result of self-serving lobbies that seek concessions by weaker trading partners, without which free trade supposedly would amount to “unfair trade.”

  These rules are then advertised as “avant garde,” implying that the PTAs are the “vanguard” of new rules.

  As a result, the willingness of WTO members to invoke the Dispute Settlement Mechanism, the pride of the WTO — and, indeed, of international governance — would also be sapped. Tribunals established within PTAs would take over the business, leading to the atrophy, and eventual irrelevance, of the mechanism.

  We can live without the Doha Round, but for many people it would not be much of a life. Now is no time for cynical complacency.

  Jagdish Bhagwati is a professor of economics and law at Columbia University and senior fellow in international economics at the Council on Foreign Relations. He is currently co-chair of the UN Conference on Trade and Development Panel of Eminent Persons on ‘Development-centered Globalization.’

  Copyright: Project Syndicate
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