Why is the doha round important

Yet the irony is that greater democratization has caused the core negotiating function of the WTO to breakdown. Acting as leaders of the developing world, Brazil and India emerged as central players early in the Doha Round. They had a significant influence on the negotiating agenda and in shaping the substance and content of the draft Doha agreement. As a result, the prospective deal that emerged was widely considered a relatively good one for developing countries — it contained meaningful reductions in rich country agriculture subsidies and significant gains in market access across the negotiating areas, while its substantial special and differential treatment provisions meant comparatively little liberalization would be required of developing countries.

In , the WTO looked close to concluding the Doha Round, with most states generally satisfied with the deal on the table. At that point, however, it was the US that balked — and it did so specifically because of China. Concurrently, the US saw a significant decline in its share of global manufacturing Figure 2.

In this context, the draft Doha agreement on the table at the WTO in had by that point become politically untenable in the US. Which was again missed. End dates were missed again and again until when the agreement came to an impasse.

There was refusal of agreement regarding safeguard measures provided to developing countries. After this, the negotiations lay dormant for 7 years. A pact was signed in Nairobi that came at the criticism of global onlookers. While those involved in the negotiations had expressed annoyance at the longevity of the Rounds, onlookers were still quick to criticize the resolve that came in Nairobi. Many criticize that even after the talks in Nairobi ended with smiles in front of the cameras, it was in reality more of a failure than a success.

By , after 14 years of negotiations, the WTO was desperate for a positive outcome. In order to facilitate this, the organization focused on quick outcomes rather than any meaningful results. An LDC "early harvest" proposal for least developed countries LDCs which would have included such items as a deal on trade facilitation, duty-free-quota-free market access for LDCs, rules-of-origin proposals, movement on the cotton issue and a waiver to favor services for LDCs.

A "political guidance" document issued by the General Council prior to the Ministerial noted that "significantly different perspectives" remain over certain aspects of the single undertaking, making it "unlikely that all the elements of the Doha Development Round could be concluded simultaneously in the near future. If negotiators are not able to achieve a breakthrough, there may be several consequences for multilateral trade liberalization.

First, the negotiation of bilateral and regional free trade agreements may accelerate. Some trade analysts view the increasing web of these agreements with suspicion.

They assert that the emphasis on regional and bilateral negotiations undermines the WTO and increases the risk of trade diversion. Trade diversion occurs when the existence of lower tariffs under a trade agreement cause trade to be diverted away from a more efficient producer outside the trading bloc to a producer inside the bloc.

What also results from the plethora of negotiated FTAs, according to one economist, "a 'spaghetti bowl' of multiple tariffs depending on the source of a product and, in turn, a flood of rules of origin to determine which source is to be assigned to that product. A second consequence may be the increased use of the WTO's dispute settlement function.

If a political solution to disagreements among members cannot be agreed through negotiations, some practices like agricultural subsidies may be challenged in dispute settlement. An increased reliance on dispute settlement may, in turn, put stress on the WTO as an institution if the decisions rendered are not implemented or are not perceived as being fairly decided. A third consequence of a prolonged impasse may be the withdrawal of offers already on the table or of agreements already made at the negotiations.

Such development-oriented proposals such as aid-for-trade, duty-free and quota-free access for least developed countries, or trade facilitation may languish due to the stalemate in the negotiations. The EU commitment to phase out export subsidies by is contingent on a broader agreement and may not be implemented without one. Further, the global economic crisis may encourage governments to implement protectionist measures that may be entirely WTO-consistent—such as a country raising its applied rate tariffs to the bound rate—yet undermines the purpose of the negotiations to liberalize trade.

In addition, some have questioned the continued relevancy of the Doha negotiations in light of other pressing issues implicating the trade regime such as the global financial crisis, trade implications of greenhouse gas mitigation strategies, perceived exchange-rate manipulation, and widely volatile commodity prices: none of which are being addressed in the current negotiations. As two noted economists wrote, "the Doha process has been Nero-like in dwelling on issues of relatively minor consequence while the burning issues of the day are not even on the agenda.

Possible consideration of TPA legislation by the th Congress may provide a venue for a debate on the status of the Round and the prospects for reaching an agreement consistent with principles set forth by Congress in granting TPA. Trade economists argue that the reduction of trade barriers allows a more efficient exchange of products among countries and encourages economic growth. Multilateral negotiations offer the greatest potential benefits by obliging countries throughout the world to reduce barriers to trade.

The gains to the United States and to the world from multilateral trade agreements have been calculated in the billions of dollars. Multilateral negotiations are especially important to developing countries that might otherwise be left out of a regional or bilateral trade agreement. Developing country blocs can improve trade and economic growth among its members, but the larger share of benefits is from the trade agreements that open the markets of the world. Multilateral trade negotiations are also an exercise in international cooperation and encourage economic interdependence, which offers political benefits as well.

When a country opens its markets, however, increased imports might cause economic dislocations at the local or regional level. Communities might lose factories. Workers might lose their jobs. For those who experience such losses, multilateral trade agreements do not improve their economic well-being.

Also, if a country takes an action that is not in compliance with an agreement to which it is a party, it might face some form of WTO-sanctioned retaliation. Further, some oppose WTO rules that restrict how a country is permitted to respond to imports of an overseas product that employs an undesirable production method, for example a process that might use limited resources or impose unfair working conditions. Thus, while multilateral trade agreements have been found to offer broad economic benefits, they are opposed for a variety of reasons as well.

The negotiations are being held in five working groups and in other, existing bodies in the WTO. Selected topics under negotiation are discussed below in five groups: market access, development issues, WTO rules, trade facilitation, and other issues. The Uruguay Round Agreement on Agriculture called for continued negotiations toward "the long-term objective of substantial progressive reductions in support and protection.

Agriculture has become the linchpin in the Doha Development Agenda. The Doha Ministerial Declaration included language on all of these three pillars of agricultural support. It stated that the members committed to "comprehensive negotiations aimed at substantial improvements in market access; reductions of, with a view to phasing out, all forms of export subsidies; and substantial reductions in trade distorting support.

A major issue for the EU was whether or not to approve separation "decoupling" of payments to farmers based on production. Those types of payments are among the most trade-distorting "amber box". On June 26, , EU agriculture ministers approved a reform package that included partial decoupling for certain products.

The action was seen by many as a positive step for advancing the trade negotiations. The EU reform largely addressed one of the three pillars of agricultural reform—domestic support—but did little in a second pillar—market access. In the WTO negotiations on market access, the United States and the Cairns Group have supported a leveling, or harmonizing, of tariff peaks, or high rates. In comparison, the EU and Japan want flexibility to cut some items less than others to arrive at an average total rate cut.

Another difficulty is "geographical indications," or the protection of product names that reflect the original location of the product. An example is the use of "Bordeaux wine" for wines from the Bordeaux region only.

Europeans, joined by India and some other countries, want a mandatory registry of geographical indications that would prevent other countries from using the names. The United States and other countries refuse to negotiate a mandatory list, but will accept a voluntary list with no enforcement power.

While the EU has said that it will not accept an agriculture agreement without a geographical registry, it reportedly has lowered expectations to achieving a registry for wines and spirits. Developing countries view reform in agricultural trade as one of their most important goals. They argue that their own producers cannot compete against the surplus agricultural goods that the developed countries, principally the EU and the United States, are selling on the world market at low, subsidized prices.

Some African countries also are calling for an end to cotton subsidies, claiming that such subsidies are destroying markets for the smaller African producers. The July Framework Agreement provided a basis for which to continue the agriculture talks. On domestic support, subsidies are to be reduced by means of a "tiered" or "banded" approach applied to achieve "harmonization" in the levels of support. Tariff reduction will utilize a tiered formula with a harmonization component, but with some exceptions for "import sensitive products.

While there was no breakthrough at the December Hong Kong Ministerial, members agreed to eliminate export subsidies, and "export measures with equivalent effect" by , a date favored by the European Union EU. Members agreed to cut domestic support programs with a three band methodology. As the largest user of domestic agricultural subsidies, the EU was placed in the highest band. The United States and Japan were placed in the second band and lesser subsidizing countries were placed in the third band.

However, the actual percentage cuts that these bands represent remained subject to negotiation. Members also renewed a commitment to achieve a tariff cutting formula by April 30, This deadline was not met. In the parallel negotiations on cotton, members agreed to eliminate export subsidies for cotton and to provide duty-free and quota-free access for LDC cotton producers by year-end Members also agreed to reduce domestic support for cotton in a more ambitious manner than for other agricultural commodities as an "objective" in the ongoing agricultural negotiations.

Talks to reach modalities proved unsuccessful at the July 23, , meeting of the G-6 countries in Geneva and the negotiations were suspended thereafter. Sources of the stalemate in the Geneva talks included U. While each of these flexibilities was incorporated into the July Framework Agreement as negotiating modalities that would allow countries to exempt certain products from the banded tariff formula, the United States contends that the scope envisioned by some countries for these modalities would unacceptably diminish the overall market access gains from the agreement.

The United States insisted that it will not improve its offer on domestic subsidy reduction unless the EU improves considerably its market access offer and the G countries show a willingness to open their markets not only to agricultural products but to industrial products and services as well. These dynamics continued in discussions.

In July , WTO Agriculture committee chairman Crawford Falconer submitted a draft modality paper to address the divergent negotiating positions of the parties. As a result of committee-based negotiations in Geneva, revisions to this draft were made in February, May and July , the latter of which became the basis for negotiations at the WTO summit in July , Subsequent technical level negotiations and refinements resulted in a December draft from which the following headline figures are derived.

Developing countries would be able to cut two-thirds of the amount of cuts agreed by developed countries from bands with higher thresholds in equal installments over 10 years. If the average falls above that percentage, then the cut made by the formula can be reduced. Developing countries would be allowed to claim 5. The draft reaffirmed the Hong Kong Ministerial commitment to eliminate export subsidies by with half the reductions implemented by The document also seeks disciplines on export credits, guarantees, insurance programs, and state trading enterprises.

The special safeguard mechanism SSM has been revised in the December draft. Disagreements over the particulars of the SSM, a proposal to allow developing countries to raise duties beyond bound levels in instances of import surges or price depressions, contributed to the failure of the July summit.

The controversy revolved around the trigger level and the resulting level of tariff increase. This iteration represents a compromise between the higher surge trigger sought by the United States and a greater increase in the amount of the safeguard sought by India and China.

The United States has also sought to cap the safeguard duties so that their imposition would not breach the existing pre-Doha bound rates, however the latest draft provides that the bound rate could be breached for up to 2. Along with agriculture, services were a part of the "built-in agenda" of the Uruguay Round. Those negotiations began in early Negotiating guidelines and procedures were established by March Under the request-offer approach being used, countries first request changes in other countries' practices, other countries then respond by making offers of changes, and finally the countries negotiate bilaterally on a final agreement.

The Doha Ministerial Declaration recognized the work already undertaken and reaffirmed the March guidelines as the basis for continuing the negotiations. It directed participants to submit initial requests for specific commitments by June 30, , and initial offers by March 31, The services talks are going slowly. Only 28 revised offers were tendered by November , although the July Framework stipulated a March 31, , deadline.

All members were to have submitted their initial offers by March 31, Many have decried the poor quality of offers, many of which only bind existing practices, rather than offer new concessions and excluded some sectors entirely. At Hong Kong, members committed to submit a second round of revised offers by July 31, , and to submit a final schedule of commitments by October 31, In order to expedite the negotiating process, members also agreed to employ plurilateral requests to other members covering specific sectors and modes of supply to be completed by February 28, In response to this deadline, 21 plurilateral requests concerning 17 sectors and 4 modes of supply were submitted, and 4 rounds of discussions have been held concerning them.

In addition, 6 rounds of bilateral request-offer meetings have been held among the participants since the end of To some members, including the United States, the talks have not yielded adequate offers of improved market access. Consequently, various methods have been advocated to break the stalemate in negotiations, from calls to prepare a services modalities text to the convening of a signaling conference. Yet little emerged from this conference. In March , the chair of the negotiating committee summarized the state of the negotiations,.

Gaps in sectoral coverage and levels of commitment need to be filled in order for Members to be satisfied with the outcome of the services negotiations. In filling these gaps, rule-making in the services negotiations will need to move in tandem with market access. Members can make progress in market access in services once the political will has been summoned to resolve problems in other areas of the Round. One area of controversy is so-called "Mode IV" services.

Mode IV relates to the temporary movement of business persons to another country in order to perform a service on-site. Developing countries want easier movement of their nationals under Mode IV. They claim that the services negotiations have centered on the establishment of businesses in other countries, which has been a focus of developed countries, while there has been no negotiation on Mode IV, which would help them. Developed countries, especially the United States, have opposed discussions on Mode IV services trade.

In this regard, bilateral and regional trade deals have proliferated, but their tariff reductions and services liberalization are preferential i.

While such deals may have political value, their economic benefits are limited. It is up to the governments, then, where they want to drive it. But the reality is, the WTO cannot liberalize trade unless governments want to do so. Unfortunately, every government seems to have a reason why its own agriculture subsidies or other sacrosanct protectionism should be excluded from disciplines.

The focus is always on addressing the kinds of protectionism that others engage in. With that attitude, though, real trade liberalization becomes almost impossible to achieve.

Losing the WTO as an effective forum for trade liberalization would be a setback for free trade. Despite its existing successes, there is much more the WTO could achieve, as trade liberalization is most beneficial when carried out multilaterally. It is therefore in the interests of all governments to make the WTO work by committing to trade liberalization in relation to their own protectionism.

For example, Brazil has been accused of subsidizing its sugar industry. Most of the remaining tariff lines will be completely phased out in four stages over three years. This means that by almost all imports of the relevant products will be duty free.

See generally, Office of the U. Live Now. Notes 1. Download the Free Trade Bulletin. About the Author. Page Contents.