Saving Doha and the multilateral trading system

It is tempting to write off the Doha trade round as dead, and to liken the hapless efforts of negotiators in Geneva to salvage something from it as akin to the ludicrous attempts by the Monty Python team to knock life into a dead parrot in their famous TV sketch. The argument goes, that you can prod and shake dead parrots as much as you like: all you will achieve is proof that the parrot is irrefutably lifeless, cadaverous, dead.

But there is another way of looking at this. First, the Doha Round matters – perhaps not so much now as ten years ago, but certainly more than its detractors give it credit for.  And the “early harvest” package of development measures proposed recently by the WTO Director-General, Pascal Lamy, matters too.

What is clear is that some of the less contentious elements of the Doha talks—which with real political will could be agreed this year—have the potential to deliver real and immediate gains for the global economy. As an example, the US-based Peterson Institute estimates that a trade facilitation package (comprising new rules to streamline customs and business regulation) could boost world GDP by up to $100bn annually. Such a deal, whilst intrinsically development-orientated, would have huge value for both the EU and US. It is not an opportunity we can afford to miss—especially now.

A mini-agreement along these lines would leave the remainder of the Doha negotiations on ice, with electoral cycles in the US and elsewhere unlikely to allow a full conclusion before 2013. This is, to be sure, no ideal situation. Worse still, recent reports on these pages have suggested that even a narrow standalone agreement may ultimately be beyond reach this year. But without the political will needed to strike some kind of deal in 2011, any judgement on the strategy to keep the Round alive has to be set against the alternative of a possible collapsing of the talks as a whole.

Abandoning the Doha Round would be to waste the decade of talks that has produced the most far-ranging package of trade liberalization ever put within reach. It would be to miss the opportunity to overhaul global farm trade, and provide new access in almost all the world’s largest markets. Indeed, there is certainly no guarantee that the negotiations could simply be rebooted and concluded in the future. Far better, therefore, to seize the sizeable gains on offer this year and continue to build towards a broad agreement under the existing Doha mandate. To paraphrase Winston Churchill: when going through hell, keep going.

But keeping going shouldn’t preclude the option of trying something different too. After ten years of Doha, it is certainly not heretical to suggest that the WTO may benefit from a broadening of its agenda. For too long commentators have talked in binary terms about the shape of WTO-led liberalization: that is, Doha or the alternative. In reality, the key is to develop a complimentary agenda to restore fully the credibility and centrality of the WTO as a forum for establishing the rules governing world trade. Three simple steps would go a long way to achieving this.

One, the WTO urgently needs to be given a new and enhanced mandate to monitor compliance with existing multilateral trade commitments. The 1995 Uruguay Round resulted in an impressive opening of markets in many sectors, but there remain countries which have not yet fully implemented their commitments. This problem has been compounded by a well-documented re-emergence of protectionist sentiment in some markets since the financial crisis of 2009. In this context, it would be appropriate for the WTO to channel greater resource into a new monitoring mechanism covering all 153 member countries.

Two. Plurilateral negotiations—that is, negotiations among coalitions of the wiling—should be initiated on a new generation of trade issues outside the existing Doha mandate. These could include prospective agreements on investment protection, e-commerce and transparency. This is certainly not a new concept in itself—indeed it is one which has been developed cogently in recent weeks by the former US Trade Representative, Susan Schwab. The problem is that the plurilateral agenda is too often framed as an alternative to the Doha Round; in reality however it should be a useful and necessary complement.

Three, the WTO needs to find new mechanisms to work with business on the development of new trade rules. It widely recognised that the dynamics of international trade have undergone a significant transformation over the past decade. Multi-directional movements of goods, ideas and technologies have created real challenges to our understanding of world trade and the rules governing it. Engaging with business—either directly or through intermediary bodies—seems to offer the best means of ensuring that future trade agreements fully reflect the realities and needs of today’s most dynamic international commerce.

None of this will be easy, of course. But agreeing an early-harvest of measures under the Doha Round this December should free up spare capacity for the WTO to make these additional tracks a manageable proposition. If this can be achieved there may be life in the WTO just yet.

Stephen Pattison, Director and CEO, ICC UK