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The Doha Trade Round is Worth Fighting For

Otaviano Canuto's picture

November marks the eighth anniversary of the Doha Development Agenda– the first multilateral trade negotiation under the auspices of the World Trade Organization.  But what started as a real opportunity to help poor countries prosper through trade, for some it has now become a lost cause. But Doha doesn’t have to be a metaphor for failure. We can still save it and make it work. After all, if we can’t fix Doha, how can we hope to address much greater challenges that confront us, such as climate change?

For many, lowering subsidies and tariffs appears to be a tough sell for their domestic constituencies. They say a Doha deal is not worth the costs because it will not generate enough market access opportunities.  But as we gear up for the upcoming World Trade Organization’s (WTO) ministerial meeting in Geneva on Nov. 30, we have to stress an unequivocal fact: the conclusion of the Doha round is worth fighting for. It will give the world economy a boost when it is most needed, reduce the scope for governments to resort to protectionism, and bolster the prospects for cooperation in other critical areas like the environment.

In terms of improved market access, the modalities under consideration – even taking into account likely exceptions for sensitive products – will generate increased trade that in turn could produce an additional US$160 billion in real global income, as new World Bank research shows.  Are we really in such good economic shape that we can do without the extra stimulus?

For some, the proposals now on the table do too little to reduce average levels of protection. The average farm tariffs that exporters face would fall to 12 per cent (from 14.5 percent), and the tariffs on exports of manufactures to less than 2.5 per cent (from about 3 percent). But this is misleading because the small average cuts hide large reductions in peak tariffs. For millions of workers and farmers in poor countries, tariff and subsidy cuts will make a big difference. A Doha deal would mean tariff declines from 32 to 6 percent for the tennis shoes manufactured in Bangladesh and exported to the U.S. And removing all cotton subsidies and tariffs would increase real incomes in Sub-Saharan Africa by US$150 million per year.

Beyond the additional market access gains, Doha will restrain governments from resorting to protectionism. President Barack Obama in the U.S. and his counterparts in the EU all face pressure to protect their domestic interests. But in a world with new emerging powers like China or Brazil, it’s no longer possible for the industrial nations to have the only and last word. Especially, when the interests of very poor countries not represented in the G8 or G20 are at stake.

On the environmental front, a conclusion of Doha will also help. Agricultural support programs have produced a lot of pollution and devastation. Over 75 percent of global fish stocks are over-exploited, with a resulting annual loss for the world economy of  US$50 billion. A Doha deal could phase out fishery subsidies, benefiting many small island states and poor coastal regions in developing countries that rely on fisheries for livelihood and food security.  Similarly, removing policies that restrain trade in efficient environmental goods and services could foster a greener quality of growth.

Last but not least, there will be greater economic opportunities for very poor countries as a result of enhanced market access, the implementation of the “duty free and quota free” proposal, and an agreement to take concrete actions to facilitate trade, such as lowering red tape type border crossing costs, and significant reductions in tariff escalation (tariff peaks).
 
Standing in the way of success are differences over the design of certain agricultural safeguards, and whether there should be a movement to free or freer trade in specific sectors, among other things. These issues should not hold up a Doha agreement. There is already a significant deal on the table. At a time that the global economy struggles to leave the recession behind, we cannot afford to say no to this opportunity to boost growth, jobs and incomes.

Comments

Submitted by Christine Zarzicki on
Otaviano, I certainly agree that the Doha Trade Round is worth fighting for. Its success has multiple positive implications that can change the global economy, as we know it. Not only will reducing tariffs and subsidies allow producers in developing countries (both in agriculture and manufactures) to compete, it will ultimately lead to economic growth in these countries and thereby reducing poverty. The higher the per capita income per person, the more that nation can consume and thus their activity in the global market will surely increase. This in effect will stimulate the global economy. Once developed nations allow developing countries to compete in the international arena (primarily by addressing their own protectionist tendencies), global economic stability will occur. The prospect of economic growth for developing nations not only means security for their nation, it also means that internationally there will be less spent on aid and peacekeeping. If the developed nations of the world do not want to see this type of transformation, than it is clear that the priorities of these nations are most likely not in the best interest of the Third World.

Submitted by Otaviano Canuto on
You've got it all right, Christine. If not for any other reason, trade opening by developed countries would ultimately serve their own self-interest

Submitted by advocate of Doha on
As another advocate of the Doha Trade Round, I enjoyed reading the article. We should think about who should really be the beneficiary of the DDA and how much benefit this discussion could incur as mentioned here...

Submitted by Otaviano Canuto on
This is one of those cases in which a simple exercise of pointing out benefits and costs reveals a lot...

Submitted by Denise on
Infortunatelly, my dear friend, USA said no for an agreement. This message was clearly sent by mr Kirk to his colleagues in Geneva yesterday. It was expected by minister Amorim, as I could realize some days ago. Your article is a perfect warn for the WTO partners. Specially, for the US administration, who should be enough honest at the present moment to accept his responsability for this failure. Don´t you agree?

Submitted by Anonymous on
"Another related article that came out today: http://www.google.com/hostednews/afp/article/ALeqM5ihEfX9Svbq5M3_qSLG0se9ulGuCQ"

Submitted by Otaviano Canuto on
I enjoyed reading the article. Thanks, Anonymous

Submitted by Otaviano Canuto on
Don't give up yet, Denise. This is a marathon and ultimately all major stakeholders - including the USA - may circumvent domestic resistance and other domestic political urgent demands. We should keep on hammering on the benefits of moving ahead with the DDA process.

Submitted by ELLY POSEN on
We couldn't agree more. Don't give up! It's people like you that make change possible. If everyone educates one person and soforth, change will come. thanks for you post!

Submitted by ROBERT K GEORGE on
I REAL APPRICIATE THE ARTICLE,ITS VERY NICE BUT WE IN DEVELOPING COUNTRY,IT IS A DREAM ESPECIALLY AFRICAN COUNTRIES BECAUSE THERE IS NO TRANSPARENT AND NO GOOD GOVERNANCE.

Submitted by Pose on
I had a very clever teacher on macro-economics at the University. He said to me, sun.. if we honestly wanted to make the world a greener and happier place for the human race, we would have done that 100 years ago. Globalization is the keyword.. but according to me (and to him) 2 things are hiding. 1. Global control of human kind 2. Making the world a better place I think its the first one.

Submitted by MOHAMMED ADIL on
time has changed and countries like US should recognise that they are not the only players,all countries especially the poorcountries should be given importance in the global trade. Iam impressed with your article.

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