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A VoxEU.org eBook Next Steps: Getting Past the Doha Round Crisis Edited by Richard Baldwin and Simon Evenett

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A VoxEUorg eBook

Next Steps Getting Past the Doha Round Crisis

Edited by Richard Baldwin and Simon Evenett

Next Steps Getting Past the Doha Round Crisis

A VoxEUorg eBook

Centre for Economic Policy Research (CEPR)

Centre for Economic Policy Research3rd Floor77 Bastwick StreetLondonEC1V 3PZUK

Tel +44 (0) 20 7183 8801Fax +44 (0)20 7183 8820Email ceprceprorgWeb wwwceprorg

copy Centre for Economic Policy Research 2011

ISBN (eBook) 978-1-907142-37-6

Next Steps Getting Past the Doha Round Crisis

A VoxEUorg eBook

Edited by Richard Baldwin and Simon Evenett

Centre for Economic Policy Research (CEPR)

The Centre for Economic Policy Research is a network of over 700 Research Fellows and Affiliates based primarily in European Universities The Centre coordinates the re-search activities of its Fellows and Affiliates and communicates the results to the public and private sectors CEPR is an entrepreneur developing research initiatives with the producers consumers and sponsors of research Established in 1983 CEPR is a Euro-pean economics research organization with uniquely wide-ranging scope and activities

The Centre is pluralist and non-partisan bringing economic research to bear on the analysis of medium- and long-run policy questions CEPR research may include views on policy but the Executive Committee of the Centre does not give prior review to its publications and the Centre takes no institutional policy positions The opinions ex-pressed in this report are those of the authors and not those of the Centre for Economic Policy Research

CEPR is a registered charity (No 287287) and a company limited by guarantee and registered in England (No 1727026)

Chair of the Board Guillermo de la DehesaPresident Richard PortesChief Executive Officer S tephen YeoResearch Director Mathias DewatripontPolicy Director Richard Baldwin

Contents

Foreword vii

The Doha dilemma An introduction to the issues 9 and possible solutions Richard Baldwin and Simon Evenett

There is no Plan B ndash only Plan A Towards completing 19 Doha Mari Pangestu

Acknowledge Doharsquos demise and move on to save 27 the WTO Susan Schwab

Next Steps Getting past the Doha Round crisis 33Ujal Singh Bhatia

Next Steps Is an early harvest still possible 41Zhenyu Sun

Getting past the Doha Round crisis Moving forward 47 in the WTO John Weekes

The good ship Doha Salvage-and-abandon-ship or 51 repair-and-wait Stuart Harbinson

Keeping the WTO on track A Doha down payment 61 plus more Richard Baldwin and Simon Evenett

vii

Doha is deadlocked ndash the members of the WTO are unable to give up and unable to go

forward

In this eBook the contributors propose several deacutemarche that consider various

combinations of 4 initiatives that offer a way out of the current impasse

bull Deliver a down payment

bull Ditch the current process of negotiating in ldquosilosrdquo ndash it doesnrsquot work

bull Develop a new and forward-looking agenda for the WTO

bull Demonstrate some leadership

The down payment is straightforward All the contributors suggest a number of area

where agreement is already close and which could be wrapped up in time for the

December Ministerial After a decade of negotiations it hardly seems right to call this

ldquoan early harvestrdquo but a set of measures that focus on the needs of the least developed

nations seems right for a ldquoDevelopment Roundrdquo

The current approach to negotiations is clearly not working and offers no way forward

Why not try new approaches A number of contributors suggest abandoning the current

ldquosilo approachrdquo The December Ministerial they argue should adopt a new approach

abandoning modalities and emphasising horizontal negotiations One contributor ex-

USTR Susan Schwab suggests abandoning the Round altogether and starting from

scratch

While much of the energy in the Doha negotiations has been expended on traditional

issues such as agriculture and market access for goods and services there is a long list

of new issues that will only grow in importance over time Several contributors advocate

a programme of analysis and discussion that will help members better understand issues

such as competition policy climate change and government procurement

Foreword

VOX Research-based policy analysis and commentary from leading economists

viii

The current Doha deadlock is largely due to the absence of leadership from the major

players Expecting leadership now from any of the Big 5 is unrealistic Baldwin and

Evenett drawing on their discussions with a wide-range of WTO delegations suggest

that one demarche that could help unblock the impasse is a bold move by the middle-

power WTO members They could seize the initiative by adopting a set of unilateral

measures to offer to liberalise trade The new commercial opportunities this would

provide would remind exporters what they have to gain from the conclusion of the

Round

Richard Baldwin and Simon Evenett have acted with their usual speed and efficiency

assembling at short notice a distinguished group of authors whose essays identify

solutions to Doha Deadlock And as always they have been very ably supported by

Team Vox in particular by Bob Denham Samantha Reid Anil Shamdasani and Pierre-

Louis Veacutezina We are grateful to them all

Stephen YeoChief Executive OfficerMay 2011

9

World leaders must make important decisions concerning the future of the Doha Round

for the 31 May 2011 meeting of the WTO membership This essay introduces the issues

and summarises contributorsrsquo suggestions for ldquoNext Stepsrdquo It argues that the best

outcome would be for WTO members to agree to work towards a small package of

deliverables for December 2011 and push the rest of the agenda items into the future

ndash perhaps with specific instructions for changing the basic negotiating protocols used

to date

Global leaders face a dilemma over the WTO multilateral trade negotiations known

as the Doha Round The talks are dead in the water both movement forwards and

movement backwards seem blocked How did we get here Current and former trade

policy officials typically emphasise two points

bull Ten years of talks have made some progress but it now must be taken as a hard fact

that the Doha Round in its entirety will not finish this year

bull No government is willing to announce publicly that they want to abandon the Round

The sources of unwillingness vary Some argue that abandoning the Round would throw

away genuine progress such as the ultimate phase-out of agricultural export subsidies

Others wish to maintain attention focused on particular problems in the trade system

Yet others simply fear that theyrsquoll be blamed for delivering the bad news

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

The Doha dilemma An introduction to the issues and possible solutions

99

VOX Research-based policy analysis and commentary from leading economists

10

Next Steps Saving the WTO from the Doha Round

World leaders must now decide how to tackle this dilemma at the WTOrsquos next key

meeting on 31 May 2011 Logically there are only 3 roads ahead

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock

in some of the progress to date

This eBook on ldquoNext Steps Getting Past the Doha Round Crisisrdquo gathers the thinking

of a handful of the worldrsquos most experienced Doha experts namely former US Trade

Representative Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia

Chinarsquos former WTO Ambassador Zenyu Sun Canadarsquos former WTO Ambassador

John Weekes and Hong Kongrsquos former WTO Ambassador Stuart Harbinson ndash all of

whom spent years directly engaged in Doha negotiations

Road 1 The pitfalls of declaring failure

Susan Schwab argues strongly that declaring Doharsquos demise is essential to allowing

the WTO to move on John Weekes likewise argues ldquoIt would be damaging to invest

more resources and credibility in something that canrsquot be donerdquo Ujal Singh Bhatia by

contrast argues that Road 1 could lead to unpredictable results Zenyu Sun notes that

declaring the Doha Round to be dead would be easy but then what ldquoWould such an

announcement inspire people to inject more energy into the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt itrdquo he writes

These judgements on the medium- to long-term ramifications differ but the short-

term fallout is clear Declaring the Round ldquodeadrdquo would invite an immediate storm of

recrimination among WTO members A great deal of hope and effort has been invested

in the Round by nations across the globe Most WTO members are still looking for the

Next Steps Getting Past the Doha Round Crisis

11

Doha Round to effect critical adjustments to the world trading system ndash especially a

rebalancing of the level of openness to agricultural versus industrial trade (Nassar and

Perez 2011) If one or more of the Big-5 reject a deal that most members still think is

doable the blame game could get very nasty

There is a great danger that this level of ill-will could undermine multilateral trade

cooperation for years It could lock in the growing perception that the WTO is not a

place where serious negotiations can be conducted The US in particular is likely to

be subject to severe criticism in a way that might have the unintended consequence of

convincing US Congressional and private sector groups that the WTO is not a forum

where America can do business Such an outcome would serve no onersquos interests

Despite the clear logic of Schwabrsquos and Weekesrsquo arguments the pitfalls highlighted

by Bhatia and Sun find resonance with most world leaders This is why almost every

WTO member opposes Road 1 As a consequence it is extremely unlikely that WTO

members will decide to declare Doha dead any time soon

Road 2 The pitfalls of suspension

Suspension is certainly the most politically expedient choice for the Big-5 and it

is superficially attractive The logic is well expressed in the old story about a man

ndash condemned to death by his Emperor ndash who obtains a yearrsquos stay of execution by

promising to teach the Emperorrsquos horse to sing ldquoMuch could happen in a yearrdquo the man

reasons ldquoThe Emperor could die I could die the horse could singrdquo

But the usual merits of muddling through donrsquot apply to Doha Suspensions have been

tried so often that everyone would know that suspension is just a circuitous means of

killing the Round Road 2 is just the long route to Road 1 All the pitfalls of Road 1

therefore also apply to Road 2

But suspension would be even worse in many ways The world of trade is changing more

rapidly than negotiating positions so each delay seems to make a compromise based on

VOX Research-based policy analysis and commentary from leading economists

12

the existing elements even less likely Worse still a suspension would strengthen and

spread the belief that the WTO is not an appropriate venue for multilateral negotiations

As Ujal Singh Bhatia writes ldquothe Round will continue to hang like an albatross around

the WTOrsquos neck preventing it from addressing new challenges to the global trading

systemrdquo This would be particular worrisome since the world economy is moving into a

phase of great stress It is facing new challenges that will require multilateral solutions

ndash issues like food security natural-resource export restrictions and trade in goods

services and technology that are essential to climate-change adaption and mitigation

Road 3 A small package followed by a big package

The third road seems the most likely way to move past the Doha dilemma of not being

able to move forwards or backwards on the broad agenda The idea here is that the

agenda would be sorted into ldquodo-ablerdquo and ldquonot yet do-ablerdquo piles Nations would move

forward on a small package of do-ables for December 2011 while agreeing to discuss

the bigger issues later under revised ground rules that would be more likely to permit

the trade-offs necessary to make the big package acceptable to all members

As Stuart Harbinson puts it Doha is like a ship run aground a small package of

deliverables for December 2011 would act as a ldquopatchrdquo to keep the ldquogood ship Dohardquo

afloat until the high tide comes in and lifts the ship off the rocks ldquoIn this analogy the

lsquohigh tidersquo would be a change in the global economic and political seascape enabling

the major trading economies to settle their differences and bring the ship safely into

harbourrdquo he writes

Choices to make on the small package

All five experienced trade negotiators contributing to this eBook ndash and most of the WTO

delegations with whom we spoke ndash believe that it is worth trying to lock in agreement

on a small number of areas by the end of 2011 There are two critical issues to decide

Next Steps Getting Past the Doha Round Crisis

13

1 How much time should be spent on negotiating the small package

2 Which items should be in the small package

The contributors disagree over the first issue Susan Schwab argues for giving it not

more than 2 weeks others suggest longer They all however recognise that a prolonged

and contentious negotiation on a small package ndash especially one that ultimately proved

fruitless ndash would solve nothing and might harm the system

There is far more agreement on the second issue ndash possible composition of the small

package All the contributors and most of the WTO delegations with whom we spoke

suggest that some items on Doharsquos massive negotiating agenda are close to conclusion

Indeed the lists are remarkably similar despite the vast differences in the contributorsrsquo

perspectives They all point out however that striking even a very restrained list of

agreement will require abundant goodwill and hard negotiating

Suggestions for the small-package items include

bull Some sort of accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

bull A package of measures that promote ldquotrade facilitationrdquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impediments to trade

bull An agreement on a monitoring mechanism for special and differential treatment

bull An agreement to make permanent the transparency mechanism for regional trade

agreements that has been operating successfully for years

bull An agreement on certain non-tariff barriers

VOX Research-based policy analysis and commentary from leading economists

14

bull An agreement formalising cooperation between the WTO and various multilateral

environmental agreements

Other issues may ultimately prove tractable or necessary to provide balance Those most

often mentioned include a standstill agreement on fisheries subsidies certain aspects

of the less controversial rules negotiations and export subsidies Such a package could

also include other DDA matters for which the negotiations could be completed quickly

or non-DDA matters where the WTO membership is at one such as the promising

negotiations to upgrade the WTOrsquos Agreement on Government Procurement

The final issue is what to call the small package this is not a trivial matter

bull One option is to just boldly call the small package the ldquoDoha Roundrdquo ndash to declare

victory and move on

While this would clearly disappoint many it speaks to the objective of not letting the

Round drag down the WTO ndash not allowing the WTOrsquos credibility to be further damaged

by endless discussions that can never led to a happy ending

Of course this option would leave unsolved the core Doha issues ndash reducing distortions

in and improving market access for industrial goods agricultural products and services

trade and updating the rules But it might allow members to re-craft the parameters of

the negotiations in a way that would be more likely to lead to success This is clearly

the view taken by Susan Schwab and John Weekes As John Weekes puts it ldquoNot

completing the Doha Round would be a serious setback to the WTO and the multilateral

trading system However if it is clear that the Round cannot be concluded successfully

it is better to admit that and work constructively to develop an agenda for the future

work of the organisationrdquo

Another option would be to wrap up the collection of small agreements into a package

called the ldquoDoha down paymentrdquo or ldquoDoha deliverablesrdquo or ldquoDoha early harvestrdquo as a

way of stressing that all the Doha agenda items are still on the table

Next Steps Getting Past the Doha Round Crisis

15

A third option would be to view the individual items as standalone agreements to be

agreed by the ministers of WTO members at the December meeting without clear

reference to what comes next

This brings us to the next major element of the Road 3 pathway What to do with the

rest of the agenda

Choices to make on the big package

Albert Einstein once defined insanity as doing the same thing over and over and

expecting different results This makes it clear that any complete plan for a way past the

Doha dilemma must change something in the way the negotiations have been operating

Any multilateral trade negotiation involves choice on a series of negotiating rules

or conventions The Doha Round has accreted an odd constellation of these Some

are fundamental and therefore extremely difficult to change These include the idea

that everything must be agreed by all before anything is agreed (the so-called single-

undertaking principle) or the choice to focus on the particular tariff-cutting formula

known as the Swiss formulas But many of the choices are less central such as the exact

way in which flexibilities on tariff-cutting are to be decided

The ramifications of these procedures on the negotiating dynamic were not well

understood years ago when the original decisions were taken The lack of understanding

is even deeper when it comes to the joint operation and interaction among the

conventions

For these reasons the set of negotiating conventions that guide Round may no longer be

optimal Consideration of the pros and cons of alternatives might identify other ways of

finding a package of trade-offs that is acceptable to all

VOX Research-based policy analysis and commentary from leading economists

16

The forward-looking agenda

A number of contributors suggested that the process of rebuilding momentum and

confidence in the ultimate outcome could be boosted by agreeing to launch work

programmes (not actual negotiations) on how the WTO could address 21st-century

trade issues that have come to the fore since the Doha agenda was set in 2001

Here there are two basic lines The first would consider WTO institutional reform the

second would consider new issues such as new disciplines to underpin the increasing

convergence of trade investment and services (as is now routinely done in regional

trade agreements) setting limits on acceptable national climate policies with trade

implications or export restrictions

There certainly seems merit to these idea If nothing else it would interject new

dimensions to discussions that have been going on for a decade It would also make

it clear that we need to safeguard the WTO as a forum for multilateral discussions on

critical 21st-century issues

Concluding remarks

Many decent hard-working public servants have committed plenty of energy to the

Doha Round since its inception At this critical time any temptation for recriminations

or lapses into bitter disappointment should be set to one side to let governments chart a

new path for the WTO The circumstances facing WTO members in the middle of 2011

are hardly ideal and the set of options that stand any chance of acceptance is narrow In

times like these it would be a mistake to make the perfect the enemy of the good It is

time to think creatively and cooperatively about getting the WTO past the Doha crisis

A decision or non-decision that led to several more years of drift ndash years that will be

complicated by elections and changes in governments in some of the leading trading

powers ndash could turn out to be the beginning of the end for the WTOrsquos role as leader

of the global trading system The alternative ndash uncoordinated developments led by the

Next Steps Getting Past the Doha Round Crisis

17

Big-5 in their own systems of regional trade agreements ndash is a very plausible outcome

at this stage but not one that will ultimately serve anyonersquos long-run interests

References

Andre Nassar and Carlos Perez (2011) ldquoWhy WTO members should not give up the

Doha Round The case of agricultural traderdquo in Richard Baldwin and Simon Evenett

(eds) Why World Leaders Must Resist the False Promise of a Doha Delay VoxEU

April

19

Doha is stalled by gaps that are unbridgeable today Indonesiarsquos Trade Minister argues

that we need to be guided by priorities and pragmatism We should develop a set of

stepping stones that will help us complete the Doha Round eventually We should

identify the areas that are achievable in the very near future but which have an impact

on development while building confidence for the continued journey to a successful

Round We should never lose sight of the final goal ndash completing the Doha Round as a

single undertaking In short we are not looking for a ldquoPlan Brdquo we are looking for a

new way to execute Plan A

The importance of completing the Doha Development Agenda sooner rather than later

goes beyond bringing gains of $360 billion of additional trade with substantial benefits

for industrialised and developing economies (HLTE 2011) The importance also goes

beyond what pragmatic soothsayers who are telling us ldquoWhy are you worried the

WTO system will continue to be robust whether we conclude Doha or not Companies

and countries will continue to traderdquo As a developing country policy maker ndash and I

believe I speak for many other developing countries ndash I am greatly worried about the

costs and opportunity lost of not completing Doha

The costs of not completing Doha

I will point to four costs of not completing the Doha Round

bull First is what it could achieve for food security

Mari PangestuMinister of Trade Indonesia

There is no Plan B ndash only Plan A Towards completing Doha

1919

VOX Research-based policy analysis and commentary from leading economists

20

During the 2008 food crisis imbalances between supply and demand were partly

attributed to distorted agriculture prices caused by trade-distorting export subsidies

and domestic-support schemes The agriculture package in Doha will go some way to

address this In todayrsquos situation of high commodity prices now is the perfect time to

address the removal and elimination of such trade-distorting policies Removing these

distortions can only be achieved through multilateral negotiations not through bilateral

or regional agreements

Most importantly the winners would be the billions of hungry and poor people all over

the world correcting the system and ensuring the future supply of food and greater

price stability is very much in their interests For example in Indonesia a 10 increase

in the price of rice without any change in income would lead to a 1 increase in

poverty

bull Second keeping protection at bay

During the depth of the crisis benign protectionism was the order of the day according

to the self-reporting surveillance mechanism established by the WTO at the request of

G20 Leaders This allowed the rebound of trade to become one of the costless ways for

the global economy to recover It is ironical that in the recovery the latest report (WTO

2011) shows that there has been a slight increase in protectionism causing an estimated

impact of 06 to G20 exports

The main increase has been due to tariff increases automatic licenses and other

restrictions including export restrictions Whilst this is still ldquosmallrdquo it is nevertheless

double from the previous period Restoration of the confidence in the world trading

system through clear signals that we are progressing on completing the Round is crucial

to keeping protectionism at bay Developing countries such as Indonesia have a great

interest in this because only the multilateral trading system will provide the fair rules-

based trading system for us to face large and more developed partners on a fair and

equal standing

Next Steps Getting Past the Doha Round Crisis

21

bull Third the lack of progress on the Doha Round already has and will continue to raise

the pressure to undertake bilateral and regional free trade negotiations

In the ASEAN region there are already FTAs between ASEAN and all six of its dialog

partners (Australia China India Japan Korea New Zealand) and numerous bilateral

FTAs The EU has just completed negotiations with Korea which has put pressure

for the Korea-US FTA to be ratified as soon as possible The EU has also completed

negotiations with India and is negotiating with Singapore Malaysia and preparing

to do so with other ASEAN countries Recently China Korea and Japan announced

revitalization of their FTA initiative Furthermore we have the Trans-Pacific Partnership

initiative between 8 members of APEC

It is not the bilateral and regional free trade agreements which are problematic per

se it is negotiating them in the absence of a robust WTO system ndash a system which is

seen as meeting the needs of the current and future trade-linked issues Bilateral and

regional agreements can only work towards complementing the multilateral trading

system when they are ldquoWTO-plusrdquo not ldquoWTO-insteadrdquo

bull Fourth the potential dampening effect on unilateral reforms

The political economy of openness in trade policy and institutional reform have always

functioned better within the framework of international commitments Multilateral

rules impose an important caveat on what countries can or cannot do In a country like

Indonesia this has worked to our advantage in the way we frame our reforms and in fact

has functioned in the past to put bad policies to rest

For instance in the famous National Car case in the mid 1980s which violated the

MFN principle by allowing duty-free imports of cars only from one source country the

domestic politics at the time did not allow for policymakers to remove this policy The

policy was finally ended through the WTOrsquos dispute settlement mechanism It would

be too bad for reforms if the process is undertaken within weakened confidence of

multilateral trading system or one which will eventually not be relevant to the evolution

of 21st century trade issues

VOX Research-based policy analysis and commentary from leading economists

22

The Way Forward No Plan B

Despite G20 Leadersrsquo commitments and all the good intentions and intensive work in

Geneva that came after the push given by trade ministers during their informal meeting

in Davos in January 2011 it proved impossible to arrive at a draft text by the end-of-

April milestone There remains ldquounbridgeable gapsrdquo in a number of main negotiating

groups namely non-agriculture market access

Given this situation trade ministers met first during the APEC Ministers of Trade

Meeting in Big Sky Montana and then on the fringes of the OECD meeting in Paris

Fortunately all have agreed that we all remain committed to completing Doha as a single

undertaking However there was a sense of realism as to the timing and pathways to

achieve this desirable outcome in a timely way

From an Indonesian perspective there is no ldquoPlan Brdquo We do not support a ldquoDoha

Lightrdquo and we remain committed to a comprehensive ambitious and balanced package

building on what we have achieved to date

After almost 6 years of negotiations since the key Hong Kong WTO Ministerial I

believe we are more than 50 or some would say 80 of the way done A realistic way

forward is to identify the sequence of steps that would take us to the final outcome this

is necessary to avoid the costs and lost-opportunities I outlined above

This is not about an early harvest or ldquocherry pickingrdquo and then stopping It is about

identifying the steps forward in a meaningful way towards the final goal of the single

undertaking of Doha

Identifying stepping stones to a final Doha Round conclusion

There are areas within the negotiations that could be seen as steps towards the final

package Of course work and political will is still needed to find ways to bridge the

Next Steps Getting Past the Doha Round Crisis

23

unbridgeable gaps In identifying the areas where we could find convergence a number

of priorities stand out

bull First and foremost is areas of negotiations that will contribute and deliver to devel-

opment objectives such as the Least Developed Countries package andor an effec-

tive aid-for-trade and facilitation package this is after all a Development Round

bull Second areas where there would be clear benefits for development and the private

sector in facilitating and ensuring the benefits of trade are greater we need stake-

holders to be cheerleading the way forward

bull Third there could be areas where we would be able to address the food-security

challenge

One could also foresee that within each current area of negotiations there could be

items which could be wrapped up without disturbing the overall balance of elements

in that particular area It is important that we do not go into ldquonewrdquo negotiations in

identifying which areas We should go into the mode of identifying these pathways and

steps with the mindset and political will of win-win

We need to be guided by priorities and pragmatism That is to identify the areas that are

doable and achievable in the very near future but which have an impact on development

and increasing the benefits of trade while at the same time building confidence for us to

continue our journey to the final package Most importantly we should never lose sight

of the final goal of the single undertaking

Looking forward

It is also important to provide the signal in what we say and do elsewhere Beyond

talking about Doha we must ensure continued confidence in and implementation of the

rules-based open trading system

VOX Research-based policy analysis and commentary from leading economists

24

bull This would mean the commitments of G20 Leaders and others on refraining from

protectionism going beyond words the good intentions need to be strengthened

with commitments and actions

bull It also has implications for how we undertake bilateral and regional agreements

these should be done in a way that is not an alternative to and does not detract from

the multilateral trading system We should pursue regionalism in a way which is

going to contribute to and complement the system

Concluding remarks

In conclusion we should not underestimate the costs of not doing all this We will

need to draw upon the strength of our individual and collective political commitment

We need to call on the ability of some major economies to look beyond pure national

interests and to look at the impact and costs on the global system and economy And we

need to remember that there are many countries and billions of people ndash many of which

are impoverished ndash who are waiting for the Doha deliverables

References

HLTE (2011) ldquoWorld trade and the Doha roundrdquo final report of the High-Level Trade

Experts Group chaired by Jagdish Bhagwati and Peter Sutherland

WTO (2011) ldquoReports on G20 trade and investment measures (mid-October 2010 to

April 2011)rdquo WTO Secretariat 24 May

About the author

Mari Pangestu is Indonesiarsquos Minister of Trade since 2004 having served as Executive

Director of the Jakarta-based think tank the Center for Strategic and International

Studies and a lecturer in the Faculty of Economics at the University of Indonesia From

1991 to 1998 Dr Pangestu was the coordinator of the Trade Policy Forum of the Pacific

Next Steps Getting Past the Doha Round Crisis

25

Economic Cooperation Council and serves on the Board of the Overseas Development

Council World Gold Council and the Asian Journal of Business from The University

of Michigan Ann Arbor

She has published widely on a range of subjects including matters pertaining to

Indonesia as well as regional (ie Asian and Asia Pacific) and global issues She earned

her BA and MA in economics from Australian National University and a PhD in

economics from the University of California Davis

27

The Doha Round has failed according the former US Trade Representative Susan

Schwab This essay argues that prolonging Doha jeopardises the multilateral trading

system and threatens future prospects for WTO-led liberalisation Negotiators should

salvage whatever partial agreements they can from Doha and quickly drop the rest

to ensure the December ministerial meeting focuses on future work plans rather than

recriminations over Doha

The Doha Round has failed It is time for the international community to acknowledge

this sad fact and move on Prolonging the pretence that the Doha Round will succeed

is now a greater threat to the WTO and the multilateral trading system than facing the

truth

A great many smart hard-working and well-intentioned individuals have worked over

many years to realise Doharsquos potential to contribute to global economic growth and

development But what is on the table in Geneva has failed to deliver any outcome

let alone a meaningful one It is time for a swift clean break from the past and to

lay the groundwork for a future where the WTO and its members revive WTO-led

liberalisation and reform

End Doharsquos stranglehold and build towards near-term wins

To keep the multilateral trading system healthy it is necessary to end the Doha

Roundrsquos stranglehold on the system This should happen quickly in order to ensure

that the December 2011 ministerial meeting focuses on future work plans rather than

Susan SchwabUniversity of Marlyand former US Trade Representative

Acknowledge Doharsquos demise and move on to save the WTO

2727

VOX Research-based policy analysis and commentary from leading economists

28

recriminations about a Doha Development Agenda that has struggled through one failed

encounter after another

Negotiators should refocus their efforts on near-term wins and on building the next

Round ndash which need not be another behemoth but perhaps a ldquorolling roundrdquo of reforms

and new market access or a few highest-common-denominator plurilateral or WTO-

plus deals Ultimately these should lead to a broader-based market access and rules

agreement under the multilateral auspices of the WTO

The small package possibility

In my recent Foreign Affairs article (Schwab 2011) I suggested that negotiators should

try to salvage whatever partial agreements they can and then walk away from the rest

I mentioned a number of potential candidates such as trade facilitation and the largely

completed agricultural-export pillar (comprising proposed agreements on export credits

food aid state-trading firms and the elimination of export subsidies) Negotiators

might also try to complete two environment-related agreements one cutting subsidies

to industrial fishing fleets that are overfishing the worldrsquos oceans and the other ending

tariff and nontariff barriers to rdquogreenrdquo technologies in major producing and consuming

countries Taken together or individually each of these would benefit countries across

the spectrum of economic development

I am however sceptical that even these small agreements are achievable in the current

climate of mistrust and entrenched positions A troubling development during the course

of the Round has been how often countries seem to forget or forfeit their own economic

interests ndash let alone the greater good ndash in the face of peer pressure and group-think In

the current environment even these smaller deals might prove impossible to achieve

It is certainly worth trying to achieve a few deliverables by taking a run at a small

package but negotiators should not spend too much time on it They already know

exactly what the options are if they cannot get to ldquoyesrdquo in say two weeks they should

Next Steps Getting Past the Doha Round Crisis

29

give up and move on to the real challenge of launching a new series of multilateral

negotiations under WTO auspices

Getting past Doha

How to conclude the Doha Round One option would be for the Director-General and

a representative sample of WTO Ambassadors to come together in the interest of the

institution and to offer a declaration of Doharsquos demise along with their pledge to begin

building the future That would enable leaders at the November G20 meeting to pledge

their support for the rules-based trading system the WTO and its next steps rather than

for the ever elusive ldquobalanced and ambitiousrdquo Doha outcome

After a short period of grieving over the death of Doha and an opportunity to get

beyond the anger lead trading nations should refocus on getting the WTO back into

its mainstream business of negotiating mutually advantageous market opening and

updating the global rdquorules of the roadrdquo This approach offers the best promise of a

meaningful ldquodevelopmentrdquo outcome as well

How might this be achieved

It seems unrealistic to think WTO members would agree to launch another massive

all-or-nothing round in the near future Such broad negotiations however will be

necessary to tackle some of the worldrsquos most important market access challenges in

services manufacturing and agriculture along with such issues as farm subsidies

There are ways to build-up to the big-round model again where countries once more see

economic self-interest in the use of broad-based negotiations and trade-offs to achieve

both new market access and market reforms First however we must re-establish trust

and regain momentum

One way forward would be for ministers to agree to launch a number of confidence-

building negotiations For example ministers in December could decide to open talks

VOX Research-based policy analysis and commentary from leading economists

30

on expanding the 1997 Information Technology Agreement a number of nations

seem interested and the US Administration already has the authority to implement an

enhanced agreement If negotiators fail to work through the 850 brackets in the current

Doha trade facilitation text that could also be tackled as a stand-alone agreement since

each nation would benefit from more efficient movement of goods and services across

borders

Another confidence-building measure might be a merger of sectoral agreements geared

toward a widely-shared objective such as cheaper better healthcare A package that

included pharmaceuticals medical devices and healthcare services might attract

support from the broad array of WTO members across the development spectrum Given

the high-level of public interest in and awareness of environment issues a sectoral

negotiation on environmental goods and services might be another confidence-building

deal once it is removed from the straightjacket that Doha has become

Lessons from Doha for next steps and the next round

Confidence building agreements would offer modest economic and social contributions

and serve to prepare the atmospherics for launch the next Round This brings me to my

last topic ndash the lessons we should draw from a decade of Doha talks

One thing that is quite clear from years of struggling with the basic structure of Doha

is that the combination of formula and self-selected flexibilities has not worked It

resulted in a situation where every negotiator had to assume the worst case ndash knowing

the political costs they would pay for their own liberalisation but expecting their trading

partners to use flexibilities to negate any meaningful new market-access It is possible

to draw from the best of the Doha formulas ndash such as the higher the barrier the greater

the cut ndash while still creating real negotiations around them through requests and offers

delivered using above- and below-formula cuts

Next Steps Getting Past the Doha Round Crisis

31

Another key lesson is that lumping the worldrsquos very diverse economies into three

basic categories ndash developed developing and least developed ndash is a practice that no

longer fits 21st century economic and trade realities Nor is it a structure conducive to

negotiations and real progress based on an exchange of market access among nations

with large markets Yes the advanced economies should be expected to do more than

those at lesser stages of economic development but expectations should also reflect

the fact that many emerging economies are characterised by both poverty and sectors

where they are globally competitive trade powerhouses

The emerging economies have large markets represent over half of global GDP growth

and stand to be the biggest winners from any major trade agreement They should be

expected to contribute to the next Round accordingly Major trade agreements generally

take at least 12 years to implement from the time they are initially concluded What

should the world trading system look like in 2025 in terms of the absolute and relative

responsibilities of key trading nations

Concluding remarks

I am optimistic when it comes to the multilateral trading system and the WTOrsquos central

role in its governance The optimistic scenario is that we put the Doha Round behind

us Facing facts can invigorate and strengthen the trading system If we fail to act the

WTO risks losing its relevance

The Doha Round ndash which in my view cannot be concluded as it is conceived today ndash

should not be allowed to continue draining the WTOrsquos credibility and potential progress

on the multilateral front Now is the time to liberate the would-be trade liberalisers from

the Doha straightjacket and move on

VOX Research-based policy analysis and commentary from leading economists

32

References

Schwab Susan (2011) ldquoAfter Doha Why the negotiations are doomed and what we

should do about itrdquo Foreign Affairs MayJune

About the author

Ambassador Schwab has been a Professor at the University of Maryland School of

Public Policy since January 2009 and a strategic advisor to Mayer Brown LLP (global

law firm) since March 2010 Ambassador Schwab served as US Trade Representative

from June 2006 to January 2009 and as Deputy US Trade Representative from

October 2005 to June 2006 Prior to her service as Deputy US Trade Representative

Ambassador Schwab served as President and Chief Executive Officer of the University

System of Maryland Foundation from June 2004 to October 2005 as a consultant

for the US Department of Treasury from July 2003 to December 2003 and as Dean

of the University of Maryland School of Public Policy from July 1995 to July 2003

Ambassador Schwab serves on the boards of Boeing Company Caterpillar Inc and

FedEx Corporation

She holds a BA in Political Economy from Williams College a Masters in Development

Policy from Stanford University (Food Research Institute) and a PhD in Public

Administration and International Business from The George Washington University

33

Hopes for finishing Doha in 2011 are fading fast This essay suggests a three-track

approach for moving beyond the Doha crisis 1) Identify a package of ldquodeliverablesrsquo ndash

parts of the Round that could be agreed by December 2011 2) Assemble a package of

contentious issues for ongoing negotiation with clear terms of reference 3) Establish

a work programme to consider WTO institutional reform and forward-looking issues

For reasons that are too well known to be repeated the WTO finds itself at the crossroads

Decisions to be taken in the next few weeks will determine whether it can steer its

way to a successful conclusion of the Doha Round in the near future Failing this the

Round will continue to hang like an albatross around the WTOrsquos neck preventing it

from delivering the promised boost to least developed nations and freezing its ability

to address new challenges to the global trading system All countries would suffer from

such an outcome but especially the worldrsquos poorest and most vulnerable

The cost of a never-ending Doha Round

The adverse implications of a continuing Doha impasse on the future role of the WTO

are too compelling to be dismissed offhandedly

Several trade-linked global problems require global cooperation Food security energy

security trade-related aspects of climate change labour mobility commodity price

volatility and integration of regional liberalisation into the multilateral system are

problems that can only be solved with global cooperation

Ujal Singh BhatiaFormerly Indiarsquos Ambassador and Permanent Representative to the WTO

Next Steps Getting past the Doha Round crisis

3333

VOX Research-based policy analysis and commentary from leading economists

34

For example if food exporters continue to impose export barriers when prices rise

food importers may respond with import barriers to boost self-sufficiency This sort of

protectionist reverberation could lead the world to a situation in which all the players

are worse off but none can improve the situation unilaterally Avoiding this sort of

outcome would require global agreements There are very few global institutions that

could manage such cooperation indeed the WTO might be the only one A WTO locked

in endless Doha debates cannot be the centre of the rules based global trading system

There are many thinkers who believe that the structure of WTO rules is robust enough

to withstand a Doha failure It is true that the sky will not fall if Doha is terminated

without a conclusion Such analysts however tend to underestimate the significant

structural changes taking place in the global economy and the trading system The

WTO is working on a set of rules agreed upon in 1994 that were based on an agenda

set almost a quarter of century ago These are still useful and relevant for much of

world trade ndash but not all For instance the rules were not designed for the technology-

driven fragmentation of the manufacturing process and the distribution of the product

value chain across several geographical locations the intertwining of production with

related services the embedded intellectual property rights in components and sub-

components or the multiplicity of rules of origin All these require a different approach

to rule making

A WTO that remains preoccupied with the Doha Round cannot be expected to focus

on such issues Therefore the continuing relevance of the WTO and its primacy in

the global trading system are contingent upon a successful and early conclusion of

the Doha Round Notwithstanding this urgency it is now clear that a Doha package

cannot be wound up in 2011 along the lines agreed by G20 leaders in November 2010

To prevent this from tying the WTO in knots for years to come it is necessary to think

creatively about ways forward

Next Steps Getting Past the Doha Round Crisis

35

Ideas for moving beyond the impasse

Any effort to deal with the impasse in the negotiations needs to be based on a holistic

appreciation of the systemic implications of a continuing stalemate as much as on the

negotiating positions of various members The efforts for a solution acceptable to all

members therefore need to focus on issues in the Doha mandate as well as on issues for

a post Doha situation

Within this framework four constraints need to be borne in mind

bull A ldquoDoha Literdquo of reduced ambition will not work The outcome has to reflect a dec-

adersquos efforts of the global community Ambition however cannot be defined to suit

the convenience of a few members It must touch all aspects of the Doha mandate

bull Aspects of the Doha mandate that are more relevant to the development dimension

have to be ambitiously addressed and fast tracked

bull WTO needs to start work on a new work programme to address new challenges

bull The Doha Round cannot be completed in 2011 A down payment is necessary from

the Doha Round this year to convince the world that the WTO can deliver

A three-track approach

These constraints require the WTO to adopt a three-track approach during the next few

months leading up to the ministerial meeting in December 2011

Track 1 Identification of a list of issues that specially address the trading interests

of smaller developing countries and relatively less contentious issues for fast tracked

finalisation before the ministerial meeting

Track 2 Identification of a package of the more contentious issues for continuing

consultations with clear terms of reference

Track 3 Identification of appropriate terms of reference for a work programme on

WTO institutional reform and the forward-looking agenda

VOX Research-based policy analysis and commentary from leading economists

36

A possible timeline

These three tracks taken as a package would provide a way forward that respects all

four constraints Achieving consensus on them would be difficult ndash and require months

of preparatory work and negotiations

If the WTO membership starts immediately however there is still time to get the

package ready for finalisation by ministers at the December 2011 ministerial meeting

For this to happen it is essential that discussions on such a package begin this month

so that its contents can be finalised by the end of June 2011 This would leave about

four working months before the ministerial meeting to complete negotiations on the

selected areas

What the three tracks might contain

The first track would contain the Doha down-payment package As with any WTO

package the contents would need to be negotiated and it might require complementary

policies such as technical assistance initiatives

Such a list must include items that speak to development aspects of the Doha mandate

such as

bull The Implementation of the Hong Kong decision on duty-free quota-free treatment

for less developed countries

bull A ministerial decision on the Monitoring Mechanism for Special and Differential

Treatment provisions

bull A ministerial decision on the issues raised by the Sub-Saharan African cotton ex-

porters (the group known as the C-4) and

bull The finalisation of a less-developed-country (LDC) waiver in services so that pref-

erential treatment can be provided to LDCrsquos in services without extending it to

others

Next Steps Getting Past the Doha Round Crisis

37

It should also include areas of the negotiations that engage the interest of all members

such as

bull Trade Facilitation

bull All aspects of export competition in agriculture including export subsidies

bull The Transparency Mechanism for regional trade agreements (RTAs)

bull The non-tariff barriers (NTBs) package in non-agricultural market access (NAMA)

and

bull A ministerial decision on interactions and relationships between the WTOrsquos rules

and its committees on the one hand and existing multilateral environmental agree-

ments on the other (eg the Basel Convention on the Control of Transboundary

Movements of Hazardous Wastes and the Montreal Protocol on Substances that

Deplete the Ozone Layer)

While some members would like to exclude some of these areas from a fast tracked

process in the hope of using them for trade offs in the final stage it is important that the

package is as comprehensive as possible

Track two Items for further negotiation

The second track would gather all remaining items currently under negotiations This

would include

bull All aspects of market access in industrial goods agriculture and services

bull All aspects of subsidies in agriculture

bull Various aspects of rules including fisheries subsidies

bull Environmental goods and

bull Issues related to trade-related aspects of international property rights (TRIPS) re-

garding the protection of Geographical Indicators and the protection of traditional

VOX Research-based policy analysis and commentary from leading economists

38

knowledge and folklore that were are mentioned in the Convention on Biological

Diversity1

The need for a balanced package deserves emphasis It is often assumed that there

is a straight trade-off between agricultural subsidies and market access The situation

however is more complex The interest of countries like India China and Indonesia

in agricultural reform is more systemic than export related For them other incentives

within the mandate will be required

Track three Looking ahead

The underlying theme for the work programme would be an appraisal of the entire

negotiating and decision-making process in the WTO in the context of the present

realities both within and outside the organisation The objective would be to prepare

the WTO to address new challenges to the global trading system concurrently with the

ongoing work on the remaining parts of the Doha mandate

Closing remarks

The above proposals constitute a basic template for addressing the Doha conundrum

To what extent they are actually embraced will depend on how much political capital

the major members of the WTO are prepared to invest in moving the Doha Round

forward There is much scepticism about whether such political will exists It is time

for governments to prove the sceptics wrong

1 Specifically as specified in paragraphs 18 and 19 of the Doha Declaration

Next Steps Getting Past the Doha Round Crisis

39

About the author

Ambassador Bhatia Singh joined the Indian Administrative Service in 1974 holding

several senior positions in provincial administration in Orissa State between 1976 and

1995 He served as Joint Secretary Ministry of Commerce and Industry between 1995-

2000 in which capacity he handled a number of bilateral regional and multilateral trade

negotiations From 2004 to his retirement in 2010 he served as Indiarsquos Ambassador and

Permanent Representative to the WTO in Geneva

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

Next Steps Getting Past the Doha Round Crisis

A VoxEUorg eBook

Centre for Economic Policy Research (CEPR)

Centre for Economic Policy Research3rd Floor77 Bastwick StreetLondonEC1V 3PZUK

Tel +44 (0) 20 7183 8801Fax +44 (0)20 7183 8820Email ceprceprorgWeb wwwceprorg

copy Centre for Economic Policy Research 2011

ISBN (eBook) 978-1-907142-37-6

Next Steps Getting Past the Doha Round Crisis

A VoxEUorg eBook

Edited by Richard Baldwin and Simon Evenett

Centre for Economic Policy Research (CEPR)

The Centre for Economic Policy Research is a network of over 700 Research Fellows and Affiliates based primarily in European Universities The Centre coordinates the re-search activities of its Fellows and Affiliates and communicates the results to the public and private sectors CEPR is an entrepreneur developing research initiatives with the producers consumers and sponsors of research Established in 1983 CEPR is a Euro-pean economics research organization with uniquely wide-ranging scope and activities

The Centre is pluralist and non-partisan bringing economic research to bear on the analysis of medium- and long-run policy questions CEPR research may include views on policy but the Executive Committee of the Centre does not give prior review to its publications and the Centre takes no institutional policy positions The opinions ex-pressed in this report are those of the authors and not those of the Centre for Economic Policy Research

CEPR is a registered charity (No 287287) and a company limited by guarantee and registered in England (No 1727026)

Chair of the Board Guillermo de la DehesaPresident Richard PortesChief Executive Officer S tephen YeoResearch Director Mathias DewatripontPolicy Director Richard Baldwin

Contents

Foreword vii

The Doha dilemma An introduction to the issues 9 and possible solutions Richard Baldwin and Simon Evenett

There is no Plan B ndash only Plan A Towards completing 19 Doha Mari Pangestu

Acknowledge Doharsquos demise and move on to save 27 the WTO Susan Schwab

Next Steps Getting past the Doha Round crisis 33Ujal Singh Bhatia

Next Steps Is an early harvest still possible 41Zhenyu Sun

Getting past the Doha Round crisis Moving forward 47 in the WTO John Weekes

The good ship Doha Salvage-and-abandon-ship or 51 repair-and-wait Stuart Harbinson

Keeping the WTO on track A Doha down payment 61 plus more Richard Baldwin and Simon Evenett

vii

Doha is deadlocked ndash the members of the WTO are unable to give up and unable to go

forward

In this eBook the contributors propose several deacutemarche that consider various

combinations of 4 initiatives that offer a way out of the current impasse

bull Deliver a down payment

bull Ditch the current process of negotiating in ldquosilosrdquo ndash it doesnrsquot work

bull Develop a new and forward-looking agenda for the WTO

bull Demonstrate some leadership

The down payment is straightforward All the contributors suggest a number of area

where agreement is already close and which could be wrapped up in time for the

December Ministerial After a decade of negotiations it hardly seems right to call this

ldquoan early harvestrdquo but a set of measures that focus on the needs of the least developed

nations seems right for a ldquoDevelopment Roundrdquo

The current approach to negotiations is clearly not working and offers no way forward

Why not try new approaches A number of contributors suggest abandoning the current

ldquosilo approachrdquo The December Ministerial they argue should adopt a new approach

abandoning modalities and emphasising horizontal negotiations One contributor ex-

USTR Susan Schwab suggests abandoning the Round altogether and starting from

scratch

While much of the energy in the Doha negotiations has been expended on traditional

issues such as agriculture and market access for goods and services there is a long list

of new issues that will only grow in importance over time Several contributors advocate

a programme of analysis and discussion that will help members better understand issues

such as competition policy climate change and government procurement

Foreword

VOX Research-based policy analysis and commentary from leading economists

viii

The current Doha deadlock is largely due to the absence of leadership from the major

players Expecting leadership now from any of the Big 5 is unrealistic Baldwin and

Evenett drawing on their discussions with a wide-range of WTO delegations suggest

that one demarche that could help unblock the impasse is a bold move by the middle-

power WTO members They could seize the initiative by adopting a set of unilateral

measures to offer to liberalise trade The new commercial opportunities this would

provide would remind exporters what they have to gain from the conclusion of the

Round

Richard Baldwin and Simon Evenett have acted with their usual speed and efficiency

assembling at short notice a distinguished group of authors whose essays identify

solutions to Doha Deadlock And as always they have been very ably supported by

Team Vox in particular by Bob Denham Samantha Reid Anil Shamdasani and Pierre-

Louis Veacutezina We are grateful to them all

Stephen YeoChief Executive OfficerMay 2011

9

World leaders must make important decisions concerning the future of the Doha Round

for the 31 May 2011 meeting of the WTO membership This essay introduces the issues

and summarises contributorsrsquo suggestions for ldquoNext Stepsrdquo It argues that the best

outcome would be for WTO members to agree to work towards a small package of

deliverables for December 2011 and push the rest of the agenda items into the future

ndash perhaps with specific instructions for changing the basic negotiating protocols used

to date

Global leaders face a dilemma over the WTO multilateral trade negotiations known

as the Doha Round The talks are dead in the water both movement forwards and

movement backwards seem blocked How did we get here Current and former trade

policy officials typically emphasise two points

bull Ten years of talks have made some progress but it now must be taken as a hard fact

that the Doha Round in its entirety will not finish this year

bull No government is willing to announce publicly that they want to abandon the Round

The sources of unwillingness vary Some argue that abandoning the Round would throw

away genuine progress such as the ultimate phase-out of agricultural export subsidies

Others wish to maintain attention focused on particular problems in the trade system

Yet others simply fear that theyrsquoll be blamed for delivering the bad news

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

The Doha dilemma An introduction to the issues and possible solutions

99

VOX Research-based policy analysis and commentary from leading economists

10

Next Steps Saving the WTO from the Doha Round

World leaders must now decide how to tackle this dilemma at the WTOrsquos next key

meeting on 31 May 2011 Logically there are only 3 roads ahead

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock

in some of the progress to date

This eBook on ldquoNext Steps Getting Past the Doha Round Crisisrdquo gathers the thinking

of a handful of the worldrsquos most experienced Doha experts namely former US Trade

Representative Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia

Chinarsquos former WTO Ambassador Zenyu Sun Canadarsquos former WTO Ambassador

John Weekes and Hong Kongrsquos former WTO Ambassador Stuart Harbinson ndash all of

whom spent years directly engaged in Doha negotiations

Road 1 The pitfalls of declaring failure

Susan Schwab argues strongly that declaring Doharsquos demise is essential to allowing

the WTO to move on John Weekes likewise argues ldquoIt would be damaging to invest

more resources and credibility in something that canrsquot be donerdquo Ujal Singh Bhatia by

contrast argues that Road 1 could lead to unpredictable results Zenyu Sun notes that

declaring the Doha Round to be dead would be easy but then what ldquoWould such an

announcement inspire people to inject more energy into the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt itrdquo he writes

These judgements on the medium- to long-term ramifications differ but the short-

term fallout is clear Declaring the Round ldquodeadrdquo would invite an immediate storm of

recrimination among WTO members A great deal of hope and effort has been invested

in the Round by nations across the globe Most WTO members are still looking for the

Next Steps Getting Past the Doha Round Crisis

11

Doha Round to effect critical adjustments to the world trading system ndash especially a

rebalancing of the level of openness to agricultural versus industrial trade (Nassar and

Perez 2011) If one or more of the Big-5 reject a deal that most members still think is

doable the blame game could get very nasty

There is a great danger that this level of ill-will could undermine multilateral trade

cooperation for years It could lock in the growing perception that the WTO is not a

place where serious negotiations can be conducted The US in particular is likely to

be subject to severe criticism in a way that might have the unintended consequence of

convincing US Congressional and private sector groups that the WTO is not a forum

where America can do business Such an outcome would serve no onersquos interests

Despite the clear logic of Schwabrsquos and Weekesrsquo arguments the pitfalls highlighted

by Bhatia and Sun find resonance with most world leaders This is why almost every

WTO member opposes Road 1 As a consequence it is extremely unlikely that WTO

members will decide to declare Doha dead any time soon

Road 2 The pitfalls of suspension

Suspension is certainly the most politically expedient choice for the Big-5 and it

is superficially attractive The logic is well expressed in the old story about a man

ndash condemned to death by his Emperor ndash who obtains a yearrsquos stay of execution by

promising to teach the Emperorrsquos horse to sing ldquoMuch could happen in a yearrdquo the man

reasons ldquoThe Emperor could die I could die the horse could singrdquo

But the usual merits of muddling through donrsquot apply to Doha Suspensions have been

tried so often that everyone would know that suspension is just a circuitous means of

killing the Round Road 2 is just the long route to Road 1 All the pitfalls of Road 1

therefore also apply to Road 2

But suspension would be even worse in many ways The world of trade is changing more

rapidly than negotiating positions so each delay seems to make a compromise based on

VOX Research-based policy analysis and commentary from leading economists

12

the existing elements even less likely Worse still a suspension would strengthen and

spread the belief that the WTO is not an appropriate venue for multilateral negotiations

As Ujal Singh Bhatia writes ldquothe Round will continue to hang like an albatross around

the WTOrsquos neck preventing it from addressing new challenges to the global trading

systemrdquo This would be particular worrisome since the world economy is moving into a

phase of great stress It is facing new challenges that will require multilateral solutions

ndash issues like food security natural-resource export restrictions and trade in goods

services and technology that are essential to climate-change adaption and mitigation

Road 3 A small package followed by a big package

The third road seems the most likely way to move past the Doha dilemma of not being

able to move forwards or backwards on the broad agenda The idea here is that the

agenda would be sorted into ldquodo-ablerdquo and ldquonot yet do-ablerdquo piles Nations would move

forward on a small package of do-ables for December 2011 while agreeing to discuss

the bigger issues later under revised ground rules that would be more likely to permit

the trade-offs necessary to make the big package acceptable to all members

As Stuart Harbinson puts it Doha is like a ship run aground a small package of

deliverables for December 2011 would act as a ldquopatchrdquo to keep the ldquogood ship Dohardquo

afloat until the high tide comes in and lifts the ship off the rocks ldquoIn this analogy the

lsquohigh tidersquo would be a change in the global economic and political seascape enabling

the major trading economies to settle their differences and bring the ship safely into

harbourrdquo he writes

Choices to make on the small package

All five experienced trade negotiators contributing to this eBook ndash and most of the WTO

delegations with whom we spoke ndash believe that it is worth trying to lock in agreement

on a small number of areas by the end of 2011 There are two critical issues to decide

Next Steps Getting Past the Doha Round Crisis

13

1 How much time should be spent on negotiating the small package

2 Which items should be in the small package

The contributors disagree over the first issue Susan Schwab argues for giving it not

more than 2 weeks others suggest longer They all however recognise that a prolonged

and contentious negotiation on a small package ndash especially one that ultimately proved

fruitless ndash would solve nothing and might harm the system

There is far more agreement on the second issue ndash possible composition of the small

package All the contributors and most of the WTO delegations with whom we spoke

suggest that some items on Doharsquos massive negotiating agenda are close to conclusion

Indeed the lists are remarkably similar despite the vast differences in the contributorsrsquo

perspectives They all point out however that striking even a very restrained list of

agreement will require abundant goodwill and hard negotiating

Suggestions for the small-package items include

bull Some sort of accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

bull A package of measures that promote ldquotrade facilitationrdquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impediments to trade

bull An agreement on a monitoring mechanism for special and differential treatment

bull An agreement to make permanent the transparency mechanism for regional trade

agreements that has been operating successfully for years

bull An agreement on certain non-tariff barriers

VOX Research-based policy analysis and commentary from leading economists

14

bull An agreement formalising cooperation between the WTO and various multilateral

environmental agreements

Other issues may ultimately prove tractable or necessary to provide balance Those most

often mentioned include a standstill agreement on fisheries subsidies certain aspects

of the less controversial rules negotiations and export subsidies Such a package could

also include other DDA matters for which the negotiations could be completed quickly

or non-DDA matters where the WTO membership is at one such as the promising

negotiations to upgrade the WTOrsquos Agreement on Government Procurement

The final issue is what to call the small package this is not a trivial matter

bull One option is to just boldly call the small package the ldquoDoha Roundrdquo ndash to declare

victory and move on

While this would clearly disappoint many it speaks to the objective of not letting the

Round drag down the WTO ndash not allowing the WTOrsquos credibility to be further damaged

by endless discussions that can never led to a happy ending

Of course this option would leave unsolved the core Doha issues ndash reducing distortions

in and improving market access for industrial goods agricultural products and services

trade and updating the rules But it might allow members to re-craft the parameters of

the negotiations in a way that would be more likely to lead to success This is clearly

the view taken by Susan Schwab and John Weekes As John Weekes puts it ldquoNot

completing the Doha Round would be a serious setback to the WTO and the multilateral

trading system However if it is clear that the Round cannot be concluded successfully

it is better to admit that and work constructively to develop an agenda for the future

work of the organisationrdquo

Another option would be to wrap up the collection of small agreements into a package

called the ldquoDoha down paymentrdquo or ldquoDoha deliverablesrdquo or ldquoDoha early harvestrdquo as a

way of stressing that all the Doha agenda items are still on the table

Next Steps Getting Past the Doha Round Crisis

15

A third option would be to view the individual items as standalone agreements to be

agreed by the ministers of WTO members at the December meeting without clear

reference to what comes next

This brings us to the next major element of the Road 3 pathway What to do with the

rest of the agenda

Choices to make on the big package

Albert Einstein once defined insanity as doing the same thing over and over and

expecting different results This makes it clear that any complete plan for a way past the

Doha dilemma must change something in the way the negotiations have been operating

Any multilateral trade negotiation involves choice on a series of negotiating rules

or conventions The Doha Round has accreted an odd constellation of these Some

are fundamental and therefore extremely difficult to change These include the idea

that everything must be agreed by all before anything is agreed (the so-called single-

undertaking principle) or the choice to focus on the particular tariff-cutting formula

known as the Swiss formulas But many of the choices are less central such as the exact

way in which flexibilities on tariff-cutting are to be decided

The ramifications of these procedures on the negotiating dynamic were not well

understood years ago when the original decisions were taken The lack of understanding

is even deeper when it comes to the joint operation and interaction among the

conventions

For these reasons the set of negotiating conventions that guide Round may no longer be

optimal Consideration of the pros and cons of alternatives might identify other ways of

finding a package of trade-offs that is acceptable to all

VOX Research-based policy analysis and commentary from leading economists

16

The forward-looking agenda

A number of contributors suggested that the process of rebuilding momentum and

confidence in the ultimate outcome could be boosted by agreeing to launch work

programmes (not actual negotiations) on how the WTO could address 21st-century

trade issues that have come to the fore since the Doha agenda was set in 2001

Here there are two basic lines The first would consider WTO institutional reform the

second would consider new issues such as new disciplines to underpin the increasing

convergence of trade investment and services (as is now routinely done in regional

trade agreements) setting limits on acceptable national climate policies with trade

implications or export restrictions

There certainly seems merit to these idea If nothing else it would interject new

dimensions to discussions that have been going on for a decade It would also make

it clear that we need to safeguard the WTO as a forum for multilateral discussions on

critical 21st-century issues

Concluding remarks

Many decent hard-working public servants have committed plenty of energy to the

Doha Round since its inception At this critical time any temptation for recriminations

or lapses into bitter disappointment should be set to one side to let governments chart a

new path for the WTO The circumstances facing WTO members in the middle of 2011

are hardly ideal and the set of options that stand any chance of acceptance is narrow In

times like these it would be a mistake to make the perfect the enemy of the good It is

time to think creatively and cooperatively about getting the WTO past the Doha crisis

A decision or non-decision that led to several more years of drift ndash years that will be

complicated by elections and changes in governments in some of the leading trading

powers ndash could turn out to be the beginning of the end for the WTOrsquos role as leader

of the global trading system The alternative ndash uncoordinated developments led by the

Next Steps Getting Past the Doha Round Crisis

17

Big-5 in their own systems of regional trade agreements ndash is a very plausible outcome

at this stage but not one that will ultimately serve anyonersquos long-run interests

References

Andre Nassar and Carlos Perez (2011) ldquoWhy WTO members should not give up the

Doha Round The case of agricultural traderdquo in Richard Baldwin and Simon Evenett

(eds) Why World Leaders Must Resist the False Promise of a Doha Delay VoxEU

April

19

Doha is stalled by gaps that are unbridgeable today Indonesiarsquos Trade Minister argues

that we need to be guided by priorities and pragmatism We should develop a set of

stepping stones that will help us complete the Doha Round eventually We should

identify the areas that are achievable in the very near future but which have an impact

on development while building confidence for the continued journey to a successful

Round We should never lose sight of the final goal ndash completing the Doha Round as a

single undertaking In short we are not looking for a ldquoPlan Brdquo we are looking for a

new way to execute Plan A

The importance of completing the Doha Development Agenda sooner rather than later

goes beyond bringing gains of $360 billion of additional trade with substantial benefits

for industrialised and developing economies (HLTE 2011) The importance also goes

beyond what pragmatic soothsayers who are telling us ldquoWhy are you worried the

WTO system will continue to be robust whether we conclude Doha or not Companies

and countries will continue to traderdquo As a developing country policy maker ndash and I

believe I speak for many other developing countries ndash I am greatly worried about the

costs and opportunity lost of not completing Doha

The costs of not completing Doha

I will point to four costs of not completing the Doha Round

bull First is what it could achieve for food security

Mari PangestuMinister of Trade Indonesia

There is no Plan B ndash only Plan A Towards completing Doha

1919

VOX Research-based policy analysis and commentary from leading economists

20

During the 2008 food crisis imbalances between supply and demand were partly

attributed to distorted agriculture prices caused by trade-distorting export subsidies

and domestic-support schemes The agriculture package in Doha will go some way to

address this In todayrsquos situation of high commodity prices now is the perfect time to

address the removal and elimination of such trade-distorting policies Removing these

distortions can only be achieved through multilateral negotiations not through bilateral

or regional agreements

Most importantly the winners would be the billions of hungry and poor people all over

the world correcting the system and ensuring the future supply of food and greater

price stability is very much in their interests For example in Indonesia a 10 increase

in the price of rice without any change in income would lead to a 1 increase in

poverty

bull Second keeping protection at bay

During the depth of the crisis benign protectionism was the order of the day according

to the self-reporting surveillance mechanism established by the WTO at the request of

G20 Leaders This allowed the rebound of trade to become one of the costless ways for

the global economy to recover It is ironical that in the recovery the latest report (WTO

2011) shows that there has been a slight increase in protectionism causing an estimated

impact of 06 to G20 exports

The main increase has been due to tariff increases automatic licenses and other

restrictions including export restrictions Whilst this is still ldquosmallrdquo it is nevertheless

double from the previous period Restoration of the confidence in the world trading

system through clear signals that we are progressing on completing the Round is crucial

to keeping protectionism at bay Developing countries such as Indonesia have a great

interest in this because only the multilateral trading system will provide the fair rules-

based trading system for us to face large and more developed partners on a fair and

equal standing

Next Steps Getting Past the Doha Round Crisis

21

bull Third the lack of progress on the Doha Round already has and will continue to raise

the pressure to undertake bilateral and regional free trade negotiations

In the ASEAN region there are already FTAs between ASEAN and all six of its dialog

partners (Australia China India Japan Korea New Zealand) and numerous bilateral

FTAs The EU has just completed negotiations with Korea which has put pressure

for the Korea-US FTA to be ratified as soon as possible The EU has also completed

negotiations with India and is negotiating with Singapore Malaysia and preparing

to do so with other ASEAN countries Recently China Korea and Japan announced

revitalization of their FTA initiative Furthermore we have the Trans-Pacific Partnership

initiative between 8 members of APEC

It is not the bilateral and regional free trade agreements which are problematic per

se it is negotiating them in the absence of a robust WTO system ndash a system which is

seen as meeting the needs of the current and future trade-linked issues Bilateral and

regional agreements can only work towards complementing the multilateral trading

system when they are ldquoWTO-plusrdquo not ldquoWTO-insteadrdquo

bull Fourth the potential dampening effect on unilateral reforms

The political economy of openness in trade policy and institutional reform have always

functioned better within the framework of international commitments Multilateral

rules impose an important caveat on what countries can or cannot do In a country like

Indonesia this has worked to our advantage in the way we frame our reforms and in fact

has functioned in the past to put bad policies to rest

For instance in the famous National Car case in the mid 1980s which violated the

MFN principle by allowing duty-free imports of cars only from one source country the

domestic politics at the time did not allow for policymakers to remove this policy The

policy was finally ended through the WTOrsquos dispute settlement mechanism It would

be too bad for reforms if the process is undertaken within weakened confidence of

multilateral trading system or one which will eventually not be relevant to the evolution

of 21st century trade issues

VOX Research-based policy analysis and commentary from leading economists

22

The Way Forward No Plan B

Despite G20 Leadersrsquo commitments and all the good intentions and intensive work in

Geneva that came after the push given by trade ministers during their informal meeting

in Davos in January 2011 it proved impossible to arrive at a draft text by the end-of-

April milestone There remains ldquounbridgeable gapsrdquo in a number of main negotiating

groups namely non-agriculture market access

Given this situation trade ministers met first during the APEC Ministers of Trade

Meeting in Big Sky Montana and then on the fringes of the OECD meeting in Paris

Fortunately all have agreed that we all remain committed to completing Doha as a single

undertaking However there was a sense of realism as to the timing and pathways to

achieve this desirable outcome in a timely way

From an Indonesian perspective there is no ldquoPlan Brdquo We do not support a ldquoDoha

Lightrdquo and we remain committed to a comprehensive ambitious and balanced package

building on what we have achieved to date

After almost 6 years of negotiations since the key Hong Kong WTO Ministerial I

believe we are more than 50 or some would say 80 of the way done A realistic way

forward is to identify the sequence of steps that would take us to the final outcome this

is necessary to avoid the costs and lost-opportunities I outlined above

This is not about an early harvest or ldquocherry pickingrdquo and then stopping It is about

identifying the steps forward in a meaningful way towards the final goal of the single

undertaking of Doha

Identifying stepping stones to a final Doha Round conclusion

There are areas within the negotiations that could be seen as steps towards the final

package Of course work and political will is still needed to find ways to bridge the

Next Steps Getting Past the Doha Round Crisis

23

unbridgeable gaps In identifying the areas where we could find convergence a number

of priorities stand out

bull First and foremost is areas of negotiations that will contribute and deliver to devel-

opment objectives such as the Least Developed Countries package andor an effec-

tive aid-for-trade and facilitation package this is after all a Development Round

bull Second areas where there would be clear benefits for development and the private

sector in facilitating and ensuring the benefits of trade are greater we need stake-

holders to be cheerleading the way forward

bull Third there could be areas where we would be able to address the food-security

challenge

One could also foresee that within each current area of negotiations there could be

items which could be wrapped up without disturbing the overall balance of elements

in that particular area It is important that we do not go into ldquonewrdquo negotiations in

identifying which areas We should go into the mode of identifying these pathways and

steps with the mindset and political will of win-win

We need to be guided by priorities and pragmatism That is to identify the areas that are

doable and achievable in the very near future but which have an impact on development

and increasing the benefits of trade while at the same time building confidence for us to

continue our journey to the final package Most importantly we should never lose sight

of the final goal of the single undertaking

Looking forward

It is also important to provide the signal in what we say and do elsewhere Beyond

talking about Doha we must ensure continued confidence in and implementation of the

rules-based open trading system

VOX Research-based policy analysis and commentary from leading economists

24

bull This would mean the commitments of G20 Leaders and others on refraining from

protectionism going beyond words the good intentions need to be strengthened

with commitments and actions

bull It also has implications for how we undertake bilateral and regional agreements

these should be done in a way that is not an alternative to and does not detract from

the multilateral trading system We should pursue regionalism in a way which is

going to contribute to and complement the system

Concluding remarks

In conclusion we should not underestimate the costs of not doing all this We will

need to draw upon the strength of our individual and collective political commitment

We need to call on the ability of some major economies to look beyond pure national

interests and to look at the impact and costs on the global system and economy And we

need to remember that there are many countries and billions of people ndash many of which

are impoverished ndash who are waiting for the Doha deliverables

References

HLTE (2011) ldquoWorld trade and the Doha roundrdquo final report of the High-Level Trade

Experts Group chaired by Jagdish Bhagwati and Peter Sutherland

WTO (2011) ldquoReports on G20 trade and investment measures (mid-October 2010 to

April 2011)rdquo WTO Secretariat 24 May

About the author

Mari Pangestu is Indonesiarsquos Minister of Trade since 2004 having served as Executive

Director of the Jakarta-based think tank the Center for Strategic and International

Studies and a lecturer in the Faculty of Economics at the University of Indonesia From

1991 to 1998 Dr Pangestu was the coordinator of the Trade Policy Forum of the Pacific

Next Steps Getting Past the Doha Round Crisis

25

Economic Cooperation Council and serves on the Board of the Overseas Development

Council World Gold Council and the Asian Journal of Business from The University

of Michigan Ann Arbor

She has published widely on a range of subjects including matters pertaining to

Indonesia as well as regional (ie Asian and Asia Pacific) and global issues She earned

her BA and MA in economics from Australian National University and a PhD in

economics from the University of California Davis

27

The Doha Round has failed according the former US Trade Representative Susan

Schwab This essay argues that prolonging Doha jeopardises the multilateral trading

system and threatens future prospects for WTO-led liberalisation Negotiators should

salvage whatever partial agreements they can from Doha and quickly drop the rest

to ensure the December ministerial meeting focuses on future work plans rather than

recriminations over Doha

The Doha Round has failed It is time for the international community to acknowledge

this sad fact and move on Prolonging the pretence that the Doha Round will succeed

is now a greater threat to the WTO and the multilateral trading system than facing the

truth

A great many smart hard-working and well-intentioned individuals have worked over

many years to realise Doharsquos potential to contribute to global economic growth and

development But what is on the table in Geneva has failed to deliver any outcome

let alone a meaningful one It is time for a swift clean break from the past and to

lay the groundwork for a future where the WTO and its members revive WTO-led

liberalisation and reform

End Doharsquos stranglehold and build towards near-term wins

To keep the multilateral trading system healthy it is necessary to end the Doha

Roundrsquos stranglehold on the system This should happen quickly in order to ensure

that the December 2011 ministerial meeting focuses on future work plans rather than

Susan SchwabUniversity of Marlyand former US Trade Representative

Acknowledge Doharsquos demise and move on to save the WTO

2727

VOX Research-based policy analysis and commentary from leading economists

28

recriminations about a Doha Development Agenda that has struggled through one failed

encounter after another

Negotiators should refocus their efforts on near-term wins and on building the next

Round ndash which need not be another behemoth but perhaps a ldquorolling roundrdquo of reforms

and new market access or a few highest-common-denominator plurilateral or WTO-

plus deals Ultimately these should lead to a broader-based market access and rules

agreement under the multilateral auspices of the WTO

The small package possibility

In my recent Foreign Affairs article (Schwab 2011) I suggested that negotiators should

try to salvage whatever partial agreements they can and then walk away from the rest

I mentioned a number of potential candidates such as trade facilitation and the largely

completed agricultural-export pillar (comprising proposed agreements on export credits

food aid state-trading firms and the elimination of export subsidies) Negotiators

might also try to complete two environment-related agreements one cutting subsidies

to industrial fishing fleets that are overfishing the worldrsquos oceans and the other ending

tariff and nontariff barriers to rdquogreenrdquo technologies in major producing and consuming

countries Taken together or individually each of these would benefit countries across

the spectrum of economic development

I am however sceptical that even these small agreements are achievable in the current

climate of mistrust and entrenched positions A troubling development during the course

of the Round has been how often countries seem to forget or forfeit their own economic

interests ndash let alone the greater good ndash in the face of peer pressure and group-think In

the current environment even these smaller deals might prove impossible to achieve

It is certainly worth trying to achieve a few deliverables by taking a run at a small

package but negotiators should not spend too much time on it They already know

exactly what the options are if they cannot get to ldquoyesrdquo in say two weeks they should

Next Steps Getting Past the Doha Round Crisis

29

give up and move on to the real challenge of launching a new series of multilateral

negotiations under WTO auspices

Getting past Doha

How to conclude the Doha Round One option would be for the Director-General and

a representative sample of WTO Ambassadors to come together in the interest of the

institution and to offer a declaration of Doharsquos demise along with their pledge to begin

building the future That would enable leaders at the November G20 meeting to pledge

their support for the rules-based trading system the WTO and its next steps rather than

for the ever elusive ldquobalanced and ambitiousrdquo Doha outcome

After a short period of grieving over the death of Doha and an opportunity to get

beyond the anger lead trading nations should refocus on getting the WTO back into

its mainstream business of negotiating mutually advantageous market opening and

updating the global rdquorules of the roadrdquo This approach offers the best promise of a

meaningful ldquodevelopmentrdquo outcome as well

How might this be achieved

It seems unrealistic to think WTO members would agree to launch another massive

all-or-nothing round in the near future Such broad negotiations however will be

necessary to tackle some of the worldrsquos most important market access challenges in

services manufacturing and agriculture along with such issues as farm subsidies

There are ways to build-up to the big-round model again where countries once more see

economic self-interest in the use of broad-based negotiations and trade-offs to achieve

both new market access and market reforms First however we must re-establish trust

and regain momentum

One way forward would be for ministers to agree to launch a number of confidence-

building negotiations For example ministers in December could decide to open talks

VOX Research-based policy analysis and commentary from leading economists

30

on expanding the 1997 Information Technology Agreement a number of nations

seem interested and the US Administration already has the authority to implement an

enhanced agreement If negotiators fail to work through the 850 brackets in the current

Doha trade facilitation text that could also be tackled as a stand-alone agreement since

each nation would benefit from more efficient movement of goods and services across

borders

Another confidence-building measure might be a merger of sectoral agreements geared

toward a widely-shared objective such as cheaper better healthcare A package that

included pharmaceuticals medical devices and healthcare services might attract

support from the broad array of WTO members across the development spectrum Given

the high-level of public interest in and awareness of environment issues a sectoral

negotiation on environmental goods and services might be another confidence-building

deal once it is removed from the straightjacket that Doha has become

Lessons from Doha for next steps and the next round

Confidence building agreements would offer modest economic and social contributions

and serve to prepare the atmospherics for launch the next Round This brings me to my

last topic ndash the lessons we should draw from a decade of Doha talks

One thing that is quite clear from years of struggling with the basic structure of Doha

is that the combination of formula and self-selected flexibilities has not worked It

resulted in a situation where every negotiator had to assume the worst case ndash knowing

the political costs they would pay for their own liberalisation but expecting their trading

partners to use flexibilities to negate any meaningful new market-access It is possible

to draw from the best of the Doha formulas ndash such as the higher the barrier the greater

the cut ndash while still creating real negotiations around them through requests and offers

delivered using above- and below-formula cuts

Next Steps Getting Past the Doha Round Crisis

31

Another key lesson is that lumping the worldrsquos very diverse economies into three

basic categories ndash developed developing and least developed ndash is a practice that no

longer fits 21st century economic and trade realities Nor is it a structure conducive to

negotiations and real progress based on an exchange of market access among nations

with large markets Yes the advanced economies should be expected to do more than

those at lesser stages of economic development but expectations should also reflect

the fact that many emerging economies are characterised by both poverty and sectors

where they are globally competitive trade powerhouses

The emerging economies have large markets represent over half of global GDP growth

and stand to be the biggest winners from any major trade agreement They should be

expected to contribute to the next Round accordingly Major trade agreements generally

take at least 12 years to implement from the time they are initially concluded What

should the world trading system look like in 2025 in terms of the absolute and relative

responsibilities of key trading nations

Concluding remarks

I am optimistic when it comes to the multilateral trading system and the WTOrsquos central

role in its governance The optimistic scenario is that we put the Doha Round behind

us Facing facts can invigorate and strengthen the trading system If we fail to act the

WTO risks losing its relevance

The Doha Round ndash which in my view cannot be concluded as it is conceived today ndash

should not be allowed to continue draining the WTOrsquos credibility and potential progress

on the multilateral front Now is the time to liberate the would-be trade liberalisers from

the Doha straightjacket and move on

VOX Research-based policy analysis and commentary from leading economists

32

References

Schwab Susan (2011) ldquoAfter Doha Why the negotiations are doomed and what we

should do about itrdquo Foreign Affairs MayJune

About the author

Ambassador Schwab has been a Professor at the University of Maryland School of

Public Policy since January 2009 and a strategic advisor to Mayer Brown LLP (global

law firm) since March 2010 Ambassador Schwab served as US Trade Representative

from June 2006 to January 2009 and as Deputy US Trade Representative from

October 2005 to June 2006 Prior to her service as Deputy US Trade Representative

Ambassador Schwab served as President and Chief Executive Officer of the University

System of Maryland Foundation from June 2004 to October 2005 as a consultant

for the US Department of Treasury from July 2003 to December 2003 and as Dean

of the University of Maryland School of Public Policy from July 1995 to July 2003

Ambassador Schwab serves on the boards of Boeing Company Caterpillar Inc and

FedEx Corporation

She holds a BA in Political Economy from Williams College a Masters in Development

Policy from Stanford University (Food Research Institute) and a PhD in Public

Administration and International Business from The George Washington University

33

Hopes for finishing Doha in 2011 are fading fast This essay suggests a three-track

approach for moving beyond the Doha crisis 1) Identify a package of ldquodeliverablesrsquo ndash

parts of the Round that could be agreed by December 2011 2) Assemble a package of

contentious issues for ongoing negotiation with clear terms of reference 3) Establish

a work programme to consider WTO institutional reform and forward-looking issues

For reasons that are too well known to be repeated the WTO finds itself at the crossroads

Decisions to be taken in the next few weeks will determine whether it can steer its

way to a successful conclusion of the Doha Round in the near future Failing this the

Round will continue to hang like an albatross around the WTOrsquos neck preventing it

from delivering the promised boost to least developed nations and freezing its ability

to address new challenges to the global trading system All countries would suffer from

such an outcome but especially the worldrsquos poorest and most vulnerable

The cost of a never-ending Doha Round

The adverse implications of a continuing Doha impasse on the future role of the WTO

are too compelling to be dismissed offhandedly

Several trade-linked global problems require global cooperation Food security energy

security trade-related aspects of climate change labour mobility commodity price

volatility and integration of regional liberalisation into the multilateral system are

problems that can only be solved with global cooperation

Ujal Singh BhatiaFormerly Indiarsquos Ambassador and Permanent Representative to the WTO

Next Steps Getting past the Doha Round crisis

3333

VOX Research-based policy analysis and commentary from leading economists

34

For example if food exporters continue to impose export barriers when prices rise

food importers may respond with import barriers to boost self-sufficiency This sort of

protectionist reverberation could lead the world to a situation in which all the players

are worse off but none can improve the situation unilaterally Avoiding this sort of

outcome would require global agreements There are very few global institutions that

could manage such cooperation indeed the WTO might be the only one A WTO locked

in endless Doha debates cannot be the centre of the rules based global trading system

There are many thinkers who believe that the structure of WTO rules is robust enough

to withstand a Doha failure It is true that the sky will not fall if Doha is terminated

without a conclusion Such analysts however tend to underestimate the significant

structural changes taking place in the global economy and the trading system The

WTO is working on a set of rules agreed upon in 1994 that were based on an agenda

set almost a quarter of century ago These are still useful and relevant for much of

world trade ndash but not all For instance the rules were not designed for the technology-

driven fragmentation of the manufacturing process and the distribution of the product

value chain across several geographical locations the intertwining of production with

related services the embedded intellectual property rights in components and sub-

components or the multiplicity of rules of origin All these require a different approach

to rule making

A WTO that remains preoccupied with the Doha Round cannot be expected to focus

on such issues Therefore the continuing relevance of the WTO and its primacy in

the global trading system are contingent upon a successful and early conclusion of

the Doha Round Notwithstanding this urgency it is now clear that a Doha package

cannot be wound up in 2011 along the lines agreed by G20 leaders in November 2010

To prevent this from tying the WTO in knots for years to come it is necessary to think

creatively about ways forward

Next Steps Getting Past the Doha Round Crisis

35

Ideas for moving beyond the impasse

Any effort to deal with the impasse in the negotiations needs to be based on a holistic

appreciation of the systemic implications of a continuing stalemate as much as on the

negotiating positions of various members The efforts for a solution acceptable to all

members therefore need to focus on issues in the Doha mandate as well as on issues for

a post Doha situation

Within this framework four constraints need to be borne in mind

bull A ldquoDoha Literdquo of reduced ambition will not work The outcome has to reflect a dec-

adersquos efforts of the global community Ambition however cannot be defined to suit

the convenience of a few members It must touch all aspects of the Doha mandate

bull Aspects of the Doha mandate that are more relevant to the development dimension

have to be ambitiously addressed and fast tracked

bull WTO needs to start work on a new work programme to address new challenges

bull The Doha Round cannot be completed in 2011 A down payment is necessary from

the Doha Round this year to convince the world that the WTO can deliver

A three-track approach

These constraints require the WTO to adopt a three-track approach during the next few

months leading up to the ministerial meeting in December 2011

Track 1 Identification of a list of issues that specially address the trading interests

of smaller developing countries and relatively less contentious issues for fast tracked

finalisation before the ministerial meeting

Track 2 Identification of a package of the more contentious issues for continuing

consultations with clear terms of reference

Track 3 Identification of appropriate terms of reference for a work programme on

WTO institutional reform and the forward-looking agenda

VOX Research-based policy analysis and commentary from leading economists

36

A possible timeline

These three tracks taken as a package would provide a way forward that respects all

four constraints Achieving consensus on them would be difficult ndash and require months

of preparatory work and negotiations

If the WTO membership starts immediately however there is still time to get the

package ready for finalisation by ministers at the December 2011 ministerial meeting

For this to happen it is essential that discussions on such a package begin this month

so that its contents can be finalised by the end of June 2011 This would leave about

four working months before the ministerial meeting to complete negotiations on the

selected areas

What the three tracks might contain

The first track would contain the Doha down-payment package As with any WTO

package the contents would need to be negotiated and it might require complementary

policies such as technical assistance initiatives

Such a list must include items that speak to development aspects of the Doha mandate

such as

bull The Implementation of the Hong Kong decision on duty-free quota-free treatment

for less developed countries

bull A ministerial decision on the Monitoring Mechanism for Special and Differential

Treatment provisions

bull A ministerial decision on the issues raised by the Sub-Saharan African cotton ex-

porters (the group known as the C-4) and

bull The finalisation of a less-developed-country (LDC) waiver in services so that pref-

erential treatment can be provided to LDCrsquos in services without extending it to

others

Next Steps Getting Past the Doha Round Crisis

37

It should also include areas of the negotiations that engage the interest of all members

such as

bull Trade Facilitation

bull All aspects of export competition in agriculture including export subsidies

bull The Transparency Mechanism for regional trade agreements (RTAs)

bull The non-tariff barriers (NTBs) package in non-agricultural market access (NAMA)

and

bull A ministerial decision on interactions and relationships between the WTOrsquos rules

and its committees on the one hand and existing multilateral environmental agree-

ments on the other (eg the Basel Convention on the Control of Transboundary

Movements of Hazardous Wastes and the Montreal Protocol on Substances that

Deplete the Ozone Layer)

While some members would like to exclude some of these areas from a fast tracked

process in the hope of using them for trade offs in the final stage it is important that the

package is as comprehensive as possible

Track two Items for further negotiation

The second track would gather all remaining items currently under negotiations This

would include

bull All aspects of market access in industrial goods agriculture and services

bull All aspects of subsidies in agriculture

bull Various aspects of rules including fisheries subsidies

bull Environmental goods and

bull Issues related to trade-related aspects of international property rights (TRIPS) re-

garding the protection of Geographical Indicators and the protection of traditional

VOX Research-based policy analysis and commentary from leading economists

38

knowledge and folklore that were are mentioned in the Convention on Biological

Diversity1

The need for a balanced package deserves emphasis It is often assumed that there

is a straight trade-off between agricultural subsidies and market access The situation

however is more complex The interest of countries like India China and Indonesia

in agricultural reform is more systemic than export related For them other incentives

within the mandate will be required

Track three Looking ahead

The underlying theme for the work programme would be an appraisal of the entire

negotiating and decision-making process in the WTO in the context of the present

realities both within and outside the organisation The objective would be to prepare

the WTO to address new challenges to the global trading system concurrently with the

ongoing work on the remaining parts of the Doha mandate

Closing remarks

The above proposals constitute a basic template for addressing the Doha conundrum

To what extent they are actually embraced will depend on how much political capital

the major members of the WTO are prepared to invest in moving the Doha Round

forward There is much scepticism about whether such political will exists It is time

for governments to prove the sceptics wrong

1 Specifically as specified in paragraphs 18 and 19 of the Doha Declaration

Next Steps Getting Past the Doha Round Crisis

39

About the author

Ambassador Bhatia Singh joined the Indian Administrative Service in 1974 holding

several senior positions in provincial administration in Orissa State between 1976 and

1995 He served as Joint Secretary Ministry of Commerce and Industry between 1995-

2000 in which capacity he handled a number of bilateral regional and multilateral trade

negotiations From 2004 to his retirement in 2010 he served as Indiarsquos Ambassador and

Permanent Representative to the WTO in Geneva

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

Centre for Economic Policy Research (CEPR)

Centre for Economic Policy Research3rd Floor77 Bastwick StreetLondonEC1V 3PZUK

Tel +44 (0) 20 7183 8801Fax +44 (0)20 7183 8820Email ceprceprorgWeb wwwceprorg

copy Centre for Economic Policy Research 2011

ISBN (eBook) 978-1-907142-37-6

Next Steps Getting Past the Doha Round Crisis

A VoxEUorg eBook

Edited by Richard Baldwin and Simon Evenett

Centre for Economic Policy Research (CEPR)

The Centre for Economic Policy Research is a network of over 700 Research Fellows and Affiliates based primarily in European Universities The Centre coordinates the re-search activities of its Fellows and Affiliates and communicates the results to the public and private sectors CEPR is an entrepreneur developing research initiatives with the producers consumers and sponsors of research Established in 1983 CEPR is a Euro-pean economics research organization with uniquely wide-ranging scope and activities

The Centre is pluralist and non-partisan bringing economic research to bear on the analysis of medium- and long-run policy questions CEPR research may include views on policy but the Executive Committee of the Centre does not give prior review to its publications and the Centre takes no institutional policy positions The opinions ex-pressed in this report are those of the authors and not those of the Centre for Economic Policy Research

CEPR is a registered charity (No 287287) and a company limited by guarantee and registered in England (No 1727026)

Chair of the Board Guillermo de la DehesaPresident Richard PortesChief Executive Officer S tephen YeoResearch Director Mathias DewatripontPolicy Director Richard Baldwin

Contents

Foreword vii

The Doha dilemma An introduction to the issues 9 and possible solutions Richard Baldwin and Simon Evenett

There is no Plan B ndash only Plan A Towards completing 19 Doha Mari Pangestu

Acknowledge Doharsquos demise and move on to save 27 the WTO Susan Schwab

Next Steps Getting past the Doha Round crisis 33Ujal Singh Bhatia

Next Steps Is an early harvest still possible 41Zhenyu Sun

Getting past the Doha Round crisis Moving forward 47 in the WTO John Weekes

The good ship Doha Salvage-and-abandon-ship or 51 repair-and-wait Stuart Harbinson

Keeping the WTO on track A Doha down payment 61 plus more Richard Baldwin and Simon Evenett

vii

Doha is deadlocked ndash the members of the WTO are unable to give up and unable to go

forward

In this eBook the contributors propose several deacutemarche that consider various

combinations of 4 initiatives that offer a way out of the current impasse

bull Deliver a down payment

bull Ditch the current process of negotiating in ldquosilosrdquo ndash it doesnrsquot work

bull Develop a new and forward-looking agenda for the WTO

bull Demonstrate some leadership

The down payment is straightforward All the contributors suggest a number of area

where agreement is already close and which could be wrapped up in time for the

December Ministerial After a decade of negotiations it hardly seems right to call this

ldquoan early harvestrdquo but a set of measures that focus on the needs of the least developed

nations seems right for a ldquoDevelopment Roundrdquo

The current approach to negotiations is clearly not working and offers no way forward

Why not try new approaches A number of contributors suggest abandoning the current

ldquosilo approachrdquo The December Ministerial they argue should adopt a new approach

abandoning modalities and emphasising horizontal negotiations One contributor ex-

USTR Susan Schwab suggests abandoning the Round altogether and starting from

scratch

While much of the energy in the Doha negotiations has been expended on traditional

issues such as agriculture and market access for goods and services there is a long list

of new issues that will only grow in importance over time Several contributors advocate

a programme of analysis and discussion that will help members better understand issues

such as competition policy climate change and government procurement

Foreword

VOX Research-based policy analysis and commentary from leading economists

viii

The current Doha deadlock is largely due to the absence of leadership from the major

players Expecting leadership now from any of the Big 5 is unrealistic Baldwin and

Evenett drawing on their discussions with a wide-range of WTO delegations suggest

that one demarche that could help unblock the impasse is a bold move by the middle-

power WTO members They could seize the initiative by adopting a set of unilateral

measures to offer to liberalise trade The new commercial opportunities this would

provide would remind exporters what they have to gain from the conclusion of the

Round

Richard Baldwin and Simon Evenett have acted with their usual speed and efficiency

assembling at short notice a distinguished group of authors whose essays identify

solutions to Doha Deadlock And as always they have been very ably supported by

Team Vox in particular by Bob Denham Samantha Reid Anil Shamdasani and Pierre-

Louis Veacutezina We are grateful to them all

Stephen YeoChief Executive OfficerMay 2011

9

World leaders must make important decisions concerning the future of the Doha Round

for the 31 May 2011 meeting of the WTO membership This essay introduces the issues

and summarises contributorsrsquo suggestions for ldquoNext Stepsrdquo It argues that the best

outcome would be for WTO members to agree to work towards a small package of

deliverables for December 2011 and push the rest of the agenda items into the future

ndash perhaps with specific instructions for changing the basic negotiating protocols used

to date

Global leaders face a dilemma over the WTO multilateral trade negotiations known

as the Doha Round The talks are dead in the water both movement forwards and

movement backwards seem blocked How did we get here Current and former trade

policy officials typically emphasise two points

bull Ten years of talks have made some progress but it now must be taken as a hard fact

that the Doha Round in its entirety will not finish this year

bull No government is willing to announce publicly that they want to abandon the Round

The sources of unwillingness vary Some argue that abandoning the Round would throw

away genuine progress such as the ultimate phase-out of agricultural export subsidies

Others wish to maintain attention focused on particular problems in the trade system

Yet others simply fear that theyrsquoll be blamed for delivering the bad news

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

The Doha dilemma An introduction to the issues and possible solutions

99

VOX Research-based policy analysis and commentary from leading economists

10

Next Steps Saving the WTO from the Doha Round

World leaders must now decide how to tackle this dilemma at the WTOrsquos next key

meeting on 31 May 2011 Logically there are only 3 roads ahead

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock

in some of the progress to date

This eBook on ldquoNext Steps Getting Past the Doha Round Crisisrdquo gathers the thinking

of a handful of the worldrsquos most experienced Doha experts namely former US Trade

Representative Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia

Chinarsquos former WTO Ambassador Zenyu Sun Canadarsquos former WTO Ambassador

John Weekes and Hong Kongrsquos former WTO Ambassador Stuart Harbinson ndash all of

whom spent years directly engaged in Doha negotiations

Road 1 The pitfalls of declaring failure

Susan Schwab argues strongly that declaring Doharsquos demise is essential to allowing

the WTO to move on John Weekes likewise argues ldquoIt would be damaging to invest

more resources and credibility in something that canrsquot be donerdquo Ujal Singh Bhatia by

contrast argues that Road 1 could lead to unpredictable results Zenyu Sun notes that

declaring the Doha Round to be dead would be easy but then what ldquoWould such an

announcement inspire people to inject more energy into the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt itrdquo he writes

These judgements on the medium- to long-term ramifications differ but the short-

term fallout is clear Declaring the Round ldquodeadrdquo would invite an immediate storm of

recrimination among WTO members A great deal of hope and effort has been invested

in the Round by nations across the globe Most WTO members are still looking for the

Next Steps Getting Past the Doha Round Crisis

11

Doha Round to effect critical adjustments to the world trading system ndash especially a

rebalancing of the level of openness to agricultural versus industrial trade (Nassar and

Perez 2011) If one or more of the Big-5 reject a deal that most members still think is

doable the blame game could get very nasty

There is a great danger that this level of ill-will could undermine multilateral trade

cooperation for years It could lock in the growing perception that the WTO is not a

place where serious negotiations can be conducted The US in particular is likely to

be subject to severe criticism in a way that might have the unintended consequence of

convincing US Congressional and private sector groups that the WTO is not a forum

where America can do business Such an outcome would serve no onersquos interests

Despite the clear logic of Schwabrsquos and Weekesrsquo arguments the pitfalls highlighted

by Bhatia and Sun find resonance with most world leaders This is why almost every

WTO member opposes Road 1 As a consequence it is extremely unlikely that WTO

members will decide to declare Doha dead any time soon

Road 2 The pitfalls of suspension

Suspension is certainly the most politically expedient choice for the Big-5 and it

is superficially attractive The logic is well expressed in the old story about a man

ndash condemned to death by his Emperor ndash who obtains a yearrsquos stay of execution by

promising to teach the Emperorrsquos horse to sing ldquoMuch could happen in a yearrdquo the man

reasons ldquoThe Emperor could die I could die the horse could singrdquo

But the usual merits of muddling through donrsquot apply to Doha Suspensions have been

tried so often that everyone would know that suspension is just a circuitous means of

killing the Round Road 2 is just the long route to Road 1 All the pitfalls of Road 1

therefore also apply to Road 2

But suspension would be even worse in many ways The world of trade is changing more

rapidly than negotiating positions so each delay seems to make a compromise based on

VOX Research-based policy analysis and commentary from leading economists

12

the existing elements even less likely Worse still a suspension would strengthen and

spread the belief that the WTO is not an appropriate venue for multilateral negotiations

As Ujal Singh Bhatia writes ldquothe Round will continue to hang like an albatross around

the WTOrsquos neck preventing it from addressing new challenges to the global trading

systemrdquo This would be particular worrisome since the world economy is moving into a

phase of great stress It is facing new challenges that will require multilateral solutions

ndash issues like food security natural-resource export restrictions and trade in goods

services and technology that are essential to climate-change adaption and mitigation

Road 3 A small package followed by a big package

The third road seems the most likely way to move past the Doha dilemma of not being

able to move forwards or backwards on the broad agenda The idea here is that the

agenda would be sorted into ldquodo-ablerdquo and ldquonot yet do-ablerdquo piles Nations would move

forward on a small package of do-ables for December 2011 while agreeing to discuss

the bigger issues later under revised ground rules that would be more likely to permit

the trade-offs necessary to make the big package acceptable to all members

As Stuart Harbinson puts it Doha is like a ship run aground a small package of

deliverables for December 2011 would act as a ldquopatchrdquo to keep the ldquogood ship Dohardquo

afloat until the high tide comes in and lifts the ship off the rocks ldquoIn this analogy the

lsquohigh tidersquo would be a change in the global economic and political seascape enabling

the major trading economies to settle their differences and bring the ship safely into

harbourrdquo he writes

Choices to make on the small package

All five experienced trade negotiators contributing to this eBook ndash and most of the WTO

delegations with whom we spoke ndash believe that it is worth trying to lock in agreement

on a small number of areas by the end of 2011 There are two critical issues to decide

Next Steps Getting Past the Doha Round Crisis

13

1 How much time should be spent on negotiating the small package

2 Which items should be in the small package

The contributors disagree over the first issue Susan Schwab argues for giving it not

more than 2 weeks others suggest longer They all however recognise that a prolonged

and contentious negotiation on a small package ndash especially one that ultimately proved

fruitless ndash would solve nothing and might harm the system

There is far more agreement on the second issue ndash possible composition of the small

package All the contributors and most of the WTO delegations with whom we spoke

suggest that some items on Doharsquos massive negotiating agenda are close to conclusion

Indeed the lists are remarkably similar despite the vast differences in the contributorsrsquo

perspectives They all point out however that striking even a very restrained list of

agreement will require abundant goodwill and hard negotiating

Suggestions for the small-package items include

bull Some sort of accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

bull A package of measures that promote ldquotrade facilitationrdquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impediments to trade

bull An agreement on a monitoring mechanism for special and differential treatment

bull An agreement to make permanent the transparency mechanism for regional trade

agreements that has been operating successfully for years

bull An agreement on certain non-tariff barriers

VOX Research-based policy analysis and commentary from leading economists

14

bull An agreement formalising cooperation between the WTO and various multilateral

environmental agreements

Other issues may ultimately prove tractable or necessary to provide balance Those most

often mentioned include a standstill agreement on fisheries subsidies certain aspects

of the less controversial rules negotiations and export subsidies Such a package could

also include other DDA matters for which the negotiations could be completed quickly

or non-DDA matters where the WTO membership is at one such as the promising

negotiations to upgrade the WTOrsquos Agreement on Government Procurement

The final issue is what to call the small package this is not a trivial matter

bull One option is to just boldly call the small package the ldquoDoha Roundrdquo ndash to declare

victory and move on

While this would clearly disappoint many it speaks to the objective of not letting the

Round drag down the WTO ndash not allowing the WTOrsquos credibility to be further damaged

by endless discussions that can never led to a happy ending

Of course this option would leave unsolved the core Doha issues ndash reducing distortions

in and improving market access for industrial goods agricultural products and services

trade and updating the rules But it might allow members to re-craft the parameters of

the negotiations in a way that would be more likely to lead to success This is clearly

the view taken by Susan Schwab and John Weekes As John Weekes puts it ldquoNot

completing the Doha Round would be a serious setback to the WTO and the multilateral

trading system However if it is clear that the Round cannot be concluded successfully

it is better to admit that and work constructively to develop an agenda for the future

work of the organisationrdquo

Another option would be to wrap up the collection of small agreements into a package

called the ldquoDoha down paymentrdquo or ldquoDoha deliverablesrdquo or ldquoDoha early harvestrdquo as a

way of stressing that all the Doha agenda items are still on the table

Next Steps Getting Past the Doha Round Crisis

15

A third option would be to view the individual items as standalone agreements to be

agreed by the ministers of WTO members at the December meeting without clear

reference to what comes next

This brings us to the next major element of the Road 3 pathway What to do with the

rest of the agenda

Choices to make on the big package

Albert Einstein once defined insanity as doing the same thing over and over and

expecting different results This makes it clear that any complete plan for a way past the

Doha dilemma must change something in the way the negotiations have been operating

Any multilateral trade negotiation involves choice on a series of negotiating rules

or conventions The Doha Round has accreted an odd constellation of these Some

are fundamental and therefore extremely difficult to change These include the idea

that everything must be agreed by all before anything is agreed (the so-called single-

undertaking principle) or the choice to focus on the particular tariff-cutting formula

known as the Swiss formulas But many of the choices are less central such as the exact

way in which flexibilities on tariff-cutting are to be decided

The ramifications of these procedures on the negotiating dynamic were not well

understood years ago when the original decisions were taken The lack of understanding

is even deeper when it comes to the joint operation and interaction among the

conventions

For these reasons the set of negotiating conventions that guide Round may no longer be

optimal Consideration of the pros and cons of alternatives might identify other ways of

finding a package of trade-offs that is acceptable to all

VOX Research-based policy analysis and commentary from leading economists

16

The forward-looking agenda

A number of contributors suggested that the process of rebuilding momentum and

confidence in the ultimate outcome could be boosted by agreeing to launch work

programmes (not actual negotiations) on how the WTO could address 21st-century

trade issues that have come to the fore since the Doha agenda was set in 2001

Here there are two basic lines The first would consider WTO institutional reform the

second would consider new issues such as new disciplines to underpin the increasing

convergence of trade investment and services (as is now routinely done in regional

trade agreements) setting limits on acceptable national climate policies with trade

implications or export restrictions

There certainly seems merit to these idea If nothing else it would interject new

dimensions to discussions that have been going on for a decade It would also make

it clear that we need to safeguard the WTO as a forum for multilateral discussions on

critical 21st-century issues

Concluding remarks

Many decent hard-working public servants have committed plenty of energy to the

Doha Round since its inception At this critical time any temptation for recriminations

or lapses into bitter disappointment should be set to one side to let governments chart a

new path for the WTO The circumstances facing WTO members in the middle of 2011

are hardly ideal and the set of options that stand any chance of acceptance is narrow In

times like these it would be a mistake to make the perfect the enemy of the good It is

time to think creatively and cooperatively about getting the WTO past the Doha crisis

A decision or non-decision that led to several more years of drift ndash years that will be

complicated by elections and changes in governments in some of the leading trading

powers ndash could turn out to be the beginning of the end for the WTOrsquos role as leader

of the global trading system The alternative ndash uncoordinated developments led by the

Next Steps Getting Past the Doha Round Crisis

17

Big-5 in their own systems of regional trade agreements ndash is a very plausible outcome

at this stage but not one that will ultimately serve anyonersquos long-run interests

References

Andre Nassar and Carlos Perez (2011) ldquoWhy WTO members should not give up the

Doha Round The case of agricultural traderdquo in Richard Baldwin and Simon Evenett

(eds) Why World Leaders Must Resist the False Promise of a Doha Delay VoxEU

April

19

Doha is stalled by gaps that are unbridgeable today Indonesiarsquos Trade Minister argues

that we need to be guided by priorities and pragmatism We should develop a set of

stepping stones that will help us complete the Doha Round eventually We should

identify the areas that are achievable in the very near future but which have an impact

on development while building confidence for the continued journey to a successful

Round We should never lose sight of the final goal ndash completing the Doha Round as a

single undertaking In short we are not looking for a ldquoPlan Brdquo we are looking for a

new way to execute Plan A

The importance of completing the Doha Development Agenda sooner rather than later

goes beyond bringing gains of $360 billion of additional trade with substantial benefits

for industrialised and developing economies (HLTE 2011) The importance also goes

beyond what pragmatic soothsayers who are telling us ldquoWhy are you worried the

WTO system will continue to be robust whether we conclude Doha or not Companies

and countries will continue to traderdquo As a developing country policy maker ndash and I

believe I speak for many other developing countries ndash I am greatly worried about the

costs and opportunity lost of not completing Doha

The costs of not completing Doha

I will point to four costs of not completing the Doha Round

bull First is what it could achieve for food security

Mari PangestuMinister of Trade Indonesia

There is no Plan B ndash only Plan A Towards completing Doha

1919

VOX Research-based policy analysis and commentary from leading economists

20

During the 2008 food crisis imbalances between supply and demand were partly

attributed to distorted agriculture prices caused by trade-distorting export subsidies

and domestic-support schemes The agriculture package in Doha will go some way to

address this In todayrsquos situation of high commodity prices now is the perfect time to

address the removal and elimination of such trade-distorting policies Removing these

distortions can only be achieved through multilateral negotiations not through bilateral

or regional agreements

Most importantly the winners would be the billions of hungry and poor people all over

the world correcting the system and ensuring the future supply of food and greater

price stability is very much in their interests For example in Indonesia a 10 increase

in the price of rice without any change in income would lead to a 1 increase in

poverty

bull Second keeping protection at bay

During the depth of the crisis benign protectionism was the order of the day according

to the self-reporting surveillance mechanism established by the WTO at the request of

G20 Leaders This allowed the rebound of trade to become one of the costless ways for

the global economy to recover It is ironical that in the recovery the latest report (WTO

2011) shows that there has been a slight increase in protectionism causing an estimated

impact of 06 to G20 exports

The main increase has been due to tariff increases automatic licenses and other

restrictions including export restrictions Whilst this is still ldquosmallrdquo it is nevertheless

double from the previous period Restoration of the confidence in the world trading

system through clear signals that we are progressing on completing the Round is crucial

to keeping protectionism at bay Developing countries such as Indonesia have a great

interest in this because only the multilateral trading system will provide the fair rules-

based trading system for us to face large and more developed partners on a fair and

equal standing

Next Steps Getting Past the Doha Round Crisis

21

bull Third the lack of progress on the Doha Round already has and will continue to raise

the pressure to undertake bilateral and regional free trade negotiations

In the ASEAN region there are already FTAs between ASEAN and all six of its dialog

partners (Australia China India Japan Korea New Zealand) and numerous bilateral

FTAs The EU has just completed negotiations with Korea which has put pressure

for the Korea-US FTA to be ratified as soon as possible The EU has also completed

negotiations with India and is negotiating with Singapore Malaysia and preparing

to do so with other ASEAN countries Recently China Korea and Japan announced

revitalization of their FTA initiative Furthermore we have the Trans-Pacific Partnership

initiative between 8 members of APEC

It is not the bilateral and regional free trade agreements which are problematic per

se it is negotiating them in the absence of a robust WTO system ndash a system which is

seen as meeting the needs of the current and future trade-linked issues Bilateral and

regional agreements can only work towards complementing the multilateral trading

system when they are ldquoWTO-plusrdquo not ldquoWTO-insteadrdquo

bull Fourth the potential dampening effect on unilateral reforms

The political economy of openness in trade policy and institutional reform have always

functioned better within the framework of international commitments Multilateral

rules impose an important caveat on what countries can or cannot do In a country like

Indonesia this has worked to our advantage in the way we frame our reforms and in fact

has functioned in the past to put bad policies to rest

For instance in the famous National Car case in the mid 1980s which violated the

MFN principle by allowing duty-free imports of cars only from one source country the

domestic politics at the time did not allow for policymakers to remove this policy The

policy was finally ended through the WTOrsquos dispute settlement mechanism It would

be too bad for reforms if the process is undertaken within weakened confidence of

multilateral trading system or one which will eventually not be relevant to the evolution

of 21st century trade issues

VOX Research-based policy analysis and commentary from leading economists

22

The Way Forward No Plan B

Despite G20 Leadersrsquo commitments and all the good intentions and intensive work in

Geneva that came after the push given by trade ministers during their informal meeting

in Davos in January 2011 it proved impossible to arrive at a draft text by the end-of-

April milestone There remains ldquounbridgeable gapsrdquo in a number of main negotiating

groups namely non-agriculture market access

Given this situation trade ministers met first during the APEC Ministers of Trade

Meeting in Big Sky Montana and then on the fringes of the OECD meeting in Paris

Fortunately all have agreed that we all remain committed to completing Doha as a single

undertaking However there was a sense of realism as to the timing and pathways to

achieve this desirable outcome in a timely way

From an Indonesian perspective there is no ldquoPlan Brdquo We do not support a ldquoDoha

Lightrdquo and we remain committed to a comprehensive ambitious and balanced package

building on what we have achieved to date

After almost 6 years of negotiations since the key Hong Kong WTO Ministerial I

believe we are more than 50 or some would say 80 of the way done A realistic way

forward is to identify the sequence of steps that would take us to the final outcome this

is necessary to avoid the costs and lost-opportunities I outlined above

This is not about an early harvest or ldquocherry pickingrdquo and then stopping It is about

identifying the steps forward in a meaningful way towards the final goal of the single

undertaking of Doha

Identifying stepping stones to a final Doha Round conclusion

There are areas within the negotiations that could be seen as steps towards the final

package Of course work and political will is still needed to find ways to bridge the

Next Steps Getting Past the Doha Round Crisis

23

unbridgeable gaps In identifying the areas where we could find convergence a number

of priorities stand out

bull First and foremost is areas of negotiations that will contribute and deliver to devel-

opment objectives such as the Least Developed Countries package andor an effec-

tive aid-for-trade and facilitation package this is after all a Development Round

bull Second areas where there would be clear benefits for development and the private

sector in facilitating and ensuring the benefits of trade are greater we need stake-

holders to be cheerleading the way forward

bull Third there could be areas where we would be able to address the food-security

challenge

One could also foresee that within each current area of negotiations there could be

items which could be wrapped up without disturbing the overall balance of elements

in that particular area It is important that we do not go into ldquonewrdquo negotiations in

identifying which areas We should go into the mode of identifying these pathways and

steps with the mindset and political will of win-win

We need to be guided by priorities and pragmatism That is to identify the areas that are

doable and achievable in the very near future but which have an impact on development

and increasing the benefits of trade while at the same time building confidence for us to

continue our journey to the final package Most importantly we should never lose sight

of the final goal of the single undertaking

Looking forward

It is also important to provide the signal in what we say and do elsewhere Beyond

talking about Doha we must ensure continued confidence in and implementation of the

rules-based open trading system

VOX Research-based policy analysis and commentary from leading economists

24

bull This would mean the commitments of G20 Leaders and others on refraining from

protectionism going beyond words the good intentions need to be strengthened

with commitments and actions

bull It also has implications for how we undertake bilateral and regional agreements

these should be done in a way that is not an alternative to and does not detract from

the multilateral trading system We should pursue regionalism in a way which is

going to contribute to and complement the system

Concluding remarks

In conclusion we should not underestimate the costs of not doing all this We will

need to draw upon the strength of our individual and collective political commitment

We need to call on the ability of some major economies to look beyond pure national

interests and to look at the impact and costs on the global system and economy And we

need to remember that there are many countries and billions of people ndash many of which

are impoverished ndash who are waiting for the Doha deliverables

References

HLTE (2011) ldquoWorld trade and the Doha roundrdquo final report of the High-Level Trade

Experts Group chaired by Jagdish Bhagwati and Peter Sutherland

WTO (2011) ldquoReports on G20 trade and investment measures (mid-October 2010 to

April 2011)rdquo WTO Secretariat 24 May

About the author

Mari Pangestu is Indonesiarsquos Minister of Trade since 2004 having served as Executive

Director of the Jakarta-based think tank the Center for Strategic and International

Studies and a lecturer in the Faculty of Economics at the University of Indonesia From

1991 to 1998 Dr Pangestu was the coordinator of the Trade Policy Forum of the Pacific

Next Steps Getting Past the Doha Round Crisis

25

Economic Cooperation Council and serves on the Board of the Overseas Development

Council World Gold Council and the Asian Journal of Business from The University

of Michigan Ann Arbor

She has published widely on a range of subjects including matters pertaining to

Indonesia as well as regional (ie Asian and Asia Pacific) and global issues She earned

her BA and MA in economics from Australian National University and a PhD in

economics from the University of California Davis

27

The Doha Round has failed according the former US Trade Representative Susan

Schwab This essay argues that prolonging Doha jeopardises the multilateral trading

system and threatens future prospects for WTO-led liberalisation Negotiators should

salvage whatever partial agreements they can from Doha and quickly drop the rest

to ensure the December ministerial meeting focuses on future work plans rather than

recriminations over Doha

The Doha Round has failed It is time for the international community to acknowledge

this sad fact and move on Prolonging the pretence that the Doha Round will succeed

is now a greater threat to the WTO and the multilateral trading system than facing the

truth

A great many smart hard-working and well-intentioned individuals have worked over

many years to realise Doharsquos potential to contribute to global economic growth and

development But what is on the table in Geneva has failed to deliver any outcome

let alone a meaningful one It is time for a swift clean break from the past and to

lay the groundwork for a future where the WTO and its members revive WTO-led

liberalisation and reform

End Doharsquos stranglehold and build towards near-term wins

To keep the multilateral trading system healthy it is necessary to end the Doha

Roundrsquos stranglehold on the system This should happen quickly in order to ensure

that the December 2011 ministerial meeting focuses on future work plans rather than

Susan SchwabUniversity of Marlyand former US Trade Representative

Acknowledge Doharsquos demise and move on to save the WTO

2727

VOX Research-based policy analysis and commentary from leading economists

28

recriminations about a Doha Development Agenda that has struggled through one failed

encounter after another

Negotiators should refocus their efforts on near-term wins and on building the next

Round ndash which need not be another behemoth but perhaps a ldquorolling roundrdquo of reforms

and new market access or a few highest-common-denominator plurilateral or WTO-

plus deals Ultimately these should lead to a broader-based market access and rules

agreement under the multilateral auspices of the WTO

The small package possibility

In my recent Foreign Affairs article (Schwab 2011) I suggested that negotiators should

try to salvage whatever partial agreements they can and then walk away from the rest

I mentioned a number of potential candidates such as trade facilitation and the largely

completed agricultural-export pillar (comprising proposed agreements on export credits

food aid state-trading firms and the elimination of export subsidies) Negotiators

might also try to complete two environment-related agreements one cutting subsidies

to industrial fishing fleets that are overfishing the worldrsquos oceans and the other ending

tariff and nontariff barriers to rdquogreenrdquo technologies in major producing and consuming

countries Taken together or individually each of these would benefit countries across

the spectrum of economic development

I am however sceptical that even these small agreements are achievable in the current

climate of mistrust and entrenched positions A troubling development during the course

of the Round has been how often countries seem to forget or forfeit their own economic

interests ndash let alone the greater good ndash in the face of peer pressure and group-think In

the current environment even these smaller deals might prove impossible to achieve

It is certainly worth trying to achieve a few deliverables by taking a run at a small

package but negotiators should not spend too much time on it They already know

exactly what the options are if they cannot get to ldquoyesrdquo in say two weeks they should

Next Steps Getting Past the Doha Round Crisis

29

give up and move on to the real challenge of launching a new series of multilateral

negotiations under WTO auspices

Getting past Doha

How to conclude the Doha Round One option would be for the Director-General and

a representative sample of WTO Ambassadors to come together in the interest of the

institution and to offer a declaration of Doharsquos demise along with their pledge to begin

building the future That would enable leaders at the November G20 meeting to pledge

their support for the rules-based trading system the WTO and its next steps rather than

for the ever elusive ldquobalanced and ambitiousrdquo Doha outcome

After a short period of grieving over the death of Doha and an opportunity to get

beyond the anger lead trading nations should refocus on getting the WTO back into

its mainstream business of negotiating mutually advantageous market opening and

updating the global rdquorules of the roadrdquo This approach offers the best promise of a

meaningful ldquodevelopmentrdquo outcome as well

How might this be achieved

It seems unrealistic to think WTO members would agree to launch another massive

all-or-nothing round in the near future Such broad negotiations however will be

necessary to tackle some of the worldrsquos most important market access challenges in

services manufacturing and agriculture along with such issues as farm subsidies

There are ways to build-up to the big-round model again where countries once more see

economic self-interest in the use of broad-based negotiations and trade-offs to achieve

both new market access and market reforms First however we must re-establish trust

and regain momentum

One way forward would be for ministers to agree to launch a number of confidence-

building negotiations For example ministers in December could decide to open talks

VOX Research-based policy analysis and commentary from leading economists

30

on expanding the 1997 Information Technology Agreement a number of nations

seem interested and the US Administration already has the authority to implement an

enhanced agreement If negotiators fail to work through the 850 brackets in the current

Doha trade facilitation text that could also be tackled as a stand-alone agreement since

each nation would benefit from more efficient movement of goods and services across

borders

Another confidence-building measure might be a merger of sectoral agreements geared

toward a widely-shared objective such as cheaper better healthcare A package that

included pharmaceuticals medical devices and healthcare services might attract

support from the broad array of WTO members across the development spectrum Given

the high-level of public interest in and awareness of environment issues a sectoral

negotiation on environmental goods and services might be another confidence-building

deal once it is removed from the straightjacket that Doha has become

Lessons from Doha for next steps and the next round

Confidence building agreements would offer modest economic and social contributions

and serve to prepare the atmospherics for launch the next Round This brings me to my

last topic ndash the lessons we should draw from a decade of Doha talks

One thing that is quite clear from years of struggling with the basic structure of Doha

is that the combination of formula and self-selected flexibilities has not worked It

resulted in a situation where every negotiator had to assume the worst case ndash knowing

the political costs they would pay for their own liberalisation but expecting their trading

partners to use flexibilities to negate any meaningful new market-access It is possible

to draw from the best of the Doha formulas ndash such as the higher the barrier the greater

the cut ndash while still creating real negotiations around them through requests and offers

delivered using above- and below-formula cuts

Next Steps Getting Past the Doha Round Crisis

31

Another key lesson is that lumping the worldrsquos very diverse economies into three

basic categories ndash developed developing and least developed ndash is a practice that no

longer fits 21st century economic and trade realities Nor is it a structure conducive to

negotiations and real progress based on an exchange of market access among nations

with large markets Yes the advanced economies should be expected to do more than

those at lesser stages of economic development but expectations should also reflect

the fact that many emerging economies are characterised by both poverty and sectors

where they are globally competitive trade powerhouses

The emerging economies have large markets represent over half of global GDP growth

and stand to be the biggest winners from any major trade agreement They should be

expected to contribute to the next Round accordingly Major trade agreements generally

take at least 12 years to implement from the time they are initially concluded What

should the world trading system look like in 2025 in terms of the absolute and relative

responsibilities of key trading nations

Concluding remarks

I am optimistic when it comes to the multilateral trading system and the WTOrsquos central

role in its governance The optimistic scenario is that we put the Doha Round behind

us Facing facts can invigorate and strengthen the trading system If we fail to act the

WTO risks losing its relevance

The Doha Round ndash which in my view cannot be concluded as it is conceived today ndash

should not be allowed to continue draining the WTOrsquos credibility and potential progress

on the multilateral front Now is the time to liberate the would-be trade liberalisers from

the Doha straightjacket and move on

VOX Research-based policy analysis and commentary from leading economists

32

References

Schwab Susan (2011) ldquoAfter Doha Why the negotiations are doomed and what we

should do about itrdquo Foreign Affairs MayJune

About the author

Ambassador Schwab has been a Professor at the University of Maryland School of

Public Policy since January 2009 and a strategic advisor to Mayer Brown LLP (global

law firm) since March 2010 Ambassador Schwab served as US Trade Representative

from June 2006 to January 2009 and as Deputy US Trade Representative from

October 2005 to June 2006 Prior to her service as Deputy US Trade Representative

Ambassador Schwab served as President and Chief Executive Officer of the University

System of Maryland Foundation from June 2004 to October 2005 as a consultant

for the US Department of Treasury from July 2003 to December 2003 and as Dean

of the University of Maryland School of Public Policy from July 1995 to July 2003

Ambassador Schwab serves on the boards of Boeing Company Caterpillar Inc and

FedEx Corporation

She holds a BA in Political Economy from Williams College a Masters in Development

Policy from Stanford University (Food Research Institute) and a PhD in Public

Administration and International Business from The George Washington University

33

Hopes for finishing Doha in 2011 are fading fast This essay suggests a three-track

approach for moving beyond the Doha crisis 1) Identify a package of ldquodeliverablesrsquo ndash

parts of the Round that could be agreed by December 2011 2) Assemble a package of

contentious issues for ongoing negotiation with clear terms of reference 3) Establish

a work programme to consider WTO institutional reform and forward-looking issues

For reasons that are too well known to be repeated the WTO finds itself at the crossroads

Decisions to be taken in the next few weeks will determine whether it can steer its

way to a successful conclusion of the Doha Round in the near future Failing this the

Round will continue to hang like an albatross around the WTOrsquos neck preventing it

from delivering the promised boost to least developed nations and freezing its ability

to address new challenges to the global trading system All countries would suffer from

such an outcome but especially the worldrsquos poorest and most vulnerable

The cost of a never-ending Doha Round

The adverse implications of a continuing Doha impasse on the future role of the WTO

are too compelling to be dismissed offhandedly

Several trade-linked global problems require global cooperation Food security energy

security trade-related aspects of climate change labour mobility commodity price

volatility and integration of regional liberalisation into the multilateral system are

problems that can only be solved with global cooperation

Ujal Singh BhatiaFormerly Indiarsquos Ambassador and Permanent Representative to the WTO

Next Steps Getting past the Doha Round crisis

3333

VOX Research-based policy analysis and commentary from leading economists

34

For example if food exporters continue to impose export barriers when prices rise

food importers may respond with import barriers to boost self-sufficiency This sort of

protectionist reverberation could lead the world to a situation in which all the players

are worse off but none can improve the situation unilaterally Avoiding this sort of

outcome would require global agreements There are very few global institutions that

could manage such cooperation indeed the WTO might be the only one A WTO locked

in endless Doha debates cannot be the centre of the rules based global trading system

There are many thinkers who believe that the structure of WTO rules is robust enough

to withstand a Doha failure It is true that the sky will not fall if Doha is terminated

without a conclusion Such analysts however tend to underestimate the significant

structural changes taking place in the global economy and the trading system The

WTO is working on a set of rules agreed upon in 1994 that were based on an agenda

set almost a quarter of century ago These are still useful and relevant for much of

world trade ndash but not all For instance the rules were not designed for the technology-

driven fragmentation of the manufacturing process and the distribution of the product

value chain across several geographical locations the intertwining of production with

related services the embedded intellectual property rights in components and sub-

components or the multiplicity of rules of origin All these require a different approach

to rule making

A WTO that remains preoccupied with the Doha Round cannot be expected to focus

on such issues Therefore the continuing relevance of the WTO and its primacy in

the global trading system are contingent upon a successful and early conclusion of

the Doha Round Notwithstanding this urgency it is now clear that a Doha package

cannot be wound up in 2011 along the lines agreed by G20 leaders in November 2010

To prevent this from tying the WTO in knots for years to come it is necessary to think

creatively about ways forward

Next Steps Getting Past the Doha Round Crisis

35

Ideas for moving beyond the impasse

Any effort to deal with the impasse in the negotiations needs to be based on a holistic

appreciation of the systemic implications of a continuing stalemate as much as on the

negotiating positions of various members The efforts for a solution acceptable to all

members therefore need to focus on issues in the Doha mandate as well as on issues for

a post Doha situation

Within this framework four constraints need to be borne in mind

bull A ldquoDoha Literdquo of reduced ambition will not work The outcome has to reflect a dec-

adersquos efforts of the global community Ambition however cannot be defined to suit

the convenience of a few members It must touch all aspects of the Doha mandate

bull Aspects of the Doha mandate that are more relevant to the development dimension

have to be ambitiously addressed and fast tracked

bull WTO needs to start work on a new work programme to address new challenges

bull The Doha Round cannot be completed in 2011 A down payment is necessary from

the Doha Round this year to convince the world that the WTO can deliver

A three-track approach

These constraints require the WTO to adopt a three-track approach during the next few

months leading up to the ministerial meeting in December 2011

Track 1 Identification of a list of issues that specially address the trading interests

of smaller developing countries and relatively less contentious issues for fast tracked

finalisation before the ministerial meeting

Track 2 Identification of a package of the more contentious issues for continuing

consultations with clear terms of reference

Track 3 Identification of appropriate terms of reference for a work programme on

WTO institutional reform and the forward-looking agenda

VOX Research-based policy analysis and commentary from leading economists

36

A possible timeline

These three tracks taken as a package would provide a way forward that respects all

four constraints Achieving consensus on them would be difficult ndash and require months

of preparatory work and negotiations

If the WTO membership starts immediately however there is still time to get the

package ready for finalisation by ministers at the December 2011 ministerial meeting

For this to happen it is essential that discussions on such a package begin this month

so that its contents can be finalised by the end of June 2011 This would leave about

four working months before the ministerial meeting to complete negotiations on the

selected areas

What the three tracks might contain

The first track would contain the Doha down-payment package As with any WTO

package the contents would need to be negotiated and it might require complementary

policies such as technical assistance initiatives

Such a list must include items that speak to development aspects of the Doha mandate

such as

bull The Implementation of the Hong Kong decision on duty-free quota-free treatment

for less developed countries

bull A ministerial decision on the Monitoring Mechanism for Special and Differential

Treatment provisions

bull A ministerial decision on the issues raised by the Sub-Saharan African cotton ex-

porters (the group known as the C-4) and

bull The finalisation of a less-developed-country (LDC) waiver in services so that pref-

erential treatment can be provided to LDCrsquos in services without extending it to

others

Next Steps Getting Past the Doha Round Crisis

37

It should also include areas of the negotiations that engage the interest of all members

such as

bull Trade Facilitation

bull All aspects of export competition in agriculture including export subsidies

bull The Transparency Mechanism for regional trade agreements (RTAs)

bull The non-tariff barriers (NTBs) package in non-agricultural market access (NAMA)

and

bull A ministerial decision on interactions and relationships between the WTOrsquos rules

and its committees on the one hand and existing multilateral environmental agree-

ments on the other (eg the Basel Convention on the Control of Transboundary

Movements of Hazardous Wastes and the Montreal Protocol on Substances that

Deplete the Ozone Layer)

While some members would like to exclude some of these areas from a fast tracked

process in the hope of using them for trade offs in the final stage it is important that the

package is as comprehensive as possible

Track two Items for further negotiation

The second track would gather all remaining items currently under negotiations This

would include

bull All aspects of market access in industrial goods agriculture and services

bull All aspects of subsidies in agriculture

bull Various aspects of rules including fisheries subsidies

bull Environmental goods and

bull Issues related to trade-related aspects of international property rights (TRIPS) re-

garding the protection of Geographical Indicators and the protection of traditional

VOX Research-based policy analysis and commentary from leading economists

38

knowledge and folklore that were are mentioned in the Convention on Biological

Diversity1

The need for a balanced package deserves emphasis It is often assumed that there

is a straight trade-off between agricultural subsidies and market access The situation

however is more complex The interest of countries like India China and Indonesia

in agricultural reform is more systemic than export related For them other incentives

within the mandate will be required

Track three Looking ahead

The underlying theme for the work programme would be an appraisal of the entire

negotiating and decision-making process in the WTO in the context of the present

realities both within and outside the organisation The objective would be to prepare

the WTO to address new challenges to the global trading system concurrently with the

ongoing work on the remaining parts of the Doha mandate

Closing remarks

The above proposals constitute a basic template for addressing the Doha conundrum

To what extent they are actually embraced will depend on how much political capital

the major members of the WTO are prepared to invest in moving the Doha Round

forward There is much scepticism about whether such political will exists It is time

for governments to prove the sceptics wrong

1 Specifically as specified in paragraphs 18 and 19 of the Doha Declaration

Next Steps Getting Past the Doha Round Crisis

39

About the author

Ambassador Bhatia Singh joined the Indian Administrative Service in 1974 holding

several senior positions in provincial administration in Orissa State between 1976 and

1995 He served as Joint Secretary Ministry of Commerce and Industry between 1995-

2000 in which capacity he handled a number of bilateral regional and multilateral trade

negotiations From 2004 to his retirement in 2010 he served as Indiarsquos Ambassador and

Permanent Representative to the WTO in Geneva

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

Next Steps Getting Past the Doha Round Crisis

A VoxEUorg eBook

Edited by Richard Baldwin and Simon Evenett

Centre for Economic Policy Research (CEPR)

The Centre for Economic Policy Research is a network of over 700 Research Fellows and Affiliates based primarily in European Universities The Centre coordinates the re-search activities of its Fellows and Affiliates and communicates the results to the public and private sectors CEPR is an entrepreneur developing research initiatives with the producers consumers and sponsors of research Established in 1983 CEPR is a Euro-pean economics research organization with uniquely wide-ranging scope and activities

The Centre is pluralist and non-partisan bringing economic research to bear on the analysis of medium- and long-run policy questions CEPR research may include views on policy but the Executive Committee of the Centre does not give prior review to its publications and the Centre takes no institutional policy positions The opinions ex-pressed in this report are those of the authors and not those of the Centre for Economic Policy Research

CEPR is a registered charity (No 287287) and a company limited by guarantee and registered in England (No 1727026)

Chair of the Board Guillermo de la DehesaPresident Richard PortesChief Executive Officer S tephen YeoResearch Director Mathias DewatripontPolicy Director Richard Baldwin

Contents

Foreword vii

The Doha dilemma An introduction to the issues 9 and possible solutions Richard Baldwin and Simon Evenett

There is no Plan B ndash only Plan A Towards completing 19 Doha Mari Pangestu

Acknowledge Doharsquos demise and move on to save 27 the WTO Susan Schwab

Next Steps Getting past the Doha Round crisis 33Ujal Singh Bhatia

Next Steps Is an early harvest still possible 41Zhenyu Sun

Getting past the Doha Round crisis Moving forward 47 in the WTO John Weekes

The good ship Doha Salvage-and-abandon-ship or 51 repair-and-wait Stuart Harbinson

Keeping the WTO on track A Doha down payment 61 plus more Richard Baldwin and Simon Evenett

vii

Doha is deadlocked ndash the members of the WTO are unable to give up and unable to go

forward

In this eBook the contributors propose several deacutemarche that consider various

combinations of 4 initiatives that offer a way out of the current impasse

bull Deliver a down payment

bull Ditch the current process of negotiating in ldquosilosrdquo ndash it doesnrsquot work

bull Develop a new and forward-looking agenda for the WTO

bull Demonstrate some leadership

The down payment is straightforward All the contributors suggest a number of area

where agreement is already close and which could be wrapped up in time for the

December Ministerial After a decade of negotiations it hardly seems right to call this

ldquoan early harvestrdquo but a set of measures that focus on the needs of the least developed

nations seems right for a ldquoDevelopment Roundrdquo

The current approach to negotiations is clearly not working and offers no way forward

Why not try new approaches A number of contributors suggest abandoning the current

ldquosilo approachrdquo The December Ministerial they argue should adopt a new approach

abandoning modalities and emphasising horizontal negotiations One contributor ex-

USTR Susan Schwab suggests abandoning the Round altogether and starting from

scratch

While much of the energy in the Doha negotiations has been expended on traditional

issues such as agriculture and market access for goods and services there is a long list

of new issues that will only grow in importance over time Several contributors advocate

a programme of analysis and discussion that will help members better understand issues

such as competition policy climate change and government procurement

Foreword

VOX Research-based policy analysis and commentary from leading economists

viii

The current Doha deadlock is largely due to the absence of leadership from the major

players Expecting leadership now from any of the Big 5 is unrealistic Baldwin and

Evenett drawing on their discussions with a wide-range of WTO delegations suggest

that one demarche that could help unblock the impasse is a bold move by the middle-

power WTO members They could seize the initiative by adopting a set of unilateral

measures to offer to liberalise trade The new commercial opportunities this would

provide would remind exporters what they have to gain from the conclusion of the

Round

Richard Baldwin and Simon Evenett have acted with their usual speed and efficiency

assembling at short notice a distinguished group of authors whose essays identify

solutions to Doha Deadlock And as always they have been very ably supported by

Team Vox in particular by Bob Denham Samantha Reid Anil Shamdasani and Pierre-

Louis Veacutezina We are grateful to them all

Stephen YeoChief Executive OfficerMay 2011

9

World leaders must make important decisions concerning the future of the Doha Round

for the 31 May 2011 meeting of the WTO membership This essay introduces the issues

and summarises contributorsrsquo suggestions for ldquoNext Stepsrdquo It argues that the best

outcome would be for WTO members to agree to work towards a small package of

deliverables for December 2011 and push the rest of the agenda items into the future

ndash perhaps with specific instructions for changing the basic negotiating protocols used

to date

Global leaders face a dilemma over the WTO multilateral trade negotiations known

as the Doha Round The talks are dead in the water both movement forwards and

movement backwards seem blocked How did we get here Current and former trade

policy officials typically emphasise two points

bull Ten years of talks have made some progress but it now must be taken as a hard fact

that the Doha Round in its entirety will not finish this year

bull No government is willing to announce publicly that they want to abandon the Round

The sources of unwillingness vary Some argue that abandoning the Round would throw

away genuine progress such as the ultimate phase-out of agricultural export subsidies

Others wish to maintain attention focused on particular problems in the trade system

Yet others simply fear that theyrsquoll be blamed for delivering the bad news

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

The Doha dilemma An introduction to the issues and possible solutions

99

VOX Research-based policy analysis and commentary from leading economists

10

Next Steps Saving the WTO from the Doha Round

World leaders must now decide how to tackle this dilemma at the WTOrsquos next key

meeting on 31 May 2011 Logically there are only 3 roads ahead

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock

in some of the progress to date

This eBook on ldquoNext Steps Getting Past the Doha Round Crisisrdquo gathers the thinking

of a handful of the worldrsquos most experienced Doha experts namely former US Trade

Representative Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia

Chinarsquos former WTO Ambassador Zenyu Sun Canadarsquos former WTO Ambassador

John Weekes and Hong Kongrsquos former WTO Ambassador Stuart Harbinson ndash all of

whom spent years directly engaged in Doha negotiations

Road 1 The pitfalls of declaring failure

Susan Schwab argues strongly that declaring Doharsquos demise is essential to allowing

the WTO to move on John Weekes likewise argues ldquoIt would be damaging to invest

more resources and credibility in something that canrsquot be donerdquo Ujal Singh Bhatia by

contrast argues that Road 1 could lead to unpredictable results Zenyu Sun notes that

declaring the Doha Round to be dead would be easy but then what ldquoWould such an

announcement inspire people to inject more energy into the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt itrdquo he writes

These judgements on the medium- to long-term ramifications differ but the short-

term fallout is clear Declaring the Round ldquodeadrdquo would invite an immediate storm of

recrimination among WTO members A great deal of hope and effort has been invested

in the Round by nations across the globe Most WTO members are still looking for the

Next Steps Getting Past the Doha Round Crisis

11

Doha Round to effect critical adjustments to the world trading system ndash especially a

rebalancing of the level of openness to agricultural versus industrial trade (Nassar and

Perez 2011) If one or more of the Big-5 reject a deal that most members still think is

doable the blame game could get very nasty

There is a great danger that this level of ill-will could undermine multilateral trade

cooperation for years It could lock in the growing perception that the WTO is not a

place where serious negotiations can be conducted The US in particular is likely to

be subject to severe criticism in a way that might have the unintended consequence of

convincing US Congressional and private sector groups that the WTO is not a forum

where America can do business Such an outcome would serve no onersquos interests

Despite the clear logic of Schwabrsquos and Weekesrsquo arguments the pitfalls highlighted

by Bhatia and Sun find resonance with most world leaders This is why almost every

WTO member opposes Road 1 As a consequence it is extremely unlikely that WTO

members will decide to declare Doha dead any time soon

Road 2 The pitfalls of suspension

Suspension is certainly the most politically expedient choice for the Big-5 and it

is superficially attractive The logic is well expressed in the old story about a man

ndash condemned to death by his Emperor ndash who obtains a yearrsquos stay of execution by

promising to teach the Emperorrsquos horse to sing ldquoMuch could happen in a yearrdquo the man

reasons ldquoThe Emperor could die I could die the horse could singrdquo

But the usual merits of muddling through donrsquot apply to Doha Suspensions have been

tried so often that everyone would know that suspension is just a circuitous means of

killing the Round Road 2 is just the long route to Road 1 All the pitfalls of Road 1

therefore also apply to Road 2

But suspension would be even worse in many ways The world of trade is changing more

rapidly than negotiating positions so each delay seems to make a compromise based on

VOX Research-based policy analysis and commentary from leading economists

12

the existing elements even less likely Worse still a suspension would strengthen and

spread the belief that the WTO is not an appropriate venue for multilateral negotiations

As Ujal Singh Bhatia writes ldquothe Round will continue to hang like an albatross around

the WTOrsquos neck preventing it from addressing new challenges to the global trading

systemrdquo This would be particular worrisome since the world economy is moving into a

phase of great stress It is facing new challenges that will require multilateral solutions

ndash issues like food security natural-resource export restrictions and trade in goods

services and technology that are essential to climate-change adaption and mitigation

Road 3 A small package followed by a big package

The third road seems the most likely way to move past the Doha dilemma of not being

able to move forwards or backwards on the broad agenda The idea here is that the

agenda would be sorted into ldquodo-ablerdquo and ldquonot yet do-ablerdquo piles Nations would move

forward on a small package of do-ables for December 2011 while agreeing to discuss

the bigger issues later under revised ground rules that would be more likely to permit

the trade-offs necessary to make the big package acceptable to all members

As Stuart Harbinson puts it Doha is like a ship run aground a small package of

deliverables for December 2011 would act as a ldquopatchrdquo to keep the ldquogood ship Dohardquo

afloat until the high tide comes in and lifts the ship off the rocks ldquoIn this analogy the

lsquohigh tidersquo would be a change in the global economic and political seascape enabling

the major trading economies to settle their differences and bring the ship safely into

harbourrdquo he writes

Choices to make on the small package

All five experienced trade negotiators contributing to this eBook ndash and most of the WTO

delegations with whom we spoke ndash believe that it is worth trying to lock in agreement

on a small number of areas by the end of 2011 There are two critical issues to decide

Next Steps Getting Past the Doha Round Crisis

13

1 How much time should be spent on negotiating the small package

2 Which items should be in the small package

The contributors disagree over the first issue Susan Schwab argues for giving it not

more than 2 weeks others suggest longer They all however recognise that a prolonged

and contentious negotiation on a small package ndash especially one that ultimately proved

fruitless ndash would solve nothing and might harm the system

There is far more agreement on the second issue ndash possible composition of the small

package All the contributors and most of the WTO delegations with whom we spoke

suggest that some items on Doharsquos massive negotiating agenda are close to conclusion

Indeed the lists are remarkably similar despite the vast differences in the contributorsrsquo

perspectives They all point out however that striking even a very restrained list of

agreement will require abundant goodwill and hard negotiating

Suggestions for the small-package items include

bull Some sort of accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

bull A package of measures that promote ldquotrade facilitationrdquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impediments to trade

bull An agreement on a monitoring mechanism for special and differential treatment

bull An agreement to make permanent the transparency mechanism for regional trade

agreements that has been operating successfully for years

bull An agreement on certain non-tariff barriers

VOX Research-based policy analysis and commentary from leading economists

14

bull An agreement formalising cooperation between the WTO and various multilateral

environmental agreements

Other issues may ultimately prove tractable or necessary to provide balance Those most

often mentioned include a standstill agreement on fisheries subsidies certain aspects

of the less controversial rules negotiations and export subsidies Such a package could

also include other DDA matters for which the negotiations could be completed quickly

or non-DDA matters where the WTO membership is at one such as the promising

negotiations to upgrade the WTOrsquos Agreement on Government Procurement

The final issue is what to call the small package this is not a trivial matter

bull One option is to just boldly call the small package the ldquoDoha Roundrdquo ndash to declare

victory and move on

While this would clearly disappoint many it speaks to the objective of not letting the

Round drag down the WTO ndash not allowing the WTOrsquos credibility to be further damaged

by endless discussions that can never led to a happy ending

Of course this option would leave unsolved the core Doha issues ndash reducing distortions

in and improving market access for industrial goods agricultural products and services

trade and updating the rules But it might allow members to re-craft the parameters of

the negotiations in a way that would be more likely to lead to success This is clearly

the view taken by Susan Schwab and John Weekes As John Weekes puts it ldquoNot

completing the Doha Round would be a serious setback to the WTO and the multilateral

trading system However if it is clear that the Round cannot be concluded successfully

it is better to admit that and work constructively to develop an agenda for the future

work of the organisationrdquo

Another option would be to wrap up the collection of small agreements into a package

called the ldquoDoha down paymentrdquo or ldquoDoha deliverablesrdquo or ldquoDoha early harvestrdquo as a

way of stressing that all the Doha agenda items are still on the table

Next Steps Getting Past the Doha Round Crisis

15

A third option would be to view the individual items as standalone agreements to be

agreed by the ministers of WTO members at the December meeting without clear

reference to what comes next

This brings us to the next major element of the Road 3 pathway What to do with the

rest of the agenda

Choices to make on the big package

Albert Einstein once defined insanity as doing the same thing over and over and

expecting different results This makes it clear that any complete plan for a way past the

Doha dilemma must change something in the way the negotiations have been operating

Any multilateral trade negotiation involves choice on a series of negotiating rules

or conventions The Doha Round has accreted an odd constellation of these Some

are fundamental and therefore extremely difficult to change These include the idea

that everything must be agreed by all before anything is agreed (the so-called single-

undertaking principle) or the choice to focus on the particular tariff-cutting formula

known as the Swiss formulas But many of the choices are less central such as the exact

way in which flexibilities on tariff-cutting are to be decided

The ramifications of these procedures on the negotiating dynamic were not well

understood years ago when the original decisions were taken The lack of understanding

is even deeper when it comes to the joint operation and interaction among the

conventions

For these reasons the set of negotiating conventions that guide Round may no longer be

optimal Consideration of the pros and cons of alternatives might identify other ways of

finding a package of trade-offs that is acceptable to all

VOX Research-based policy analysis and commentary from leading economists

16

The forward-looking agenda

A number of contributors suggested that the process of rebuilding momentum and

confidence in the ultimate outcome could be boosted by agreeing to launch work

programmes (not actual negotiations) on how the WTO could address 21st-century

trade issues that have come to the fore since the Doha agenda was set in 2001

Here there are two basic lines The first would consider WTO institutional reform the

second would consider new issues such as new disciplines to underpin the increasing

convergence of trade investment and services (as is now routinely done in regional

trade agreements) setting limits on acceptable national climate policies with trade

implications or export restrictions

There certainly seems merit to these idea If nothing else it would interject new

dimensions to discussions that have been going on for a decade It would also make

it clear that we need to safeguard the WTO as a forum for multilateral discussions on

critical 21st-century issues

Concluding remarks

Many decent hard-working public servants have committed plenty of energy to the

Doha Round since its inception At this critical time any temptation for recriminations

or lapses into bitter disappointment should be set to one side to let governments chart a

new path for the WTO The circumstances facing WTO members in the middle of 2011

are hardly ideal and the set of options that stand any chance of acceptance is narrow In

times like these it would be a mistake to make the perfect the enemy of the good It is

time to think creatively and cooperatively about getting the WTO past the Doha crisis

A decision or non-decision that led to several more years of drift ndash years that will be

complicated by elections and changes in governments in some of the leading trading

powers ndash could turn out to be the beginning of the end for the WTOrsquos role as leader

of the global trading system The alternative ndash uncoordinated developments led by the

Next Steps Getting Past the Doha Round Crisis

17

Big-5 in their own systems of regional trade agreements ndash is a very plausible outcome

at this stage but not one that will ultimately serve anyonersquos long-run interests

References

Andre Nassar and Carlos Perez (2011) ldquoWhy WTO members should not give up the

Doha Round The case of agricultural traderdquo in Richard Baldwin and Simon Evenett

(eds) Why World Leaders Must Resist the False Promise of a Doha Delay VoxEU

April

19

Doha is stalled by gaps that are unbridgeable today Indonesiarsquos Trade Minister argues

that we need to be guided by priorities and pragmatism We should develop a set of

stepping stones that will help us complete the Doha Round eventually We should

identify the areas that are achievable in the very near future but which have an impact

on development while building confidence for the continued journey to a successful

Round We should never lose sight of the final goal ndash completing the Doha Round as a

single undertaking In short we are not looking for a ldquoPlan Brdquo we are looking for a

new way to execute Plan A

The importance of completing the Doha Development Agenda sooner rather than later

goes beyond bringing gains of $360 billion of additional trade with substantial benefits

for industrialised and developing economies (HLTE 2011) The importance also goes

beyond what pragmatic soothsayers who are telling us ldquoWhy are you worried the

WTO system will continue to be robust whether we conclude Doha or not Companies

and countries will continue to traderdquo As a developing country policy maker ndash and I

believe I speak for many other developing countries ndash I am greatly worried about the

costs and opportunity lost of not completing Doha

The costs of not completing Doha

I will point to four costs of not completing the Doha Round

bull First is what it could achieve for food security

Mari PangestuMinister of Trade Indonesia

There is no Plan B ndash only Plan A Towards completing Doha

1919

VOX Research-based policy analysis and commentary from leading economists

20

During the 2008 food crisis imbalances between supply and demand were partly

attributed to distorted agriculture prices caused by trade-distorting export subsidies

and domestic-support schemes The agriculture package in Doha will go some way to

address this In todayrsquos situation of high commodity prices now is the perfect time to

address the removal and elimination of such trade-distorting policies Removing these

distortions can only be achieved through multilateral negotiations not through bilateral

or regional agreements

Most importantly the winners would be the billions of hungry and poor people all over

the world correcting the system and ensuring the future supply of food and greater

price stability is very much in their interests For example in Indonesia a 10 increase

in the price of rice without any change in income would lead to a 1 increase in

poverty

bull Second keeping protection at bay

During the depth of the crisis benign protectionism was the order of the day according

to the self-reporting surveillance mechanism established by the WTO at the request of

G20 Leaders This allowed the rebound of trade to become one of the costless ways for

the global economy to recover It is ironical that in the recovery the latest report (WTO

2011) shows that there has been a slight increase in protectionism causing an estimated

impact of 06 to G20 exports

The main increase has been due to tariff increases automatic licenses and other

restrictions including export restrictions Whilst this is still ldquosmallrdquo it is nevertheless

double from the previous period Restoration of the confidence in the world trading

system through clear signals that we are progressing on completing the Round is crucial

to keeping protectionism at bay Developing countries such as Indonesia have a great

interest in this because only the multilateral trading system will provide the fair rules-

based trading system for us to face large and more developed partners on a fair and

equal standing

Next Steps Getting Past the Doha Round Crisis

21

bull Third the lack of progress on the Doha Round already has and will continue to raise

the pressure to undertake bilateral and regional free trade negotiations

In the ASEAN region there are already FTAs between ASEAN and all six of its dialog

partners (Australia China India Japan Korea New Zealand) and numerous bilateral

FTAs The EU has just completed negotiations with Korea which has put pressure

for the Korea-US FTA to be ratified as soon as possible The EU has also completed

negotiations with India and is negotiating with Singapore Malaysia and preparing

to do so with other ASEAN countries Recently China Korea and Japan announced

revitalization of their FTA initiative Furthermore we have the Trans-Pacific Partnership

initiative between 8 members of APEC

It is not the bilateral and regional free trade agreements which are problematic per

se it is negotiating them in the absence of a robust WTO system ndash a system which is

seen as meeting the needs of the current and future trade-linked issues Bilateral and

regional agreements can only work towards complementing the multilateral trading

system when they are ldquoWTO-plusrdquo not ldquoWTO-insteadrdquo

bull Fourth the potential dampening effect on unilateral reforms

The political economy of openness in trade policy and institutional reform have always

functioned better within the framework of international commitments Multilateral

rules impose an important caveat on what countries can or cannot do In a country like

Indonesia this has worked to our advantage in the way we frame our reforms and in fact

has functioned in the past to put bad policies to rest

For instance in the famous National Car case in the mid 1980s which violated the

MFN principle by allowing duty-free imports of cars only from one source country the

domestic politics at the time did not allow for policymakers to remove this policy The

policy was finally ended through the WTOrsquos dispute settlement mechanism It would

be too bad for reforms if the process is undertaken within weakened confidence of

multilateral trading system or one which will eventually not be relevant to the evolution

of 21st century trade issues

VOX Research-based policy analysis and commentary from leading economists

22

The Way Forward No Plan B

Despite G20 Leadersrsquo commitments and all the good intentions and intensive work in

Geneva that came after the push given by trade ministers during their informal meeting

in Davos in January 2011 it proved impossible to arrive at a draft text by the end-of-

April milestone There remains ldquounbridgeable gapsrdquo in a number of main negotiating

groups namely non-agriculture market access

Given this situation trade ministers met first during the APEC Ministers of Trade

Meeting in Big Sky Montana and then on the fringes of the OECD meeting in Paris

Fortunately all have agreed that we all remain committed to completing Doha as a single

undertaking However there was a sense of realism as to the timing and pathways to

achieve this desirable outcome in a timely way

From an Indonesian perspective there is no ldquoPlan Brdquo We do not support a ldquoDoha

Lightrdquo and we remain committed to a comprehensive ambitious and balanced package

building on what we have achieved to date

After almost 6 years of negotiations since the key Hong Kong WTO Ministerial I

believe we are more than 50 or some would say 80 of the way done A realistic way

forward is to identify the sequence of steps that would take us to the final outcome this

is necessary to avoid the costs and lost-opportunities I outlined above

This is not about an early harvest or ldquocherry pickingrdquo and then stopping It is about

identifying the steps forward in a meaningful way towards the final goal of the single

undertaking of Doha

Identifying stepping stones to a final Doha Round conclusion

There are areas within the negotiations that could be seen as steps towards the final

package Of course work and political will is still needed to find ways to bridge the

Next Steps Getting Past the Doha Round Crisis

23

unbridgeable gaps In identifying the areas where we could find convergence a number

of priorities stand out

bull First and foremost is areas of negotiations that will contribute and deliver to devel-

opment objectives such as the Least Developed Countries package andor an effec-

tive aid-for-trade and facilitation package this is after all a Development Round

bull Second areas where there would be clear benefits for development and the private

sector in facilitating and ensuring the benefits of trade are greater we need stake-

holders to be cheerleading the way forward

bull Third there could be areas where we would be able to address the food-security

challenge

One could also foresee that within each current area of negotiations there could be

items which could be wrapped up without disturbing the overall balance of elements

in that particular area It is important that we do not go into ldquonewrdquo negotiations in

identifying which areas We should go into the mode of identifying these pathways and

steps with the mindset and political will of win-win

We need to be guided by priorities and pragmatism That is to identify the areas that are

doable and achievable in the very near future but which have an impact on development

and increasing the benefits of trade while at the same time building confidence for us to

continue our journey to the final package Most importantly we should never lose sight

of the final goal of the single undertaking

Looking forward

It is also important to provide the signal in what we say and do elsewhere Beyond

talking about Doha we must ensure continued confidence in and implementation of the

rules-based open trading system

VOX Research-based policy analysis and commentary from leading economists

24

bull This would mean the commitments of G20 Leaders and others on refraining from

protectionism going beyond words the good intentions need to be strengthened

with commitments and actions

bull It also has implications for how we undertake bilateral and regional agreements

these should be done in a way that is not an alternative to and does not detract from

the multilateral trading system We should pursue regionalism in a way which is

going to contribute to and complement the system

Concluding remarks

In conclusion we should not underestimate the costs of not doing all this We will

need to draw upon the strength of our individual and collective political commitment

We need to call on the ability of some major economies to look beyond pure national

interests and to look at the impact and costs on the global system and economy And we

need to remember that there are many countries and billions of people ndash many of which

are impoverished ndash who are waiting for the Doha deliverables

References

HLTE (2011) ldquoWorld trade and the Doha roundrdquo final report of the High-Level Trade

Experts Group chaired by Jagdish Bhagwati and Peter Sutherland

WTO (2011) ldquoReports on G20 trade and investment measures (mid-October 2010 to

April 2011)rdquo WTO Secretariat 24 May

About the author

Mari Pangestu is Indonesiarsquos Minister of Trade since 2004 having served as Executive

Director of the Jakarta-based think tank the Center for Strategic and International

Studies and a lecturer in the Faculty of Economics at the University of Indonesia From

1991 to 1998 Dr Pangestu was the coordinator of the Trade Policy Forum of the Pacific

Next Steps Getting Past the Doha Round Crisis

25

Economic Cooperation Council and serves on the Board of the Overseas Development

Council World Gold Council and the Asian Journal of Business from The University

of Michigan Ann Arbor

She has published widely on a range of subjects including matters pertaining to

Indonesia as well as regional (ie Asian and Asia Pacific) and global issues She earned

her BA and MA in economics from Australian National University and a PhD in

economics from the University of California Davis

27

The Doha Round has failed according the former US Trade Representative Susan

Schwab This essay argues that prolonging Doha jeopardises the multilateral trading

system and threatens future prospects for WTO-led liberalisation Negotiators should

salvage whatever partial agreements they can from Doha and quickly drop the rest

to ensure the December ministerial meeting focuses on future work plans rather than

recriminations over Doha

The Doha Round has failed It is time for the international community to acknowledge

this sad fact and move on Prolonging the pretence that the Doha Round will succeed

is now a greater threat to the WTO and the multilateral trading system than facing the

truth

A great many smart hard-working and well-intentioned individuals have worked over

many years to realise Doharsquos potential to contribute to global economic growth and

development But what is on the table in Geneva has failed to deliver any outcome

let alone a meaningful one It is time for a swift clean break from the past and to

lay the groundwork for a future where the WTO and its members revive WTO-led

liberalisation and reform

End Doharsquos stranglehold and build towards near-term wins

To keep the multilateral trading system healthy it is necessary to end the Doha

Roundrsquos stranglehold on the system This should happen quickly in order to ensure

that the December 2011 ministerial meeting focuses on future work plans rather than

Susan SchwabUniversity of Marlyand former US Trade Representative

Acknowledge Doharsquos demise and move on to save the WTO

2727

VOX Research-based policy analysis and commentary from leading economists

28

recriminations about a Doha Development Agenda that has struggled through one failed

encounter after another

Negotiators should refocus their efforts on near-term wins and on building the next

Round ndash which need not be another behemoth but perhaps a ldquorolling roundrdquo of reforms

and new market access or a few highest-common-denominator plurilateral or WTO-

plus deals Ultimately these should lead to a broader-based market access and rules

agreement under the multilateral auspices of the WTO

The small package possibility

In my recent Foreign Affairs article (Schwab 2011) I suggested that negotiators should

try to salvage whatever partial agreements they can and then walk away from the rest

I mentioned a number of potential candidates such as trade facilitation and the largely

completed agricultural-export pillar (comprising proposed agreements on export credits

food aid state-trading firms and the elimination of export subsidies) Negotiators

might also try to complete two environment-related agreements one cutting subsidies

to industrial fishing fleets that are overfishing the worldrsquos oceans and the other ending

tariff and nontariff barriers to rdquogreenrdquo technologies in major producing and consuming

countries Taken together or individually each of these would benefit countries across

the spectrum of economic development

I am however sceptical that even these small agreements are achievable in the current

climate of mistrust and entrenched positions A troubling development during the course

of the Round has been how often countries seem to forget or forfeit their own economic

interests ndash let alone the greater good ndash in the face of peer pressure and group-think In

the current environment even these smaller deals might prove impossible to achieve

It is certainly worth trying to achieve a few deliverables by taking a run at a small

package but negotiators should not spend too much time on it They already know

exactly what the options are if they cannot get to ldquoyesrdquo in say two weeks they should

Next Steps Getting Past the Doha Round Crisis

29

give up and move on to the real challenge of launching a new series of multilateral

negotiations under WTO auspices

Getting past Doha

How to conclude the Doha Round One option would be for the Director-General and

a representative sample of WTO Ambassadors to come together in the interest of the

institution and to offer a declaration of Doharsquos demise along with their pledge to begin

building the future That would enable leaders at the November G20 meeting to pledge

their support for the rules-based trading system the WTO and its next steps rather than

for the ever elusive ldquobalanced and ambitiousrdquo Doha outcome

After a short period of grieving over the death of Doha and an opportunity to get

beyond the anger lead trading nations should refocus on getting the WTO back into

its mainstream business of negotiating mutually advantageous market opening and

updating the global rdquorules of the roadrdquo This approach offers the best promise of a

meaningful ldquodevelopmentrdquo outcome as well

How might this be achieved

It seems unrealistic to think WTO members would agree to launch another massive

all-or-nothing round in the near future Such broad negotiations however will be

necessary to tackle some of the worldrsquos most important market access challenges in

services manufacturing and agriculture along with such issues as farm subsidies

There are ways to build-up to the big-round model again where countries once more see

economic self-interest in the use of broad-based negotiations and trade-offs to achieve

both new market access and market reforms First however we must re-establish trust

and regain momentum

One way forward would be for ministers to agree to launch a number of confidence-

building negotiations For example ministers in December could decide to open talks

VOX Research-based policy analysis and commentary from leading economists

30

on expanding the 1997 Information Technology Agreement a number of nations

seem interested and the US Administration already has the authority to implement an

enhanced agreement If negotiators fail to work through the 850 brackets in the current

Doha trade facilitation text that could also be tackled as a stand-alone agreement since

each nation would benefit from more efficient movement of goods and services across

borders

Another confidence-building measure might be a merger of sectoral agreements geared

toward a widely-shared objective such as cheaper better healthcare A package that

included pharmaceuticals medical devices and healthcare services might attract

support from the broad array of WTO members across the development spectrum Given

the high-level of public interest in and awareness of environment issues a sectoral

negotiation on environmental goods and services might be another confidence-building

deal once it is removed from the straightjacket that Doha has become

Lessons from Doha for next steps and the next round

Confidence building agreements would offer modest economic and social contributions

and serve to prepare the atmospherics for launch the next Round This brings me to my

last topic ndash the lessons we should draw from a decade of Doha talks

One thing that is quite clear from years of struggling with the basic structure of Doha

is that the combination of formula and self-selected flexibilities has not worked It

resulted in a situation where every negotiator had to assume the worst case ndash knowing

the political costs they would pay for their own liberalisation but expecting their trading

partners to use flexibilities to negate any meaningful new market-access It is possible

to draw from the best of the Doha formulas ndash such as the higher the barrier the greater

the cut ndash while still creating real negotiations around them through requests and offers

delivered using above- and below-formula cuts

Next Steps Getting Past the Doha Round Crisis

31

Another key lesson is that lumping the worldrsquos very diverse economies into three

basic categories ndash developed developing and least developed ndash is a practice that no

longer fits 21st century economic and trade realities Nor is it a structure conducive to

negotiations and real progress based on an exchange of market access among nations

with large markets Yes the advanced economies should be expected to do more than

those at lesser stages of economic development but expectations should also reflect

the fact that many emerging economies are characterised by both poverty and sectors

where they are globally competitive trade powerhouses

The emerging economies have large markets represent over half of global GDP growth

and stand to be the biggest winners from any major trade agreement They should be

expected to contribute to the next Round accordingly Major trade agreements generally

take at least 12 years to implement from the time they are initially concluded What

should the world trading system look like in 2025 in terms of the absolute and relative

responsibilities of key trading nations

Concluding remarks

I am optimistic when it comes to the multilateral trading system and the WTOrsquos central

role in its governance The optimistic scenario is that we put the Doha Round behind

us Facing facts can invigorate and strengthen the trading system If we fail to act the

WTO risks losing its relevance

The Doha Round ndash which in my view cannot be concluded as it is conceived today ndash

should not be allowed to continue draining the WTOrsquos credibility and potential progress

on the multilateral front Now is the time to liberate the would-be trade liberalisers from

the Doha straightjacket and move on

VOX Research-based policy analysis and commentary from leading economists

32

References

Schwab Susan (2011) ldquoAfter Doha Why the negotiations are doomed and what we

should do about itrdquo Foreign Affairs MayJune

About the author

Ambassador Schwab has been a Professor at the University of Maryland School of

Public Policy since January 2009 and a strategic advisor to Mayer Brown LLP (global

law firm) since March 2010 Ambassador Schwab served as US Trade Representative

from June 2006 to January 2009 and as Deputy US Trade Representative from

October 2005 to June 2006 Prior to her service as Deputy US Trade Representative

Ambassador Schwab served as President and Chief Executive Officer of the University

System of Maryland Foundation from June 2004 to October 2005 as a consultant

for the US Department of Treasury from July 2003 to December 2003 and as Dean

of the University of Maryland School of Public Policy from July 1995 to July 2003

Ambassador Schwab serves on the boards of Boeing Company Caterpillar Inc and

FedEx Corporation

She holds a BA in Political Economy from Williams College a Masters in Development

Policy from Stanford University (Food Research Institute) and a PhD in Public

Administration and International Business from The George Washington University

33

Hopes for finishing Doha in 2011 are fading fast This essay suggests a three-track

approach for moving beyond the Doha crisis 1) Identify a package of ldquodeliverablesrsquo ndash

parts of the Round that could be agreed by December 2011 2) Assemble a package of

contentious issues for ongoing negotiation with clear terms of reference 3) Establish

a work programme to consider WTO institutional reform and forward-looking issues

For reasons that are too well known to be repeated the WTO finds itself at the crossroads

Decisions to be taken in the next few weeks will determine whether it can steer its

way to a successful conclusion of the Doha Round in the near future Failing this the

Round will continue to hang like an albatross around the WTOrsquos neck preventing it

from delivering the promised boost to least developed nations and freezing its ability

to address new challenges to the global trading system All countries would suffer from

such an outcome but especially the worldrsquos poorest and most vulnerable

The cost of a never-ending Doha Round

The adverse implications of a continuing Doha impasse on the future role of the WTO

are too compelling to be dismissed offhandedly

Several trade-linked global problems require global cooperation Food security energy

security trade-related aspects of climate change labour mobility commodity price

volatility and integration of regional liberalisation into the multilateral system are

problems that can only be solved with global cooperation

Ujal Singh BhatiaFormerly Indiarsquos Ambassador and Permanent Representative to the WTO

Next Steps Getting past the Doha Round crisis

3333

VOX Research-based policy analysis and commentary from leading economists

34

For example if food exporters continue to impose export barriers when prices rise

food importers may respond with import barriers to boost self-sufficiency This sort of

protectionist reverberation could lead the world to a situation in which all the players

are worse off but none can improve the situation unilaterally Avoiding this sort of

outcome would require global agreements There are very few global institutions that

could manage such cooperation indeed the WTO might be the only one A WTO locked

in endless Doha debates cannot be the centre of the rules based global trading system

There are many thinkers who believe that the structure of WTO rules is robust enough

to withstand a Doha failure It is true that the sky will not fall if Doha is terminated

without a conclusion Such analysts however tend to underestimate the significant

structural changes taking place in the global economy and the trading system The

WTO is working on a set of rules agreed upon in 1994 that were based on an agenda

set almost a quarter of century ago These are still useful and relevant for much of

world trade ndash but not all For instance the rules were not designed for the technology-

driven fragmentation of the manufacturing process and the distribution of the product

value chain across several geographical locations the intertwining of production with

related services the embedded intellectual property rights in components and sub-

components or the multiplicity of rules of origin All these require a different approach

to rule making

A WTO that remains preoccupied with the Doha Round cannot be expected to focus

on such issues Therefore the continuing relevance of the WTO and its primacy in

the global trading system are contingent upon a successful and early conclusion of

the Doha Round Notwithstanding this urgency it is now clear that a Doha package

cannot be wound up in 2011 along the lines agreed by G20 leaders in November 2010

To prevent this from tying the WTO in knots for years to come it is necessary to think

creatively about ways forward

Next Steps Getting Past the Doha Round Crisis

35

Ideas for moving beyond the impasse

Any effort to deal with the impasse in the negotiations needs to be based on a holistic

appreciation of the systemic implications of a continuing stalemate as much as on the

negotiating positions of various members The efforts for a solution acceptable to all

members therefore need to focus on issues in the Doha mandate as well as on issues for

a post Doha situation

Within this framework four constraints need to be borne in mind

bull A ldquoDoha Literdquo of reduced ambition will not work The outcome has to reflect a dec-

adersquos efforts of the global community Ambition however cannot be defined to suit

the convenience of a few members It must touch all aspects of the Doha mandate

bull Aspects of the Doha mandate that are more relevant to the development dimension

have to be ambitiously addressed and fast tracked

bull WTO needs to start work on a new work programme to address new challenges

bull The Doha Round cannot be completed in 2011 A down payment is necessary from

the Doha Round this year to convince the world that the WTO can deliver

A three-track approach

These constraints require the WTO to adopt a three-track approach during the next few

months leading up to the ministerial meeting in December 2011

Track 1 Identification of a list of issues that specially address the trading interests

of smaller developing countries and relatively less contentious issues for fast tracked

finalisation before the ministerial meeting

Track 2 Identification of a package of the more contentious issues for continuing

consultations with clear terms of reference

Track 3 Identification of appropriate terms of reference for a work programme on

WTO institutional reform and the forward-looking agenda

VOX Research-based policy analysis and commentary from leading economists

36

A possible timeline

These three tracks taken as a package would provide a way forward that respects all

four constraints Achieving consensus on them would be difficult ndash and require months

of preparatory work and negotiations

If the WTO membership starts immediately however there is still time to get the

package ready for finalisation by ministers at the December 2011 ministerial meeting

For this to happen it is essential that discussions on such a package begin this month

so that its contents can be finalised by the end of June 2011 This would leave about

four working months before the ministerial meeting to complete negotiations on the

selected areas

What the three tracks might contain

The first track would contain the Doha down-payment package As with any WTO

package the contents would need to be negotiated and it might require complementary

policies such as technical assistance initiatives

Such a list must include items that speak to development aspects of the Doha mandate

such as

bull The Implementation of the Hong Kong decision on duty-free quota-free treatment

for less developed countries

bull A ministerial decision on the Monitoring Mechanism for Special and Differential

Treatment provisions

bull A ministerial decision on the issues raised by the Sub-Saharan African cotton ex-

porters (the group known as the C-4) and

bull The finalisation of a less-developed-country (LDC) waiver in services so that pref-

erential treatment can be provided to LDCrsquos in services without extending it to

others

Next Steps Getting Past the Doha Round Crisis

37

It should also include areas of the negotiations that engage the interest of all members

such as

bull Trade Facilitation

bull All aspects of export competition in agriculture including export subsidies

bull The Transparency Mechanism for regional trade agreements (RTAs)

bull The non-tariff barriers (NTBs) package in non-agricultural market access (NAMA)

and

bull A ministerial decision on interactions and relationships between the WTOrsquos rules

and its committees on the one hand and existing multilateral environmental agree-

ments on the other (eg the Basel Convention on the Control of Transboundary

Movements of Hazardous Wastes and the Montreal Protocol on Substances that

Deplete the Ozone Layer)

While some members would like to exclude some of these areas from a fast tracked

process in the hope of using them for trade offs in the final stage it is important that the

package is as comprehensive as possible

Track two Items for further negotiation

The second track would gather all remaining items currently under negotiations This

would include

bull All aspects of market access in industrial goods agriculture and services

bull All aspects of subsidies in agriculture

bull Various aspects of rules including fisheries subsidies

bull Environmental goods and

bull Issues related to trade-related aspects of international property rights (TRIPS) re-

garding the protection of Geographical Indicators and the protection of traditional

VOX Research-based policy analysis and commentary from leading economists

38

knowledge and folklore that were are mentioned in the Convention on Biological

Diversity1

The need for a balanced package deserves emphasis It is often assumed that there

is a straight trade-off between agricultural subsidies and market access The situation

however is more complex The interest of countries like India China and Indonesia

in agricultural reform is more systemic than export related For them other incentives

within the mandate will be required

Track three Looking ahead

The underlying theme for the work programme would be an appraisal of the entire

negotiating and decision-making process in the WTO in the context of the present

realities both within and outside the organisation The objective would be to prepare

the WTO to address new challenges to the global trading system concurrently with the

ongoing work on the remaining parts of the Doha mandate

Closing remarks

The above proposals constitute a basic template for addressing the Doha conundrum

To what extent they are actually embraced will depend on how much political capital

the major members of the WTO are prepared to invest in moving the Doha Round

forward There is much scepticism about whether such political will exists It is time

for governments to prove the sceptics wrong

1 Specifically as specified in paragraphs 18 and 19 of the Doha Declaration

Next Steps Getting Past the Doha Round Crisis

39

About the author

Ambassador Bhatia Singh joined the Indian Administrative Service in 1974 holding

several senior positions in provincial administration in Orissa State between 1976 and

1995 He served as Joint Secretary Ministry of Commerce and Industry between 1995-

2000 in which capacity he handled a number of bilateral regional and multilateral trade

negotiations From 2004 to his retirement in 2010 he served as Indiarsquos Ambassador and

Permanent Representative to the WTO in Geneva

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

Centre for Economic Policy Research (CEPR)

The Centre for Economic Policy Research is a network of over 700 Research Fellows and Affiliates based primarily in European Universities The Centre coordinates the re-search activities of its Fellows and Affiliates and communicates the results to the public and private sectors CEPR is an entrepreneur developing research initiatives with the producers consumers and sponsors of research Established in 1983 CEPR is a Euro-pean economics research organization with uniquely wide-ranging scope and activities

The Centre is pluralist and non-partisan bringing economic research to bear on the analysis of medium- and long-run policy questions CEPR research may include views on policy but the Executive Committee of the Centre does not give prior review to its publications and the Centre takes no institutional policy positions The opinions ex-pressed in this report are those of the authors and not those of the Centre for Economic Policy Research

CEPR is a registered charity (No 287287) and a company limited by guarantee and registered in England (No 1727026)

Chair of the Board Guillermo de la DehesaPresident Richard PortesChief Executive Officer S tephen YeoResearch Director Mathias DewatripontPolicy Director Richard Baldwin

Contents

Foreword vii

The Doha dilemma An introduction to the issues 9 and possible solutions Richard Baldwin and Simon Evenett

There is no Plan B ndash only Plan A Towards completing 19 Doha Mari Pangestu

Acknowledge Doharsquos demise and move on to save 27 the WTO Susan Schwab

Next Steps Getting past the Doha Round crisis 33Ujal Singh Bhatia

Next Steps Is an early harvest still possible 41Zhenyu Sun

Getting past the Doha Round crisis Moving forward 47 in the WTO John Weekes

The good ship Doha Salvage-and-abandon-ship or 51 repair-and-wait Stuart Harbinson

Keeping the WTO on track A Doha down payment 61 plus more Richard Baldwin and Simon Evenett

vii

Doha is deadlocked ndash the members of the WTO are unable to give up and unable to go

forward

In this eBook the contributors propose several deacutemarche that consider various

combinations of 4 initiatives that offer a way out of the current impasse

bull Deliver a down payment

bull Ditch the current process of negotiating in ldquosilosrdquo ndash it doesnrsquot work

bull Develop a new and forward-looking agenda for the WTO

bull Demonstrate some leadership

The down payment is straightforward All the contributors suggest a number of area

where agreement is already close and which could be wrapped up in time for the

December Ministerial After a decade of negotiations it hardly seems right to call this

ldquoan early harvestrdquo but a set of measures that focus on the needs of the least developed

nations seems right for a ldquoDevelopment Roundrdquo

The current approach to negotiations is clearly not working and offers no way forward

Why not try new approaches A number of contributors suggest abandoning the current

ldquosilo approachrdquo The December Ministerial they argue should adopt a new approach

abandoning modalities and emphasising horizontal negotiations One contributor ex-

USTR Susan Schwab suggests abandoning the Round altogether and starting from

scratch

While much of the energy in the Doha negotiations has been expended on traditional

issues such as agriculture and market access for goods and services there is a long list

of new issues that will only grow in importance over time Several contributors advocate

a programme of analysis and discussion that will help members better understand issues

such as competition policy climate change and government procurement

Foreword

VOX Research-based policy analysis and commentary from leading economists

viii

The current Doha deadlock is largely due to the absence of leadership from the major

players Expecting leadership now from any of the Big 5 is unrealistic Baldwin and

Evenett drawing on their discussions with a wide-range of WTO delegations suggest

that one demarche that could help unblock the impasse is a bold move by the middle-

power WTO members They could seize the initiative by adopting a set of unilateral

measures to offer to liberalise trade The new commercial opportunities this would

provide would remind exporters what they have to gain from the conclusion of the

Round

Richard Baldwin and Simon Evenett have acted with their usual speed and efficiency

assembling at short notice a distinguished group of authors whose essays identify

solutions to Doha Deadlock And as always they have been very ably supported by

Team Vox in particular by Bob Denham Samantha Reid Anil Shamdasani and Pierre-

Louis Veacutezina We are grateful to them all

Stephen YeoChief Executive OfficerMay 2011

9

World leaders must make important decisions concerning the future of the Doha Round

for the 31 May 2011 meeting of the WTO membership This essay introduces the issues

and summarises contributorsrsquo suggestions for ldquoNext Stepsrdquo It argues that the best

outcome would be for WTO members to agree to work towards a small package of

deliverables for December 2011 and push the rest of the agenda items into the future

ndash perhaps with specific instructions for changing the basic negotiating protocols used

to date

Global leaders face a dilemma over the WTO multilateral trade negotiations known

as the Doha Round The talks are dead in the water both movement forwards and

movement backwards seem blocked How did we get here Current and former trade

policy officials typically emphasise two points

bull Ten years of talks have made some progress but it now must be taken as a hard fact

that the Doha Round in its entirety will not finish this year

bull No government is willing to announce publicly that they want to abandon the Round

The sources of unwillingness vary Some argue that abandoning the Round would throw

away genuine progress such as the ultimate phase-out of agricultural export subsidies

Others wish to maintain attention focused on particular problems in the trade system

Yet others simply fear that theyrsquoll be blamed for delivering the bad news

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

The Doha dilemma An introduction to the issues and possible solutions

99

VOX Research-based policy analysis and commentary from leading economists

10

Next Steps Saving the WTO from the Doha Round

World leaders must now decide how to tackle this dilemma at the WTOrsquos next key

meeting on 31 May 2011 Logically there are only 3 roads ahead

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock

in some of the progress to date

This eBook on ldquoNext Steps Getting Past the Doha Round Crisisrdquo gathers the thinking

of a handful of the worldrsquos most experienced Doha experts namely former US Trade

Representative Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia

Chinarsquos former WTO Ambassador Zenyu Sun Canadarsquos former WTO Ambassador

John Weekes and Hong Kongrsquos former WTO Ambassador Stuart Harbinson ndash all of

whom spent years directly engaged in Doha negotiations

Road 1 The pitfalls of declaring failure

Susan Schwab argues strongly that declaring Doharsquos demise is essential to allowing

the WTO to move on John Weekes likewise argues ldquoIt would be damaging to invest

more resources and credibility in something that canrsquot be donerdquo Ujal Singh Bhatia by

contrast argues that Road 1 could lead to unpredictable results Zenyu Sun notes that

declaring the Doha Round to be dead would be easy but then what ldquoWould such an

announcement inspire people to inject more energy into the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt itrdquo he writes

These judgements on the medium- to long-term ramifications differ but the short-

term fallout is clear Declaring the Round ldquodeadrdquo would invite an immediate storm of

recrimination among WTO members A great deal of hope and effort has been invested

in the Round by nations across the globe Most WTO members are still looking for the

Next Steps Getting Past the Doha Round Crisis

11

Doha Round to effect critical adjustments to the world trading system ndash especially a

rebalancing of the level of openness to agricultural versus industrial trade (Nassar and

Perez 2011) If one or more of the Big-5 reject a deal that most members still think is

doable the blame game could get very nasty

There is a great danger that this level of ill-will could undermine multilateral trade

cooperation for years It could lock in the growing perception that the WTO is not a

place where serious negotiations can be conducted The US in particular is likely to

be subject to severe criticism in a way that might have the unintended consequence of

convincing US Congressional and private sector groups that the WTO is not a forum

where America can do business Such an outcome would serve no onersquos interests

Despite the clear logic of Schwabrsquos and Weekesrsquo arguments the pitfalls highlighted

by Bhatia and Sun find resonance with most world leaders This is why almost every

WTO member opposes Road 1 As a consequence it is extremely unlikely that WTO

members will decide to declare Doha dead any time soon

Road 2 The pitfalls of suspension

Suspension is certainly the most politically expedient choice for the Big-5 and it

is superficially attractive The logic is well expressed in the old story about a man

ndash condemned to death by his Emperor ndash who obtains a yearrsquos stay of execution by

promising to teach the Emperorrsquos horse to sing ldquoMuch could happen in a yearrdquo the man

reasons ldquoThe Emperor could die I could die the horse could singrdquo

But the usual merits of muddling through donrsquot apply to Doha Suspensions have been

tried so often that everyone would know that suspension is just a circuitous means of

killing the Round Road 2 is just the long route to Road 1 All the pitfalls of Road 1

therefore also apply to Road 2

But suspension would be even worse in many ways The world of trade is changing more

rapidly than negotiating positions so each delay seems to make a compromise based on

VOX Research-based policy analysis and commentary from leading economists

12

the existing elements even less likely Worse still a suspension would strengthen and

spread the belief that the WTO is not an appropriate venue for multilateral negotiations

As Ujal Singh Bhatia writes ldquothe Round will continue to hang like an albatross around

the WTOrsquos neck preventing it from addressing new challenges to the global trading

systemrdquo This would be particular worrisome since the world economy is moving into a

phase of great stress It is facing new challenges that will require multilateral solutions

ndash issues like food security natural-resource export restrictions and trade in goods

services and technology that are essential to climate-change adaption and mitigation

Road 3 A small package followed by a big package

The third road seems the most likely way to move past the Doha dilemma of not being

able to move forwards or backwards on the broad agenda The idea here is that the

agenda would be sorted into ldquodo-ablerdquo and ldquonot yet do-ablerdquo piles Nations would move

forward on a small package of do-ables for December 2011 while agreeing to discuss

the bigger issues later under revised ground rules that would be more likely to permit

the trade-offs necessary to make the big package acceptable to all members

As Stuart Harbinson puts it Doha is like a ship run aground a small package of

deliverables for December 2011 would act as a ldquopatchrdquo to keep the ldquogood ship Dohardquo

afloat until the high tide comes in and lifts the ship off the rocks ldquoIn this analogy the

lsquohigh tidersquo would be a change in the global economic and political seascape enabling

the major trading economies to settle their differences and bring the ship safely into

harbourrdquo he writes

Choices to make on the small package

All five experienced trade negotiators contributing to this eBook ndash and most of the WTO

delegations with whom we spoke ndash believe that it is worth trying to lock in agreement

on a small number of areas by the end of 2011 There are two critical issues to decide

Next Steps Getting Past the Doha Round Crisis

13

1 How much time should be spent on negotiating the small package

2 Which items should be in the small package

The contributors disagree over the first issue Susan Schwab argues for giving it not

more than 2 weeks others suggest longer They all however recognise that a prolonged

and contentious negotiation on a small package ndash especially one that ultimately proved

fruitless ndash would solve nothing and might harm the system

There is far more agreement on the second issue ndash possible composition of the small

package All the contributors and most of the WTO delegations with whom we spoke

suggest that some items on Doharsquos massive negotiating agenda are close to conclusion

Indeed the lists are remarkably similar despite the vast differences in the contributorsrsquo

perspectives They all point out however that striking even a very restrained list of

agreement will require abundant goodwill and hard negotiating

Suggestions for the small-package items include

bull Some sort of accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

bull A package of measures that promote ldquotrade facilitationrdquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impediments to trade

bull An agreement on a monitoring mechanism for special and differential treatment

bull An agreement to make permanent the transparency mechanism for regional trade

agreements that has been operating successfully for years

bull An agreement on certain non-tariff barriers

VOX Research-based policy analysis and commentary from leading economists

14

bull An agreement formalising cooperation between the WTO and various multilateral

environmental agreements

Other issues may ultimately prove tractable or necessary to provide balance Those most

often mentioned include a standstill agreement on fisheries subsidies certain aspects

of the less controversial rules negotiations and export subsidies Such a package could

also include other DDA matters for which the negotiations could be completed quickly

or non-DDA matters where the WTO membership is at one such as the promising

negotiations to upgrade the WTOrsquos Agreement on Government Procurement

The final issue is what to call the small package this is not a trivial matter

bull One option is to just boldly call the small package the ldquoDoha Roundrdquo ndash to declare

victory and move on

While this would clearly disappoint many it speaks to the objective of not letting the

Round drag down the WTO ndash not allowing the WTOrsquos credibility to be further damaged

by endless discussions that can never led to a happy ending

Of course this option would leave unsolved the core Doha issues ndash reducing distortions

in and improving market access for industrial goods agricultural products and services

trade and updating the rules But it might allow members to re-craft the parameters of

the negotiations in a way that would be more likely to lead to success This is clearly

the view taken by Susan Schwab and John Weekes As John Weekes puts it ldquoNot

completing the Doha Round would be a serious setback to the WTO and the multilateral

trading system However if it is clear that the Round cannot be concluded successfully

it is better to admit that and work constructively to develop an agenda for the future

work of the organisationrdquo

Another option would be to wrap up the collection of small agreements into a package

called the ldquoDoha down paymentrdquo or ldquoDoha deliverablesrdquo or ldquoDoha early harvestrdquo as a

way of stressing that all the Doha agenda items are still on the table

Next Steps Getting Past the Doha Round Crisis

15

A third option would be to view the individual items as standalone agreements to be

agreed by the ministers of WTO members at the December meeting without clear

reference to what comes next

This brings us to the next major element of the Road 3 pathway What to do with the

rest of the agenda

Choices to make on the big package

Albert Einstein once defined insanity as doing the same thing over and over and

expecting different results This makes it clear that any complete plan for a way past the

Doha dilemma must change something in the way the negotiations have been operating

Any multilateral trade negotiation involves choice on a series of negotiating rules

or conventions The Doha Round has accreted an odd constellation of these Some

are fundamental and therefore extremely difficult to change These include the idea

that everything must be agreed by all before anything is agreed (the so-called single-

undertaking principle) or the choice to focus on the particular tariff-cutting formula

known as the Swiss formulas But many of the choices are less central such as the exact

way in which flexibilities on tariff-cutting are to be decided

The ramifications of these procedures on the negotiating dynamic were not well

understood years ago when the original decisions were taken The lack of understanding

is even deeper when it comes to the joint operation and interaction among the

conventions

For these reasons the set of negotiating conventions that guide Round may no longer be

optimal Consideration of the pros and cons of alternatives might identify other ways of

finding a package of trade-offs that is acceptable to all

VOX Research-based policy analysis and commentary from leading economists

16

The forward-looking agenda

A number of contributors suggested that the process of rebuilding momentum and

confidence in the ultimate outcome could be boosted by agreeing to launch work

programmes (not actual negotiations) on how the WTO could address 21st-century

trade issues that have come to the fore since the Doha agenda was set in 2001

Here there are two basic lines The first would consider WTO institutional reform the

second would consider new issues such as new disciplines to underpin the increasing

convergence of trade investment and services (as is now routinely done in regional

trade agreements) setting limits on acceptable national climate policies with trade

implications or export restrictions

There certainly seems merit to these idea If nothing else it would interject new

dimensions to discussions that have been going on for a decade It would also make

it clear that we need to safeguard the WTO as a forum for multilateral discussions on

critical 21st-century issues

Concluding remarks

Many decent hard-working public servants have committed plenty of energy to the

Doha Round since its inception At this critical time any temptation for recriminations

or lapses into bitter disappointment should be set to one side to let governments chart a

new path for the WTO The circumstances facing WTO members in the middle of 2011

are hardly ideal and the set of options that stand any chance of acceptance is narrow In

times like these it would be a mistake to make the perfect the enemy of the good It is

time to think creatively and cooperatively about getting the WTO past the Doha crisis

A decision or non-decision that led to several more years of drift ndash years that will be

complicated by elections and changes in governments in some of the leading trading

powers ndash could turn out to be the beginning of the end for the WTOrsquos role as leader

of the global trading system The alternative ndash uncoordinated developments led by the

Next Steps Getting Past the Doha Round Crisis

17

Big-5 in their own systems of regional trade agreements ndash is a very plausible outcome

at this stage but not one that will ultimately serve anyonersquos long-run interests

References

Andre Nassar and Carlos Perez (2011) ldquoWhy WTO members should not give up the

Doha Round The case of agricultural traderdquo in Richard Baldwin and Simon Evenett

(eds) Why World Leaders Must Resist the False Promise of a Doha Delay VoxEU

April

19

Doha is stalled by gaps that are unbridgeable today Indonesiarsquos Trade Minister argues

that we need to be guided by priorities and pragmatism We should develop a set of

stepping stones that will help us complete the Doha Round eventually We should

identify the areas that are achievable in the very near future but which have an impact

on development while building confidence for the continued journey to a successful

Round We should never lose sight of the final goal ndash completing the Doha Round as a

single undertaking In short we are not looking for a ldquoPlan Brdquo we are looking for a

new way to execute Plan A

The importance of completing the Doha Development Agenda sooner rather than later

goes beyond bringing gains of $360 billion of additional trade with substantial benefits

for industrialised and developing economies (HLTE 2011) The importance also goes

beyond what pragmatic soothsayers who are telling us ldquoWhy are you worried the

WTO system will continue to be robust whether we conclude Doha or not Companies

and countries will continue to traderdquo As a developing country policy maker ndash and I

believe I speak for many other developing countries ndash I am greatly worried about the

costs and opportunity lost of not completing Doha

The costs of not completing Doha

I will point to four costs of not completing the Doha Round

bull First is what it could achieve for food security

Mari PangestuMinister of Trade Indonesia

There is no Plan B ndash only Plan A Towards completing Doha

1919

VOX Research-based policy analysis and commentary from leading economists

20

During the 2008 food crisis imbalances between supply and demand were partly

attributed to distorted agriculture prices caused by trade-distorting export subsidies

and domestic-support schemes The agriculture package in Doha will go some way to

address this In todayrsquos situation of high commodity prices now is the perfect time to

address the removal and elimination of such trade-distorting policies Removing these

distortions can only be achieved through multilateral negotiations not through bilateral

or regional agreements

Most importantly the winners would be the billions of hungry and poor people all over

the world correcting the system and ensuring the future supply of food and greater

price stability is very much in their interests For example in Indonesia a 10 increase

in the price of rice without any change in income would lead to a 1 increase in

poverty

bull Second keeping protection at bay

During the depth of the crisis benign protectionism was the order of the day according

to the self-reporting surveillance mechanism established by the WTO at the request of

G20 Leaders This allowed the rebound of trade to become one of the costless ways for

the global economy to recover It is ironical that in the recovery the latest report (WTO

2011) shows that there has been a slight increase in protectionism causing an estimated

impact of 06 to G20 exports

The main increase has been due to tariff increases automatic licenses and other

restrictions including export restrictions Whilst this is still ldquosmallrdquo it is nevertheless

double from the previous period Restoration of the confidence in the world trading

system through clear signals that we are progressing on completing the Round is crucial

to keeping protectionism at bay Developing countries such as Indonesia have a great

interest in this because only the multilateral trading system will provide the fair rules-

based trading system for us to face large and more developed partners on a fair and

equal standing

Next Steps Getting Past the Doha Round Crisis

21

bull Third the lack of progress on the Doha Round already has and will continue to raise

the pressure to undertake bilateral and regional free trade negotiations

In the ASEAN region there are already FTAs between ASEAN and all six of its dialog

partners (Australia China India Japan Korea New Zealand) and numerous bilateral

FTAs The EU has just completed negotiations with Korea which has put pressure

for the Korea-US FTA to be ratified as soon as possible The EU has also completed

negotiations with India and is negotiating with Singapore Malaysia and preparing

to do so with other ASEAN countries Recently China Korea and Japan announced

revitalization of their FTA initiative Furthermore we have the Trans-Pacific Partnership

initiative between 8 members of APEC

It is not the bilateral and regional free trade agreements which are problematic per

se it is negotiating them in the absence of a robust WTO system ndash a system which is

seen as meeting the needs of the current and future trade-linked issues Bilateral and

regional agreements can only work towards complementing the multilateral trading

system when they are ldquoWTO-plusrdquo not ldquoWTO-insteadrdquo

bull Fourth the potential dampening effect on unilateral reforms

The political economy of openness in trade policy and institutional reform have always

functioned better within the framework of international commitments Multilateral

rules impose an important caveat on what countries can or cannot do In a country like

Indonesia this has worked to our advantage in the way we frame our reforms and in fact

has functioned in the past to put bad policies to rest

For instance in the famous National Car case in the mid 1980s which violated the

MFN principle by allowing duty-free imports of cars only from one source country the

domestic politics at the time did not allow for policymakers to remove this policy The

policy was finally ended through the WTOrsquos dispute settlement mechanism It would

be too bad for reforms if the process is undertaken within weakened confidence of

multilateral trading system or one which will eventually not be relevant to the evolution

of 21st century trade issues

VOX Research-based policy analysis and commentary from leading economists

22

The Way Forward No Plan B

Despite G20 Leadersrsquo commitments and all the good intentions and intensive work in

Geneva that came after the push given by trade ministers during their informal meeting

in Davos in January 2011 it proved impossible to arrive at a draft text by the end-of-

April milestone There remains ldquounbridgeable gapsrdquo in a number of main negotiating

groups namely non-agriculture market access

Given this situation trade ministers met first during the APEC Ministers of Trade

Meeting in Big Sky Montana and then on the fringes of the OECD meeting in Paris

Fortunately all have agreed that we all remain committed to completing Doha as a single

undertaking However there was a sense of realism as to the timing and pathways to

achieve this desirable outcome in a timely way

From an Indonesian perspective there is no ldquoPlan Brdquo We do not support a ldquoDoha

Lightrdquo and we remain committed to a comprehensive ambitious and balanced package

building on what we have achieved to date

After almost 6 years of negotiations since the key Hong Kong WTO Ministerial I

believe we are more than 50 or some would say 80 of the way done A realistic way

forward is to identify the sequence of steps that would take us to the final outcome this

is necessary to avoid the costs and lost-opportunities I outlined above

This is not about an early harvest or ldquocherry pickingrdquo and then stopping It is about

identifying the steps forward in a meaningful way towards the final goal of the single

undertaking of Doha

Identifying stepping stones to a final Doha Round conclusion

There are areas within the negotiations that could be seen as steps towards the final

package Of course work and political will is still needed to find ways to bridge the

Next Steps Getting Past the Doha Round Crisis

23

unbridgeable gaps In identifying the areas where we could find convergence a number

of priorities stand out

bull First and foremost is areas of negotiations that will contribute and deliver to devel-

opment objectives such as the Least Developed Countries package andor an effec-

tive aid-for-trade and facilitation package this is after all a Development Round

bull Second areas where there would be clear benefits for development and the private

sector in facilitating and ensuring the benefits of trade are greater we need stake-

holders to be cheerleading the way forward

bull Third there could be areas where we would be able to address the food-security

challenge

One could also foresee that within each current area of negotiations there could be

items which could be wrapped up without disturbing the overall balance of elements

in that particular area It is important that we do not go into ldquonewrdquo negotiations in

identifying which areas We should go into the mode of identifying these pathways and

steps with the mindset and political will of win-win

We need to be guided by priorities and pragmatism That is to identify the areas that are

doable and achievable in the very near future but which have an impact on development

and increasing the benefits of trade while at the same time building confidence for us to

continue our journey to the final package Most importantly we should never lose sight

of the final goal of the single undertaking

Looking forward

It is also important to provide the signal in what we say and do elsewhere Beyond

talking about Doha we must ensure continued confidence in and implementation of the

rules-based open trading system

VOX Research-based policy analysis and commentary from leading economists

24

bull This would mean the commitments of G20 Leaders and others on refraining from

protectionism going beyond words the good intentions need to be strengthened

with commitments and actions

bull It also has implications for how we undertake bilateral and regional agreements

these should be done in a way that is not an alternative to and does not detract from

the multilateral trading system We should pursue regionalism in a way which is

going to contribute to and complement the system

Concluding remarks

In conclusion we should not underestimate the costs of not doing all this We will

need to draw upon the strength of our individual and collective political commitment

We need to call on the ability of some major economies to look beyond pure national

interests and to look at the impact and costs on the global system and economy And we

need to remember that there are many countries and billions of people ndash many of which

are impoverished ndash who are waiting for the Doha deliverables

References

HLTE (2011) ldquoWorld trade and the Doha roundrdquo final report of the High-Level Trade

Experts Group chaired by Jagdish Bhagwati and Peter Sutherland

WTO (2011) ldquoReports on G20 trade and investment measures (mid-October 2010 to

April 2011)rdquo WTO Secretariat 24 May

About the author

Mari Pangestu is Indonesiarsquos Minister of Trade since 2004 having served as Executive

Director of the Jakarta-based think tank the Center for Strategic and International

Studies and a lecturer in the Faculty of Economics at the University of Indonesia From

1991 to 1998 Dr Pangestu was the coordinator of the Trade Policy Forum of the Pacific

Next Steps Getting Past the Doha Round Crisis

25

Economic Cooperation Council and serves on the Board of the Overseas Development

Council World Gold Council and the Asian Journal of Business from The University

of Michigan Ann Arbor

She has published widely on a range of subjects including matters pertaining to

Indonesia as well as regional (ie Asian and Asia Pacific) and global issues She earned

her BA and MA in economics from Australian National University and a PhD in

economics from the University of California Davis

27

The Doha Round has failed according the former US Trade Representative Susan

Schwab This essay argues that prolonging Doha jeopardises the multilateral trading

system and threatens future prospects for WTO-led liberalisation Negotiators should

salvage whatever partial agreements they can from Doha and quickly drop the rest

to ensure the December ministerial meeting focuses on future work plans rather than

recriminations over Doha

The Doha Round has failed It is time for the international community to acknowledge

this sad fact and move on Prolonging the pretence that the Doha Round will succeed

is now a greater threat to the WTO and the multilateral trading system than facing the

truth

A great many smart hard-working and well-intentioned individuals have worked over

many years to realise Doharsquos potential to contribute to global economic growth and

development But what is on the table in Geneva has failed to deliver any outcome

let alone a meaningful one It is time for a swift clean break from the past and to

lay the groundwork for a future where the WTO and its members revive WTO-led

liberalisation and reform

End Doharsquos stranglehold and build towards near-term wins

To keep the multilateral trading system healthy it is necessary to end the Doha

Roundrsquos stranglehold on the system This should happen quickly in order to ensure

that the December 2011 ministerial meeting focuses on future work plans rather than

Susan SchwabUniversity of Marlyand former US Trade Representative

Acknowledge Doharsquos demise and move on to save the WTO

2727

VOX Research-based policy analysis and commentary from leading economists

28

recriminations about a Doha Development Agenda that has struggled through one failed

encounter after another

Negotiators should refocus their efforts on near-term wins and on building the next

Round ndash which need not be another behemoth but perhaps a ldquorolling roundrdquo of reforms

and new market access or a few highest-common-denominator plurilateral or WTO-

plus deals Ultimately these should lead to a broader-based market access and rules

agreement under the multilateral auspices of the WTO

The small package possibility

In my recent Foreign Affairs article (Schwab 2011) I suggested that negotiators should

try to salvage whatever partial agreements they can and then walk away from the rest

I mentioned a number of potential candidates such as trade facilitation and the largely

completed agricultural-export pillar (comprising proposed agreements on export credits

food aid state-trading firms and the elimination of export subsidies) Negotiators

might also try to complete two environment-related agreements one cutting subsidies

to industrial fishing fleets that are overfishing the worldrsquos oceans and the other ending

tariff and nontariff barriers to rdquogreenrdquo technologies in major producing and consuming

countries Taken together or individually each of these would benefit countries across

the spectrum of economic development

I am however sceptical that even these small agreements are achievable in the current

climate of mistrust and entrenched positions A troubling development during the course

of the Round has been how often countries seem to forget or forfeit their own economic

interests ndash let alone the greater good ndash in the face of peer pressure and group-think In

the current environment even these smaller deals might prove impossible to achieve

It is certainly worth trying to achieve a few deliverables by taking a run at a small

package but negotiators should not spend too much time on it They already know

exactly what the options are if they cannot get to ldquoyesrdquo in say two weeks they should

Next Steps Getting Past the Doha Round Crisis

29

give up and move on to the real challenge of launching a new series of multilateral

negotiations under WTO auspices

Getting past Doha

How to conclude the Doha Round One option would be for the Director-General and

a representative sample of WTO Ambassadors to come together in the interest of the

institution and to offer a declaration of Doharsquos demise along with their pledge to begin

building the future That would enable leaders at the November G20 meeting to pledge

their support for the rules-based trading system the WTO and its next steps rather than

for the ever elusive ldquobalanced and ambitiousrdquo Doha outcome

After a short period of grieving over the death of Doha and an opportunity to get

beyond the anger lead trading nations should refocus on getting the WTO back into

its mainstream business of negotiating mutually advantageous market opening and

updating the global rdquorules of the roadrdquo This approach offers the best promise of a

meaningful ldquodevelopmentrdquo outcome as well

How might this be achieved

It seems unrealistic to think WTO members would agree to launch another massive

all-or-nothing round in the near future Such broad negotiations however will be

necessary to tackle some of the worldrsquos most important market access challenges in

services manufacturing and agriculture along with such issues as farm subsidies

There are ways to build-up to the big-round model again where countries once more see

economic self-interest in the use of broad-based negotiations and trade-offs to achieve

both new market access and market reforms First however we must re-establish trust

and regain momentum

One way forward would be for ministers to agree to launch a number of confidence-

building negotiations For example ministers in December could decide to open talks

VOX Research-based policy analysis and commentary from leading economists

30

on expanding the 1997 Information Technology Agreement a number of nations

seem interested and the US Administration already has the authority to implement an

enhanced agreement If negotiators fail to work through the 850 brackets in the current

Doha trade facilitation text that could also be tackled as a stand-alone agreement since

each nation would benefit from more efficient movement of goods and services across

borders

Another confidence-building measure might be a merger of sectoral agreements geared

toward a widely-shared objective such as cheaper better healthcare A package that

included pharmaceuticals medical devices and healthcare services might attract

support from the broad array of WTO members across the development spectrum Given

the high-level of public interest in and awareness of environment issues a sectoral

negotiation on environmental goods and services might be another confidence-building

deal once it is removed from the straightjacket that Doha has become

Lessons from Doha for next steps and the next round

Confidence building agreements would offer modest economic and social contributions

and serve to prepare the atmospherics for launch the next Round This brings me to my

last topic ndash the lessons we should draw from a decade of Doha talks

One thing that is quite clear from years of struggling with the basic structure of Doha

is that the combination of formula and self-selected flexibilities has not worked It

resulted in a situation where every negotiator had to assume the worst case ndash knowing

the political costs they would pay for their own liberalisation but expecting their trading

partners to use flexibilities to negate any meaningful new market-access It is possible

to draw from the best of the Doha formulas ndash such as the higher the barrier the greater

the cut ndash while still creating real negotiations around them through requests and offers

delivered using above- and below-formula cuts

Next Steps Getting Past the Doha Round Crisis

31

Another key lesson is that lumping the worldrsquos very diverse economies into three

basic categories ndash developed developing and least developed ndash is a practice that no

longer fits 21st century economic and trade realities Nor is it a structure conducive to

negotiations and real progress based on an exchange of market access among nations

with large markets Yes the advanced economies should be expected to do more than

those at lesser stages of economic development but expectations should also reflect

the fact that many emerging economies are characterised by both poverty and sectors

where they are globally competitive trade powerhouses

The emerging economies have large markets represent over half of global GDP growth

and stand to be the biggest winners from any major trade agreement They should be

expected to contribute to the next Round accordingly Major trade agreements generally

take at least 12 years to implement from the time they are initially concluded What

should the world trading system look like in 2025 in terms of the absolute and relative

responsibilities of key trading nations

Concluding remarks

I am optimistic when it comes to the multilateral trading system and the WTOrsquos central

role in its governance The optimistic scenario is that we put the Doha Round behind

us Facing facts can invigorate and strengthen the trading system If we fail to act the

WTO risks losing its relevance

The Doha Round ndash which in my view cannot be concluded as it is conceived today ndash

should not be allowed to continue draining the WTOrsquos credibility and potential progress

on the multilateral front Now is the time to liberate the would-be trade liberalisers from

the Doha straightjacket and move on

VOX Research-based policy analysis and commentary from leading economists

32

References

Schwab Susan (2011) ldquoAfter Doha Why the negotiations are doomed and what we

should do about itrdquo Foreign Affairs MayJune

About the author

Ambassador Schwab has been a Professor at the University of Maryland School of

Public Policy since January 2009 and a strategic advisor to Mayer Brown LLP (global

law firm) since March 2010 Ambassador Schwab served as US Trade Representative

from June 2006 to January 2009 and as Deputy US Trade Representative from

October 2005 to June 2006 Prior to her service as Deputy US Trade Representative

Ambassador Schwab served as President and Chief Executive Officer of the University

System of Maryland Foundation from June 2004 to October 2005 as a consultant

for the US Department of Treasury from July 2003 to December 2003 and as Dean

of the University of Maryland School of Public Policy from July 1995 to July 2003

Ambassador Schwab serves on the boards of Boeing Company Caterpillar Inc and

FedEx Corporation

She holds a BA in Political Economy from Williams College a Masters in Development

Policy from Stanford University (Food Research Institute) and a PhD in Public

Administration and International Business from The George Washington University

33

Hopes for finishing Doha in 2011 are fading fast This essay suggests a three-track

approach for moving beyond the Doha crisis 1) Identify a package of ldquodeliverablesrsquo ndash

parts of the Round that could be agreed by December 2011 2) Assemble a package of

contentious issues for ongoing negotiation with clear terms of reference 3) Establish

a work programme to consider WTO institutional reform and forward-looking issues

For reasons that are too well known to be repeated the WTO finds itself at the crossroads

Decisions to be taken in the next few weeks will determine whether it can steer its

way to a successful conclusion of the Doha Round in the near future Failing this the

Round will continue to hang like an albatross around the WTOrsquos neck preventing it

from delivering the promised boost to least developed nations and freezing its ability

to address new challenges to the global trading system All countries would suffer from

such an outcome but especially the worldrsquos poorest and most vulnerable

The cost of a never-ending Doha Round

The adverse implications of a continuing Doha impasse on the future role of the WTO

are too compelling to be dismissed offhandedly

Several trade-linked global problems require global cooperation Food security energy

security trade-related aspects of climate change labour mobility commodity price

volatility and integration of regional liberalisation into the multilateral system are

problems that can only be solved with global cooperation

Ujal Singh BhatiaFormerly Indiarsquos Ambassador and Permanent Representative to the WTO

Next Steps Getting past the Doha Round crisis

3333

VOX Research-based policy analysis and commentary from leading economists

34

For example if food exporters continue to impose export barriers when prices rise

food importers may respond with import barriers to boost self-sufficiency This sort of

protectionist reverberation could lead the world to a situation in which all the players

are worse off but none can improve the situation unilaterally Avoiding this sort of

outcome would require global agreements There are very few global institutions that

could manage such cooperation indeed the WTO might be the only one A WTO locked

in endless Doha debates cannot be the centre of the rules based global trading system

There are many thinkers who believe that the structure of WTO rules is robust enough

to withstand a Doha failure It is true that the sky will not fall if Doha is terminated

without a conclusion Such analysts however tend to underestimate the significant

structural changes taking place in the global economy and the trading system The

WTO is working on a set of rules agreed upon in 1994 that were based on an agenda

set almost a quarter of century ago These are still useful and relevant for much of

world trade ndash but not all For instance the rules were not designed for the technology-

driven fragmentation of the manufacturing process and the distribution of the product

value chain across several geographical locations the intertwining of production with

related services the embedded intellectual property rights in components and sub-

components or the multiplicity of rules of origin All these require a different approach

to rule making

A WTO that remains preoccupied with the Doha Round cannot be expected to focus

on such issues Therefore the continuing relevance of the WTO and its primacy in

the global trading system are contingent upon a successful and early conclusion of

the Doha Round Notwithstanding this urgency it is now clear that a Doha package

cannot be wound up in 2011 along the lines agreed by G20 leaders in November 2010

To prevent this from tying the WTO in knots for years to come it is necessary to think

creatively about ways forward

Next Steps Getting Past the Doha Round Crisis

35

Ideas for moving beyond the impasse

Any effort to deal with the impasse in the negotiations needs to be based on a holistic

appreciation of the systemic implications of a continuing stalemate as much as on the

negotiating positions of various members The efforts for a solution acceptable to all

members therefore need to focus on issues in the Doha mandate as well as on issues for

a post Doha situation

Within this framework four constraints need to be borne in mind

bull A ldquoDoha Literdquo of reduced ambition will not work The outcome has to reflect a dec-

adersquos efforts of the global community Ambition however cannot be defined to suit

the convenience of a few members It must touch all aspects of the Doha mandate

bull Aspects of the Doha mandate that are more relevant to the development dimension

have to be ambitiously addressed and fast tracked

bull WTO needs to start work on a new work programme to address new challenges

bull The Doha Round cannot be completed in 2011 A down payment is necessary from

the Doha Round this year to convince the world that the WTO can deliver

A three-track approach

These constraints require the WTO to adopt a three-track approach during the next few

months leading up to the ministerial meeting in December 2011

Track 1 Identification of a list of issues that specially address the trading interests

of smaller developing countries and relatively less contentious issues for fast tracked

finalisation before the ministerial meeting

Track 2 Identification of a package of the more contentious issues for continuing

consultations with clear terms of reference

Track 3 Identification of appropriate terms of reference for a work programme on

WTO institutional reform and the forward-looking agenda

VOX Research-based policy analysis and commentary from leading economists

36

A possible timeline

These three tracks taken as a package would provide a way forward that respects all

four constraints Achieving consensus on them would be difficult ndash and require months

of preparatory work and negotiations

If the WTO membership starts immediately however there is still time to get the

package ready for finalisation by ministers at the December 2011 ministerial meeting

For this to happen it is essential that discussions on such a package begin this month

so that its contents can be finalised by the end of June 2011 This would leave about

four working months before the ministerial meeting to complete negotiations on the

selected areas

What the three tracks might contain

The first track would contain the Doha down-payment package As with any WTO

package the contents would need to be negotiated and it might require complementary

policies such as technical assistance initiatives

Such a list must include items that speak to development aspects of the Doha mandate

such as

bull The Implementation of the Hong Kong decision on duty-free quota-free treatment

for less developed countries

bull A ministerial decision on the Monitoring Mechanism for Special and Differential

Treatment provisions

bull A ministerial decision on the issues raised by the Sub-Saharan African cotton ex-

porters (the group known as the C-4) and

bull The finalisation of a less-developed-country (LDC) waiver in services so that pref-

erential treatment can be provided to LDCrsquos in services without extending it to

others

Next Steps Getting Past the Doha Round Crisis

37

It should also include areas of the negotiations that engage the interest of all members

such as

bull Trade Facilitation

bull All aspects of export competition in agriculture including export subsidies

bull The Transparency Mechanism for regional trade agreements (RTAs)

bull The non-tariff barriers (NTBs) package in non-agricultural market access (NAMA)

and

bull A ministerial decision on interactions and relationships between the WTOrsquos rules

and its committees on the one hand and existing multilateral environmental agree-

ments on the other (eg the Basel Convention on the Control of Transboundary

Movements of Hazardous Wastes and the Montreal Protocol on Substances that

Deplete the Ozone Layer)

While some members would like to exclude some of these areas from a fast tracked

process in the hope of using them for trade offs in the final stage it is important that the

package is as comprehensive as possible

Track two Items for further negotiation

The second track would gather all remaining items currently under negotiations This

would include

bull All aspects of market access in industrial goods agriculture and services

bull All aspects of subsidies in agriculture

bull Various aspects of rules including fisheries subsidies

bull Environmental goods and

bull Issues related to trade-related aspects of international property rights (TRIPS) re-

garding the protection of Geographical Indicators and the protection of traditional

VOX Research-based policy analysis and commentary from leading economists

38

knowledge and folklore that were are mentioned in the Convention on Biological

Diversity1

The need for a balanced package deserves emphasis It is often assumed that there

is a straight trade-off between agricultural subsidies and market access The situation

however is more complex The interest of countries like India China and Indonesia

in agricultural reform is more systemic than export related For them other incentives

within the mandate will be required

Track three Looking ahead

The underlying theme for the work programme would be an appraisal of the entire

negotiating and decision-making process in the WTO in the context of the present

realities both within and outside the organisation The objective would be to prepare

the WTO to address new challenges to the global trading system concurrently with the

ongoing work on the remaining parts of the Doha mandate

Closing remarks

The above proposals constitute a basic template for addressing the Doha conundrum

To what extent they are actually embraced will depend on how much political capital

the major members of the WTO are prepared to invest in moving the Doha Round

forward There is much scepticism about whether such political will exists It is time

for governments to prove the sceptics wrong

1 Specifically as specified in paragraphs 18 and 19 of the Doha Declaration

Next Steps Getting Past the Doha Round Crisis

39

About the author

Ambassador Bhatia Singh joined the Indian Administrative Service in 1974 holding

several senior positions in provincial administration in Orissa State between 1976 and

1995 He served as Joint Secretary Ministry of Commerce and Industry between 1995-

2000 in which capacity he handled a number of bilateral regional and multilateral trade

negotiations From 2004 to his retirement in 2010 he served as Indiarsquos Ambassador and

Permanent Representative to the WTO in Geneva

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

Contents

Foreword vii

The Doha dilemma An introduction to the issues 9 and possible solutions Richard Baldwin and Simon Evenett

There is no Plan B ndash only Plan A Towards completing 19 Doha Mari Pangestu

Acknowledge Doharsquos demise and move on to save 27 the WTO Susan Schwab

Next Steps Getting past the Doha Round crisis 33Ujal Singh Bhatia

Next Steps Is an early harvest still possible 41Zhenyu Sun

Getting past the Doha Round crisis Moving forward 47 in the WTO John Weekes

The good ship Doha Salvage-and-abandon-ship or 51 repair-and-wait Stuart Harbinson

Keeping the WTO on track A Doha down payment 61 plus more Richard Baldwin and Simon Evenett

vii

Doha is deadlocked ndash the members of the WTO are unable to give up and unable to go

forward

In this eBook the contributors propose several deacutemarche that consider various

combinations of 4 initiatives that offer a way out of the current impasse

bull Deliver a down payment

bull Ditch the current process of negotiating in ldquosilosrdquo ndash it doesnrsquot work

bull Develop a new and forward-looking agenda for the WTO

bull Demonstrate some leadership

The down payment is straightforward All the contributors suggest a number of area

where agreement is already close and which could be wrapped up in time for the

December Ministerial After a decade of negotiations it hardly seems right to call this

ldquoan early harvestrdquo but a set of measures that focus on the needs of the least developed

nations seems right for a ldquoDevelopment Roundrdquo

The current approach to negotiations is clearly not working and offers no way forward

Why not try new approaches A number of contributors suggest abandoning the current

ldquosilo approachrdquo The December Ministerial they argue should adopt a new approach

abandoning modalities and emphasising horizontal negotiations One contributor ex-

USTR Susan Schwab suggests abandoning the Round altogether and starting from

scratch

While much of the energy in the Doha negotiations has been expended on traditional

issues such as agriculture and market access for goods and services there is a long list

of new issues that will only grow in importance over time Several contributors advocate

a programme of analysis and discussion that will help members better understand issues

such as competition policy climate change and government procurement

Foreword

VOX Research-based policy analysis and commentary from leading economists

viii

The current Doha deadlock is largely due to the absence of leadership from the major

players Expecting leadership now from any of the Big 5 is unrealistic Baldwin and

Evenett drawing on their discussions with a wide-range of WTO delegations suggest

that one demarche that could help unblock the impasse is a bold move by the middle-

power WTO members They could seize the initiative by adopting a set of unilateral

measures to offer to liberalise trade The new commercial opportunities this would

provide would remind exporters what they have to gain from the conclusion of the

Round

Richard Baldwin and Simon Evenett have acted with their usual speed and efficiency

assembling at short notice a distinguished group of authors whose essays identify

solutions to Doha Deadlock And as always they have been very ably supported by

Team Vox in particular by Bob Denham Samantha Reid Anil Shamdasani and Pierre-

Louis Veacutezina We are grateful to them all

Stephen YeoChief Executive OfficerMay 2011

9

World leaders must make important decisions concerning the future of the Doha Round

for the 31 May 2011 meeting of the WTO membership This essay introduces the issues

and summarises contributorsrsquo suggestions for ldquoNext Stepsrdquo It argues that the best

outcome would be for WTO members to agree to work towards a small package of

deliverables for December 2011 and push the rest of the agenda items into the future

ndash perhaps with specific instructions for changing the basic negotiating protocols used

to date

Global leaders face a dilemma over the WTO multilateral trade negotiations known

as the Doha Round The talks are dead in the water both movement forwards and

movement backwards seem blocked How did we get here Current and former trade

policy officials typically emphasise two points

bull Ten years of talks have made some progress but it now must be taken as a hard fact

that the Doha Round in its entirety will not finish this year

bull No government is willing to announce publicly that they want to abandon the Round

The sources of unwillingness vary Some argue that abandoning the Round would throw

away genuine progress such as the ultimate phase-out of agricultural export subsidies

Others wish to maintain attention focused on particular problems in the trade system

Yet others simply fear that theyrsquoll be blamed for delivering the bad news

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

The Doha dilemma An introduction to the issues and possible solutions

99

VOX Research-based policy analysis and commentary from leading economists

10

Next Steps Saving the WTO from the Doha Round

World leaders must now decide how to tackle this dilemma at the WTOrsquos next key

meeting on 31 May 2011 Logically there are only 3 roads ahead

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock

in some of the progress to date

This eBook on ldquoNext Steps Getting Past the Doha Round Crisisrdquo gathers the thinking

of a handful of the worldrsquos most experienced Doha experts namely former US Trade

Representative Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia

Chinarsquos former WTO Ambassador Zenyu Sun Canadarsquos former WTO Ambassador

John Weekes and Hong Kongrsquos former WTO Ambassador Stuart Harbinson ndash all of

whom spent years directly engaged in Doha negotiations

Road 1 The pitfalls of declaring failure

Susan Schwab argues strongly that declaring Doharsquos demise is essential to allowing

the WTO to move on John Weekes likewise argues ldquoIt would be damaging to invest

more resources and credibility in something that canrsquot be donerdquo Ujal Singh Bhatia by

contrast argues that Road 1 could lead to unpredictable results Zenyu Sun notes that

declaring the Doha Round to be dead would be easy but then what ldquoWould such an

announcement inspire people to inject more energy into the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt itrdquo he writes

These judgements on the medium- to long-term ramifications differ but the short-

term fallout is clear Declaring the Round ldquodeadrdquo would invite an immediate storm of

recrimination among WTO members A great deal of hope and effort has been invested

in the Round by nations across the globe Most WTO members are still looking for the

Next Steps Getting Past the Doha Round Crisis

11

Doha Round to effect critical adjustments to the world trading system ndash especially a

rebalancing of the level of openness to agricultural versus industrial trade (Nassar and

Perez 2011) If one or more of the Big-5 reject a deal that most members still think is

doable the blame game could get very nasty

There is a great danger that this level of ill-will could undermine multilateral trade

cooperation for years It could lock in the growing perception that the WTO is not a

place where serious negotiations can be conducted The US in particular is likely to

be subject to severe criticism in a way that might have the unintended consequence of

convincing US Congressional and private sector groups that the WTO is not a forum

where America can do business Such an outcome would serve no onersquos interests

Despite the clear logic of Schwabrsquos and Weekesrsquo arguments the pitfalls highlighted

by Bhatia and Sun find resonance with most world leaders This is why almost every

WTO member opposes Road 1 As a consequence it is extremely unlikely that WTO

members will decide to declare Doha dead any time soon

Road 2 The pitfalls of suspension

Suspension is certainly the most politically expedient choice for the Big-5 and it

is superficially attractive The logic is well expressed in the old story about a man

ndash condemned to death by his Emperor ndash who obtains a yearrsquos stay of execution by

promising to teach the Emperorrsquos horse to sing ldquoMuch could happen in a yearrdquo the man

reasons ldquoThe Emperor could die I could die the horse could singrdquo

But the usual merits of muddling through donrsquot apply to Doha Suspensions have been

tried so often that everyone would know that suspension is just a circuitous means of

killing the Round Road 2 is just the long route to Road 1 All the pitfalls of Road 1

therefore also apply to Road 2

But suspension would be even worse in many ways The world of trade is changing more

rapidly than negotiating positions so each delay seems to make a compromise based on

VOX Research-based policy analysis and commentary from leading economists

12

the existing elements even less likely Worse still a suspension would strengthen and

spread the belief that the WTO is not an appropriate venue for multilateral negotiations

As Ujal Singh Bhatia writes ldquothe Round will continue to hang like an albatross around

the WTOrsquos neck preventing it from addressing new challenges to the global trading

systemrdquo This would be particular worrisome since the world economy is moving into a

phase of great stress It is facing new challenges that will require multilateral solutions

ndash issues like food security natural-resource export restrictions and trade in goods

services and technology that are essential to climate-change adaption and mitigation

Road 3 A small package followed by a big package

The third road seems the most likely way to move past the Doha dilemma of not being

able to move forwards or backwards on the broad agenda The idea here is that the

agenda would be sorted into ldquodo-ablerdquo and ldquonot yet do-ablerdquo piles Nations would move

forward on a small package of do-ables for December 2011 while agreeing to discuss

the bigger issues later under revised ground rules that would be more likely to permit

the trade-offs necessary to make the big package acceptable to all members

As Stuart Harbinson puts it Doha is like a ship run aground a small package of

deliverables for December 2011 would act as a ldquopatchrdquo to keep the ldquogood ship Dohardquo

afloat until the high tide comes in and lifts the ship off the rocks ldquoIn this analogy the

lsquohigh tidersquo would be a change in the global economic and political seascape enabling

the major trading economies to settle their differences and bring the ship safely into

harbourrdquo he writes

Choices to make on the small package

All five experienced trade negotiators contributing to this eBook ndash and most of the WTO

delegations with whom we spoke ndash believe that it is worth trying to lock in agreement

on a small number of areas by the end of 2011 There are two critical issues to decide

Next Steps Getting Past the Doha Round Crisis

13

1 How much time should be spent on negotiating the small package

2 Which items should be in the small package

The contributors disagree over the first issue Susan Schwab argues for giving it not

more than 2 weeks others suggest longer They all however recognise that a prolonged

and contentious negotiation on a small package ndash especially one that ultimately proved

fruitless ndash would solve nothing and might harm the system

There is far more agreement on the second issue ndash possible composition of the small

package All the contributors and most of the WTO delegations with whom we spoke

suggest that some items on Doharsquos massive negotiating agenda are close to conclusion

Indeed the lists are remarkably similar despite the vast differences in the contributorsrsquo

perspectives They all point out however that striking even a very restrained list of

agreement will require abundant goodwill and hard negotiating

Suggestions for the small-package items include

bull Some sort of accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

bull A package of measures that promote ldquotrade facilitationrdquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impediments to trade

bull An agreement on a monitoring mechanism for special and differential treatment

bull An agreement to make permanent the transparency mechanism for regional trade

agreements that has been operating successfully for years

bull An agreement on certain non-tariff barriers

VOX Research-based policy analysis and commentary from leading economists

14

bull An agreement formalising cooperation between the WTO and various multilateral

environmental agreements

Other issues may ultimately prove tractable or necessary to provide balance Those most

often mentioned include a standstill agreement on fisheries subsidies certain aspects

of the less controversial rules negotiations and export subsidies Such a package could

also include other DDA matters for which the negotiations could be completed quickly

or non-DDA matters where the WTO membership is at one such as the promising

negotiations to upgrade the WTOrsquos Agreement on Government Procurement

The final issue is what to call the small package this is not a trivial matter

bull One option is to just boldly call the small package the ldquoDoha Roundrdquo ndash to declare

victory and move on

While this would clearly disappoint many it speaks to the objective of not letting the

Round drag down the WTO ndash not allowing the WTOrsquos credibility to be further damaged

by endless discussions that can never led to a happy ending

Of course this option would leave unsolved the core Doha issues ndash reducing distortions

in and improving market access for industrial goods agricultural products and services

trade and updating the rules But it might allow members to re-craft the parameters of

the negotiations in a way that would be more likely to lead to success This is clearly

the view taken by Susan Schwab and John Weekes As John Weekes puts it ldquoNot

completing the Doha Round would be a serious setback to the WTO and the multilateral

trading system However if it is clear that the Round cannot be concluded successfully

it is better to admit that and work constructively to develop an agenda for the future

work of the organisationrdquo

Another option would be to wrap up the collection of small agreements into a package

called the ldquoDoha down paymentrdquo or ldquoDoha deliverablesrdquo or ldquoDoha early harvestrdquo as a

way of stressing that all the Doha agenda items are still on the table

Next Steps Getting Past the Doha Round Crisis

15

A third option would be to view the individual items as standalone agreements to be

agreed by the ministers of WTO members at the December meeting without clear

reference to what comes next

This brings us to the next major element of the Road 3 pathway What to do with the

rest of the agenda

Choices to make on the big package

Albert Einstein once defined insanity as doing the same thing over and over and

expecting different results This makes it clear that any complete plan for a way past the

Doha dilemma must change something in the way the negotiations have been operating

Any multilateral trade negotiation involves choice on a series of negotiating rules

or conventions The Doha Round has accreted an odd constellation of these Some

are fundamental and therefore extremely difficult to change These include the idea

that everything must be agreed by all before anything is agreed (the so-called single-

undertaking principle) or the choice to focus on the particular tariff-cutting formula

known as the Swiss formulas But many of the choices are less central such as the exact

way in which flexibilities on tariff-cutting are to be decided

The ramifications of these procedures on the negotiating dynamic were not well

understood years ago when the original decisions were taken The lack of understanding

is even deeper when it comes to the joint operation and interaction among the

conventions

For these reasons the set of negotiating conventions that guide Round may no longer be

optimal Consideration of the pros and cons of alternatives might identify other ways of

finding a package of trade-offs that is acceptable to all

VOX Research-based policy analysis and commentary from leading economists

16

The forward-looking agenda

A number of contributors suggested that the process of rebuilding momentum and

confidence in the ultimate outcome could be boosted by agreeing to launch work

programmes (not actual negotiations) on how the WTO could address 21st-century

trade issues that have come to the fore since the Doha agenda was set in 2001

Here there are two basic lines The first would consider WTO institutional reform the

second would consider new issues such as new disciplines to underpin the increasing

convergence of trade investment and services (as is now routinely done in regional

trade agreements) setting limits on acceptable national climate policies with trade

implications or export restrictions

There certainly seems merit to these idea If nothing else it would interject new

dimensions to discussions that have been going on for a decade It would also make

it clear that we need to safeguard the WTO as a forum for multilateral discussions on

critical 21st-century issues

Concluding remarks

Many decent hard-working public servants have committed plenty of energy to the

Doha Round since its inception At this critical time any temptation for recriminations

or lapses into bitter disappointment should be set to one side to let governments chart a

new path for the WTO The circumstances facing WTO members in the middle of 2011

are hardly ideal and the set of options that stand any chance of acceptance is narrow In

times like these it would be a mistake to make the perfect the enemy of the good It is

time to think creatively and cooperatively about getting the WTO past the Doha crisis

A decision or non-decision that led to several more years of drift ndash years that will be

complicated by elections and changes in governments in some of the leading trading

powers ndash could turn out to be the beginning of the end for the WTOrsquos role as leader

of the global trading system The alternative ndash uncoordinated developments led by the

Next Steps Getting Past the Doha Round Crisis

17

Big-5 in their own systems of regional trade agreements ndash is a very plausible outcome

at this stage but not one that will ultimately serve anyonersquos long-run interests

References

Andre Nassar and Carlos Perez (2011) ldquoWhy WTO members should not give up the

Doha Round The case of agricultural traderdquo in Richard Baldwin and Simon Evenett

(eds) Why World Leaders Must Resist the False Promise of a Doha Delay VoxEU

April

19

Doha is stalled by gaps that are unbridgeable today Indonesiarsquos Trade Minister argues

that we need to be guided by priorities and pragmatism We should develop a set of

stepping stones that will help us complete the Doha Round eventually We should

identify the areas that are achievable in the very near future but which have an impact

on development while building confidence for the continued journey to a successful

Round We should never lose sight of the final goal ndash completing the Doha Round as a

single undertaking In short we are not looking for a ldquoPlan Brdquo we are looking for a

new way to execute Plan A

The importance of completing the Doha Development Agenda sooner rather than later

goes beyond bringing gains of $360 billion of additional trade with substantial benefits

for industrialised and developing economies (HLTE 2011) The importance also goes

beyond what pragmatic soothsayers who are telling us ldquoWhy are you worried the

WTO system will continue to be robust whether we conclude Doha or not Companies

and countries will continue to traderdquo As a developing country policy maker ndash and I

believe I speak for many other developing countries ndash I am greatly worried about the

costs and opportunity lost of not completing Doha

The costs of not completing Doha

I will point to four costs of not completing the Doha Round

bull First is what it could achieve for food security

Mari PangestuMinister of Trade Indonesia

There is no Plan B ndash only Plan A Towards completing Doha

1919

VOX Research-based policy analysis and commentary from leading economists

20

During the 2008 food crisis imbalances between supply and demand were partly

attributed to distorted agriculture prices caused by trade-distorting export subsidies

and domestic-support schemes The agriculture package in Doha will go some way to

address this In todayrsquos situation of high commodity prices now is the perfect time to

address the removal and elimination of such trade-distorting policies Removing these

distortions can only be achieved through multilateral negotiations not through bilateral

or regional agreements

Most importantly the winners would be the billions of hungry and poor people all over

the world correcting the system and ensuring the future supply of food and greater

price stability is very much in their interests For example in Indonesia a 10 increase

in the price of rice without any change in income would lead to a 1 increase in

poverty

bull Second keeping protection at bay

During the depth of the crisis benign protectionism was the order of the day according

to the self-reporting surveillance mechanism established by the WTO at the request of

G20 Leaders This allowed the rebound of trade to become one of the costless ways for

the global economy to recover It is ironical that in the recovery the latest report (WTO

2011) shows that there has been a slight increase in protectionism causing an estimated

impact of 06 to G20 exports

The main increase has been due to tariff increases automatic licenses and other

restrictions including export restrictions Whilst this is still ldquosmallrdquo it is nevertheless

double from the previous period Restoration of the confidence in the world trading

system through clear signals that we are progressing on completing the Round is crucial

to keeping protectionism at bay Developing countries such as Indonesia have a great

interest in this because only the multilateral trading system will provide the fair rules-

based trading system for us to face large and more developed partners on a fair and

equal standing

Next Steps Getting Past the Doha Round Crisis

21

bull Third the lack of progress on the Doha Round already has and will continue to raise

the pressure to undertake bilateral and regional free trade negotiations

In the ASEAN region there are already FTAs between ASEAN and all six of its dialog

partners (Australia China India Japan Korea New Zealand) and numerous bilateral

FTAs The EU has just completed negotiations with Korea which has put pressure

for the Korea-US FTA to be ratified as soon as possible The EU has also completed

negotiations with India and is negotiating with Singapore Malaysia and preparing

to do so with other ASEAN countries Recently China Korea and Japan announced

revitalization of their FTA initiative Furthermore we have the Trans-Pacific Partnership

initiative between 8 members of APEC

It is not the bilateral and regional free trade agreements which are problematic per

se it is negotiating them in the absence of a robust WTO system ndash a system which is

seen as meeting the needs of the current and future trade-linked issues Bilateral and

regional agreements can only work towards complementing the multilateral trading

system when they are ldquoWTO-plusrdquo not ldquoWTO-insteadrdquo

bull Fourth the potential dampening effect on unilateral reforms

The political economy of openness in trade policy and institutional reform have always

functioned better within the framework of international commitments Multilateral

rules impose an important caveat on what countries can or cannot do In a country like

Indonesia this has worked to our advantage in the way we frame our reforms and in fact

has functioned in the past to put bad policies to rest

For instance in the famous National Car case in the mid 1980s which violated the

MFN principle by allowing duty-free imports of cars only from one source country the

domestic politics at the time did not allow for policymakers to remove this policy The

policy was finally ended through the WTOrsquos dispute settlement mechanism It would

be too bad for reforms if the process is undertaken within weakened confidence of

multilateral trading system or one which will eventually not be relevant to the evolution

of 21st century trade issues

VOX Research-based policy analysis and commentary from leading economists

22

The Way Forward No Plan B

Despite G20 Leadersrsquo commitments and all the good intentions and intensive work in

Geneva that came after the push given by trade ministers during their informal meeting

in Davos in January 2011 it proved impossible to arrive at a draft text by the end-of-

April milestone There remains ldquounbridgeable gapsrdquo in a number of main negotiating

groups namely non-agriculture market access

Given this situation trade ministers met first during the APEC Ministers of Trade

Meeting in Big Sky Montana and then on the fringes of the OECD meeting in Paris

Fortunately all have agreed that we all remain committed to completing Doha as a single

undertaking However there was a sense of realism as to the timing and pathways to

achieve this desirable outcome in a timely way

From an Indonesian perspective there is no ldquoPlan Brdquo We do not support a ldquoDoha

Lightrdquo and we remain committed to a comprehensive ambitious and balanced package

building on what we have achieved to date

After almost 6 years of negotiations since the key Hong Kong WTO Ministerial I

believe we are more than 50 or some would say 80 of the way done A realistic way

forward is to identify the sequence of steps that would take us to the final outcome this

is necessary to avoid the costs and lost-opportunities I outlined above

This is not about an early harvest or ldquocherry pickingrdquo and then stopping It is about

identifying the steps forward in a meaningful way towards the final goal of the single

undertaking of Doha

Identifying stepping stones to a final Doha Round conclusion

There are areas within the negotiations that could be seen as steps towards the final

package Of course work and political will is still needed to find ways to bridge the

Next Steps Getting Past the Doha Round Crisis

23

unbridgeable gaps In identifying the areas where we could find convergence a number

of priorities stand out

bull First and foremost is areas of negotiations that will contribute and deliver to devel-

opment objectives such as the Least Developed Countries package andor an effec-

tive aid-for-trade and facilitation package this is after all a Development Round

bull Second areas where there would be clear benefits for development and the private

sector in facilitating and ensuring the benefits of trade are greater we need stake-

holders to be cheerleading the way forward

bull Third there could be areas where we would be able to address the food-security

challenge

One could also foresee that within each current area of negotiations there could be

items which could be wrapped up without disturbing the overall balance of elements

in that particular area It is important that we do not go into ldquonewrdquo negotiations in

identifying which areas We should go into the mode of identifying these pathways and

steps with the mindset and political will of win-win

We need to be guided by priorities and pragmatism That is to identify the areas that are

doable and achievable in the very near future but which have an impact on development

and increasing the benefits of trade while at the same time building confidence for us to

continue our journey to the final package Most importantly we should never lose sight

of the final goal of the single undertaking

Looking forward

It is also important to provide the signal in what we say and do elsewhere Beyond

talking about Doha we must ensure continued confidence in and implementation of the

rules-based open trading system

VOX Research-based policy analysis and commentary from leading economists

24

bull This would mean the commitments of G20 Leaders and others on refraining from

protectionism going beyond words the good intentions need to be strengthened

with commitments and actions

bull It also has implications for how we undertake bilateral and regional agreements

these should be done in a way that is not an alternative to and does not detract from

the multilateral trading system We should pursue regionalism in a way which is

going to contribute to and complement the system

Concluding remarks

In conclusion we should not underestimate the costs of not doing all this We will

need to draw upon the strength of our individual and collective political commitment

We need to call on the ability of some major economies to look beyond pure national

interests and to look at the impact and costs on the global system and economy And we

need to remember that there are many countries and billions of people ndash many of which

are impoverished ndash who are waiting for the Doha deliverables

References

HLTE (2011) ldquoWorld trade and the Doha roundrdquo final report of the High-Level Trade

Experts Group chaired by Jagdish Bhagwati and Peter Sutherland

WTO (2011) ldquoReports on G20 trade and investment measures (mid-October 2010 to

April 2011)rdquo WTO Secretariat 24 May

About the author

Mari Pangestu is Indonesiarsquos Minister of Trade since 2004 having served as Executive

Director of the Jakarta-based think tank the Center for Strategic and International

Studies and a lecturer in the Faculty of Economics at the University of Indonesia From

1991 to 1998 Dr Pangestu was the coordinator of the Trade Policy Forum of the Pacific

Next Steps Getting Past the Doha Round Crisis

25

Economic Cooperation Council and serves on the Board of the Overseas Development

Council World Gold Council and the Asian Journal of Business from The University

of Michigan Ann Arbor

She has published widely on a range of subjects including matters pertaining to

Indonesia as well as regional (ie Asian and Asia Pacific) and global issues She earned

her BA and MA in economics from Australian National University and a PhD in

economics from the University of California Davis

27

The Doha Round has failed according the former US Trade Representative Susan

Schwab This essay argues that prolonging Doha jeopardises the multilateral trading

system and threatens future prospects for WTO-led liberalisation Negotiators should

salvage whatever partial agreements they can from Doha and quickly drop the rest

to ensure the December ministerial meeting focuses on future work plans rather than

recriminations over Doha

The Doha Round has failed It is time for the international community to acknowledge

this sad fact and move on Prolonging the pretence that the Doha Round will succeed

is now a greater threat to the WTO and the multilateral trading system than facing the

truth

A great many smart hard-working and well-intentioned individuals have worked over

many years to realise Doharsquos potential to contribute to global economic growth and

development But what is on the table in Geneva has failed to deliver any outcome

let alone a meaningful one It is time for a swift clean break from the past and to

lay the groundwork for a future where the WTO and its members revive WTO-led

liberalisation and reform

End Doharsquos stranglehold and build towards near-term wins

To keep the multilateral trading system healthy it is necessary to end the Doha

Roundrsquos stranglehold on the system This should happen quickly in order to ensure

that the December 2011 ministerial meeting focuses on future work plans rather than

Susan SchwabUniversity of Marlyand former US Trade Representative

Acknowledge Doharsquos demise and move on to save the WTO

2727

VOX Research-based policy analysis and commentary from leading economists

28

recriminations about a Doha Development Agenda that has struggled through one failed

encounter after another

Negotiators should refocus their efforts on near-term wins and on building the next

Round ndash which need not be another behemoth but perhaps a ldquorolling roundrdquo of reforms

and new market access or a few highest-common-denominator plurilateral or WTO-

plus deals Ultimately these should lead to a broader-based market access and rules

agreement under the multilateral auspices of the WTO

The small package possibility

In my recent Foreign Affairs article (Schwab 2011) I suggested that negotiators should

try to salvage whatever partial agreements they can and then walk away from the rest

I mentioned a number of potential candidates such as trade facilitation and the largely

completed agricultural-export pillar (comprising proposed agreements on export credits

food aid state-trading firms and the elimination of export subsidies) Negotiators

might also try to complete two environment-related agreements one cutting subsidies

to industrial fishing fleets that are overfishing the worldrsquos oceans and the other ending

tariff and nontariff barriers to rdquogreenrdquo technologies in major producing and consuming

countries Taken together or individually each of these would benefit countries across

the spectrum of economic development

I am however sceptical that even these small agreements are achievable in the current

climate of mistrust and entrenched positions A troubling development during the course

of the Round has been how often countries seem to forget or forfeit their own economic

interests ndash let alone the greater good ndash in the face of peer pressure and group-think In

the current environment even these smaller deals might prove impossible to achieve

It is certainly worth trying to achieve a few deliverables by taking a run at a small

package but negotiators should not spend too much time on it They already know

exactly what the options are if they cannot get to ldquoyesrdquo in say two weeks they should

Next Steps Getting Past the Doha Round Crisis

29

give up and move on to the real challenge of launching a new series of multilateral

negotiations under WTO auspices

Getting past Doha

How to conclude the Doha Round One option would be for the Director-General and

a representative sample of WTO Ambassadors to come together in the interest of the

institution and to offer a declaration of Doharsquos demise along with their pledge to begin

building the future That would enable leaders at the November G20 meeting to pledge

their support for the rules-based trading system the WTO and its next steps rather than

for the ever elusive ldquobalanced and ambitiousrdquo Doha outcome

After a short period of grieving over the death of Doha and an opportunity to get

beyond the anger lead trading nations should refocus on getting the WTO back into

its mainstream business of negotiating mutually advantageous market opening and

updating the global rdquorules of the roadrdquo This approach offers the best promise of a

meaningful ldquodevelopmentrdquo outcome as well

How might this be achieved

It seems unrealistic to think WTO members would agree to launch another massive

all-or-nothing round in the near future Such broad negotiations however will be

necessary to tackle some of the worldrsquos most important market access challenges in

services manufacturing and agriculture along with such issues as farm subsidies

There are ways to build-up to the big-round model again where countries once more see

economic self-interest in the use of broad-based negotiations and trade-offs to achieve

both new market access and market reforms First however we must re-establish trust

and regain momentum

One way forward would be for ministers to agree to launch a number of confidence-

building negotiations For example ministers in December could decide to open talks

VOX Research-based policy analysis and commentary from leading economists

30

on expanding the 1997 Information Technology Agreement a number of nations

seem interested and the US Administration already has the authority to implement an

enhanced agreement If negotiators fail to work through the 850 brackets in the current

Doha trade facilitation text that could also be tackled as a stand-alone agreement since

each nation would benefit from more efficient movement of goods and services across

borders

Another confidence-building measure might be a merger of sectoral agreements geared

toward a widely-shared objective such as cheaper better healthcare A package that

included pharmaceuticals medical devices and healthcare services might attract

support from the broad array of WTO members across the development spectrum Given

the high-level of public interest in and awareness of environment issues a sectoral

negotiation on environmental goods and services might be another confidence-building

deal once it is removed from the straightjacket that Doha has become

Lessons from Doha for next steps and the next round

Confidence building agreements would offer modest economic and social contributions

and serve to prepare the atmospherics for launch the next Round This brings me to my

last topic ndash the lessons we should draw from a decade of Doha talks

One thing that is quite clear from years of struggling with the basic structure of Doha

is that the combination of formula and self-selected flexibilities has not worked It

resulted in a situation where every negotiator had to assume the worst case ndash knowing

the political costs they would pay for their own liberalisation but expecting their trading

partners to use flexibilities to negate any meaningful new market-access It is possible

to draw from the best of the Doha formulas ndash such as the higher the barrier the greater

the cut ndash while still creating real negotiations around them through requests and offers

delivered using above- and below-formula cuts

Next Steps Getting Past the Doha Round Crisis

31

Another key lesson is that lumping the worldrsquos very diverse economies into three

basic categories ndash developed developing and least developed ndash is a practice that no

longer fits 21st century economic and trade realities Nor is it a structure conducive to

negotiations and real progress based on an exchange of market access among nations

with large markets Yes the advanced economies should be expected to do more than

those at lesser stages of economic development but expectations should also reflect

the fact that many emerging economies are characterised by both poverty and sectors

where they are globally competitive trade powerhouses

The emerging economies have large markets represent over half of global GDP growth

and stand to be the biggest winners from any major trade agreement They should be

expected to contribute to the next Round accordingly Major trade agreements generally

take at least 12 years to implement from the time they are initially concluded What

should the world trading system look like in 2025 in terms of the absolute and relative

responsibilities of key trading nations

Concluding remarks

I am optimistic when it comes to the multilateral trading system and the WTOrsquos central

role in its governance The optimistic scenario is that we put the Doha Round behind

us Facing facts can invigorate and strengthen the trading system If we fail to act the

WTO risks losing its relevance

The Doha Round ndash which in my view cannot be concluded as it is conceived today ndash

should not be allowed to continue draining the WTOrsquos credibility and potential progress

on the multilateral front Now is the time to liberate the would-be trade liberalisers from

the Doha straightjacket and move on

VOX Research-based policy analysis and commentary from leading economists

32

References

Schwab Susan (2011) ldquoAfter Doha Why the negotiations are doomed and what we

should do about itrdquo Foreign Affairs MayJune

About the author

Ambassador Schwab has been a Professor at the University of Maryland School of

Public Policy since January 2009 and a strategic advisor to Mayer Brown LLP (global

law firm) since March 2010 Ambassador Schwab served as US Trade Representative

from June 2006 to January 2009 and as Deputy US Trade Representative from

October 2005 to June 2006 Prior to her service as Deputy US Trade Representative

Ambassador Schwab served as President and Chief Executive Officer of the University

System of Maryland Foundation from June 2004 to October 2005 as a consultant

for the US Department of Treasury from July 2003 to December 2003 and as Dean

of the University of Maryland School of Public Policy from July 1995 to July 2003

Ambassador Schwab serves on the boards of Boeing Company Caterpillar Inc and

FedEx Corporation

She holds a BA in Political Economy from Williams College a Masters in Development

Policy from Stanford University (Food Research Institute) and a PhD in Public

Administration and International Business from The George Washington University

33

Hopes for finishing Doha in 2011 are fading fast This essay suggests a three-track

approach for moving beyond the Doha crisis 1) Identify a package of ldquodeliverablesrsquo ndash

parts of the Round that could be agreed by December 2011 2) Assemble a package of

contentious issues for ongoing negotiation with clear terms of reference 3) Establish

a work programme to consider WTO institutional reform and forward-looking issues

For reasons that are too well known to be repeated the WTO finds itself at the crossroads

Decisions to be taken in the next few weeks will determine whether it can steer its

way to a successful conclusion of the Doha Round in the near future Failing this the

Round will continue to hang like an albatross around the WTOrsquos neck preventing it

from delivering the promised boost to least developed nations and freezing its ability

to address new challenges to the global trading system All countries would suffer from

such an outcome but especially the worldrsquos poorest and most vulnerable

The cost of a never-ending Doha Round

The adverse implications of a continuing Doha impasse on the future role of the WTO

are too compelling to be dismissed offhandedly

Several trade-linked global problems require global cooperation Food security energy

security trade-related aspects of climate change labour mobility commodity price

volatility and integration of regional liberalisation into the multilateral system are

problems that can only be solved with global cooperation

Ujal Singh BhatiaFormerly Indiarsquos Ambassador and Permanent Representative to the WTO

Next Steps Getting past the Doha Round crisis

3333

VOX Research-based policy analysis and commentary from leading economists

34

For example if food exporters continue to impose export barriers when prices rise

food importers may respond with import barriers to boost self-sufficiency This sort of

protectionist reverberation could lead the world to a situation in which all the players

are worse off but none can improve the situation unilaterally Avoiding this sort of

outcome would require global agreements There are very few global institutions that

could manage such cooperation indeed the WTO might be the only one A WTO locked

in endless Doha debates cannot be the centre of the rules based global trading system

There are many thinkers who believe that the structure of WTO rules is robust enough

to withstand a Doha failure It is true that the sky will not fall if Doha is terminated

without a conclusion Such analysts however tend to underestimate the significant

structural changes taking place in the global economy and the trading system The

WTO is working on a set of rules agreed upon in 1994 that were based on an agenda

set almost a quarter of century ago These are still useful and relevant for much of

world trade ndash but not all For instance the rules were not designed for the technology-

driven fragmentation of the manufacturing process and the distribution of the product

value chain across several geographical locations the intertwining of production with

related services the embedded intellectual property rights in components and sub-

components or the multiplicity of rules of origin All these require a different approach

to rule making

A WTO that remains preoccupied with the Doha Round cannot be expected to focus

on such issues Therefore the continuing relevance of the WTO and its primacy in

the global trading system are contingent upon a successful and early conclusion of

the Doha Round Notwithstanding this urgency it is now clear that a Doha package

cannot be wound up in 2011 along the lines agreed by G20 leaders in November 2010

To prevent this from tying the WTO in knots for years to come it is necessary to think

creatively about ways forward

Next Steps Getting Past the Doha Round Crisis

35

Ideas for moving beyond the impasse

Any effort to deal with the impasse in the negotiations needs to be based on a holistic

appreciation of the systemic implications of a continuing stalemate as much as on the

negotiating positions of various members The efforts for a solution acceptable to all

members therefore need to focus on issues in the Doha mandate as well as on issues for

a post Doha situation

Within this framework four constraints need to be borne in mind

bull A ldquoDoha Literdquo of reduced ambition will not work The outcome has to reflect a dec-

adersquos efforts of the global community Ambition however cannot be defined to suit

the convenience of a few members It must touch all aspects of the Doha mandate

bull Aspects of the Doha mandate that are more relevant to the development dimension

have to be ambitiously addressed and fast tracked

bull WTO needs to start work on a new work programme to address new challenges

bull The Doha Round cannot be completed in 2011 A down payment is necessary from

the Doha Round this year to convince the world that the WTO can deliver

A three-track approach

These constraints require the WTO to adopt a three-track approach during the next few

months leading up to the ministerial meeting in December 2011

Track 1 Identification of a list of issues that specially address the trading interests

of smaller developing countries and relatively less contentious issues for fast tracked

finalisation before the ministerial meeting

Track 2 Identification of a package of the more contentious issues for continuing

consultations with clear terms of reference

Track 3 Identification of appropriate terms of reference for a work programme on

WTO institutional reform and the forward-looking agenda

VOX Research-based policy analysis and commentary from leading economists

36

A possible timeline

These three tracks taken as a package would provide a way forward that respects all

four constraints Achieving consensus on them would be difficult ndash and require months

of preparatory work and negotiations

If the WTO membership starts immediately however there is still time to get the

package ready for finalisation by ministers at the December 2011 ministerial meeting

For this to happen it is essential that discussions on such a package begin this month

so that its contents can be finalised by the end of June 2011 This would leave about

four working months before the ministerial meeting to complete negotiations on the

selected areas

What the three tracks might contain

The first track would contain the Doha down-payment package As with any WTO

package the contents would need to be negotiated and it might require complementary

policies such as technical assistance initiatives

Such a list must include items that speak to development aspects of the Doha mandate

such as

bull The Implementation of the Hong Kong decision on duty-free quota-free treatment

for less developed countries

bull A ministerial decision on the Monitoring Mechanism for Special and Differential

Treatment provisions

bull A ministerial decision on the issues raised by the Sub-Saharan African cotton ex-

porters (the group known as the C-4) and

bull The finalisation of a less-developed-country (LDC) waiver in services so that pref-

erential treatment can be provided to LDCrsquos in services without extending it to

others

Next Steps Getting Past the Doha Round Crisis

37

It should also include areas of the negotiations that engage the interest of all members

such as

bull Trade Facilitation

bull All aspects of export competition in agriculture including export subsidies

bull The Transparency Mechanism for regional trade agreements (RTAs)

bull The non-tariff barriers (NTBs) package in non-agricultural market access (NAMA)

and

bull A ministerial decision on interactions and relationships between the WTOrsquos rules

and its committees on the one hand and existing multilateral environmental agree-

ments on the other (eg the Basel Convention on the Control of Transboundary

Movements of Hazardous Wastes and the Montreal Protocol on Substances that

Deplete the Ozone Layer)

While some members would like to exclude some of these areas from a fast tracked

process in the hope of using them for trade offs in the final stage it is important that the

package is as comprehensive as possible

Track two Items for further negotiation

The second track would gather all remaining items currently under negotiations This

would include

bull All aspects of market access in industrial goods agriculture and services

bull All aspects of subsidies in agriculture

bull Various aspects of rules including fisheries subsidies

bull Environmental goods and

bull Issues related to trade-related aspects of international property rights (TRIPS) re-

garding the protection of Geographical Indicators and the protection of traditional

VOX Research-based policy analysis and commentary from leading economists

38

knowledge and folklore that were are mentioned in the Convention on Biological

Diversity1

The need for a balanced package deserves emphasis It is often assumed that there

is a straight trade-off between agricultural subsidies and market access The situation

however is more complex The interest of countries like India China and Indonesia

in agricultural reform is more systemic than export related For them other incentives

within the mandate will be required

Track three Looking ahead

The underlying theme for the work programme would be an appraisal of the entire

negotiating and decision-making process in the WTO in the context of the present

realities both within and outside the organisation The objective would be to prepare

the WTO to address new challenges to the global trading system concurrently with the

ongoing work on the remaining parts of the Doha mandate

Closing remarks

The above proposals constitute a basic template for addressing the Doha conundrum

To what extent they are actually embraced will depend on how much political capital

the major members of the WTO are prepared to invest in moving the Doha Round

forward There is much scepticism about whether such political will exists It is time

for governments to prove the sceptics wrong

1 Specifically as specified in paragraphs 18 and 19 of the Doha Declaration

Next Steps Getting Past the Doha Round Crisis

39

About the author

Ambassador Bhatia Singh joined the Indian Administrative Service in 1974 holding

several senior positions in provincial administration in Orissa State between 1976 and

1995 He served as Joint Secretary Ministry of Commerce and Industry between 1995-

2000 in which capacity he handled a number of bilateral regional and multilateral trade

negotiations From 2004 to his retirement in 2010 he served as Indiarsquos Ambassador and

Permanent Representative to the WTO in Geneva

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

vii

Doha is deadlocked ndash the members of the WTO are unable to give up and unable to go

forward

In this eBook the contributors propose several deacutemarche that consider various

combinations of 4 initiatives that offer a way out of the current impasse

bull Deliver a down payment

bull Ditch the current process of negotiating in ldquosilosrdquo ndash it doesnrsquot work

bull Develop a new and forward-looking agenda for the WTO

bull Demonstrate some leadership

The down payment is straightforward All the contributors suggest a number of area

where agreement is already close and which could be wrapped up in time for the

December Ministerial After a decade of negotiations it hardly seems right to call this

ldquoan early harvestrdquo but a set of measures that focus on the needs of the least developed

nations seems right for a ldquoDevelopment Roundrdquo

The current approach to negotiations is clearly not working and offers no way forward

Why not try new approaches A number of contributors suggest abandoning the current

ldquosilo approachrdquo The December Ministerial they argue should adopt a new approach

abandoning modalities and emphasising horizontal negotiations One contributor ex-

USTR Susan Schwab suggests abandoning the Round altogether and starting from

scratch

While much of the energy in the Doha negotiations has been expended on traditional

issues such as agriculture and market access for goods and services there is a long list

of new issues that will only grow in importance over time Several contributors advocate

a programme of analysis and discussion that will help members better understand issues

such as competition policy climate change and government procurement

Foreword

VOX Research-based policy analysis and commentary from leading economists

viii

The current Doha deadlock is largely due to the absence of leadership from the major

players Expecting leadership now from any of the Big 5 is unrealistic Baldwin and

Evenett drawing on their discussions with a wide-range of WTO delegations suggest

that one demarche that could help unblock the impasse is a bold move by the middle-

power WTO members They could seize the initiative by adopting a set of unilateral

measures to offer to liberalise trade The new commercial opportunities this would

provide would remind exporters what they have to gain from the conclusion of the

Round

Richard Baldwin and Simon Evenett have acted with their usual speed and efficiency

assembling at short notice a distinguished group of authors whose essays identify

solutions to Doha Deadlock And as always they have been very ably supported by

Team Vox in particular by Bob Denham Samantha Reid Anil Shamdasani and Pierre-

Louis Veacutezina We are grateful to them all

Stephen YeoChief Executive OfficerMay 2011

9

World leaders must make important decisions concerning the future of the Doha Round

for the 31 May 2011 meeting of the WTO membership This essay introduces the issues

and summarises contributorsrsquo suggestions for ldquoNext Stepsrdquo It argues that the best

outcome would be for WTO members to agree to work towards a small package of

deliverables for December 2011 and push the rest of the agenda items into the future

ndash perhaps with specific instructions for changing the basic negotiating protocols used

to date

Global leaders face a dilemma over the WTO multilateral trade negotiations known

as the Doha Round The talks are dead in the water both movement forwards and

movement backwards seem blocked How did we get here Current and former trade

policy officials typically emphasise two points

bull Ten years of talks have made some progress but it now must be taken as a hard fact

that the Doha Round in its entirety will not finish this year

bull No government is willing to announce publicly that they want to abandon the Round

The sources of unwillingness vary Some argue that abandoning the Round would throw

away genuine progress such as the ultimate phase-out of agricultural export subsidies

Others wish to maintain attention focused on particular problems in the trade system

Yet others simply fear that theyrsquoll be blamed for delivering the bad news

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

The Doha dilemma An introduction to the issues and possible solutions

99

VOX Research-based policy analysis and commentary from leading economists

10

Next Steps Saving the WTO from the Doha Round

World leaders must now decide how to tackle this dilemma at the WTOrsquos next key

meeting on 31 May 2011 Logically there are only 3 roads ahead

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock

in some of the progress to date

This eBook on ldquoNext Steps Getting Past the Doha Round Crisisrdquo gathers the thinking

of a handful of the worldrsquos most experienced Doha experts namely former US Trade

Representative Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia

Chinarsquos former WTO Ambassador Zenyu Sun Canadarsquos former WTO Ambassador

John Weekes and Hong Kongrsquos former WTO Ambassador Stuart Harbinson ndash all of

whom spent years directly engaged in Doha negotiations

Road 1 The pitfalls of declaring failure

Susan Schwab argues strongly that declaring Doharsquos demise is essential to allowing

the WTO to move on John Weekes likewise argues ldquoIt would be damaging to invest

more resources and credibility in something that canrsquot be donerdquo Ujal Singh Bhatia by

contrast argues that Road 1 could lead to unpredictable results Zenyu Sun notes that

declaring the Doha Round to be dead would be easy but then what ldquoWould such an

announcement inspire people to inject more energy into the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt itrdquo he writes

These judgements on the medium- to long-term ramifications differ but the short-

term fallout is clear Declaring the Round ldquodeadrdquo would invite an immediate storm of

recrimination among WTO members A great deal of hope and effort has been invested

in the Round by nations across the globe Most WTO members are still looking for the

Next Steps Getting Past the Doha Round Crisis

11

Doha Round to effect critical adjustments to the world trading system ndash especially a

rebalancing of the level of openness to agricultural versus industrial trade (Nassar and

Perez 2011) If one or more of the Big-5 reject a deal that most members still think is

doable the blame game could get very nasty

There is a great danger that this level of ill-will could undermine multilateral trade

cooperation for years It could lock in the growing perception that the WTO is not a

place where serious negotiations can be conducted The US in particular is likely to

be subject to severe criticism in a way that might have the unintended consequence of

convincing US Congressional and private sector groups that the WTO is not a forum

where America can do business Such an outcome would serve no onersquos interests

Despite the clear logic of Schwabrsquos and Weekesrsquo arguments the pitfalls highlighted

by Bhatia and Sun find resonance with most world leaders This is why almost every

WTO member opposes Road 1 As a consequence it is extremely unlikely that WTO

members will decide to declare Doha dead any time soon

Road 2 The pitfalls of suspension

Suspension is certainly the most politically expedient choice for the Big-5 and it

is superficially attractive The logic is well expressed in the old story about a man

ndash condemned to death by his Emperor ndash who obtains a yearrsquos stay of execution by

promising to teach the Emperorrsquos horse to sing ldquoMuch could happen in a yearrdquo the man

reasons ldquoThe Emperor could die I could die the horse could singrdquo

But the usual merits of muddling through donrsquot apply to Doha Suspensions have been

tried so often that everyone would know that suspension is just a circuitous means of

killing the Round Road 2 is just the long route to Road 1 All the pitfalls of Road 1

therefore also apply to Road 2

But suspension would be even worse in many ways The world of trade is changing more

rapidly than negotiating positions so each delay seems to make a compromise based on

VOX Research-based policy analysis and commentary from leading economists

12

the existing elements even less likely Worse still a suspension would strengthen and

spread the belief that the WTO is not an appropriate venue for multilateral negotiations

As Ujal Singh Bhatia writes ldquothe Round will continue to hang like an albatross around

the WTOrsquos neck preventing it from addressing new challenges to the global trading

systemrdquo This would be particular worrisome since the world economy is moving into a

phase of great stress It is facing new challenges that will require multilateral solutions

ndash issues like food security natural-resource export restrictions and trade in goods

services and technology that are essential to climate-change adaption and mitigation

Road 3 A small package followed by a big package

The third road seems the most likely way to move past the Doha dilemma of not being

able to move forwards or backwards on the broad agenda The idea here is that the

agenda would be sorted into ldquodo-ablerdquo and ldquonot yet do-ablerdquo piles Nations would move

forward on a small package of do-ables for December 2011 while agreeing to discuss

the bigger issues later under revised ground rules that would be more likely to permit

the trade-offs necessary to make the big package acceptable to all members

As Stuart Harbinson puts it Doha is like a ship run aground a small package of

deliverables for December 2011 would act as a ldquopatchrdquo to keep the ldquogood ship Dohardquo

afloat until the high tide comes in and lifts the ship off the rocks ldquoIn this analogy the

lsquohigh tidersquo would be a change in the global economic and political seascape enabling

the major trading economies to settle their differences and bring the ship safely into

harbourrdquo he writes

Choices to make on the small package

All five experienced trade negotiators contributing to this eBook ndash and most of the WTO

delegations with whom we spoke ndash believe that it is worth trying to lock in agreement

on a small number of areas by the end of 2011 There are two critical issues to decide

Next Steps Getting Past the Doha Round Crisis

13

1 How much time should be spent on negotiating the small package

2 Which items should be in the small package

The contributors disagree over the first issue Susan Schwab argues for giving it not

more than 2 weeks others suggest longer They all however recognise that a prolonged

and contentious negotiation on a small package ndash especially one that ultimately proved

fruitless ndash would solve nothing and might harm the system

There is far more agreement on the second issue ndash possible composition of the small

package All the contributors and most of the WTO delegations with whom we spoke

suggest that some items on Doharsquos massive negotiating agenda are close to conclusion

Indeed the lists are remarkably similar despite the vast differences in the contributorsrsquo

perspectives They all point out however that striking even a very restrained list of

agreement will require abundant goodwill and hard negotiating

Suggestions for the small-package items include

bull Some sort of accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

bull A package of measures that promote ldquotrade facilitationrdquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impediments to trade

bull An agreement on a monitoring mechanism for special and differential treatment

bull An agreement to make permanent the transparency mechanism for regional trade

agreements that has been operating successfully for years

bull An agreement on certain non-tariff barriers

VOX Research-based policy analysis and commentary from leading economists

14

bull An agreement formalising cooperation between the WTO and various multilateral

environmental agreements

Other issues may ultimately prove tractable or necessary to provide balance Those most

often mentioned include a standstill agreement on fisheries subsidies certain aspects

of the less controversial rules negotiations and export subsidies Such a package could

also include other DDA matters for which the negotiations could be completed quickly

or non-DDA matters where the WTO membership is at one such as the promising

negotiations to upgrade the WTOrsquos Agreement on Government Procurement

The final issue is what to call the small package this is not a trivial matter

bull One option is to just boldly call the small package the ldquoDoha Roundrdquo ndash to declare

victory and move on

While this would clearly disappoint many it speaks to the objective of not letting the

Round drag down the WTO ndash not allowing the WTOrsquos credibility to be further damaged

by endless discussions that can never led to a happy ending

Of course this option would leave unsolved the core Doha issues ndash reducing distortions

in and improving market access for industrial goods agricultural products and services

trade and updating the rules But it might allow members to re-craft the parameters of

the negotiations in a way that would be more likely to lead to success This is clearly

the view taken by Susan Schwab and John Weekes As John Weekes puts it ldquoNot

completing the Doha Round would be a serious setback to the WTO and the multilateral

trading system However if it is clear that the Round cannot be concluded successfully

it is better to admit that and work constructively to develop an agenda for the future

work of the organisationrdquo

Another option would be to wrap up the collection of small agreements into a package

called the ldquoDoha down paymentrdquo or ldquoDoha deliverablesrdquo or ldquoDoha early harvestrdquo as a

way of stressing that all the Doha agenda items are still on the table

Next Steps Getting Past the Doha Round Crisis

15

A third option would be to view the individual items as standalone agreements to be

agreed by the ministers of WTO members at the December meeting without clear

reference to what comes next

This brings us to the next major element of the Road 3 pathway What to do with the

rest of the agenda

Choices to make on the big package

Albert Einstein once defined insanity as doing the same thing over and over and

expecting different results This makes it clear that any complete plan for a way past the

Doha dilemma must change something in the way the negotiations have been operating

Any multilateral trade negotiation involves choice on a series of negotiating rules

or conventions The Doha Round has accreted an odd constellation of these Some

are fundamental and therefore extremely difficult to change These include the idea

that everything must be agreed by all before anything is agreed (the so-called single-

undertaking principle) or the choice to focus on the particular tariff-cutting formula

known as the Swiss formulas But many of the choices are less central such as the exact

way in which flexibilities on tariff-cutting are to be decided

The ramifications of these procedures on the negotiating dynamic were not well

understood years ago when the original decisions were taken The lack of understanding

is even deeper when it comes to the joint operation and interaction among the

conventions

For these reasons the set of negotiating conventions that guide Round may no longer be

optimal Consideration of the pros and cons of alternatives might identify other ways of

finding a package of trade-offs that is acceptable to all

VOX Research-based policy analysis and commentary from leading economists

16

The forward-looking agenda

A number of contributors suggested that the process of rebuilding momentum and

confidence in the ultimate outcome could be boosted by agreeing to launch work

programmes (not actual negotiations) on how the WTO could address 21st-century

trade issues that have come to the fore since the Doha agenda was set in 2001

Here there are two basic lines The first would consider WTO institutional reform the

second would consider new issues such as new disciplines to underpin the increasing

convergence of trade investment and services (as is now routinely done in regional

trade agreements) setting limits on acceptable national climate policies with trade

implications or export restrictions

There certainly seems merit to these idea If nothing else it would interject new

dimensions to discussions that have been going on for a decade It would also make

it clear that we need to safeguard the WTO as a forum for multilateral discussions on

critical 21st-century issues

Concluding remarks

Many decent hard-working public servants have committed plenty of energy to the

Doha Round since its inception At this critical time any temptation for recriminations

or lapses into bitter disappointment should be set to one side to let governments chart a

new path for the WTO The circumstances facing WTO members in the middle of 2011

are hardly ideal and the set of options that stand any chance of acceptance is narrow In

times like these it would be a mistake to make the perfect the enemy of the good It is

time to think creatively and cooperatively about getting the WTO past the Doha crisis

A decision or non-decision that led to several more years of drift ndash years that will be

complicated by elections and changes in governments in some of the leading trading

powers ndash could turn out to be the beginning of the end for the WTOrsquos role as leader

of the global trading system The alternative ndash uncoordinated developments led by the

Next Steps Getting Past the Doha Round Crisis

17

Big-5 in their own systems of regional trade agreements ndash is a very plausible outcome

at this stage but not one that will ultimately serve anyonersquos long-run interests

References

Andre Nassar and Carlos Perez (2011) ldquoWhy WTO members should not give up the

Doha Round The case of agricultural traderdquo in Richard Baldwin and Simon Evenett

(eds) Why World Leaders Must Resist the False Promise of a Doha Delay VoxEU

April

19

Doha is stalled by gaps that are unbridgeable today Indonesiarsquos Trade Minister argues

that we need to be guided by priorities and pragmatism We should develop a set of

stepping stones that will help us complete the Doha Round eventually We should

identify the areas that are achievable in the very near future but which have an impact

on development while building confidence for the continued journey to a successful

Round We should never lose sight of the final goal ndash completing the Doha Round as a

single undertaking In short we are not looking for a ldquoPlan Brdquo we are looking for a

new way to execute Plan A

The importance of completing the Doha Development Agenda sooner rather than later

goes beyond bringing gains of $360 billion of additional trade with substantial benefits

for industrialised and developing economies (HLTE 2011) The importance also goes

beyond what pragmatic soothsayers who are telling us ldquoWhy are you worried the

WTO system will continue to be robust whether we conclude Doha or not Companies

and countries will continue to traderdquo As a developing country policy maker ndash and I

believe I speak for many other developing countries ndash I am greatly worried about the

costs and opportunity lost of not completing Doha

The costs of not completing Doha

I will point to four costs of not completing the Doha Round

bull First is what it could achieve for food security

Mari PangestuMinister of Trade Indonesia

There is no Plan B ndash only Plan A Towards completing Doha

1919

VOX Research-based policy analysis and commentary from leading economists

20

During the 2008 food crisis imbalances between supply and demand were partly

attributed to distorted agriculture prices caused by trade-distorting export subsidies

and domestic-support schemes The agriculture package in Doha will go some way to

address this In todayrsquos situation of high commodity prices now is the perfect time to

address the removal and elimination of such trade-distorting policies Removing these

distortions can only be achieved through multilateral negotiations not through bilateral

or regional agreements

Most importantly the winners would be the billions of hungry and poor people all over

the world correcting the system and ensuring the future supply of food and greater

price stability is very much in their interests For example in Indonesia a 10 increase

in the price of rice without any change in income would lead to a 1 increase in

poverty

bull Second keeping protection at bay

During the depth of the crisis benign protectionism was the order of the day according

to the self-reporting surveillance mechanism established by the WTO at the request of

G20 Leaders This allowed the rebound of trade to become one of the costless ways for

the global economy to recover It is ironical that in the recovery the latest report (WTO

2011) shows that there has been a slight increase in protectionism causing an estimated

impact of 06 to G20 exports

The main increase has been due to tariff increases automatic licenses and other

restrictions including export restrictions Whilst this is still ldquosmallrdquo it is nevertheless

double from the previous period Restoration of the confidence in the world trading

system through clear signals that we are progressing on completing the Round is crucial

to keeping protectionism at bay Developing countries such as Indonesia have a great

interest in this because only the multilateral trading system will provide the fair rules-

based trading system for us to face large and more developed partners on a fair and

equal standing

Next Steps Getting Past the Doha Round Crisis

21

bull Third the lack of progress on the Doha Round already has and will continue to raise

the pressure to undertake bilateral and regional free trade negotiations

In the ASEAN region there are already FTAs between ASEAN and all six of its dialog

partners (Australia China India Japan Korea New Zealand) and numerous bilateral

FTAs The EU has just completed negotiations with Korea which has put pressure

for the Korea-US FTA to be ratified as soon as possible The EU has also completed

negotiations with India and is negotiating with Singapore Malaysia and preparing

to do so with other ASEAN countries Recently China Korea and Japan announced

revitalization of their FTA initiative Furthermore we have the Trans-Pacific Partnership

initiative between 8 members of APEC

It is not the bilateral and regional free trade agreements which are problematic per

se it is negotiating them in the absence of a robust WTO system ndash a system which is

seen as meeting the needs of the current and future trade-linked issues Bilateral and

regional agreements can only work towards complementing the multilateral trading

system when they are ldquoWTO-plusrdquo not ldquoWTO-insteadrdquo

bull Fourth the potential dampening effect on unilateral reforms

The political economy of openness in trade policy and institutional reform have always

functioned better within the framework of international commitments Multilateral

rules impose an important caveat on what countries can or cannot do In a country like

Indonesia this has worked to our advantage in the way we frame our reforms and in fact

has functioned in the past to put bad policies to rest

For instance in the famous National Car case in the mid 1980s which violated the

MFN principle by allowing duty-free imports of cars only from one source country the

domestic politics at the time did not allow for policymakers to remove this policy The

policy was finally ended through the WTOrsquos dispute settlement mechanism It would

be too bad for reforms if the process is undertaken within weakened confidence of

multilateral trading system or one which will eventually not be relevant to the evolution

of 21st century trade issues

VOX Research-based policy analysis and commentary from leading economists

22

The Way Forward No Plan B

Despite G20 Leadersrsquo commitments and all the good intentions and intensive work in

Geneva that came after the push given by trade ministers during their informal meeting

in Davos in January 2011 it proved impossible to arrive at a draft text by the end-of-

April milestone There remains ldquounbridgeable gapsrdquo in a number of main negotiating

groups namely non-agriculture market access

Given this situation trade ministers met first during the APEC Ministers of Trade

Meeting in Big Sky Montana and then on the fringes of the OECD meeting in Paris

Fortunately all have agreed that we all remain committed to completing Doha as a single

undertaking However there was a sense of realism as to the timing and pathways to

achieve this desirable outcome in a timely way

From an Indonesian perspective there is no ldquoPlan Brdquo We do not support a ldquoDoha

Lightrdquo and we remain committed to a comprehensive ambitious and balanced package

building on what we have achieved to date

After almost 6 years of negotiations since the key Hong Kong WTO Ministerial I

believe we are more than 50 or some would say 80 of the way done A realistic way

forward is to identify the sequence of steps that would take us to the final outcome this

is necessary to avoid the costs and lost-opportunities I outlined above

This is not about an early harvest or ldquocherry pickingrdquo and then stopping It is about

identifying the steps forward in a meaningful way towards the final goal of the single

undertaking of Doha

Identifying stepping stones to a final Doha Round conclusion

There are areas within the negotiations that could be seen as steps towards the final

package Of course work and political will is still needed to find ways to bridge the

Next Steps Getting Past the Doha Round Crisis

23

unbridgeable gaps In identifying the areas where we could find convergence a number

of priorities stand out

bull First and foremost is areas of negotiations that will contribute and deliver to devel-

opment objectives such as the Least Developed Countries package andor an effec-

tive aid-for-trade and facilitation package this is after all a Development Round

bull Second areas where there would be clear benefits for development and the private

sector in facilitating and ensuring the benefits of trade are greater we need stake-

holders to be cheerleading the way forward

bull Third there could be areas where we would be able to address the food-security

challenge

One could also foresee that within each current area of negotiations there could be

items which could be wrapped up without disturbing the overall balance of elements

in that particular area It is important that we do not go into ldquonewrdquo negotiations in

identifying which areas We should go into the mode of identifying these pathways and

steps with the mindset and political will of win-win

We need to be guided by priorities and pragmatism That is to identify the areas that are

doable and achievable in the very near future but which have an impact on development

and increasing the benefits of trade while at the same time building confidence for us to

continue our journey to the final package Most importantly we should never lose sight

of the final goal of the single undertaking

Looking forward

It is also important to provide the signal in what we say and do elsewhere Beyond

talking about Doha we must ensure continued confidence in and implementation of the

rules-based open trading system

VOX Research-based policy analysis and commentary from leading economists

24

bull This would mean the commitments of G20 Leaders and others on refraining from

protectionism going beyond words the good intentions need to be strengthened

with commitments and actions

bull It also has implications for how we undertake bilateral and regional agreements

these should be done in a way that is not an alternative to and does not detract from

the multilateral trading system We should pursue regionalism in a way which is

going to contribute to and complement the system

Concluding remarks

In conclusion we should not underestimate the costs of not doing all this We will

need to draw upon the strength of our individual and collective political commitment

We need to call on the ability of some major economies to look beyond pure national

interests and to look at the impact and costs on the global system and economy And we

need to remember that there are many countries and billions of people ndash many of which

are impoverished ndash who are waiting for the Doha deliverables

References

HLTE (2011) ldquoWorld trade and the Doha roundrdquo final report of the High-Level Trade

Experts Group chaired by Jagdish Bhagwati and Peter Sutherland

WTO (2011) ldquoReports on G20 trade and investment measures (mid-October 2010 to

April 2011)rdquo WTO Secretariat 24 May

About the author

Mari Pangestu is Indonesiarsquos Minister of Trade since 2004 having served as Executive

Director of the Jakarta-based think tank the Center for Strategic and International

Studies and a lecturer in the Faculty of Economics at the University of Indonesia From

1991 to 1998 Dr Pangestu was the coordinator of the Trade Policy Forum of the Pacific

Next Steps Getting Past the Doha Round Crisis

25

Economic Cooperation Council and serves on the Board of the Overseas Development

Council World Gold Council and the Asian Journal of Business from The University

of Michigan Ann Arbor

She has published widely on a range of subjects including matters pertaining to

Indonesia as well as regional (ie Asian and Asia Pacific) and global issues She earned

her BA and MA in economics from Australian National University and a PhD in

economics from the University of California Davis

27

The Doha Round has failed according the former US Trade Representative Susan

Schwab This essay argues that prolonging Doha jeopardises the multilateral trading

system and threatens future prospects for WTO-led liberalisation Negotiators should

salvage whatever partial agreements they can from Doha and quickly drop the rest

to ensure the December ministerial meeting focuses on future work plans rather than

recriminations over Doha

The Doha Round has failed It is time for the international community to acknowledge

this sad fact and move on Prolonging the pretence that the Doha Round will succeed

is now a greater threat to the WTO and the multilateral trading system than facing the

truth

A great many smart hard-working and well-intentioned individuals have worked over

many years to realise Doharsquos potential to contribute to global economic growth and

development But what is on the table in Geneva has failed to deliver any outcome

let alone a meaningful one It is time for a swift clean break from the past and to

lay the groundwork for a future where the WTO and its members revive WTO-led

liberalisation and reform

End Doharsquos stranglehold and build towards near-term wins

To keep the multilateral trading system healthy it is necessary to end the Doha

Roundrsquos stranglehold on the system This should happen quickly in order to ensure

that the December 2011 ministerial meeting focuses on future work plans rather than

Susan SchwabUniversity of Marlyand former US Trade Representative

Acknowledge Doharsquos demise and move on to save the WTO

2727

VOX Research-based policy analysis and commentary from leading economists

28

recriminations about a Doha Development Agenda that has struggled through one failed

encounter after another

Negotiators should refocus their efforts on near-term wins and on building the next

Round ndash which need not be another behemoth but perhaps a ldquorolling roundrdquo of reforms

and new market access or a few highest-common-denominator plurilateral or WTO-

plus deals Ultimately these should lead to a broader-based market access and rules

agreement under the multilateral auspices of the WTO

The small package possibility

In my recent Foreign Affairs article (Schwab 2011) I suggested that negotiators should

try to salvage whatever partial agreements they can and then walk away from the rest

I mentioned a number of potential candidates such as trade facilitation and the largely

completed agricultural-export pillar (comprising proposed agreements on export credits

food aid state-trading firms and the elimination of export subsidies) Negotiators

might also try to complete two environment-related agreements one cutting subsidies

to industrial fishing fleets that are overfishing the worldrsquos oceans and the other ending

tariff and nontariff barriers to rdquogreenrdquo technologies in major producing and consuming

countries Taken together or individually each of these would benefit countries across

the spectrum of economic development

I am however sceptical that even these small agreements are achievable in the current

climate of mistrust and entrenched positions A troubling development during the course

of the Round has been how often countries seem to forget or forfeit their own economic

interests ndash let alone the greater good ndash in the face of peer pressure and group-think In

the current environment even these smaller deals might prove impossible to achieve

It is certainly worth trying to achieve a few deliverables by taking a run at a small

package but negotiators should not spend too much time on it They already know

exactly what the options are if they cannot get to ldquoyesrdquo in say two weeks they should

Next Steps Getting Past the Doha Round Crisis

29

give up and move on to the real challenge of launching a new series of multilateral

negotiations under WTO auspices

Getting past Doha

How to conclude the Doha Round One option would be for the Director-General and

a representative sample of WTO Ambassadors to come together in the interest of the

institution and to offer a declaration of Doharsquos demise along with their pledge to begin

building the future That would enable leaders at the November G20 meeting to pledge

their support for the rules-based trading system the WTO and its next steps rather than

for the ever elusive ldquobalanced and ambitiousrdquo Doha outcome

After a short period of grieving over the death of Doha and an opportunity to get

beyond the anger lead trading nations should refocus on getting the WTO back into

its mainstream business of negotiating mutually advantageous market opening and

updating the global rdquorules of the roadrdquo This approach offers the best promise of a

meaningful ldquodevelopmentrdquo outcome as well

How might this be achieved

It seems unrealistic to think WTO members would agree to launch another massive

all-or-nothing round in the near future Such broad negotiations however will be

necessary to tackle some of the worldrsquos most important market access challenges in

services manufacturing and agriculture along with such issues as farm subsidies

There are ways to build-up to the big-round model again where countries once more see

economic self-interest in the use of broad-based negotiations and trade-offs to achieve

both new market access and market reforms First however we must re-establish trust

and regain momentum

One way forward would be for ministers to agree to launch a number of confidence-

building negotiations For example ministers in December could decide to open talks

VOX Research-based policy analysis and commentary from leading economists

30

on expanding the 1997 Information Technology Agreement a number of nations

seem interested and the US Administration already has the authority to implement an

enhanced agreement If negotiators fail to work through the 850 brackets in the current

Doha trade facilitation text that could also be tackled as a stand-alone agreement since

each nation would benefit from more efficient movement of goods and services across

borders

Another confidence-building measure might be a merger of sectoral agreements geared

toward a widely-shared objective such as cheaper better healthcare A package that

included pharmaceuticals medical devices and healthcare services might attract

support from the broad array of WTO members across the development spectrum Given

the high-level of public interest in and awareness of environment issues a sectoral

negotiation on environmental goods and services might be another confidence-building

deal once it is removed from the straightjacket that Doha has become

Lessons from Doha for next steps and the next round

Confidence building agreements would offer modest economic and social contributions

and serve to prepare the atmospherics for launch the next Round This brings me to my

last topic ndash the lessons we should draw from a decade of Doha talks

One thing that is quite clear from years of struggling with the basic structure of Doha

is that the combination of formula and self-selected flexibilities has not worked It

resulted in a situation where every negotiator had to assume the worst case ndash knowing

the political costs they would pay for their own liberalisation but expecting their trading

partners to use flexibilities to negate any meaningful new market-access It is possible

to draw from the best of the Doha formulas ndash such as the higher the barrier the greater

the cut ndash while still creating real negotiations around them through requests and offers

delivered using above- and below-formula cuts

Next Steps Getting Past the Doha Round Crisis

31

Another key lesson is that lumping the worldrsquos very diverse economies into three

basic categories ndash developed developing and least developed ndash is a practice that no

longer fits 21st century economic and trade realities Nor is it a structure conducive to

negotiations and real progress based on an exchange of market access among nations

with large markets Yes the advanced economies should be expected to do more than

those at lesser stages of economic development but expectations should also reflect

the fact that many emerging economies are characterised by both poverty and sectors

where they are globally competitive trade powerhouses

The emerging economies have large markets represent over half of global GDP growth

and stand to be the biggest winners from any major trade agreement They should be

expected to contribute to the next Round accordingly Major trade agreements generally

take at least 12 years to implement from the time they are initially concluded What

should the world trading system look like in 2025 in terms of the absolute and relative

responsibilities of key trading nations

Concluding remarks

I am optimistic when it comes to the multilateral trading system and the WTOrsquos central

role in its governance The optimistic scenario is that we put the Doha Round behind

us Facing facts can invigorate and strengthen the trading system If we fail to act the

WTO risks losing its relevance

The Doha Round ndash which in my view cannot be concluded as it is conceived today ndash

should not be allowed to continue draining the WTOrsquos credibility and potential progress

on the multilateral front Now is the time to liberate the would-be trade liberalisers from

the Doha straightjacket and move on

VOX Research-based policy analysis and commentary from leading economists

32

References

Schwab Susan (2011) ldquoAfter Doha Why the negotiations are doomed and what we

should do about itrdquo Foreign Affairs MayJune

About the author

Ambassador Schwab has been a Professor at the University of Maryland School of

Public Policy since January 2009 and a strategic advisor to Mayer Brown LLP (global

law firm) since March 2010 Ambassador Schwab served as US Trade Representative

from June 2006 to January 2009 and as Deputy US Trade Representative from

October 2005 to June 2006 Prior to her service as Deputy US Trade Representative

Ambassador Schwab served as President and Chief Executive Officer of the University

System of Maryland Foundation from June 2004 to October 2005 as a consultant

for the US Department of Treasury from July 2003 to December 2003 and as Dean

of the University of Maryland School of Public Policy from July 1995 to July 2003

Ambassador Schwab serves on the boards of Boeing Company Caterpillar Inc and

FedEx Corporation

She holds a BA in Political Economy from Williams College a Masters in Development

Policy from Stanford University (Food Research Institute) and a PhD in Public

Administration and International Business from The George Washington University

33

Hopes for finishing Doha in 2011 are fading fast This essay suggests a three-track

approach for moving beyond the Doha crisis 1) Identify a package of ldquodeliverablesrsquo ndash

parts of the Round that could be agreed by December 2011 2) Assemble a package of

contentious issues for ongoing negotiation with clear terms of reference 3) Establish

a work programme to consider WTO institutional reform and forward-looking issues

For reasons that are too well known to be repeated the WTO finds itself at the crossroads

Decisions to be taken in the next few weeks will determine whether it can steer its

way to a successful conclusion of the Doha Round in the near future Failing this the

Round will continue to hang like an albatross around the WTOrsquos neck preventing it

from delivering the promised boost to least developed nations and freezing its ability

to address new challenges to the global trading system All countries would suffer from

such an outcome but especially the worldrsquos poorest and most vulnerable

The cost of a never-ending Doha Round

The adverse implications of a continuing Doha impasse on the future role of the WTO

are too compelling to be dismissed offhandedly

Several trade-linked global problems require global cooperation Food security energy

security trade-related aspects of climate change labour mobility commodity price

volatility and integration of regional liberalisation into the multilateral system are

problems that can only be solved with global cooperation

Ujal Singh BhatiaFormerly Indiarsquos Ambassador and Permanent Representative to the WTO

Next Steps Getting past the Doha Round crisis

3333

VOX Research-based policy analysis and commentary from leading economists

34

For example if food exporters continue to impose export barriers when prices rise

food importers may respond with import barriers to boost self-sufficiency This sort of

protectionist reverberation could lead the world to a situation in which all the players

are worse off but none can improve the situation unilaterally Avoiding this sort of

outcome would require global agreements There are very few global institutions that

could manage such cooperation indeed the WTO might be the only one A WTO locked

in endless Doha debates cannot be the centre of the rules based global trading system

There are many thinkers who believe that the structure of WTO rules is robust enough

to withstand a Doha failure It is true that the sky will not fall if Doha is terminated

without a conclusion Such analysts however tend to underestimate the significant

structural changes taking place in the global economy and the trading system The

WTO is working on a set of rules agreed upon in 1994 that were based on an agenda

set almost a quarter of century ago These are still useful and relevant for much of

world trade ndash but not all For instance the rules were not designed for the technology-

driven fragmentation of the manufacturing process and the distribution of the product

value chain across several geographical locations the intertwining of production with

related services the embedded intellectual property rights in components and sub-

components or the multiplicity of rules of origin All these require a different approach

to rule making

A WTO that remains preoccupied with the Doha Round cannot be expected to focus

on such issues Therefore the continuing relevance of the WTO and its primacy in

the global trading system are contingent upon a successful and early conclusion of

the Doha Round Notwithstanding this urgency it is now clear that a Doha package

cannot be wound up in 2011 along the lines agreed by G20 leaders in November 2010

To prevent this from tying the WTO in knots for years to come it is necessary to think

creatively about ways forward

Next Steps Getting Past the Doha Round Crisis

35

Ideas for moving beyond the impasse

Any effort to deal with the impasse in the negotiations needs to be based on a holistic

appreciation of the systemic implications of a continuing stalemate as much as on the

negotiating positions of various members The efforts for a solution acceptable to all

members therefore need to focus on issues in the Doha mandate as well as on issues for

a post Doha situation

Within this framework four constraints need to be borne in mind

bull A ldquoDoha Literdquo of reduced ambition will not work The outcome has to reflect a dec-

adersquos efforts of the global community Ambition however cannot be defined to suit

the convenience of a few members It must touch all aspects of the Doha mandate

bull Aspects of the Doha mandate that are more relevant to the development dimension

have to be ambitiously addressed and fast tracked

bull WTO needs to start work on a new work programme to address new challenges

bull The Doha Round cannot be completed in 2011 A down payment is necessary from

the Doha Round this year to convince the world that the WTO can deliver

A three-track approach

These constraints require the WTO to adopt a three-track approach during the next few

months leading up to the ministerial meeting in December 2011

Track 1 Identification of a list of issues that specially address the trading interests

of smaller developing countries and relatively less contentious issues for fast tracked

finalisation before the ministerial meeting

Track 2 Identification of a package of the more contentious issues for continuing

consultations with clear terms of reference

Track 3 Identification of appropriate terms of reference for a work programme on

WTO institutional reform and the forward-looking agenda

VOX Research-based policy analysis and commentary from leading economists

36

A possible timeline

These three tracks taken as a package would provide a way forward that respects all

four constraints Achieving consensus on them would be difficult ndash and require months

of preparatory work and negotiations

If the WTO membership starts immediately however there is still time to get the

package ready for finalisation by ministers at the December 2011 ministerial meeting

For this to happen it is essential that discussions on such a package begin this month

so that its contents can be finalised by the end of June 2011 This would leave about

four working months before the ministerial meeting to complete negotiations on the

selected areas

What the three tracks might contain

The first track would contain the Doha down-payment package As with any WTO

package the contents would need to be negotiated and it might require complementary

policies such as technical assistance initiatives

Such a list must include items that speak to development aspects of the Doha mandate

such as

bull The Implementation of the Hong Kong decision on duty-free quota-free treatment

for less developed countries

bull A ministerial decision on the Monitoring Mechanism for Special and Differential

Treatment provisions

bull A ministerial decision on the issues raised by the Sub-Saharan African cotton ex-

porters (the group known as the C-4) and

bull The finalisation of a less-developed-country (LDC) waiver in services so that pref-

erential treatment can be provided to LDCrsquos in services without extending it to

others

Next Steps Getting Past the Doha Round Crisis

37

It should also include areas of the negotiations that engage the interest of all members

such as

bull Trade Facilitation

bull All aspects of export competition in agriculture including export subsidies

bull The Transparency Mechanism for regional trade agreements (RTAs)

bull The non-tariff barriers (NTBs) package in non-agricultural market access (NAMA)

and

bull A ministerial decision on interactions and relationships between the WTOrsquos rules

and its committees on the one hand and existing multilateral environmental agree-

ments on the other (eg the Basel Convention on the Control of Transboundary

Movements of Hazardous Wastes and the Montreal Protocol on Substances that

Deplete the Ozone Layer)

While some members would like to exclude some of these areas from a fast tracked

process in the hope of using them for trade offs in the final stage it is important that the

package is as comprehensive as possible

Track two Items for further negotiation

The second track would gather all remaining items currently under negotiations This

would include

bull All aspects of market access in industrial goods agriculture and services

bull All aspects of subsidies in agriculture

bull Various aspects of rules including fisheries subsidies

bull Environmental goods and

bull Issues related to trade-related aspects of international property rights (TRIPS) re-

garding the protection of Geographical Indicators and the protection of traditional

VOX Research-based policy analysis and commentary from leading economists

38

knowledge and folklore that were are mentioned in the Convention on Biological

Diversity1

The need for a balanced package deserves emphasis It is often assumed that there

is a straight trade-off between agricultural subsidies and market access The situation

however is more complex The interest of countries like India China and Indonesia

in agricultural reform is more systemic than export related For them other incentives

within the mandate will be required

Track three Looking ahead

The underlying theme for the work programme would be an appraisal of the entire

negotiating and decision-making process in the WTO in the context of the present

realities both within and outside the organisation The objective would be to prepare

the WTO to address new challenges to the global trading system concurrently with the

ongoing work on the remaining parts of the Doha mandate

Closing remarks

The above proposals constitute a basic template for addressing the Doha conundrum

To what extent they are actually embraced will depend on how much political capital

the major members of the WTO are prepared to invest in moving the Doha Round

forward There is much scepticism about whether such political will exists It is time

for governments to prove the sceptics wrong

1 Specifically as specified in paragraphs 18 and 19 of the Doha Declaration

Next Steps Getting Past the Doha Round Crisis

39

About the author

Ambassador Bhatia Singh joined the Indian Administrative Service in 1974 holding

several senior positions in provincial administration in Orissa State between 1976 and

1995 He served as Joint Secretary Ministry of Commerce and Industry between 1995-

2000 in which capacity he handled a number of bilateral regional and multilateral trade

negotiations From 2004 to his retirement in 2010 he served as Indiarsquos Ambassador and

Permanent Representative to the WTO in Geneva

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

VOX Research-based policy analysis and commentary from leading economists

viii

The current Doha deadlock is largely due to the absence of leadership from the major

players Expecting leadership now from any of the Big 5 is unrealistic Baldwin and

Evenett drawing on their discussions with a wide-range of WTO delegations suggest

that one demarche that could help unblock the impasse is a bold move by the middle-

power WTO members They could seize the initiative by adopting a set of unilateral

measures to offer to liberalise trade The new commercial opportunities this would

provide would remind exporters what they have to gain from the conclusion of the

Round

Richard Baldwin and Simon Evenett have acted with their usual speed and efficiency

assembling at short notice a distinguished group of authors whose essays identify

solutions to Doha Deadlock And as always they have been very ably supported by

Team Vox in particular by Bob Denham Samantha Reid Anil Shamdasani and Pierre-

Louis Veacutezina We are grateful to them all

Stephen YeoChief Executive OfficerMay 2011

9

World leaders must make important decisions concerning the future of the Doha Round

for the 31 May 2011 meeting of the WTO membership This essay introduces the issues

and summarises contributorsrsquo suggestions for ldquoNext Stepsrdquo It argues that the best

outcome would be for WTO members to agree to work towards a small package of

deliverables for December 2011 and push the rest of the agenda items into the future

ndash perhaps with specific instructions for changing the basic negotiating protocols used

to date

Global leaders face a dilemma over the WTO multilateral trade negotiations known

as the Doha Round The talks are dead in the water both movement forwards and

movement backwards seem blocked How did we get here Current and former trade

policy officials typically emphasise two points

bull Ten years of talks have made some progress but it now must be taken as a hard fact

that the Doha Round in its entirety will not finish this year

bull No government is willing to announce publicly that they want to abandon the Round

The sources of unwillingness vary Some argue that abandoning the Round would throw

away genuine progress such as the ultimate phase-out of agricultural export subsidies

Others wish to maintain attention focused on particular problems in the trade system

Yet others simply fear that theyrsquoll be blamed for delivering the bad news

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

The Doha dilemma An introduction to the issues and possible solutions

99

VOX Research-based policy analysis and commentary from leading economists

10

Next Steps Saving the WTO from the Doha Round

World leaders must now decide how to tackle this dilemma at the WTOrsquos next key

meeting on 31 May 2011 Logically there are only 3 roads ahead

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock

in some of the progress to date

This eBook on ldquoNext Steps Getting Past the Doha Round Crisisrdquo gathers the thinking

of a handful of the worldrsquos most experienced Doha experts namely former US Trade

Representative Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia

Chinarsquos former WTO Ambassador Zenyu Sun Canadarsquos former WTO Ambassador

John Weekes and Hong Kongrsquos former WTO Ambassador Stuart Harbinson ndash all of

whom spent years directly engaged in Doha negotiations

Road 1 The pitfalls of declaring failure

Susan Schwab argues strongly that declaring Doharsquos demise is essential to allowing

the WTO to move on John Weekes likewise argues ldquoIt would be damaging to invest

more resources and credibility in something that canrsquot be donerdquo Ujal Singh Bhatia by

contrast argues that Road 1 could lead to unpredictable results Zenyu Sun notes that

declaring the Doha Round to be dead would be easy but then what ldquoWould such an

announcement inspire people to inject more energy into the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt itrdquo he writes

These judgements on the medium- to long-term ramifications differ but the short-

term fallout is clear Declaring the Round ldquodeadrdquo would invite an immediate storm of

recrimination among WTO members A great deal of hope and effort has been invested

in the Round by nations across the globe Most WTO members are still looking for the

Next Steps Getting Past the Doha Round Crisis

11

Doha Round to effect critical adjustments to the world trading system ndash especially a

rebalancing of the level of openness to agricultural versus industrial trade (Nassar and

Perez 2011) If one or more of the Big-5 reject a deal that most members still think is

doable the blame game could get very nasty

There is a great danger that this level of ill-will could undermine multilateral trade

cooperation for years It could lock in the growing perception that the WTO is not a

place where serious negotiations can be conducted The US in particular is likely to

be subject to severe criticism in a way that might have the unintended consequence of

convincing US Congressional and private sector groups that the WTO is not a forum

where America can do business Such an outcome would serve no onersquos interests

Despite the clear logic of Schwabrsquos and Weekesrsquo arguments the pitfalls highlighted

by Bhatia and Sun find resonance with most world leaders This is why almost every

WTO member opposes Road 1 As a consequence it is extremely unlikely that WTO

members will decide to declare Doha dead any time soon

Road 2 The pitfalls of suspension

Suspension is certainly the most politically expedient choice for the Big-5 and it

is superficially attractive The logic is well expressed in the old story about a man

ndash condemned to death by his Emperor ndash who obtains a yearrsquos stay of execution by

promising to teach the Emperorrsquos horse to sing ldquoMuch could happen in a yearrdquo the man

reasons ldquoThe Emperor could die I could die the horse could singrdquo

But the usual merits of muddling through donrsquot apply to Doha Suspensions have been

tried so often that everyone would know that suspension is just a circuitous means of

killing the Round Road 2 is just the long route to Road 1 All the pitfalls of Road 1

therefore also apply to Road 2

But suspension would be even worse in many ways The world of trade is changing more

rapidly than negotiating positions so each delay seems to make a compromise based on

VOX Research-based policy analysis and commentary from leading economists

12

the existing elements even less likely Worse still a suspension would strengthen and

spread the belief that the WTO is not an appropriate venue for multilateral negotiations

As Ujal Singh Bhatia writes ldquothe Round will continue to hang like an albatross around

the WTOrsquos neck preventing it from addressing new challenges to the global trading

systemrdquo This would be particular worrisome since the world economy is moving into a

phase of great stress It is facing new challenges that will require multilateral solutions

ndash issues like food security natural-resource export restrictions and trade in goods

services and technology that are essential to climate-change adaption and mitigation

Road 3 A small package followed by a big package

The third road seems the most likely way to move past the Doha dilemma of not being

able to move forwards or backwards on the broad agenda The idea here is that the

agenda would be sorted into ldquodo-ablerdquo and ldquonot yet do-ablerdquo piles Nations would move

forward on a small package of do-ables for December 2011 while agreeing to discuss

the bigger issues later under revised ground rules that would be more likely to permit

the trade-offs necessary to make the big package acceptable to all members

As Stuart Harbinson puts it Doha is like a ship run aground a small package of

deliverables for December 2011 would act as a ldquopatchrdquo to keep the ldquogood ship Dohardquo

afloat until the high tide comes in and lifts the ship off the rocks ldquoIn this analogy the

lsquohigh tidersquo would be a change in the global economic and political seascape enabling

the major trading economies to settle their differences and bring the ship safely into

harbourrdquo he writes

Choices to make on the small package

All five experienced trade negotiators contributing to this eBook ndash and most of the WTO

delegations with whom we spoke ndash believe that it is worth trying to lock in agreement

on a small number of areas by the end of 2011 There are two critical issues to decide

Next Steps Getting Past the Doha Round Crisis

13

1 How much time should be spent on negotiating the small package

2 Which items should be in the small package

The contributors disagree over the first issue Susan Schwab argues for giving it not

more than 2 weeks others suggest longer They all however recognise that a prolonged

and contentious negotiation on a small package ndash especially one that ultimately proved

fruitless ndash would solve nothing and might harm the system

There is far more agreement on the second issue ndash possible composition of the small

package All the contributors and most of the WTO delegations with whom we spoke

suggest that some items on Doharsquos massive negotiating agenda are close to conclusion

Indeed the lists are remarkably similar despite the vast differences in the contributorsrsquo

perspectives They all point out however that striking even a very restrained list of

agreement will require abundant goodwill and hard negotiating

Suggestions for the small-package items include

bull Some sort of accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

bull A package of measures that promote ldquotrade facilitationrdquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impediments to trade

bull An agreement on a monitoring mechanism for special and differential treatment

bull An agreement to make permanent the transparency mechanism for regional trade

agreements that has been operating successfully for years

bull An agreement on certain non-tariff barriers

VOX Research-based policy analysis and commentary from leading economists

14

bull An agreement formalising cooperation between the WTO and various multilateral

environmental agreements

Other issues may ultimately prove tractable or necessary to provide balance Those most

often mentioned include a standstill agreement on fisheries subsidies certain aspects

of the less controversial rules negotiations and export subsidies Such a package could

also include other DDA matters for which the negotiations could be completed quickly

or non-DDA matters where the WTO membership is at one such as the promising

negotiations to upgrade the WTOrsquos Agreement on Government Procurement

The final issue is what to call the small package this is not a trivial matter

bull One option is to just boldly call the small package the ldquoDoha Roundrdquo ndash to declare

victory and move on

While this would clearly disappoint many it speaks to the objective of not letting the

Round drag down the WTO ndash not allowing the WTOrsquos credibility to be further damaged

by endless discussions that can never led to a happy ending

Of course this option would leave unsolved the core Doha issues ndash reducing distortions

in and improving market access for industrial goods agricultural products and services

trade and updating the rules But it might allow members to re-craft the parameters of

the negotiations in a way that would be more likely to lead to success This is clearly

the view taken by Susan Schwab and John Weekes As John Weekes puts it ldquoNot

completing the Doha Round would be a serious setback to the WTO and the multilateral

trading system However if it is clear that the Round cannot be concluded successfully

it is better to admit that and work constructively to develop an agenda for the future

work of the organisationrdquo

Another option would be to wrap up the collection of small agreements into a package

called the ldquoDoha down paymentrdquo or ldquoDoha deliverablesrdquo or ldquoDoha early harvestrdquo as a

way of stressing that all the Doha agenda items are still on the table

Next Steps Getting Past the Doha Round Crisis

15

A third option would be to view the individual items as standalone agreements to be

agreed by the ministers of WTO members at the December meeting without clear

reference to what comes next

This brings us to the next major element of the Road 3 pathway What to do with the

rest of the agenda

Choices to make on the big package

Albert Einstein once defined insanity as doing the same thing over and over and

expecting different results This makes it clear that any complete plan for a way past the

Doha dilemma must change something in the way the negotiations have been operating

Any multilateral trade negotiation involves choice on a series of negotiating rules

or conventions The Doha Round has accreted an odd constellation of these Some

are fundamental and therefore extremely difficult to change These include the idea

that everything must be agreed by all before anything is agreed (the so-called single-

undertaking principle) or the choice to focus on the particular tariff-cutting formula

known as the Swiss formulas But many of the choices are less central such as the exact

way in which flexibilities on tariff-cutting are to be decided

The ramifications of these procedures on the negotiating dynamic were not well

understood years ago when the original decisions were taken The lack of understanding

is even deeper when it comes to the joint operation and interaction among the

conventions

For these reasons the set of negotiating conventions that guide Round may no longer be

optimal Consideration of the pros and cons of alternatives might identify other ways of

finding a package of trade-offs that is acceptable to all

VOX Research-based policy analysis and commentary from leading economists

16

The forward-looking agenda

A number of contributors suggested that the process of rebuilding momentum and

confidence in the ultimate outcome could be boosted by agreeing to launch work

programmes (not actual negotiations) on how the WTO could address 21st-century

trade issues that have come to the fore since the Doha agenda was set in 2001

Here there are two basic lines The first would consider WTO institutional reform the

second would consider new issues such as new disciplines to underpin the increasing

convergence of trade investment and services (as is now routinely done in regional

trade agreements) setting limits on acceptable national climate policies with trade

implications or export restrictions

There certainly seems merit to these idea If nothing else it would interject new

dimensions to discussions that have been going on for a decade It would also make

it clear that we need to safeguard the WTO as a forum for multilateral discussions on

critical 21st-century issues

Concluding remarks

Many decent hard-working public servants have committed plenty of energy to the

Doha Round since its inception At this critical time any temptation for recriminations

or lapses into bitter disappointment should be set to one side to let governments chart a

new path for the WTO The circumstances facing WTO members in the middle of 2011

are hardly ideal and the set of options that stand any chance of acceptance is narrow In

times like these it would be a mistake to make the perfect the enemy of the good It is

time to think creatively and cooperatively about getting the WTO past the Doha crisis

A decision or non-decision that led to several more years of drift ndash years that will be

complicated by elections and changes in governments in some of the leading trading

powers ndash could turn out to be the beginning of the end for the WTOrsquos role as leader

of the global trading system The alternative ndash uncoordinated developments led by the

Next Steps Getting Past the Doha Round Crisis

17

Big-5 in their own systems of regional trade agreements ndash is a very plausible outcome

at this stage but not one that will ultimately serve anyonersquos long-run interests

References

Andre Nassar and Carlos Perez (2011) ldquoWhy WTO members should not give up the

Doha Round The case of agricultural traderdquo in Richard Baldwin and Simon Evenett

(eds) Why World Leaders Must Resist the False Promise of a Doha Delay VoxEU

April

19

Doha is stalled by gaps that are unbridgeable today Indonesiarsquos Trade Minister argues

that we need to be guided by priorities and pragmatism We should develop a set of

stepping stones that will help us complete the Doha Round eventually We should

identify the areas that are achievable in the very near future but which have an impact

on development while building confidence for the continued journey to a successful

Round We should never lose sight of the final goal ndash completing the Doha Round as a

single undertaking In short we are not looking for a ldquoPlan Brdquo we are looking for a

new way to execute Plan A

The importance of completing the Doha Development Agenda sooner rather than later

goes beyond bringing gains of $360 billion of additional trade with substantial benefits

for industrialised and developing economies (HLTE 2011) The importance also goes

beyond what pragmatic soothsayers who are telling us ldquoWhy are you worried the

WTO system will continue to be robust whether we conclude Doha or not Companies

and countries will continue to traderdquo As a developing country policy maker ndash and I

believe I speak for many other developing countries ndash I am greatly worried about the

costs and opportunity lost of not completing Doha

The costs of not completing Doha

I will point to four costs of not completing the Doha Round

bull First is what it could achieve for food security

Mari PangestuMinister of Trade Indonesia

There is no Plan B ndash only Plan A Towards completing Doha

1919

VOX Research-based policy analysis and commentary from leading economists

20

During the 2008 food crisis imbalances between supply and demand were partly

attributed to distorted agriculture prices caused by trade-distorting export subsidies

and domestic-support schemes The agriculture package in Doha will go some way to

address this In todayrsquos situation of high commodity prices now is the perfect time to

address the removal and elimination of such trade-distorting policies Removing these

distortions can only be achieved through multilateral negotiations not through bilateral

or regional agreements

Most importantly the winners would be the billions of hungry and poor people all over

the world correcting the system and ensuring the future supply of food and greater

price stability is very much in their interests For example in Indonesia a 10 increase

in the price of rice without any change in income would lead to a 1 increase in

poverty

bull Second keeping protection at bay

During the depth of the crisis benign protectionism was the order of the day according

to the self-reporting surveillance mechanism established by the WTO at the request of

G20 Leaders This allowed the rebound of trade to become one of the costless ways for

the global economy to recover It is ironical that in the recovery the latest report (WTO

2011) shows that there has been a slight increase in protectionism causing an estimated

impact of 06 to G20 exports

The main increase has been due to tariff increases automatic licenses and other

restrictions including export restrictions Whilst this is still ldquosmallrdquo it is nevertheless

double from the previous period Restoration of the confidence in the world trading

system through clear signals that we are progressing on completing the Round is crucial

to keeping protectionism at bay Developing countries such as Indonesia have a great

interest in this because only the multilateral trading system will provide the fair rules-

based trading system for us to face large and more developed partners on a fair and

equal standing

Next Steps Getting Past the Doha Round Crisis

21

bull Third the lack of progress on the Doha Round already has and will continue to raise

the pressure to undertake bilateral and regional free trade negotiations

In the ASEAN region there are already FTAs between ASEAN and all six of its dialog

partners (Australia China India Japan Korea New Zealand) and numerous bilateral

FTAs The EU has just completed negotiations with Korea which has put pressure

for the Korea-US FTA to be ratified as soon as possible The EU has also completed

negotiations with India and is negotiating with Singapore Malaysia and preparing

to do so with other ASEAN countries Recently China Korea and Japan announced

revitalization of their FTA initiative Furthermore we have the Trans-Pacific Partnership

initiative between 8 members of APEC

It is not the bilateral and regional free trade agreements which are problematic per

se it is negotiating them in the absence of a robust WTO system ndash a system which is

seen as meeting the needs of the current and future trade-linked issues Bilateral and

regional agreements can only work towards complementing the multilateral trading

system when they are ldquoWTO-plusrdquo not ldquoWTO-insteadrdquo

bull Fourth the potential dampening effect on unilateral reforms

The political economy of openness in trade policy and institutional reform have always

functioned better within the framework of international commitments Multilateral

rules impose an important caveat on what countries can or cannot do In a country like

Indonesia this has worked to our advantage in the way we frame our reforms and in fact

has functioned in the past to put bad policies to rest

For instance in the famous National Car case in the mid 1980s which violated the

MFN principle by allowing duty-free imports of cars only from one source country the

domestic politics at the time did not allow for policymakers to remove this policy The

policy was finally ended through the WTOrsquos dispute settlement mechanism It would

be too bad for reforms if the process is undertaken within weakened confidence of

multilateral trading system or one which will eventually not be relevant to the evolution

of 21st century trade issues

VOX Research-based policy analysis and commentary from leading economists

22

The Way Forward No Plan B

Despite G20 Leadersrsquo commitments and all the good intentions and intensive work in

Geneva that came after the push given by trade ministers during their informal meeting

in Davos in January 2011 it proved impossible to arrive at a draft text by the end-of-

April milestone There remains ldquounbridgeable gapsrdquo in a number of main negotiating

groups namely non-agriculture market access

Given this situation trade ministers met first during the APEC Ministers of Trade

Meeting in Big Sky Montana and then on the fringes of the OECD meeting in Paris

Fortunately all have agreed that we all remain committed to completing Doha as a single

undertaking However there was a sense of realism as to the timing and pathways to

achieve this desirable outcome in a timely way

From an Indonesian perspective there is no ldquoPlan Brdquo We do not support a ldquoDoha

Lightrdquo and we remain committed to a comprehensive ambitious and balanced package

building on what we have achieved to date

After almost 6 years of negotiations since the key Hong Kong WTO Ministerial I

believe we are more than 50 or some would say 80 of the way done A realistic way

forward is to identify the sequence of steps that would take us to the final outcome this

is necessary to avoid the costs and lost-opportunities I outlined above

This is not about an early harvest or ldquocherry pickingrdquo and then stopping It is about

identifying the steps forward in a meaningful way towards the final goal of the single

undertaking of Doha

Identifying stepping stones to a final Doha Round conclusion

There are areas within the negotiations that could be seen as steps towards the final

package Of course work and political will is still needed to find ways to bridge the

Next Steps Getting Past the Doha Round Crisis

23

unbridgeable gaps In identifying the areas where we could find convergence a number

of priorities stand out

bull First and foremost is areas of negotiations that will contribute and deliver to devel-

opment objectives such as the Least Developed Countries package andor an effec-

tive aid-for-trade and facilitation package this is after all a Development Round

bull Second areas where there would be clear benefits for development and the private

sector in facilitating and ensuring the benefits of trade are greater we need stake-

holders to be cheerleading the way forward

bull Third there could be areas where we would be able to address the food-security

challenge

One could also foresee that within each current area of negotiations there could be

items which could be wrapped up without disturbing the overall balance of elements

in that particular area It is important that we do not go into ldquonewrdquo negotiations in

identifying which areas We should go into the mode of identifying these pathways and

steps with the mindset and political will of win-win

We need to be guided by priorities and pragmatism That is to identify the areas that are

doable and achievable in the very near future but which have an impact on development

and increasing the benefits of trade while at the same time building confidence for us to

continue our journey to the final package Most importantly we should never lose sight

of the final goal of the single undertaking

Looking forward

It is also important to provide the signal in what we say and do elsewhere Beyond

talking about Doha we must ensure continued confidence in and implementation of the

rules-based open trading system

VOX Research-based policy analysis and commentary from leading economists

24

bull This would mean the commitments of G20 Leaders and others on refraining from

protectionism going beyond words the good intentions need to be strengthened

with commitments and actions

bull It also has implications for how we undertake bilateral and regional agreements

these should be done in a way that is not an alternative to and does not detract from

the multilateral trading system We should pursue regionalism in a way which is

going to contribute to and complement the system

Concluding remarks

In conclusion we should not underestimate the costs of not doing all this We will

need to draw upon the strength of our individual and collective political commitment

We need to call on the ability of some major economies to look beyond pure national

interests and to look at the impact and costs on the global system and economy And we

need to remember that there are many countries and billions of people ndash many of which

are impoverished ndash who are waiting for the Doha deliverables

References

HLTE (2011) ldquoWorld trade and the Doha roundrdquo final report of the High-Level Trade

Experts Group chaired by Jagdish Bhagwati and Peter Sutherland

WTO (2011) ldquoReports on G20 trade and investment measures (mid-October 2010 to

April 2011)rdquo WTO Secretariat 24 May

About the author

Mari Pangestu is Indonesiarsquos Minister of Trade since 2004 having served as Executive

Director of the Jakarta-based think tank the Center for Strategic and International

Studies and a lecturer in the Faculty of Economics at the University of Indonesia From

1991 to 1998 Dr Pangestu was the coordinator of the Trade Policy Forum of the Pacific

Next Steps Getting Past the Doha Round Crisis

25

Economic Cooperation Council and serves on the Board of the Overseas Development

Council World Gold Council and the Asian Journal of Business from The University

of Michigan Ann Arbor

She has published widely on a range of subjects including matters pertaining to

Indonesia as well as regional (ie Asian and Asia Pacific) and global issues She earned

her BA and MA in economics from Australian National University and a PhD in

economics from the University of California Davis

27

The Doha Round has failed according the former US Trade Representative Susan

Schwab This essay argues that prolonging Doha jeopardises the multilateral trading

system and threatens future prospects for WTO-led liberalisation Negotiators should

salvage whatever partial agreements they can from Doha and quickly drop the rest

to ensure the December ministerial meeting focuses on future work plans rather than

recriminations over Doha

The Doha Round has failed It is time for the international community to acknowledge

this sad fact and move on Prolonging the pretence that the Doha Round will succeed

is now a greater threat to the WTO and the multilateral trading system than facing the

truth

A great many smart hard-working and well-intentioned individuals have worked over

many years to realise Doharsquos potential to contribute to global economic growth and

development But what is on the table in Geneva has failed to deliver any outcome

let alone a meaningful one It is time for a swift clean break from the past and to

lay the groundwork for a future where the WTO and its members revive WTO-led

liberalisation and reform

End Doharsquos stranglehold and build towards near-term wins

To keep the multilateral trading system healthy it is necessary to end the Doha

Roundrsquos stranglehold on the system This should happen quickly in order to ensure

that the December 2011 ministerial meeting focuses on future work plans rather than

Susan SchwabUniversity of Marlyand former US Trade Representative

Acknowledge Doharsquos demise and move on to save the WTO

2727

VOX Research-based policy analysis and commentary from leading economists

28

recriminations about a Doha Development Agenda that has struggled through one failed

encounter after another

Negotiators should refocus their efforts on near-term wins and on building the next

Round ndash which need not be another behemoth but perhaps a ldquorolling roundrdquo of reforms

and new market access or a few highest-common-denominator plurilateral or WTO-

plus deals Ultimately these should lead to a broader-based market access and rules

agreement under the multilateral auspices of the WTO

The small package possibility

In my recent Foreign Affairs article (Schwab 2011) I suggested that negotiators should

try to salvage whatever partial agreements they can and then walk away from the rest

I mentioned a number of potential candidates such as trade facilitation and the largely

completed agricultural-export pillar (comprising proposed agreements on export credits

food aid state-trading firms and the elimination of export subsidies) Negotiators

might also try to complete two environment-related agreements one cutting subsidies

to industrial fishing fleets that are overfishing the worldrsquos oceans and the other ending

tariff and nontariff barriers to rdquogreenrdquo technologies in major producing and consuming

countries Taken together or individually each of these would benefit countries across

the spectrum of economic development

I am however sceptical that even these small agreements are achievable in the current

climate of mistrust and entrenched positions A troubling development during the course

of the Round has been how often countries seem to forget or forfeit their own economic

interests ndash let alone the greater good ndash in the face of peer pressure and group-think In

the current environment even these smaller deals might prove impossible to achieve

It is certainly worth trying to achieve a few deliverables by taking a run at a small

package but negotiators should not spend too much time on it They already know

exactly what the options are if they cannot get to ldquoyesrdquo in say two weeks they should

Next Steps Getting Past the Doha Round Crisis

29

give up and move on to the real challenge of launching a new series of multilateral

negotiations under WTO auspices

Getting past Doha

How to conclude the Doha Round One option would be for the Director-General and

a representative sample of WTO Ambassadors to come together in the interest of the

institution and to offer a declaration of Doharsquos demise along with their pledge to begin

building the future That would enable leaders at the November G20 meeting to pledge

their support for the rules-based trading system the WTO and its next steps rather than

for the ever elusive ldquobalanced and ambitiousrdquo Doha outcome

After a short period of grieving over the death of Doha and an opportunity to get

beyond the anger lead trading nations should refocus on getting the WTO back into

its mainstream business of negotiating mutually advantageous market opening and

updating the global rdquorules of the roadrdquo This approach offers the best promise of a

meaningful ldquodevelopmentrdquo outcome as well

How might this be achieved

It seems unrealistic to think WTO members would agree to launch another massive

all-or-nothing round in the near future Such broad negotiations however will be

necessary to tackle some of the worldrsquos most important market access challenges in

services manufacturing and agriculture along with such issues as farm subsidies

There are ways to build-up to the big-round model again where countries once more see

economic self-interest in the use of broad-based negotiations and trade-offs to achieve

both new market access and market reforms First however we must re-establish trust

and regain momentum

One way forward would be for ministers to agree to launch a number of confidence-

building negotiations For example ministers in December could decide to open talks

VOX Research-based policy analysis and commentary from leading economists

30

on expanding the 1997 Information Technology Agreement a number of nations

seem interested and the US Administration already has the authority to implement an

enhanced agreement If negotiators fail to work through the 850 brackets in the current

Doha trade facilitation text that could also be tackled as a stand-alone agreement since

each nation would benefit from more efficient movement of goods and services across

borders

Another confidence-building measure might be a merger of sectoral agreements geared

toward a widely-shared objective such as cheaper better healthcare A package that

included pharmaceuticals medical devices and healthcare services might attract

support from the broad array of WTO members across the development spectrum Given

the high-level of public interest in and awareness of environment issues a sectoral

negotiation on environmental goods and services might be another confidence-building

deal once it is removed from the straightjacket that Doha has become

Lessons from Doha for next steps and the next round

Confidence building agreements would offer modest economic and social contributions

and serve to prepare the atmospherics for launch the next Round This brings me to my

last topic ndash the lessons we should draw from a decade of Doha talks

One thing that is quite clear from years of struggling with the basic structure of Doha

is that the combination of formula and self-selected flexibilities has not worked It

resulted in a situation where every negotiator had to assume the worst case ndash knowing

the political costs they would pay for their own liberalisation but expecting their trading

partners to use flexibilities to negate any meaningful new market-access It is possible

to draw from the best of the Doha formulas ndash such as the higher the barrier the greater

the cut ndash while still creating real negotiations around them through requests and offers

delivered using above- and below-formula cuts

Next Steps Getting Past the Doha Round Crisis

31

Another key lesson is that lumping the worldrsquos very diverse economies into three

basic categories ndash developed developing and least developed ndash is a practice that no

longer fits 21st century economic and trade realities Nor is it a structure conducive to

negotiations and real progress based on an exchange of market access among nations

with large markets Yes the advanced economies should be expected to do more than

those at lesser stages of economic development but expectations should also reflect

the fact that many emerging economies are characterised by both poverty and sectors

where they are globally competitive trade powerhouses

The emerging economies have large markets represent over half of global GDP growth

and stand to be the biggest winners from any major trade agreement They should be

expected to contribute to the next Round accordingly Major trade agreements generally

take at least 12 years to implement from the time they are initially concluded What

should the world trading system look like in 2025 in terms of the absolute and relative

responsibilities of key trading nations

Concluding remarks

I am optimistic when it comes to the multilateral trading system and the WTOrsquos central

role in its governance The optimistic scenario is that we put the Doha Round behind

us Facing facts can invigorate and strengthen the trading system If we fail to act the

WTO risks losing its relevance

The Doha Round ndash which in my view cannot be concluded as it is conceived today ndash

should not be allowed to continue draining the WTOrsquos credibility and potential progress

on the multilateral front Now is the time to liberate the would-be trade liberalisers from

the Doha straightjacket and move on

VOX Research-based policy analysis and commentary from leading economists

32

References

Schwab Susan (2011) ldquoAfter Doha Why the negotiations are doomed and what we

should do about itrdquo Foreign Affairs MayJune

About the author

Ambassador Schwab has been a Professor at the University of Maryland School of

Public Policy since January 2009 and a strategic advisor to Mayer Brown LLP (global

law firm) since March 2010 Ambassador Schwab served as US Trade Representative

from June 2006 to January 2009 and as Deputy US Trade Representative from

October 2005 to June 2006 Prior to her service as Deputy US Trade Representative

Ambassador Schwab served as President and Chief Executive Officer of the University

System of Maryland Foundation from June 2004 to October 2005 as a consultant

for the US Department of Treasury from July 2003 to December 2003 and as Dean

of the University of Maryland School of Public Policy from July 1995 to July 2003

Ambassador Schwab serves on the boards of Boeing Company Caterpillar Inc and

FedEx Corporation

She holds a BA in Political Economy from Williams College a Masters in Development

Policy from Stanford University (Food Research Institute) and a PhD in Public

Administration and International Business from The George Washington University

33

Hopes for finishing Doha in 2011 are fading fast This essay suggests a three-track

approach for moving beyond the Doha crisis 1) Identify a package of ldquodeliverablesrsquo ndash

parts of the Round that could be agreed by December 2011 2) Assemble a package of

contentious issues for ongoing negotiation with clear terms of reference 3) Establish

a work programme to consider WTO institutional reform and forward-looking issues

For reasons that are too well known to be repeated the WTO finds itself at the crossroads

Decisions to be taken in the next few weeks will determine whether it can steer its

way to a successful conclusion of the Doha Round in the near future Failing this the

Round will continue to hang like an albatross around the WTOrsquos neck preventing it

from delivering the promised boost to least developed nations and freezing its ability

to address new challenges to the global trading system All countries would suffer from

such an outcome but especially the worldrsquos poorest and most vulnerable

The cost of a never-ending Doha Round

The adverse implications of a continuing Doha impasse on the future role of the WTO

are too compelling to be dismissed offhandedly

Several trade-linked global problems require global cooperation Food security energy

security trade-related aspects of climate change labour mobility commodity price

volatility and integration of regional liberalisation into the multilateral system are

problems that can only be solved with global cooperation

Ujal Singh BhatiaFormerly Indiarsquos Ambassador and Permanent Representative to the WTO

Next Steps Getting past the Doha Round crisis

3333

VOX Research-based policy analysis and commentary from leading economists

34

For example if food exporters continue to impose export barriers when prices rise

food importers may respond with import barriers to boost self-sufficiency This sort of

protectionist reverberation could lead the world to a situation in which all the players

are worse off but none can improve the situation unilaterally Avoiding this sort of

outcome would require global agreements There are very few global institutions that

could manage such cooperation indeed the WTO might be the only one A WTO locked

in endless Doha debates cannot be the centre of the rules based global trading system

There are many thinkers who believe that the structure of WTO rules is robust enough

to withstand a Doha failure It is true that the sky will not fall if Doha is terminated

without a conclusion Such analysts however tend to underestimate the significant

structural changes taking place in the global economy and the trading system The

WTO is working on a set of rules agreed upon in 1994 that were based on an agenda

set almost a quarter of century ago These are still useful and relevant for much of

world trade ndash but not all For instance the rules were not designed for the technology-

driven fragmentation of the manufacturing process and the distribution of the product

value chain across several geographical locations the intertwining of production with

related services the embedded intellectual property rights in components and sub-

components or the multiplicity of rules of origin All these require a different approach

to rule making

A WTO that remains preoccupied with the Doha Round cannot be expected to focus

on such issues Therefore the continuing relevance of the WTO and its primacy in

the global trading system are contingent upon a successful and early conclusion of

the Doha Round Notwithstanding this urgency it is now clear that a Doha package

cannot be wound up in 2011 along the lines agreed by G20 leaders in November 2010

To prevent this from tying the WTO in knots for years to come it is necessary to think

creatively about ways forward

Next Steps Getting Past the Doha Round Crisis

35

Ideas for moving beyond the impasse

Any effort to deal with the impasse in the negotiations needs to be based on a holistic

appreciation of the systemic implications of a continuing stalemate as much as on the

negotiating positions of various members The efforts for a solution acceptable to all

members therefore need to focus on issues in the Doha mandate as well as on issues for

a post Doha situation

Within this framework four constraints need to be borne in mind

bull A ldquoDoha Literdquo of reduced ambition will not work The outcome has to reflect a dec-

adersquos efforts of the global community Ambition however cannot be defined to suit

the convenience of a few members It must touch all aspects of the Doha mandate

bull Aspects of the Doha mandate that are more relevant to the development dimension

have to be ambitiously addressed and fast tracked

bull WTO needs to start work on a new work programme to address new challenges

bull The Doha Round cannot be completed in 2011 A down payment is necessary from

the Doha Round this year to convince the world that the WTO can deliver

A three-track approach

These constraints require the WTO to adopt a three-track approach during the next few

months leading up to the ministerial meeting in December 2011

Track 1 Identification of a list of issues that specially address the trading interests

of smaller developing countries and relatively less contentious issues for fast tracked

finalisation before the ministerial meeting

Track 2 Identification of a package of the more contentious issues for continuing

consultations with clear terms of reference

Track 3 Identification of appropriate terms of reference for a work programme on

WTO institutional reform and the forward-looking agenda

VOX Research-based policy analysis and commentary from leading economists

36

A possible timeline

These three tracks taken as a package would provide a way forward that respects all

four constraints Achieving consensus on them would be difficult ndash and require months

of preparatory work and negotiations

If the WTO membership starts immediately however there is still time to get the

package ready for finalisation by ministers at the December 2011 ministerial meeting

For this to happen it is essential that discussions on such a package begin this month

so that its contents can be finalised by the end of June 2011 This would leave about

four working months before the ministerial meeting to complete negotiations on the

selected areas

What the three tracks might contain

The first track would contain the Doha down-payment package As with any WTO

package the contents would need to be negotiated and it might require complementary

policies such as technical assistance initiatives

Such a list must include items that speak to development aspects of the Doha mandate

such as

bull The Implementation of the Hong Kong decision on duty-free quota-free treatment

for less developed countries

bull A ministerial decision on the Monitoring Mechanism for Special and Differential

Treatment provisions

bull A ministerial decision on the issues raised by the Sub-Saharan African cotton ex-

porters (the group known as the C-4) and

bull The finalisation of a less-developed-country (LDC) waiver in services so that pref-

erential treatment can be provided to LDCrsquos in services without extending it to

others

Next Steps Getting Past the Doha Round Crisis

37

It should also include areas of the negotiations that engage the interest of all members

such as

bull Trade Facilitation

bull All aspects of export competition in agriculture including export subsidies

bull The Transparency Mechanism for regional trade agreements (RTAs)

bull The non-tariff barriers (NTBs) package in non-agricultural market access (NAMA)

and

bull A ministerial decision on interactions and relationships between the WTOrsquos rules

and its committees on the one hand and existing multilateral environmental agree-

ments on the other (eg the Basel Convention on the Control of Transboundary

Movements of Hazardous Wastes and the Montreal Protocol on Substances that

Deplete the Ozone Layer)

While some members would like to exclude some of these areas from a fast tracked

process in the hope of using them for trade offs in the final stage it is important that the

package is as comprehensive as possible

Track two Items for further negotiation

The second track would gather all remaining items currently under negotiations This

would include

bull All aspects of market access in industrial goods agriculture and services

bull All aspects of subsidies in agriculture

bull Various aspects of rules including fisheries subsidies

bull Environmental goods and

bull Issues related to trade-related aspects of international property rights (TRIPS) re-

garding the protection of Geographical Indicators and the protection of traditional

VOX Research-based policy analysis and commentary from leading economists

38

knowledge and folklore that were are mentioned in the Convention on Biological

Diversity1

The need for a balanced package deserves emphasis It is often assumed that there

is a straight trade-off between agricultural subsidies and market access The situation

however is more complex The interest of countries like India China and Indonesia

in agricultural reform is more systemic than export related For them other incentives

within the mandate will be required

Track three Looking ahead

The underlying theme for the work programme would be an appraisal of the entire

negotiating and decision-making process in the WTO in the context of the present

realities both within and outside the organisation The objective would be to prepare

the WTO to address new challenges to the global trading system concurrently with the

ongoing work on the remaining parts of the Doha mandate

Closing remarks

The above proposals constitute a basic template for addressing the Doha conundrum

To what extent they are actually embraced will depend on how much political capital

the major members of the WTO are prepared to invest in moving the Doha Round

forward There is much scepticism about whether such political will exists It is time

for governments to prove the sceptics wrong

1 Specifically as specified in paragraphs 18 and 19 of the Doha Declaration

Next Steps Getting Past the Doha Round Crisis

39

About the author

Ambassador Bhatia Singh joined the Indian Administrative Service in 1974 holding

several senior positions in provincial administration in Orissa State between 1976 and

1995 He served as Joint Secretary Ministry of Commerce and Industry between 1995-

2000 in which capacity he handled a number of bilateral regional and multilateral trade

negotiations From 2004 to his retirement in 2010 he served as Indiarsquos Ambassador and

Permanent Representative to the WTO in Geneva

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

9

World leaders must make important decisions concerning the future of the Doha Round

for the 31 May 2011 meeting of the WTO membership This essay introduces the issues

and summarises contributorsrsquo suggestions for ldquoNext Stepsrdquo It argues that the best

outcome would be for WTO members to agree to work towards a small package of

deliverables for December 2011 and push the rest of the agenda items into the future

ndash perhaps with specific instructions for changing the basic negotiating protocols used

to date

Global leaders face a dilemma over the WTO multilateral trade negotiations known

as the Doha Round The talks are dead in the water both movement forwards and

movement backwards seem blocked How did we get here Current and former trade

policy officials typically emphasise two points

bull Ten years of talks have made some progress but it now must be taken as a hard fact

that the Doha Round in its entirety will not finish this year

bull No government is willing to announce publicly that they want to abandon the Round

The sources of unwillingness vary Some argue that abandoning the Round would throw

away genuine progress such as the ultimate phase-out of agricultural export subsidies

Others wish to maintain attention focused on particular problems in the trade system

Yet others simply fear that theyrsquoll be blamed for delivering the bad news

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

The Doha dilemma An introduction to the issues and possible solutions

99

VOX Research-based policy analysis and commentary from leading economists

10

Next Steps Saving the WTO from the Doha Round

World leaders must now decide how to tackle this dilemma at the WTOrsquos next key

meeting on 31 May 2011 Logically there are only 3 roads ahead

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock

in some of the progress to date

This eBook on ldquoNext Steps Getting Past the Doha Round Crisisrdquo gathers the thinking

of a handful of the worldrsquos most experienced Doha experts namely former US Trade

Representative Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia

Chinarsquos former WTO Ambassador Zenyu Sun Canadarsquos former WTO Ambassador

John Weekes and Hong Kongrsquos former WTO Ambassador Stuart Harbinson ndash all of

whom spent years directly engaged in Doha negotiations

Road 1 The pitfalls of declaring failure

Susan Schwab argues strongly that declaring Doharsquos demise is essential to allowing

the WTO to move on John Weekes likewise argues ldquoIt would be damaging to invest

more resources and credibility in something that canrsquot be donerdquo Ujal Singh Bhatia by

contrast argues that Road 1 could lead to unpredictable results Zenyu Sun notes that

declaring the Doha Round to be dead would be easy but then what ldquoWould such an

announcement inspire people to inject more energy into the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt itrdquo he writes

These judgements on the medium- to long-term ramifications differ but the short-

term fallout is clear Declaring the Round ldquodeadrdquo would invite an immediate storm of

recrimination among WTO members A great deal of hope and effort has been invested

in the Round by nations across the globe Most WTO members are still looking for the

Next Steps Getting Past the Doha Round Crisis

11

Doha Round to effect critical adjustments to the world trading system ndash especially a

rebalancing of the level of openness to agricultural versus industrial trade (Nassar and

Perez 2011) If one or more of the Big-5 reject a deal that most members still think is

doable the blame game could get very nasty

There is a great danger that this level of ill-will could undermine multilateral trade

cooperation for years It could lock in the growing perception that the WTO is not a

place where serious negotiations can be conducted The US in particular is likely to

be subject to severe criticism in a way that might have the unintended consequence of

convincing US Congressional and private sector groups that the WTO is not a forum

where America can do business Such an outcome would serve no onersquos interests

Despite the clear logic of Schwabrsquos and Weekesrsquo arguments the pitfalls highlighted

by Bhatia and Sun find resonance with most world leaders This is why almost every

WTO member opposes Road 1 As a consequence it is extremely unlikely that WTO

members will decide to declare Doha dead any time soon

Road 2 The pitfalls of suspension

Suspension is certainly the most politically expedient choice for the Big-5 and it

is superficially attractive The logic is well expressed in the old story about a man

ndash condemned to death by his Emperor ndash who obtains a yearrsquos stay of execution by

promising to teach the Emperorrsquos horse to sing ldquoMuch could happen in a yearrdquo the man

reasons ldquoThe Emperor could die I could die the horse could singrdquo

But the usual merits of muddling through donrsquot apply to Doha Suspensions have been

tried so often that everyone would know that suspension is just a circuitous means of

killing the Round Road 2 is just the long route to Road 1 All the pitfalls of Road 1

therefore also apply to Road 2

But suspension would be even worse in many ways The world of trade is changing more

rapidly than negotiating positions so each delay seems to make a compromise based on

VOX Research-based policy analysis and commentary from leading economists

12

the existing elements even less likely Worse still a suspension would strengthen and

spread the belief that the WTO is not an appropriate venue for multilateral negotiations

As Ujal Singh Bhatia writes ldquothe Round will continue to hang like an albatross around

the WTOrsquos neck preventing it from addressing new challenges to the global trading

systemrdquo This would be particular worrisome since the world economy is moving into a

phase of great stress It is facing new challenges that will require multilateral solutions

ndash issues like food security natural-resource export restrictions and trade in goods

services and technology that are essential to climate-change adaption and mitigation

Road 3 A small package followed by a big package

The third road seems the most likely way to move past the Doha dilemma of not being

able to move forwards or backwards on the broad agenda The idea here is that the

agenda would be sorted into ldquodo-ablerdquo and ldquonot yet do-ablerdquo piles Nations would move

forward on a small package of do-ables for December 2011 while agreeing to discuss

the bigger issues later under revised ground rules that would be more likely to permit

the trade-offs necessary to make the big package acceptable to all members

As Stuart Harbinson puts it Doha is like a ship run aground a small package of

deliverables for December 2011 would act as a ldquopatchrdquo to keep the ldquogood ship Dohardquo

afloat until the high tide comes in and lifts the ship off the rocks ldquoIn this analogy the

lsquohigh tidersquo would be a change in the global economic and political seascape enabling

the major trading economies to settle their differences and bring the ship safely into

harbourrdquo he writes

Choices to make on the small package

All five experienced trade negotiators contributing to this eBook ndash and most of the WTO

delegations with whom we spoke ndash believe that it is worth trying to lock in agreement

on a small number of areas by the end of 2011 There are two critical issues to decide

Next Steps Getting Past the Doha Round Crisis

13

1 How much time should be spent on negotiating the small package

2 Which items should be in the small package

The contributors disagree over the first issue Susan Schwab argues for giving it not

more than 2 weeks others suggest longer They all however recognise that a prolonged

and contentious negotiation on a small package ndash especially one that ultimately proved

fruitless ndash would solve nothing and might harm the system

There is far more agreement on the second issue ndash possible composition of the small

package All the contributors and most of the WTO delegations with whom we spoke

suggest that some items on Doharsquos massive negotiating agenda are close to conclusion

Indeed the lists are remarkably similar despite the vast differences in the contributorsrsquo

perspectives They all point out however that striking even a very restrained list of

agreement will require abundant goodwill and hard negotiating

Suggestions for the small-package items include

bull Some sort of accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

bull A package of measures that promote ldquotrade facilitationrdquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impediments to trade

bull An agreement on a monitoring mechanism for special and differential treatment

bull An agreement to make permanent the transparency mechanism for regional trade

agreements that has been operating successfully for years

bull An agreement on certain non-tariff barriers

VOX Research-based policy analysis and commentary from leading economists

14

bull An agreement formalising cooperation between the WTO and various multilateral

environmental agreements

Other issues may ultimately prove tractable or necessary to provide balance Those most

often mentioned include a standstill agreement on fisheries subsidies certain aspects

of the less controversial rules negotiations and export subsidies Such a package could

also include other DDA matters for which the negotiations could be completed quickly

or non-DDA matters where the WTO membership is at one such as the promising

negotiations to upgrade the WTOrsquos Agreement on Government Procurement

The final issue is what to call the small package this is not a trivial matter

bull One option is to just boldly call the small package the ldquoDoha Roundrdquo ndash to declare

victory and move on

While this would clearly disappoint many it speaks to the objective of not letting the

Round drag down the WTO ndash not allowing the WTOrsquos credibility to be further damaged

by endless discussions that can never led to a happy ending

Of course this option would leave unsolved the core Doha issues ndash reducing distortions

in and improving market access for industrial goods agricultural products and services

trade and updating the rules But it might allow members to re-craft the parameters of

the negotiations in a way that would be more likely to lead to success This is clearly

the view taken by Susan Schwab and John Weekes As John Weekes puts it ldquoNot

completing the Doha Round would be a serious setback to the WTO and the multilateral

trading system However if it is clear that the Round cannot be concluded successfully

it is better to admit that and work constructively to develop an agenda for the future

work of the organisationrdquo

Another option would be to wrap up the collection of small agreements into a package

called the ldquoDoha down paymentrdquo or ldquoDoha deliverablesrdquo or ldquoDoha early harvestrdquo as a

way of stressing that all the Doha agenda items are still on the table

Next Steps Getting Past the Doha Round Crisis

15

A third option would be to view the individual items as standalone agreements to be

agreed by the ministers of WTO members at the December meeting without clear

reference to what comes next

This brings us to the next major element of the Road 3 pathway What to do with the

rest of the agenda

Choices to make on the big package

Albert Einstein once defined insanity as doing the same thing over and over and

expecting different results This makes it clear that any complete plan for a way past the

Doha dilemma must change something in the way the negotiations have been operating

Any multilateral trade negotiation involves choice on a series of negotiating rules

or conventions The Doha Round has accreted an odd constellation of these Some

are fundamental and therefore extremely difficult to change These include the idea

that everything must be agreed by all before anything is agreed (the so-called single-

undertaking principle) or the choice to focus on the particular tariff-cutting formula

known as the Swiss formulas But many of the choices are less central such as the exact

way in which flexibilities on tariff-cutting are to be decided

The ramifications of these procedures on the negotiating dynamic were not well

understood years ago when the original decisions were taken The lack of understanding

is even deeper when it comes to the joint operation and interaction among the

conventions

For these reasons the set of negotiating conventions that guide Round may no longer be

optimal Consideration of the pros and cons of alternatives might identify other ways of

finding a package of trade-offs that is acceptable to all

VOX Research-based policy analysis and commentary from leading economists

16

The forward-looking agenda

A number of contributors suggested that the process of rebuilding momentum and

confidence in the ultimate outcome could be boosted by agreeing to launch work

programmes (not actual negotiations) on how the WTO could address 21st-century

trade issues that have come to the fore since the Doha agenda was set in 2001

Here there are two basic lines The first would consider WTO institutional reform the

second would consider new issues such as new disciplines to underpin the increasing

convergence of trade investment and services (as is now routinely done in regional

trade agreements) setting limits on acceptable national climate policies with trade

implications or export restrictions

There certainly seems merit to these idea If nothing else it would interject new

dimensions to discussions that have been going on for a decade It would also make

it clear that we need to safeguard the WTO as a forum for multilateral discussions on

critical 21st-century issues

Concluding remarks

Many decent hard-working public servants have committed plenty of energy to the

Doha Round since its inception At this critical time any temptation for recriminations

or lapses into bitter disappointment should be set to one side to let governments chart a

new path for the WTO The circumstances facing WTO members in the middle of 2011

are hardly ideal and the set of options that stand any chance of acceptance is narrow In

times like these it would be a mistake to make the perfect the enemy of the good It is

time to think creatively and cooperatively about getting the WTO past the Doha crisis

A decision or non-decision that led to several more years of drift ndash years that will be

complicated by elections and changes in governments in some of the leading trading

powers ndash could turn out to be the beginning of the end for the WTOrsquos role as leader

of the global trading system The alternative ndash uncoordinated developments led by the

Next Steps Getting Past the Doha Round Crisis

17

Big-5 in their own systems of regional trade agreements ndash is a very plausible outcome

at this stage but not one that will ultimately serve anyonersquos long-run interests

References

Andre Nassar and Carlos Perez (2011) ldquoWhy WTO members should not give up the

Doha Round The case of agricultural traderdquo in Richard Baldwin and Simon Evenett

(eds) Why World Leaders Must Resist the False Promise of a Doha Delay VoxEU

April

19

Doha is stalled by gaps that are unbridgeable today Indonesiarsquos Trade Minister argues

that we need to be guided by priorities and pragmatism We should develop a set of

stepping stones that will help us complete the Doha Round eventually We should

identify the areas that are achievable in the very near future but which have an impact

on development while building confidence for the continued journey to a successful

Round We should never lose sight of the final goal ndash completing the Doha Round as a

single undertaking In short we are not looking for a ldquoPlan Brdquo we are looking for a

new way to execute Plan A

The importance of completing the Doha Development Agenda sooner rather than later

goes beyond bringing gains of $360 billion of additional trade with substantial benefits

for industrialised and developing economies (HLTE 2011) The importance also goes

beyond what pragmatic soothsayers who are telling us ldquoWhy are you worried the

WTO system will continue to be robust whether we conclude Doha or not Companies

and countries will continue to traderdquo As a developing country policy maker ndash and I

believe I speak for many other developing countries ndash I am greatly worried about the

costs and opportunity lost of not completing Doha

The costs of not completing Doha

I will point to four costs of not completing the Doha Round

bull First is what it could achieve for food security

Mari PangestuMinister of Trade Indonesia

There is no Plan B ndash only Plan A Towards completing Doha

1919

VOX Research-based policy analysis and commentary from leading economists

20

During the 2008 food crisis imbalances between supply and demand were partly

attributed to distorted agriculture prices caused by trade-distorting export subsidies

and domestic-support schemes The agriculture package in Doha will go some way to

address this In todayrsquos situation of high commodity prices now is the perfect time to

address the removal and elimination of such trade-distorting policies Removing these

distortions can only be achieved through multilateral negotiations not through bilateral

or regional agreements

Most importantly the winners would be the billions of hungry and poor people all over

the world correcting the system and ensuring the future supply of food and greater

price stability is very much in their interests For example in Indonesia a 10 increase

in the price of rice without any change in income would lead to a 1 increase in

poverty

bull Second keeping protection at bay

During the depth of the crisis benign protectionism was the order of the day according

to the self-reporting surveillance mechanism established by the WTO at the request of

G20 Leaders This allowed the rebound of trade to become one of the costless ways for

the global economy to recover It is ironical that in the recovery the latest report (WTO

2011) shows that there has been a slight increase in protectionism causing an estimated

impact of 06 to G20 exports

The main increase has been due to tariff increases automatic licenses and other

restrictions including export restrictions Whilst this is still ldquosmallrdquo it is nevertheless

double from the previous period Restoration of the confidence in the world trading

system through clear signals that we are progressing on completing the Round is crucial

to keeping protectionism at bay Developing countries such as Indonesia have a great

interest in this because only the multilateral trading system will provide the fair rules-

based trading system for us to face large and more developed partners on a fair and

equal standing

Next Steps Getting Past the Doha Round Crisis

21

bull Third the lack of progress on the Doha Round already has and will continue to raise

the pressure to undertake bilateral and regional free trade negotiations

In the ASEAN region there are already FTAs between ASEAN and all six of its dialog

partners (Australia China India Japan Korea New Zealand) and numerous bilateral

FTAs The EU has just completed negotiations with Korea which has put pressure

for the Korea-US FTA to be ratified as soon as possible The EU has also completed

negotiations with India and is negotiating with Singapore Malaysia and preparing

to do so with other ASEAN countries Recently China Korea and Japan announced

revitalization of their FTA initiative Furthermore we have the Trans-Pacific Partnership

initiative between 8 members of APEC

It is not the bilateral and regional free trade agreements which are problematic per

se it is negotiating them in the absence of a robust WTO system ndash a system which is

seen as meeting the needs of the current and future trade-linked issues Bilateral and

regional agreements can only work towards complementing the multilateral trading

system when they are ldquoWTO-plusrdquo not ldquoWTO-insteadrdquo

bull Fourth the potential dampening effect on unilateral reforms

The political economy of openness in trade policy and institutional reform have always

functioned better within the framework of international commitments Multilateral

rules impose an important caveat on what countries can or cannot do In a country like

Indonesia this has worked to our advantage in the way we frame our reforms and in fact

has functioned in the past to put bad policies to rest

For instance in the famous National Car case in the mid 1980s which violated the

MFN principle by allowing duty-free imports of cars only from one source country the

domestic politics at the time did not allow for policymakers to remove this policy The

policy was finally ended through the WTOrsquos dispute settlement mechanism It would

be too bad for reforms if the process is undertaken within weakened confidence of

multilateral trading system or one which will eventually not be relevant to the evolution

of 21st century trade issues

VOX Research-based policy analysis and commentary from leading economists

22

The Way Forward No Plan B

Despite G20 Leadersrsquo commitments and all the good intentions and intensive work in

Geneva that came after the push given by trade ministers during their informal meeting

in Davos in January 2011 it proved impossible to arrive at a draft text by the end-of-

April milestone There remains ldquounbridgeable gapsrdquo in a number of main negotiating

groups namely non-agriculture market access

Given this situation trade ministers met first during the APEC Ministers of Trade

Meeting in Big Sky Montana and then on the fringes of the OECD meeting in Paris

Fortunately all have agreed that we all remain committed to completing Doha as a single

undertaking However there was a sense of realism as to the timing and pathways to

achieve this desirable outcome in a timely way

From an Indonesian perspective there is no ldquoPlan Brdquo We do not support a ldquoDoha

Lightrdquo and we remain committed to a comprehensive ambitious and balanced package

building on what we have achieved to date

After almost 6 years of negotiations since the key Hong Kong WTO Ministerial I

believe we are more than 50 or some would say 80 of the way done A realistic way

forward is to identify the sequence of steps that would take us to the final outcome this

is necessary to avoid the costs and lost-opportunities I outlined above

This is not about an early harvest or ldquocherry pickingrdquo and then stopping It is about

identifying the steps forward in a meaningful way towards the final goal of the single

undertaking of Doha

Identifying stepping stones to a final Doha Round conclusion

There are areas within the negotiations that could be seen as steps towards the final

package Of course work and political will is still needed to find ways to bridge the

Next Steps Getting Past the Doha Round Crisis

23

unbridgeable gaps In identifying the areas where we could find convergence a number

of priorities stand out

bull First and foremost is areas of negotiations that will contribute and deliver to devel-

opment objectives such as the Least Developed Countries package andor an effec-

tive aid-for-trade and facilitation package this is after all a Development Round

bull Second areas where there would be clear benefits for development and the private

sector in facilitating and ensuring the benefits of trade are greater we need stake-

holders to be cheerleading the way forward

bull Third there could be areas where we would be able to address the food-security

challenge

One could also foresee that within each current area of negotiations there could be

items which could be wrapped up without disturbing the overall balance of elements

in that particular area It is important that we do not go into ldquonewrdquo negotiations in

identifying which areas We should go into the mode of identifying these pathways and

steps with the mindset and political will of win-win

We need to be guided by priorities and pragmatism That is to identify the areas that are

doable and achievable in the very near future but which have an impact on development

and increasing the benefits of trade while at the same time building confidence for us to

continue our journey to the final package Most importantly we should never lose sight

of the final goal of the single undertaking

Looking forward

It is also important to provide the signal in what we say and do elsewhere Beyond

talking about Doha we must ensure continued confidence in and implementation of the

rules-based open trading system

VOX Research-based policy analysis and commentary from leading economists

24

bull This would mean the commitments of G20 Leaders and others on refraining from

protectionism going beyond words the good intentions need to be strengthened

with commitments and actions

bull It also has implications for how we undertake bilateral and regional agreements

these should be done in a way that is not an alternative to and does not detract from

the multilateral trading system We should pursue regionalism in a way which is

going to contribute to and complement the system

Concluding remarks

In conclusion we should not underestimate the costs of not doing all this We will

need to draw upon the strength of our individual and collective political commitment

We need to call on the ability of some major economies to look beyond pure national

interests and to look at the impact and costs on the global system and economy And we

need to remember that there are many countries and billions of people ndash many of which

are impoverished ndash who are waiting for the Doha deliverables

References

HLTE (2011) ldquoWorld trade and the Doha roundrdquo final report of the High-Level Trade

Experts Group chaired by Jagdish Bhagwati and Peter Sutherland

WTO (2011) ldquoReports on G20 trade and investment measures (mid-October 2010 to

April 2011)rdquo WTO Secretariat 24 May

About the author

Mari Pangestu is Indonesiarsquos Minister of Trade since 2004 having served as Executive

Director of the Jakarta-based think tank the Center for Strategic and International

Studies and a lecturer in the Faculty of Economics at the University of Indonesia From

1991 to 1998 Dr Pangestu was the coordinator of the Trade Policy Forum of the Pacific

Next Steps Getting Past the Doha Round Crisis

25

Economic Cooperation Council and serves on the Board of the Overseas Development

Council World Gold Council and the Asian Journal of Business from The University

of Michigan Ann Arbor

She has published widely on a range of subjects including matters pertaining to

Indonesia as well as regional (ie Asian and Asia Pacific) and global issues She earned

her BA and MA in economics from Australian National University and a PhD in

economics from the University of California Davis

27

The Doha Round has failed according the former US Trade Representative Susan

Schwab This essay argues that prolonging Doha jeopardises the multilateral trading

system and threatens future prospects for WTO-led liberalisation Negotiators should

salvage whatever partial agreements they can from Doha and quickly drop the rest

to ensure the December ministerial meeting focuses on future work plans rather than

recriminations over Doha

The Doha Round has failed It is time for the international community to acknowledge

this sad fact and move on Prolonging the pretence that the Doha Round will succeed

is now a greater threat to the WTO and the multilateral trading system than facing the

truth

A great many smart hard-working and well-intentioned individuals have worked over

many years to realise Doharsquos potential to contribute to global economic growth and

development But what is on the table in Geneva has failed to deliver any outcome

let alone a meaningful one It is time for a swift clean break from the past and to

lay the groundwork for a future where the WTO and its members revive WTO-led

liberalisation and reform

End Doharsquos stranglehold and build towards near-term wins

To keep the multilateral trading system healthy it is necessary to end the Doha

Roundrsquos stranglehold on the system This should happen quickly in order to ensure

that the December 2011 ministerial meeting focuses on future work plans rather than

Susan SchwabUniversity of Marlyand former US Trade Representative

Acknowledge Doharsquos demise and move on to save the WTO

2727

VOX Research-based policy analysis and commentary from leading economists

28

recriminations about a Doha Development Agenda that has struggled through one failed

encounter after another

Negotiators should refocus their efforts on near-term wins and on building the next

Round ndash which need not be another behemoth but perhaps a ldquorolling roundrdquo of reforms

and new market access or a few highest-common-denominator plurilateral or WTO-

plus deals Ultimately these should lead to a broader-based market access and rules

agreement under the multilateral auspices of the WTO

The small package possibility

In my recent Foreign Affairs article (Schwab 2011) I suggested that negotiators should

try to salvage whatever partial agreements they can and then walk away from the rest

I mentioned a number of potential candidates such as trade facilitation and the largely

completed agricultural-export pillar (comprising proposed agreements on export credits

food aid state-trading firms and the elimination of export subsidies) Negotiators

might also try to complete two environment-related agreements one cutting subsidies

to industrial fishing fleets that are overfishing the worldrsquos oceans and the other ending

tariff and nontariff barriers to rdquogreenrdquo technologies in major producing and consuming

countries Taken together or individually each of these would benefit countries across

the spectrum of economic development

I am however sceptical that even these small agreements are achievable in the current

climate of mistrust and entrenched positions A troubling development during the course

of the Round has been how often countries seem to forget or forfeit their own economic

interests ndash let alone the greater good ndash in the face of peer pressure and group-think In

the current environment even these smaller deals might prove impossible to achieve

It is certainly worth trying to achieve a few deliverables by taking a run at a small

package but negotiators should not spend too much time on it They already know

exactly what the options are if they cannot get to ldquoyesrdquo in say two weeks they should

Next Steps Getting Past the Doha Round Crisis

29

give up and move on to the real challenge of launching a new series of multilateral

negotiations under WTO auspices

Getting past Doha

How to conclude the Doha Round One option would be for the Director-General and

a representative sample of WTO Ambassadors to come together in the interest of the

institution and to offer a declaration of Doharsquos demise along with their pledge to begin

building the future That would enable leaders at the November G20 meeting to pledge

their support for the rules-based trading system the WTO and its next steps rather than

for the ever elusive ldquobalanced and ambitiousrdquo Doha outcome

After a short period of grieving over the death of Doha and an opportunity to get

beyond the anger lead trading nations should refocus on getting the WTO back into

its mainstream business of negotiating mutually advantageous market opening and

updating the global rdquorules of the roadrdquo This approach offers the best promise of a

meaningful ldquodevelopmentrdquo outcome as well

How might this be achieved

It seems unrealistic to think WTO members would agree to launch another massive

all-or-nothing round in the near future Such broad negotiations however will be

necessary to tackle some of the worldrsquos most important market access challenges in

services manufacturing and agriculture along with such issues as farm subsidies

There are ways to build-up to the big-round model again where countries once more see

economic self-interest in the use of broad-based negotiations and trade-offs to achieve

both new market access and market reforms First however we must re-establish trust

and regain momentum

One way forward would be for ministers to agree to launch a number of confidence-

building negotiations For example ministers in December could decide to open talks

VOX Research-based policy analysis and commentary from leading economists

30

on expanding the 1997 Information Technology Agreement a number of nations

seem interested and the US Administration already has the authority to implement an

enhanced agreement If negotiators fail to work through the 850 brackets in the current

Doha trade facilitation text that could also be tackled as a stand-alone agreement since

each nation would benefit from more efficient movement of goods and services across

borders

Another confidence-building measure might be a merger of sectoral agreements geared

toward a widely-shared objective such as cheaper better healthcare A package that

included pharmaceuticals medical devices and healthcare services might attract

support from the broad array of WTO members across the development spectrum Given

the high-level of public interest in and awareness of environment issues a sectoral

negotiation on environmental goods and services might be another confidence-building

deal once it is removed from the straightjacket that Doha has become

Lessons from Doha for next steps and the next round

Confidence building agreements would offer modest economic and social contributions

and serve to prepare the atmospherics for launch the next Round This brings me to my

last topic ndash the lessons we should draw from a decade of Doha talks

One thing that is quite clear from years of struggling with the basic structure of Doha

is that the combination of formula and self-selected flexibilities has not worked It

resulted in a situation where every negotiator had to assume the worst case ndash knowing

the political costs they would pay for their own liberalisation but expecting their trading

partners to use flexibilities to negate any meaningful new market-access It is possible

to draw from the best of the Doha formulas ndash such as the higher the barrier the greater

the cut ndash while still creating real negotiations around them through requests and offers

delivered using above- and below-formula cuts

Next Steps Getting Past the Doha Round Crisis

31

Another key lesson is that lumping the worldrsquos very diverse economies into three

basic categories ndash developed developing and least developed ndash is a practice that no

longer fits 21st century economic and trade realities Nor is it a structure conducive to

negotiations and real progress based on an exchange of market access among nations

with large markets Yes the advanced economies should be expected to do more than

those at lesser stages of economic development but expectations should also reflect

the fact that many emerging economies are characterised by both poverty and sectors

where they are globally competitive trade powerhouses

The emerging economies have large markets represent over half of global GDP growth

and stand to be the biggest winners from any major trade agreement They should be

expected to contribute to the next Round accordingly Major trade agreements generally

take at least 12 years to implement from the time they are initially concluded What

should the world trading system look like in 2025 in terms of the absolute and relative

responsibilities of key trading nations

Concluding remarks

I am optimistic when it comes to the multilateral trading system and the WTOrsquos central

role in its governance The optimistic scenario is that we put the Doha Round behind

us Facing facts can invigorate and strengthen the trading system If we fail to act the

WTO risks losing its relevance

The Doha Round ndash which in my view cannot be concluded as it is conceived today ndash

should not be allowed to continue draining the WTOrsquos credibility and potential progress

on the multilateral front Now is the time to liberate the would-be trade liberalisers from

the Doha straightjacket and move on

VOX Research-based policy analysis and commentary from leading economists

32

References

Schwab Susan (2011) ldquoAfter Doha Why the negotiations are doomed and what we

should do about itrdquo Foreign Affairs MayJune

About the author

Ambassador Schwab has been a Professor at the University of Maryland School of

Public Policy since January 2009 and a strategic advisor to Mayer Brown LLP (global

law firm) since March 2010 Ambassador Schwab served as US Trade Representative

from June 2006 to January 2009 and as Deputy US Trade Representative from

October 2005 to June 2006 Prior to her service as Deputy US Trade Representative

Ambassador Schwab served as President and Chief Executive Officer of the University

System of Maryland Foundation from June 2004 to October 2005 as a consultant

for the US Department of Treasury from July 2003 to December 2003 and as Dean

of the University of Maryland School of Public Policy from July 1995 to July 2003

Ambassador Schwab serves on the boards of Boeing Company Caterpillar Inc and

FedEx Corporation

She holds a BA in Political Economy from Williams College a Masters in Development

Policy from Stanford University (Food Research Institute) and a PhD in Public

Administration and International Business from The George Washington University

33

Hopes for finishing Doha in 2011 are fading fast This essay suggests a three-track

approach for moving beyond the Doha crisis 1) Identify a package of ldquodeliverablesrsquo ndash

parts of the Round that could be agreed by December 2011 2) Assemble a package of

contentious issues for ongoing negotiation with clear terms of reference 3) Establish

a work programme to consider WTO institutional reform and forward-looking issues

For reasons that are too well known to be repeated the WTO finds itself at the crossroads

Decisions to be taken in the next few weeks will determine whether it can steer its

way to a successful conclusion of the Doha Round in the near future Failing this the

Round will continue to hang like an albatross around the WTOrsquos neck preventing it

from delivering the promised boost to least developed nations and freezing its ability

to address new challenges to the global trading system All countries would suffer from

such an outcome but especially the worldrsquos poorest and most vulnerable

The cost of a never-ending Doha Round

The adverse implications of a continuing Doha impasse on the future role of the WTO

are too compelling to be dismissed offhandedly

Several trade-linked global problems require global cooperation Food security energy

security trade-related aspects of climate change labour mobility commodity price

volatility and integration of regional liberalisation into the multilateral system are

problems that can only be solved with global cooperation

Ujal Singh BhatiaFormerly Indiarsquos Ambassador and Permanent Representative to the WTO

Next Steps Getting past the Doha Round crisis

3333

VOX Research-based policy analysis and commentary from leading economists

34

For example if food exporters continue to impose export barriers when prices rise

food importers may respond with import barriers to boost self-sufficiency This sort of

protectionist reverberation could lead the world to a situation in which all the players

are worse off but none can improve the situation unilaterally Avoiding this sort of

outcome would require global agreements There are very few global institutions that

could manage such cooperation indeed the WTO might be the only one A WTO locked

in endless Doha debates cannot be the centre of the rules based global trading system

There are many thinkers who believe that the structure of WTO rules is robust enough

to withstand a Doha failure It is true that the sky will not fall if Doha is terminated

without a conclusion Such analysts however tend to underestimate the significant

structural changes taking place in the global economy and the trading system The

WTO is working on a set of rules agreed upon in 1994 that were based on an agenda

set almost a quarter of century ago These are still useful and relevant for much of

world trade ndash but not all For instance the rules were not designed for the technology-

driven fragmentation of the manufacturing process and the distribution of the product

value chain across several geographical locations the intertwining of production with

related services the embedded intellectual property rights in components and sub-

components or the multiplicity of rules of origin All these require a different approach

to rule making

A WTO that remains preoccupied with the Doha Round cannot be expected to focus

on such issues Therefore the continuing relevance of the WTO and its primacy in

the global trading system are contingent upon a successful and early conclusion of

the Doha Round Notwithstanding this urgency it is now clear that a Doha package

cannot be wound up in 2011 along the lines agreed by G20 leaders in November 2010

To prevent this from tying the WTO in knots for years to come it is necessary to think

creatively about ways forward

Next Steps Getting Past the Doha Round Crisis

35

Ideas for moving beyond the impasse

Any effort to deal with the impasse in the negotiations needs to be based on a holistic

appreciation of the systemic implications of a continuing stalemate as much as on the

negotiating positions of various members The efforts for a solution acceptable to all

members therefore need to focus on issues in the Doha mandate as well as on issues for

a post Doha situation

Within this framework four constraints need to be borne in mind

bull A ldquoDoha Literdquo of reduced ambition will not work The outcome has to reflect a dec-

adersquos efforts of the global community Ambition however cannot be defined to suit

the convenience of a few members It must touch all aspects of the Doha mandate

bull Aspects of the Doha mandate that are more relevant to the development dimension

have to be ambitiously addressed and fast tracked

bull WTO needs to start work on a new work programme to address new challenges

bull The Doha Round cannot be completed in 2011 A down payment is necessary from

the Doha Round this year to convince the world that the WTO can deliver

A three-track approach

These constraints require the WTO to adopt a three-track approach during the next few

months leading up to the ministerial meeting in December 2011

Track 1 Identification of a list of issues that specially address the trading interests

of smaller developing countries and relatively less contentious issues for fast tracked

finalisation before the ministerial meeting

Track 2 Identification of a package of the more contentious issues for continuing

consultations with clear terms of reference

Track 3 Identification of appropriate terms of reference for a work programme on

WTO institutional reform and the forward-looking agenda

VOX Research-based policy analysis and commentary from leading economists

36

A possible timeline

These three tracks taken as a package would provide a way forward that respects all

four constraints Achieving consensus on them would be difficult ndash and require months

of preparatory work and negotiations

If the WTO membership starts immediately however there is still time to get the

package ready for finalisation by ministers at the December 2011 ministerial meeting

For this to happen it is essential that discussions on such a package begin this month

so that its contents can be finalised by the end of June 2011 This would leave about

four working months before the ministerial meeting to complete negotiations on the

selected areas

What the three tracks might contain

The first track would contain the Doha down-payment package As with any WTO

package the contents would need to be negotiated and it might require complementary

policies such as technical assistance initiatives

Such a list must include items that speak to development aspects of the Doha mandate

such as

bull The Implementation of the Hong Kong decision on duty-free quota-free treatment

for less developed countries

bull A ministerial decision on the Monitoring Mechanism for Special and Differential

Treatment provisions

bull A ministerial decision on the issues raised by the Sub-Saharan African cotton ex-

porters (the group known as the C-4) and

bull The finalisation of a less-developed-country (LDC) waiver in services so that pref-

erential treatment can be provided to LDCrsquos in services without extending it to

others

Next Steps Getting Past the Doha Round Crisis

37

It should also include areas of the negotiations that engage the interest of all members

such as

bull Trade Facilitation

bull All aspects of export competition in agriculture including export subsidies

bull The Transparency Mechanism for regional trade agreements (RTAs)

bull The non-tariff barriers (NTBs) package in non-agricultural market access (NAMA)

and

bull A ministerial decision on interactions and relationships between the WTOrsquos rules

and its committees on the one hand and existing multilateral environmental agree-

ments on the other (eg the Basel Convention on the Control of Transboundary

Movements of Hazardous Wastes and the Montreal Protocol on Substances that

Deplete the Ozone Layer)

While some members would like to exclude some of these areas from a fast tracked

process in the hope of using them for trade offs in the final stage it is important that the

package is as comprehensive as possible

Track two Items for further negotiation

The second track would gather all remaining items currently under negotiations This

would include

bull All aspects of market access in industrial goods agriculture and services

bull All aspects of subsidies in agriculture

bull Various aspects of rules including fisheries subsidies

bull Environmental goods and

bull Issues related to trade-related aspects of international property rights (TRIPS) re-

garding the protection of Geographical Indicators and the protection of traditional

VOX Research-based policy analysis and commentary from leading economists

38

knowledge and folklore that were are mentioned in the Convention on Biological

Diversity1

The need for a balanced package deserves emphasis It is often assumed that there

is a straight trade-off between agricultural subsidies and market access The situation

however is more complex The interest of countries like India China and Indonesia

in agricultural reform is more systemic than export related For them other incentives

within the mandate will be required

Track three Looking ahead

The underlying theme for the work programme would be an appraisal of the entire

negotiating and decision-making process in the WTO in the context of the present

realities both within and outside the organisation The objective would be to prepare

the WTO to address new challenges to the global trading system concurrently with the

ongoing work on the remaining parts of the Doha mandate

Closing remarks

The above proposals constitute a basic template for addressing the Doha conundrum

To what extent they are actually embraced will depend on how much political capital

the major members of the WTO are prepared to invest in moving the Doha Round

forward There is much scepticism about whether such political will exists It is time

for governments to prove the sceptics wrong

1 Specifically as specified in paragraphs 18 and 19 of the Doha Declaration

Next Steps Getting Past the Doha Round Crisis

39

About the author

Ambassador Bhatia Singh joined the Indian Administrative Service in 1974 holding

several senior positions in provincial administration in Orissa State between 1976 and

1995 He served as Joint Secretary Ministry of Commerce and Industry between 1995-

2000 in which capacity he handled a number of bilateral regional and multilateral trade

negotiations From 2004 to his retirement in 2010 he served as Indiarsquos Ambassador and

Permanent Representative to the WTO in Geneva

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

VOX Research-based policy analysis and commentary from leading economists

10

Next Steps Saving the WTO from the Doha Round

World leaders must now decide how to tackle this dilemma at the WTOrsquos next key

meeting on 31 May 2011 Logically there are only 3 roads ahead

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock

in some of the progress to date

This eBook on ldquoNext Steps Getting Past the Doha Round Crisisrdquo gathers the thinking

of a handful of the worldrsquos most experienced Doha experts namely former US Trade

Representative Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia

Chinarsquos former WTO Ambassador Zenyu Sun Canadarsquos former WTO Ambassador

John Weekes and Hong Kongrsquos former WTO Ambassador Stuart Harbinson ndash all of

whom spent years directly engaged in Doha negotiations

Road 1 The pitfalls of declaring failure

Susan Schwab argues strongly that declaring Doharsquos demise is essential to allowing

the WTO to move on John Weekes likewise argues ldquoIt would be damaging to invest

more resources and credibility in something that canrsquot be donerdquo Ujal Singh Bhatia by

contrast argues that Road 1 could lead to unpredictable results Zenyu Sun notes that

declaring the Doha Round to be dead would be easy but then what ldquoWould such an

announcement inspire people to inject more energy into the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt itrdquo he writes

These judgements on the medium- to long-term ramifications differ but the short-

term fallout is clear Declaring the Round ldquodeadrdquo would invite an immediate storm of

recrimination among WTO members A great deal of hope and effort has been invested

in the Round by nations across the globe Most WTO members are still looking for the

Next Steps Getting Past the Doha Round Crisis

11

Doha Round to effect critical adjustments to the world trading system ndash especially a

rebalancing of the level of openness to agricultural versus industrial trade (Nassar and

Perez 2011) If one or more of the Big-5 reject a deal that most members still think is

doable the blame game could get very nasty

There is a great danger that this level of ill-will could undermine multilateral trade

cooperation for years It could lock in the growing perception that the WTO is not a

place where serious negotiations can be conducted The US in particular is likely to

be subject to severe criticism in a way that might have the unintended consequence of

convincing US Congressional and private sector groups that the WTO is not a forum

where America can do business Such an outcome would serve no onersquos interests

Despite the clear logic of Schwabrsquos and Weekesrsquo arguments the pitfalls highlighted

by Bhatia and Sun find resonance with most world leaders This is why almost every

WTO member opposes Road 1 As a consequence it is extremely unlikely that WTO

members will decide to declare Doha dead any time soon

Road 2 The pitfalls of suspension

Suspension is certainly the most politically expedient choice for the Big-5 and it

is superficially attractive The logic is well expressed in the old story about a man

ndash condemned to death by his Emperor ndash who obtains a yearrsquos stay of execution by

promising to teach the Emperorrsquos horse to sing ldquoMuch could happen in a yearrdquo the man

reasons ldquoThe Emperor could die I could die the horse could singrdquo

But the usual merits of muddling through donrsquot apply to Doha Suspensions have been

tried so often that everyone would know that suspension is just a circuitous means of

killing the Round Road 2 is just the long route to Road 1 All the pitfalls of Road 1

therefore also apply to Road 2

But suspension would be even worse in many ways The world of trade is changing more

rapidly than negotiating positions so each delay seems to make a compromise based on

VOX Research-based policy analysis and commentary from leading economists

12

the existing elements even less likely Worse still a suspension would strengthen and

spread the belief that the WTO is not an appropriate venue for multilateral negotiations

As Ujal Singh Bhatia writes ldquothe Round will continue to hang like an albatross around

the WTOrsquos neck preventing it from addressing new challenges to the global trading

systemrdquo This would be particular worrisome since the world economy is moving into a

phase of great stress It is facing new challenges that will require multilateral solutions

ndash issues like food security natural-resource export restrictions and trade in goods

services and technology that are essential to climate-change adaption and mitigation

Road 3 A small package followed by a big package

The third road seems the most likely way to move past the Doha dilemma of not being

able to move forwards or backwards on the broad agenda The idea here is that the

agenda would be sorted into ldquodo-ablerdquo and ldquonot yet do-ablerdquo piles Nations would move

forward on a small package of do-ables for December 2011 while agreeing to discuss

the bigger issues later under revised ground rules that would be more likely to permit

the trade-offs necessary to make the big package acceptable to all members

As Stuart Harbinson puts it Doha is like a ship run aground a small package of

deliverables for December 2011 would act as a ldquopatchrdquo to keep the ldquogood ship Dohardquo

afloat until the high tide comes in and lifts the ship off the rocks ldquoIn this analogy the

lsquohigh tidersquo would be a change in the global economic and political seascape enabling

the major trading economies to settle their differences and bring the ship safely into

harbourrdquo he writes

Choices to make on the small package

All five experienced trade negotiators contributing to this eBook ndash and most of the WTO

delegations with whom we spoke ndash believe that it is worth trying to lock in agreement

on a small number of areas by the end of 2011 There are two critical issues to decide

Next Steps Getting Past the Doha Round Crisis

13

1 How much time should be spent on negotiating the small package

2 Which items should be in the small package

The contributors disagree over the first issue Susan Schwab argues for giving it not

more than 2 weeks others suggest longer They all however recognise that a prolonged

and contentious negotiation on a small package ndash especially one that ultimately proved

fruitless ndash would solve nothing and might harm the system

There is far more agreement on the second issue ndash possible composition of the small

package All the contributors and most of the WTO delegations with whom we spoke

suggest that some items on Doharsquos massive negotiating agenda are close to conclusion

Indeed the lists are remarkably similar despite the vast differences in the contributorsrsquo

perspectives They all point out however that striking even a very restrained list of

agreement will require abundant goodwill and hard negotiating

Suggestions for the small-package items include

bull Some sort of accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

bull A package of measures that promote ldquotrade facilitationrdquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impediments to trade

bull An agreement on a monitoring mechanism for special and differential treatment

bull An agreement to make permanent the transparency mechanism for regional trade

agreements that has been operating successfully for years

bull An agreement on certain non-tariff barriers

VOX Research-based policy analysis and commentary from leading economists

14

bull An agreement formalising cooperation between the WTO and various multilateral

environmental agreements

Other issues may ultimately prove tractable or necessary to provide balance Those most

often mentioned include a standstill agreement on fisheries subsidies certain aspects

of the less controversial rules negotiations and export subsidies Such a package could

also include other DDA matters for which the negotiations could be completed quickly

or non-DDA matters where the WTO membership is at one such as the promising

negotiations to upgrade the WTOrsquos Agreement on Government Procurement

The final issue is what to call the small package this is not a trivial matter

bull One option is to just boldly call the small package the ldquoDoha Roundrdquo ndash to declare

victory and move on

While this would clearly disappoint many it speaks to the objective of not letting the

Round drag down the WTO ndash not allowing the WTOrsquos credibility to be further damaged

by endless discussions that can never led to a happy ending

Of course this option would leave unsolved the core Doha issues ndash reducing distortions

in and improving market access for industrial goods agricultural products and services

trade and updating the rules But it might allow members to re-craft the parameters of

the negotiations in a way that would be more likely to lead to success This is clearly

the view taken by Susan Schwab and John Weekes As John Weekes puts it ldquoNot

completing the Doha Round would be a serious setback to the WTO and the multilateral

trading system However if it is clear that the Round cannot be concluded successfully

it is better to admit that and work constructively to develop an agenda for the future

work of the organisationrdquo

Another option would be to wrap up the collection of small agreements into a package

called the ldquoDoha down paymentrdquo or ldquoDoha deliverablesrdquo or ldquoDoha early harvestrdquo as a

way of stressing that all the Doha agenda items are still on the table

Next Steps Getting Past the Doha Round Crisis

15

A third option would be to view the individual items as standalone agreements to be

agreed by the ministers of WTO members at the December meeting without clear

reference to what comes next

This brings us to the next major element of the Road 3 pathway What to do with the

rest of the agenda

Choices to make on the big package

Albert Einstein once defined insanity as doing the same thing over and over and

expecting different results This makes it clear that any complete plan for a way past the

Doha dilemma must change something in the way the negotiations have been operating

Any multilateral trade negotiation involves choice on a series of negotiating rules

or conventions The Doha Round has accreted an odd constellation of these Some

are fundamental and therefore extremely difficult to change These include the idea

that everything must be agreed by all before anything is agreed (the so-called single-

undertaking principle) or the choice to focus on the particular tariff-cutting formula

known as the Swiss formulas But many of the choices are less central such as the exact

way in which flexibilities on tariff-cutting are to be decided

The ramifications of these procedures on the negotiating dynamic were not well

understood years ago when the original decisions were taken The lack of understanding

is even deeper when it comes to the joint operation and interaction among the

conventions

For these reasons the set of negotiating conventions that guide Round may no longer be

optimal Consideration of the pros and cons of alternatives might identify other ways of

finding a package of trade-offs that is acceptable to all

VOX Research-based policy analysis and commentary from leading economists

16

The forward-looking agenda

A number of contributors suggested that the process of rebuilding momentum and

confidence in the ultimate outcome could be boosted by agreeing to launch work

programmes (not actual negotiations) on how the WTO could address 21st-century

trade issues that have come to the fore since the Doha agenda was set in 2001

Here there are two basic lines The first would consider WTO institutional reform the

second would consider new issues such as new disciplines to underpin the increasing

convergence of trade investment and services (as is now routinely done in regional

trade agreements) setting limits on acceptable national climate policies with trade

implications or export restrictions

There certainly seems merit to these idea If nothing else it would interject new

dimensions to discussions that have been going on for a decade It would also make

it clear that we need to safeguard the WTO as a forum for multilateral discussions on

critical 21st-century issues

Concluding remarks

Many decent hard-working public servants have committed plenty of energy to the

Doha Round since its inception At this critical time any temptation for recriminations

or lapses into bitter disappointment should be set to one side to let governments chart a

new path for the WTO The circumstances facing WTO members in the middle of 2011

are hardly ideal and the set of options that stand any chance of acceptance is narrow In

times like these it would be a mistake to make the perfect the enemy of the good It is

time to think creatively and cooperatively about getting the WTO past the Doha crisis

A decision or non-decision that led to several more years of drift ndash years that will be

complicated by elections and changes in governments in some of the leading trading

powers ndash could turn out to be the beginning of the end for the WTOrsquos role as leader

of the global trading system The alternative ndash uncoordinated developments led by the

Next Steps Getting Past the Doha Round Crisis

17

Big-5 in their own systems of regional trade agreements ndash is a very plausible outcome

at this stage but not one that will ultimately serve anyonersquos long-run interests

References

Andre Nassar and Carlos Perez (2011) ldquoWhy WTO members should not give up the

Doha Round The case of agricultural traderdquo in Richard Baldwin and Simon Evenett

(eds) Why World Leaders Must Resist the False Promise of a Doha Delay VoxEU

April

19

Doha is stalled by gaps that are unbridgeable today Indonesiarsquos Trade Minister argues

that we need to be guided by priorities and pragmatism We should develop a set of

stepping stones that will help us complete the Doha Round eventually We should

identify the areas that are achievable in the very near future but which have an impact

on development while building confidence for the continued journey to a successful

Round We should never lose sight of the final goal ndash completing the Doha Round as a

single undertaking In short we are not looking for a ldquoPlan Brdquo we are looking for a

new way to execute Plan A

The importance of completing the Doha Development Agenda sooner rather than later

goes beyond bringing gains of $360 billion of additional trade with substantial benefits

for industrialised and developing economies (HLTE 2011) The importance also goes

beyond what pragmatic soothsayers who are telling us ldquoWhy are you worried the

WTO system will continue to be robust whether we conclude Doha or not Companies

and countries will continue to traderdquo As a developing country policy maker ndash and I

believe I speak for many other developing countries ndash I am greatly worried about the

costs and opportunity lost of not completing Doha

The costs of not completing Doha

I will point to four costs of not completing the Doha Round

bull First is what it could achieve for food security

Mari PangestuMinister of Trade Indonesia

There is no Plan B ndash only Plan A Towards completing Doha

1919

VOX Research-based policy analysis and commentary from leading economists

20

During the 2008 food crisis imbalances between supply and demand were partly

attributed to distorted agriculture prices caused by trade-distorting export subsidies

and domestic-support schemes The agriculture package in Doha will go some way to

address this In todayrsquos situation of high commodity prices now is the perfect time to

address the removal and elimination of such trade-distorting policies Removing these

distortions can only be achieved through multilateral negotiations not through bilateral

or regional agreements

Most importantly the winners would be the billions of hungry and poor people all over

the world correcting the system and ensuring the future supply of food and greater

price stability is very much in their interests For example in Indonesia a 10 increase

in the price of rice without any change in income would lead to a 1 increase in

poverty

bull Second keeping protection at bay

During the depth of the crisis benign protectionism was the order of the day according

to the self-reporting surveillance mechanism established by the WTO at the request of

G20 Leaders This allowed the rebound of trade to become one of the costless ways for

the global economy to recover It is ironical that in the recovery the latest report (WTO

2011) shows that there has been a slight increase in protectionism causing an estimated

impact of 06 to G20 exports

The main increase has been due to tariff increases automatic licenses and other

restrictions including export restrictions Whilst this is still ldquosmallrdquo it is nevertheless

double from the previous period Restoration of the confidence in the world trading

system through clear signals that we are progressing on completing the Round is crucial

to keeping protectionism at bay Developing countries such as Indonesia have a great

interest in this because only the multilateral trading system will provide the fair rules-

based trading system for us to face large and more developed partners on a fair and

equal standing

Next Steps Getting Past the Doha Round Crisis

21

bull Third the lack of progress on the Doha Round already has and will continue to raise

the pressure to undertake bilateral and regional free trade negotiations

In the ASEAN region there are already FTAs between ASEAN and all six of its dialog

partners (Australia China India Japan Korea New Zealand) and numerous bilateral

FTAs The EU has just completed negotiations with Korea which has put pressure

for the Korea-US FTA to be ratified as soon as possible The EU has also completed

negotiations with India and is negotiating with Singapore Malaysia and preparing

to do so with other ASEAN countries Recently China Korea and Japan announced

revitalization of their FTA initiative Furthermore we have the Trans-Pacific Partnership

initiative between 8 members of APEC

It is not the bilateral and regional free trade agreements which are problematic per

se it is negotiating them in the absence of a robust WTO system ndash a system which is

seen as meeting the needs of the current and future trade-linked issues Bilateral and

regional agreements can only work towards complementing the multilateral trading

system when they are ldquoWTO-plusrdquo not ldquoWTO-insteadrdquo

bull Fourth the potential dampening effect on unilateral reforms

The political economy of openness in trade policy and institutional reform have always

functioned better within the framework of international commitments Multilateral

rules impose an important caveat on what countries can or cannot do In a country like

Indonesia this has worked to our advantage in the way we frame our reforms and in fact

has functioned in the past to put bad policies to rest

For instance in the famous National Car case in the mid 1980s which violated the

MFN principle by allowing duty-free imports of cars only from one source country the

domestic politics at the time did not allow for policymakers to remove this policy The

policy was finally ended through the WTOrsquos dispute settlement mechanism It would

be too bad for reforms if the process is undertaken within weakened confidence of

multilateral trading system or one which will eventually not be relevant to the evolution

of 21st century trade issues

VOX Research-based policy analysis and commentary from leading economists

22

The Way Forward No Plan B

Despite G20 Leadersrsquo commitments and all the good intentions and intensive work in

Geneva that came after the push given by trade ministers during their informal meeting

in Davos in January 2011 it proved impossible to arrive at a draft text by the end-of-

April milestone There remains ldquounbridgeable gapsrdquo in a number of main negotiating

groups namely non-agriculture market access

Given this situation trade ministers met first during the APEC Ministers of Trade

Meeting in Big Sky Montana and then on the fringes of the OECD meeting in Paris

Fortunately all have agreed that we all remain committed to completing Doha as a single

undertaking However there was a sense of realism as to the timing and pathways to

achieve this desirable outcome in a timely way

From an Indonesian perspective there is no ldquoPlan Brdquo We do not support a ldquoDoha

Lightrdquo and we remain committed to a comprehensive ambitious and balanced package

building on what we have achieved to date

After almost 6 years of negotiations since the key Hong Kong WTO Ministerial I

believe we are more than 50 or some would say 80 of the way done A realistic way

forward is to identify the sequence of steps that would take us to the final outcome this

is necessary to avoid the costs and lost-opportunities I outlined above

This is not about an early harvest or ldquocherry pickingrdquo and then stopping It is about

identifying the steps forward in a meaningful way towards the final goal of the single

undertaking of Doha

Identifying stepping stones to a final Doha Round conclusion

There are areas within the negotiations that could be seen as steps towards the final

package Of course work and political will is still needed to find ways to bridge the

Next Steps Getting Past the Doha Round Crisis

23

unbridgeable gaps In identifying the areas where we could find convergence a number

of priorities stand out

bull First and foremost is areas of negotiations that will contribute and deliver to devel-

opment objectives such as the Least Developed Countries package andor an effec-

tive aid-for-trade and facilitation package this is after all a Development Round

bull Second areas where there would be clear benefits for development and the private

sector in facilitating and ensuring the benefits of trade are greater we need stake-

holders to be cheerleading the way forward

bull Third there could be areas where we would be able to address the food-security

challenge

One could also foresee that within each current area of negotiations there could be

items which could be wrapped up without disturbing the overall balance of elements

in that particular area It is important that we do not go into ldquonewrdquo negotiations in

identifying which areas We should go into the mode of identifying these pathways and

steps with the mindset and political will of win-win

We need to be guided by priorities and pragmatism That is to identify the areas that are

doable and achievable in the very near future but which have an impact on development

and increasing the benefits of trade while at the same time building confidence for us to

continue our journey to the final package Most importantly we should never lose sight

of the final goal of the single undertaking

Looking forward

It is also important to provide the signal in what we say and do elsewhere Beyond

talking about Doha we must ensure continued confidence in and implementation of the

rules-based open trading system

VOX Research-based policy analysis and commentary from leading economists

24

bull This would mean the commitments of G20 Leaders and others on refraining from

protectionism going beyond words the good intentions need to be strengthened

with commitments and actions

bull It also has implications for how we undertake bilateral and regional agreements

these should be done in a way that is not an alternative to and does not detract from

the multilateral trading system We should pursue regionalism in a way which is

going to contribute to and complement the system

Concluding remarks

In conclusion we should not underestimate the costs of not doing all this We will

need to draw upon the strength of our individual and collective political commitment

We need to call on the ability of some major economies to look beyond pure national

interests and to look at the impact and costs on the global system and economy And we

need to remember that there are many countries and billions of people ndash many of which

are impoverished ndash who are waiting for the Doha deliverables

References

HLTE (2011) ldquoWorld trade and the Doha roundrdquo final report of the High-Level Trade

Experts Group chaired by Jagdish Bhagwati and Peter Sutherland

WTO (2011) ldquoReports on G20 trade and investment measures (mid-October 2010 to

April 2011)rdquo WTO Secretariat 24 May

About the author

Mari Pangestu is Indonesiarsquos Minister of Trade since 2004 having served as Executive

Director of the Jakarta-based think tank the Center for Strategic and International

Studies and a lecturer in the Faculty of Economics at the University of Indonesia From

1991 to 1998 Dr Pangestu was the coordinator of the Trade Policy Forum of the Pacific

Next Steps Getting Past the Doha Round Crisis

25

Economic Cooperation Council and serves on the Board of the Overseas Development

Council World Gold Council and the Asian Journal of Business from The University

of Michigan Ann Arbor

She has published widely on a range of subjects including matters pertaining to

Indonesia as well as regional (ie Asian and Asia Pacific) and global issues She earned

her BA and MA in economics from Australian National University and a PhD in

economics from the University of California Davis

27

The Doha Round has failed according the former US Trade Representative Susan

Schwab This essay argues that prolonging Doha jeopardises the multilateral trading

system and threatens future prospects for WTO-led liberalisation Negotiators should

salvage whatever partial agreements they can from Doha and quickly drop the rest

to ensure the December ministerial meeting focuses on future work plans rather than

recriminations over Doha

The Doha Round has failed It is time for the international community to acknowledge

this sad fact and move on Prolonging the pretence that the Doha Round will succeed

is now a greater threat to the WTO and the multilateral trading system than facing the

truth

A great many smart hard-working and well-intentioned individuals have worked over

many years to realise Doharsquos potential to contribute to global economic growth and

development But what is on the table in Geneva has failed to deliver any outcome

let alone a meaningful one It is time for a swift clean break from the past and to

lay the groundwork for a future where the WTO and its members revive WTO-led

liberalisation and reform

End Doharsquos stranglehold and build towards near-term wins

To keep the multilateral trading system healthy it is necessary to end the Doha

Roundrsquos stranglehold on the system This should happen quickly in order to ensure

that the December 2011 ministerial meeting focuses on future work plans rather than

Susan SchwabUniversity of Marlyand former US Trade Representative

Acknowledge Doharsquos demise and move on to save the WTO

2727

VOX Research-based policy analysis and commentary from leading economists

28

recriminations about a Doha Development Agenda that has struggled through one failed

encounter after another

Negotiators should refocus their efforts on near-term wins and on building the next

Round ndash which need not be another behemoth but perhaps a ldquorolling roundrdquo of reforms

and new market access or a few highest-common-denominator plurilateral or WTO-

plus deals Ultimately these should lead to a broader-based market access and rules

agreement under the multilateral auspices of the WTO

The small package possibility

In my recent Foreign Affairs article (Schwab 2011) I suggested that negotiators should

try to salvage whatever partial agreements they can and then walk away from the rest

I mentioned a number of potential candidates such as trade facilitation and the largely

completed agricultural-export pillar (comprising proposed agreements on export credits

food aid state-trading firms and the elimination of export subsidies) Negotiators

might also try to complete two environment-related agreements one cutting subsidies

to industrial fishing fleets that are overfishing the worldrsquos oceans and the other ending

tariff and nontariff barriers to rdquogreenrdquo technologies in major producing and consuming

countries Taken together or individually each of these would benefit countries across

the spectrum of economic development

I am however sceptical that even these small agreements are achievable in the current

climate of mistrust and entrenched positions A troubling development during the course

of the Round has been how often countries seem to forget or forfeit their own economic

interests ndash let alone the greater good ndash in the face of peer pressure and group-think In

the current environment even these smaller deals might prove impossible to achieve

It is certainly worth trying to achieve a few deliverables by taking a run at a small

package but negotiators should not spend too much time on it They already know

exactly what the options are if they cannot get to ldquoyesrdquo in say two weeks they should

Next Steps Getting Past the Doha Round Crisis

29

give up and move on to the real challenge of launching a new series of multilateral

negotiations under WTO auspices

Getting past Doha

How to conclude the Doha Round One option would be for the Director-General and

a representative sample of WTO Ambassadors to come together in the interest of the

institution and to offer a declaration of Doharsquos demise along with their pledge to begin

building the future That would enable leaders at the November G20 meeting to pledge

their support for the rules-based trading system the WTO and its next steps rather than

for the ever elusive ldquobalanced and ambitiousrdquo Doha outcome

After a short period of grieving over the death of Doha and an opportunity to get

beyond the anger lead trading nations should refocus on getting the WTO back into

its mainstream business of negotiating mutually advantageous market opening and

updating the global rdquorules of the roadrdquo This approach offers the best promise of a

meaningful ldquodevelopmentrdquo outcome as well

How might this be achieved

It seems unrealistic to think WTO members would agree to launch another massive

all-or-nothing round in the near future Such broad negotiations however will be

necessary to tackle some of the worldrsquos most important market access challenges in

services manufacturing and agriculture along with such issues as farm subsidies

There are ways to build-up to the big-round model again where countries once more see

economic self-interest in the use of broad-based negotiations and trade-offs to achieve

both new market access and market reforms First however we must re-establish trust

and regain momentum

One way forward would be for ministers to agree to launch a number of confidence-

building negotiations For example ministers in December could decide to open talks

VOX Research-based policy analysis and commentary from leading economists

30

on expanding the 1997 Information Technology Agreement a number of nations

seem interested and the US Administration already has the authority to implement an

enhanced agreement If negotiators fail to work through the 850 brackets in the current

Doha trade facilitation text that could also be tackled as a stand-alone agreement since

each nation would benefit from more efficient movement of goods and services across

borders

Another confidence-building measure might be a merger of sectoral agreements geared

toward a widely-shared objective such as cheaper better healthcare A package that

included pharmaceuticals medical devices and healthcare services might attract

support from the broad array of WTO members across the development spectrum Given

the high-level of public interest in and awareness of environment issues a sectoral

negotiation on environmental goods and services might be another confidence-building

deal once it is removed from the straightjacket that Doha has become

Lessons from Doha for next steps and the next round

Confidence building agreements would offer modest economic and social contributions

and serve to prepare the atmospherics for launch the next Round This brings me to my

last topic ndash the lessons we should draw from a decade of Doha talks

One thing that is quite clear from years of struggling with the basic structure of Doha

is that the combination of formula and self-selected flexibilities has not worked It

resulted in a situation where every negotiator had to assume the worst case ndash knowing

the political costs they would pay for their own liberalisation but expecting their trading

partners to use flexibilities to negate any meaningful new market-access It is possible

to draw from the best of the Doha formulas ndash such as the higher the barrier the greater

the cut ndash while still creating real negotiations around them through requests and offers

delivered using above- and below-formula cuts

Next Steps Getting Past the Doha Round Crisis

31

Another key lesson is that lumping the worldrsquos very diverse economies into three

basic categories ndash developed developing and least developed ndash is a practice that no

longer fits 21st century economic and trade realities Nor is it a structure conducive to

negotiations and real progress based on an exchange of market access among nations

with large markets Yes the advanced economies should be expected to do more than

those at lesser stages of economic development but expectations should also reflect

the fact that many emerging economies are characterised by both poverty and sectors

where they are globally competitive trade powerhouses

The emerging economies have large markets represent over half of global GDP growth

and stand to be the biggest winners from any major trade agreement They should be

expected to contribute to the next Round accordingly Major trade agreements generally

take at least 12 years to implement from the time they are initially concluded What

should the world trading system look like in 2025 in terms of the absolute and relative

responsibilities of key trading nations

Concluding remarks

I am optimistic when it comes to the multilateral trading system and the WTOrsquos central

role in its governance The optimistic scenario is that we put the Doha Round behind

us Facing facts can invigorate and strengthen the trading system If we fail to act the

WTO risks losing its relevance

The Doha Round ndash which in my view cannot be concluded as it is conceived today ndash

should not be allowed to continue draining the WTOrsquos credibility and potential progress

on the multilateral front Now is the time to liberate the would-be trade liberalisers from

the Doha straightjacket and move on

VOX Research-based policy analysis and commentary from leading economists

32

References

Schwab Susan (2011) ldquoAfter Doha Why the negotiations are doomed and what we

should do about itrdquo Foreign Affairs MayJune

About the author

Ambassador Schwab has been a Professor at the University of Maryland School of

Public Policy since January 2009 and a strategic advisor to Mayer Brown LLP (global

law firm) since March 2010 Ambassador Schwab served as US Trade Representative

from June 2006 to January 2009 and as Deputy US Trade Representative from

October 2005 to June 2006 Prior to her service as Deputy US Trade Representative

Ambassador Schwab served as President and Chief Executive Officer of the University

System of Maryland Foundation from June 2004 to October 2005 as a consultant

for the US Department of Treasury from July 2003 to December 2003 and as Dean

of the University of Maryland School of Public Policy from July 1995 to July 2003

Ambassador Schwab serves on the boards of Boeing Company Caterpillar Inc and

FedEx Corporation

She holds a BA in Political Economy from Williams College a Masters in Development

Policy from Stanford University (Food Research Institute) and a PhD in Public

Administration and International Business from The George Washington University

33

Hopes for finishing Doha in 2011 are fading fast This essay suggests a three-track

approach for moving beyond the Doha crisis 1) Identify a package of ldquodeliverablesrsquo ndash

parts of the Round that could be agreed by December 2011 2) Assemble a package of

contentious issues for ongoing negotiation with clear terms of reference 3) Establish

a work programme to consider WTO institutional reform and forward-looking issues

For reasons that are too well known to be repeated the WTO finds itself at the crossroads

Decisions to be taken in the next few weeks will determine whether it can steer its

way to a successful conclusion of the Doha Round in the near future Failing this the

Round will continue to hang like an albatross around the WTOrsquos neck preventing it

from delivering the promised boost to least developed nations and freezing its ability

to address new challenges to the global trading system All countries would suffer from

such an outcome but especially the worldrsquos poorest and most vulnerable

The cost of a never-ending Doha Round

The adverse implications of a continuing Doha impasse on the future role of the WTO

are too compelling to be dismissed offhandedly

Several trade-linked global problems require global cooperation Food security energy

security trade-related aspects of climate change labour mobility commodity price

volatility and integration of regional liberalisation into the multilateral system are

problems that can only be solved with global cooperation

Ujal Singh BhatiaFormerly Indiarsquos Ambassador and Permanent Representative to the WTO

Next Steps Getting past the Doha Round crisis

3333

VOX Research-based policy analysis and commentary from leading economists

34

For example if food exporters continue to impose export barriers when prices rise

food importers may respond with import barriers to boost self-sufficiency This sort of

protectionist reverberation could lead the world to a situation in which all the players

are worse off but none can improve the situation unilaterally Avoiding this sort of

outcome would require global agreements There are very few global institutions that

could manage such cooperation indeed the WTO might be the only one A WTO locked

in endless Doha debates cannot be the centre of the rules based global trading system

There are many thinkers who believe that the structure of WTO rules is robust enough

to withstand a Doha failure It is true that the sky will not fall if Doha is terminated

without a conclusion Such analysts however tend to underestimate the significant

structural changes taking place in the global economy and the trading system The

WTO is working on a set of rules agreed upon in 1994 that were based on an agenda

set almost a quarter of century ago These are still useful and relevant for much of

world trade ndash but not all For instance the rules were not designed for the technology-

driven fragmentation of the manufacturing process and the distribution of the product

value chain across several geographical locations the intertwining of production with

related services the embedded intellectual property rights in components and sub-

components or the multiplicity of rules of origin All these require a different approach

to rule making

A WTO that remains preoccupied with the Doha Round cannot be expected to focus

on such issues Therefore the continuing relevance of the WTO and its primacy in

the global trading system are contingent upon a successful and early conclusion of

the Doha Round Notwithstanding this urgency it is now clear that a Doha package

cannot be wound up in 2011 along the lines agreed by G20 leaders in November 2010

To prevent this from tying the WTO in knots for years to come it is necessary to think

creatively about ways forward

Next Steps Getting Past the Doha Round Crisis

35

Ideas for moving beyond the impasse

Any effort to deal with the impasse in the negotiations needs to be based on a holistic

appreciation of the systemic implications of a continuing stalemate as much as on the

negotiating positions of various members The efforts for a solution acceptable to all

members therefore need to focus on issues in the Doha mandate as well as on issues for

a post Doha situation

Within this framework four constraints need to be borne in mind

bull A ldquoDoha Literdquo of reduced ambition will not work The outcome has to reflect a dec-

adersquos efforts of the global community Ambition however cannot be defined to suit

the convenience of a few members It must touch all aspects of the Doha mandate

bull Aspects of the Doha mandate that are more relevant to the development dimension

have to be ambitiously addressed and fast tracked

bull WTO needs to start work on a new work programme to address new challenges

bull The Doha Round cannot be completed in 2011 A down payment is necessary from

the Doha Round this year to convince the world that the WTO can deliver

A three-track approach

These constraints require the WTO to adopt a three-track approach during the next few

months leading up to the ministerial meeting in December 2011

Track 1 Identification of a list of issues that specially address the trading interests

of smaller developing countries and relatively less contentious issues for fast tracked

finalisation before the ministerial meeting

Track 2 Identification of a package of the more contentious issues for continuing

consultations with clear terms of reference

Track 3 Identification of appropriate terms of reference for a work programme on

WTO institutional reform and the forward-looking agenda

VOX Research-based policy analysis and commentary from leading economists

36

A possible timeline

These three tracks taken as a package would provide a way forward that respects all

four constraints Achieving consensus on them would be difficult ndash and require months

of preparatory work and negotiations

If the WTO membership starts immediately however there is still time to get the

package ready for finalisation by ministers at the December 2011 ministerial meeting

For this to happen it is essential that discussions on such a package begin this month

so that its contents can be finalised by the end of June 2011 This would leave about

four working months before the ministerial meeting to complete negotiations on the

selected areas

What the three tracks might contain

The first track would contain the Doha down-payment package As with any WTO

package the contents would need to be negotiated and it might require complementary

policies such as technical assistance initiatives

Such a list must include items that speak to development aspects of the Doha mandate

such as

bull The Implementation of the Hong Kong decision on duty-free quota-free treatment

for less developed countries

bull A ministerial decision on the Monitoring Mechanism for Special and Differential

Treatment provisions

bull A ministerial decision on the issues raised by the Sub-Saharan African cotton ex-

porters (the group known as the C-4) and

bull The finalisation of a less-developed-country (LDC) waiver in services so that pref-

erential treatment can be provided to LDCrsquos in services without extending it to

others

Next Steps Getting Past the Doha Round Crisis

37

It should also include areas of the negotiations that engage the interest of all members

such as

bull Trade Facilitation

bull All aspects of export competition in agriculture including export subsidies

bull The Transparency Mechanism for regional trade agreements (RTAs)

bull The non-tariff barriers (NTBs) package in non-agricultural market access (NAMA)

and

bull A ministerial decision on interactions and relationships between the WTOrsquos rules

and its committees on the one hand and existing multilateral environmental agree-

ments on the other (eg the Basel Convention on the Control of Transboundary

Movements of Hazardous Wastes and the Montreal Protocol on Substances that

Deplete the Ozone Layer)

While some members would like to exclude some of these areas from a fast tracked

process in the hope of using them for trade offs in the final stage it is important that the

package is as comprehensive as possible

Track two Items for further negotiation

The second track would gather all remaining items currently under negotiations This

would include

bull All aspects of market access in industrial goods agriculture and services

bull All aspects of subsidies in agriculture

bull Various aspects of rules including fisheries subsidies

bull Environmental goods and

bull Issues related to trade-related aspects of international property rights (TRIPS) re-

garding the protection of Geographical Indicators and the protection of traditional

VOX Research-based policy analysis and commentary from leading economists

38

knowledge and folklore that were are mentioned in the Convention on Biological

Diversity1

The need for a balanced package deserves emphasis It is often assumed that there

is a straight trade-off between agricultural subsidies and market access The situation

however is more complex The interest of countries like India China and Indonesia

in agricultural reform is more systemic than export related For them other incentives

within the mandate will be required

Track three Looking ahead

The underlying theme for the work programme would be an appraisal of the entire

negotiating and decision-making process in the WTO in the context of the present

realities both within and outside the organisation The objective would be to prepare

the WTO to address new challenges to the global trading system concurrently with the

ongoing work on the remaining parts of the Doha mandate

Closing remarks

The above proposals constitute a basic template for addressing the Doha conundrum

To what extent they are actually embraced will depend on how much political capital

the major members of the WTO are prepared to invest in moving the Doha Round

forward There is much scepticism about whether such political will exists It is time

for governments to prove the sceptics wrong

1 Specifically as specified in paragraphs 18 and 19 of the Doha Declaration

Next Steps Getting Past the Doha Round Crisis

39

About the author

Ambassador Bhatia Singh joined the Indian Administrative Service in 1974 holding

several senior positions in provincial administration in Orissa State between 1976 and

1995 He served as Joint Secretary Ministry of Commerce and Industry between 1995-

2000 in which capacity he handled a number of bilateral regional and multilateral trade

negotiations From 2004 to his retirement in 2010 he served as Indiarsquos Ambassador and

Permanent Representative to the WTO in Geneva

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

Next Steps Getting Past the Doha Round Crisis

11

Doha Round to effect critical adjustments to the world trading system ndash especially a

rebalancing of the level of openness to agricultural versus industrial trade (Nassar and

Perez 2011) If one or more of the Big-5 reject a deal that most members still think is

doable the blame game could get very nasty

There is a great danger that this level of ill-will could undermine multilateral trade

cooperation for years It could lock in the growing perception that the WTO is not a

place where serious negotiations can be conducted The US in particular is likely to

be subject to severe criticism in a way that might have the unintended consequence of

convincing US Congressional and private sector groups that the WTO is not a forum

where America can do business Such an outcome would serve no onersquos interests

Despite the clear logic of Schwabrsquos and Weekesrsquo arguments the pitfalls highlighted

by Bhatia and Sun find resonance with most world leaders This is why almost every

WTO member opposes Road 1 As a consequence it is extremely unlikely that WTO

members will decide to declare Doha dead any time soon

Road 2 The pitfalls of suspension

Suspension is certainly the most politically expedient choice for the Big-5 and it

is superficially attractive The logic is well expressed in the old story about a man

ndash condemned to death by his Emperor ndash who obtains a yearrsquos stay of execution by

promising to teach the Emperorrsquos horse to sing ldquoMuch could happen in a yearrdquo the man

reasons ldquoThe Emperor could die I could die the horse could singrdquo

But the usual merits of muddling through donrsquot apply to Doha Suspensions have been

tried so often that everyone would know that suspension is just a circuitous means of

killing the Round Road 2 is just the long route to Road 1 All the pitfalls of Road 1

therefore also apply to Road 2

But suspension would be even worse in many ways The world of trade is changing more

rapidly than negotiating positions so each delay seems to make a compromise based on

VOX Research-based policy analysis and commentary from leading economists

12

the existing elements even less likely Worse still a suspension would strengthen and

spread the belief that the WTO is not an appropriate venue for multilateral negotiations

As Ujal Singh Bhatia writes ldquothe Round will continue to hang like an albatross around

the WTOrsquos neck preventing it from addressing new challenges to the global trading

systemrdquo This would be particular worrisome since the world economy is moving into a

phase of great stress It is facing new challenges that will require multilateral solutions

ndash issues like food security natural-resource export restrictions and trade in goods

services and technology that are essential to climate-change adaption and mitigation

Road 3 A small package followed by a big package

The third road seems the most likely way to move past the Doha dilemma of not being

able to move forwards or backwards on the broad agenda The idea here is that the

agenda would be sorted into ldquodo-ablerdquo and ldquonot yet do-ablerdquo piles Nations would move

forward on a small package of do-ables for December 2011 while agreeing to discuss

the bigger issues later under revised ground rules that would be more likely to permit

the trade-offs necessary to make the big package acceptable to all members

As Stuart Harbinson puts it Doha is like a ship run aground a small package of

deliverables for December 2011 would act as a ldquopatchrdquo to keep the ldquogood ship Dohardquo

afloat until the high tide comes in and lifts the ship off the rocks ldquoIn this analogy the

lsquohigh tidersquo would be a change in the global economic and political seascape enabling

the major trading economies to settle their differences and bring the ship safely into

harbourrdquo he writes

Choices to make on the small package

All five experienced trade negotiators contributing to this eBook ndash and most of the WTO

delegations with whom we spoke ndash believe that it is worth trying to lock in agreement

on a small number of areas by the end of 2011 There are two critical issues to decide

Next Steps Getting Past the Doha Round Crisis

13

1 How much time should be spent on negotiating the small package

2 Which items should be in the small package

The contributors disagree over the first issue Susan Schwab argues for giving it not

more than 2 weeks others suggest longer They all however recognise that a prolonged

and contentious negotiation on a small package ndash especially one that ultimately proved

fruitless ndash would solve nothing and might harm the system

There is far more agreement on the second issue ndash possible composition of the small

package All the contributors and most of the WTO delegations with whom we spoke

suggest that some items on Doharsquos massive negotiating agenda are close to conclusion

Indeed the lists are remarkably similar despite the vast differences in the contributorsrsquo

perspectives They all point out however that striking even a very restrained list of

agreement will require abundant goodwill and hard negotiating

Suggestions for the small-package items include

bull Some sort of accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

bull A package of measures that promote ldquotrade facilitationrdquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impediments to trade

bull An agreement on a monitoring mechanism for special and differential treatment

bull An agreement to make permanent the transparency mechanism for regional trade

agreements that has been operating successfully for years

bull An agreement on certain non-tariff barriers

VOX Research-based policy analysis and commentary from leading economists

14

bull An agreement formalising cooperation between the WTO and various multilateral

environmental agreements

Other issues may ultimately prove tractable or necessary to provide balance Those most

often mentioned include a standstill agreement on fisheries subsidies certain aspects

of the less controversial rules negotiations and export subsidies Such a package could

also include other DDA matters for which the negotiations could be completed quickly

or non-DDA matters where the WTO membership is at one such as the promising

negotiations to upgrade the WTOrsquos Agreement on Government Procurement

The final issue is what to call the small package this is not a trivial matter

bull One option is to just boldly call the small package the ldquoDoha Roundrdquo ndash to declare

victory and move on

While this would clearly disappoint many it speaks to the objective of not letting the

Round drag down the WTO ndash not allowing the WTOrsquos credibility to be further damaged

by endless discussions that can never led to a happy ending

Of course this option would leave unsolved the core Doha issues ndash reducing distortions

in and improving market access for industrial goods agricultural products and services

trade and updating the rules But it might allow members to re-craft the parameters of

the negotiations in a way that would be more likely to lead to success This is clearly

the view taken by Susan Schwab and John Weekes As John Weekes puts it ldquoNot

completing the Doha Round would be a serious setback to the WTO and the multilateral

trading system However if it is clear that the Round cannot be concluded successfully

it is better to admit that and work constructively to develop an agenda for the future

work of the organisationrdquo

Another option would be to wrap up the collection of small agreements into a package

called the ldquoDoha down paymentrdquo or ldquoDoha deliverablesrdquo or ldquoDoha early harvestrdquo as a

way of stressing that all the Doha agenda items are still on the table

Next Steps Getting Past the Doha Round Crisis

15

A third option would be to view the individual items as standalone agreements to be

agreed by the ministers of WTO members at the December meeting without clear

reference to what comes next

This brings us to the next major element of the Road 3 pathway What to do with the

rest of the agenda

Choices to make on the big package

Albert Einstein once defined insanity as doing the same thing over and over and

expecting different results This makes it clear that any complete plan for a way past the

Doha dilemma must change something in the way the negotiations have been operating

Any multilateral trade negotiation involves choice on a series of negotiating rules

or conventions The Doha Round has accreted an odd constellation of these Some

are fundamental and therefore extremely difficult to change These include the idea

that everything must be agreed by all before anything is agreed (the so-called single-

undertaking principle) or the choice to focus on the particular tariff-cutting formula

known as the Swiss formulas But many of the choices are less central such as the exact

way in which flexibilities on tariff-cutting are to be decided

The ramifications of these procedures on the negotiating dynamic were not well

understood years ago when the original decisions were taken The lack of understanding

is even deeper when it comes to the joint operation and interaction among the

conventions

For these reasons the set of negotiating conventions that guide Round may no longer be

optimal Consideration of the pros and cons of alternatives might identify other ways of

finding a package of trade-offs that is acceptable to all

VOX Research-based policy analysis and commentary from leading economists

16

The forward-looking agenda

A number of contributors suggested that the process of rebuilding momentum and

confidence in the ultimate outcome could be boosted by agreeing to launch work

programmes (not actual negotiations) on how the WTO could address 21st-century

trade issues that have come to the fore since the Doha agenda was set in 2001

Here there are two basic lines The first would consider WTO institutional reform the

second would consider new issues such as new disciplines to underpin the increasing

convergence of trade investment and services (as is now routinely done in regional

trade agreements) setting limits on acceptable national climate policies with trade

implications or export restrictions

There certainly seems merit to these idea If nothing else it would interject new

dimensions to discussions that have been going on for a decade It would also make

it clear that we need to safeguard the WTO as a forum for multilateral discussions on

critical 21st-century issues

Concluding remarks

Many decent hard-working public servants have committed plenty of energy to the

Doha Round since its inception At this critical time any temptation for recriminations

or lapses into bitter disappointment should be set to one side to let governments chart a

new path for the WTO The circumstances facing WTO members in the middle of 2011

are hardly ideal and the set of options that stand any chance of acceptance is narrow In

times like these it would be a mistake to make the perfect the enemy of the good It is

time to think creatively and cooperatively about getting the WTO past the Doha crisis

A decision or non-decision that led to several more years of drift ndash years that will be

complicated by elections and changes in governments in some of the leading trading

powers ndash could turn out to be the beginning of the end for the WTOrsquos role as leader

of the global trading system The alternative ndash uncoordinated developments led by the

Next Steps Getting Past the Doha Round Crisis

17

Big-5 in their own systems of regional trade agreements ndash is a very plausible outcome

at this stage but not one that will ultimately serve anyonersquos long-run interests

References

Andre Nassar and Carlos Perez (2011) ldquoWhy WTO members should not give up the

Doha Round The case of agricultural traderdquo in Richard Baldwin and Simon Evenett

(eds) Why World Leaders Must Resist the False Promise of a Doha Delay VoxEU

April

19

Doha is stalled by gaps that are unbridgeable today Indonesiarsquos Trade Minister argues

that we need to be guided by priorities and pragmatism We should develop a set of

stepping stones that will help us complete the Doha Round eventually We should

identify the areas that are achievable in the very near future but which have an impact

on development while building confidence for the continued journey to a successful

Round We should never lose sight of the final goal ndash completing the Doha Round as a

single undertaking In short we are not looking for a ldquoPlan Brdquo we are looking for a

new way to execute Plan A

The importance of completing the Doha Development Agenda sooner rather than later

goes beyond bringing gains of $360 billion of additional trade with substantial benefits

for industrialised and developing economies (HLTE 2011) The importance also goes

beyond what pragmatic soothsayers who are telling us ldquoWhy are you worried the

WTO system will continue to be robust whether we conclude Doha or not Companies

and countries will continue to traderdquo As a developing country policy maker ndash and I

believe I speak for many other developing countries ndash I am greatly worried about the

costs and opportunity lost of not completing Doha

The costs of not completing Doha

I will point to four costs of not completing the Doha Round

bull First is what it could achieve for food security

Mari PangestuMinister of Trade Indonesia

There is no Plan B ndash only Plan A Towards completing Doha

1919

VOX Research-based policy analysis and commentary from leading economists

20

During the 2008 food crisis imbalances between supply and demand were partly

attributed to distorted agriculture prices caused by trade-distorting export subsidies

and domestic-support schemes The agriculture package in Doha will go some way to

address this In todayrsquos situation of high commodity prices now is the perfect time to

address the removal and elimination of such trade-distorting policies Removing these

distortions can only be achieved through multilateral negotiations not through bilateral

or regional agreements

Most importantly the winners would be the billions of hungry and poor people all over

the world correcting the system and ensuring the future supply of food and greater

price stability is very much in their interests For example in Indonesia a 10 increase

in the price of rice without any change in income would lead to a 1 increase in

poverty

bull Second keeping protection at bay

During the depth of the crisis benign protectionism was the order of the day according

to the self-reporting surveillance mechanism established by the WTO at the request of

G20 Leaders This allowed the rebound of trade to become one of the costless ways for

the global economy to recover It is ironical that in the recovery the latest report (WTO

2011) shows that there has been a slight increase in protectionism causing an estimated

impact of 06 to G20 exports

The main increase has been due to tariff increases automatic licenses and other

restrictions including export restrictions Whilst this is still ldquosmallrdquo it is nevertheless

double from the previous period Restoration of the confidence in the world trading

system through clear signals that we are progressing on completing the Round is crucial

to keeping protectionism at bay Developing countries such as Indonesia have a great

interest in this because only the multilateral trading system will provide the fair rules-

based trading system for us to face large and more developed partners on a fair and

equal standing

Next Steps Getting Past the Doha Round Crisis

21

bull Third the lack of progress on the Doha Round already has and will continue to raise

the pressure to undertake bilateral and regional free trade negotiations

In the ASEAN region there are already FTAs between ASEAN and all six of its dialog

partners (Australia China India Japan Korea New Zealand) and numerous bilateral

FTAs The EU has just completed negotiations with Korea which has put pressure

for the Korea-US FTA to be ratified as soon as possible The EU has also completed

negotiations with India and is negotiating with Singapore Malaysia and preparing

to do so with other ASEAN countries Recently China Korea and Japan announced

revitalization of their FTA initiative Furthermore we have the Trans-Pacific Partnership

initiative between 8 members of APEC

It is not the bilateral and regional free trade agreements which are problematic per

se it is negotiating them in the absence of a robust WTO system ndash a system which is

seen as meeting the needs of the current and future trade-linked issues Bilateral and

regional agreements can only work towards complementing the multilateral trading

system when they are ldquoWTO-plusrdquo not ldquoWTO-insteadrdquo

bull Fourth the potential dampening effect on unilateral reforms

The political economy of openness in trade policy and institutional reform have always

functioned better within the framework of international commitments Multilateral

rules impose an important caveat on what countries can or cannot do In a country like

Indonesia this has worked to our advantage in the way we frame our reforms and in fact

has functioned in the past to put bad policies to rest

For instance in the famous National Car case in the mid 1980s which violated the

MFN principle by allowing duty-free imports of cars only from one source country the

domestic politics at the time did not allow for policymakers to remove this policy The

policy was finally ended through the WTOrsquos dispute settlement mechanism It would

be too bad for reforms if the process is undertaken within weakened confidence of

multilateral trading system or one which will eventually not be relevant to the evolution

of 21st century trade issues

VOX Research-based policy analysis and commentary from leading economists

22

The Way Forward No Plan B

Despite G20 Leadersrsquo commitments and all the good intentions and intensive work in

Geneva that came after the push given by trade ministers during their informal meeting

in Davos in January 2011 it proved impossible to arrive at a draft text by the end-of-

April milestone There remains ldquounbridgeable gapsrdquo in a number of main negotiating

groups namely non-agriculture market access

Given this situation trade ministers met first during the APEC Ministers of Trade

Meeting in Big Sky Montana and then on the fringes of the OECD meeting in Paris

Fortunately all have agreed that we all remain committed to completing Doha as a single

undertaking However there was a sense of realism as to the timing and pathways to

achieve this desirable outcome in a timely way

From an Indonesian perspective there is no ldquoPlan Brdquo We do not support a ldquoDoha

Lightrdquo and we remain committed to a comprehensive ambitious and balanced package

building on what we have achieved to date

After almost 6 years of negotiations since the key Hong Kong WTO Ministerial I

believe we are more than 50 or some would say 80 of the way done A realistic way

forward is to identify the sequence of steps that would take us to the final outcome this

is necessary to avoid the costs and lost-opportunities I outlined above

This is not about an early harvest or ldquocherry pickingrdquo and then stopping It is about

identifying the steps forward in a meaningful way towards the final goal of the single

undertaking of Doha

Identifying stepping stones to a final Doha Round conclusion

There are areas within the negotiations that could be seen as steps towards the final

package Of course work and political will is still needed to find ways to bridge the

Next Steps Getting Past the Doha Round Crisis

23

unbridgeable gaps In identifying the areas where we could find convergence a number

of priorities stand out

bull First and foremost is areas of negotiations that will contribute and deliver to devel-

opment objectives such as the Least Developed Countries package andor an effec-

tive aid-for-trade and facilitation package this is after all a Development Round

bull Second areas where there would be clear benefits for development and the private

sector in facilitating and ensuring the benefits of trade are greater we need stake-

holders to be cheerleading the way forward

bull Third there could be areas where we would be able to address the food-security

challenge

One could also foresee that within each current area of negotiations there could be

items which could be wrapped up without disturbing the overall balance of elements

in that particular area It is important that we do not go into ldquonewrdquo negotiations in

identifying which areas We should go into the mode of identifying these pathways and

steps with the mindset and political will of win-win

We need to be guided by priorities and pragmatism That is to identify the areas that are

doable and achievable in the very near future but which have an impact on development

and increasing the benefits of trade while at the same time building confidence for us to

continue our journey to the final package Most importantly we should never lose sight

of the final goal of the single undertaking

Looking forward

It is also important to provide the signal in what we say and do elsewhere Beyond

talking about Doha we must ensure continued confidence in and implementation of the

rules-based open trading system

VOX Research-based policy analysis and commentary from leading economists

24

bull This would mean the commitments of G20 Leaders and others on refraining from

protectionism going beyond words the good intentions need to be strengthened

with commitments and actions

bull It also has implications for how we undertake bilateral and regional agreements

these should be done in a way that is not an alternative to and does not detract from

the multilateral trading system We should pursue regionalism in a way which is

going to contribute to and complement the system

Concluding remarks

In conclusion we should not underestimate the costs of not doing all this We will

need to draw upon the strength of our individual and collective political commitment

We need to call on the ability of some major economies to look beyond pure national

interests and to look at the impact and costs on the global system and economy And we

need to remember that there are many countries and billions of people ndash many of which

are impoverished ndash who are waiting for the Doha deliverables

References

HLTE (2011) ldquoWorld trade and the Doha roundrdquo final report of the High-Level Trade

Experts Group chaired by Jagdish Bhagwati and Peter Sutherland

WTO (2011) ldquoReports on G20 trade and investment measures (mid-October 2010 to

April 2011)rdquo WTO Secretariat 24 May

About the author

Mari Pangestu is Indonesiarsquos Minister of Trade since 2004 having served as Executive

Director of the Jakarta-based think tank the Center for Strategic and International

Studies and a lecturer in the Faculty of Economics at the University of Indonesia From

1991 to 1998 Dr Pangestu was the coordinator of the Trade Policy Forum of the Pacific

Next Steps Getting Past the Doha Round Crisis

25

Economic Cooperation Council and serves on the Board of the Overseas Development

Council World Gold Council and the Asian Journal of Business from The University

of Michigan Ann Arbor

She has published widely on a range of subjects including matters pertaining to

Indonesia as well as regional (ie Asian and Asia Pacific) and global issues She earned

her BA and MA in economics from Australian National University and a PhD in

economics from the University of California Davis

27

The Doha Round has failed according the former US Trade Representative Susan

Schwab This essay argues that prolonging Doha jeopardises the multilateral trading

system and threatens future prospects for WTO-led liberalisation Negotiators should

salvage whatever partial agreements they can from Doha and quickly drop the rest

to ensure the December ministerial meeting focuses on future work plans rather than

recriminations over Doha

The Doha Round has failed It is time for the international community to acknowledge

this sad fact and move on Prolonging the pretence that the Doha Round will succeed

is now a greater threat to the WTO and the multilateral trading system than facing the

truth

A great many smart hard-working and well-intentioned individuals have worked over

many years to realise Doharsquos potential to contribute to global economic growth and

development But what is on the table in Geneva has failed to deliver any outcome

let alone a meaningful one It is time for a swift clean break from the past and to

lay the groundwork for a future where the WTO and its members revive WTO-led

liberalisation and reform

End Doharsquos stranglehold and build towards near-term wins

To keep the multilateral trading system healthy it is necessary to end the Doha

Roundrsquos stranglehold on the system This should happen quickly in order to ensure

that the December 2011 ministerial meeting focuses on future work plans rather than

Susan SchwabUniversity of Marlyand former US Trade Representative

Acknowledge Doharsquos demise and move on to save the WTO

2727

VOX Research-based policy analysis and commentary from leading economists

28

recriminations about a Doha Development Agenda that has struggled through one failed

encounter after another

Negotiators should refocus their efforts on near-term wins and on building the next

Round ndash which need not be another behemoth but perhaps a ldquorolling roundrdquo of reforms

and new market access or a few highest-common-denominator plurilateral or WTO-

plus deals Ultimately these should lead to a broader-based market access and rules

agreement under the multilateral auspices of the WTO

The small package possibility

In my recent Foreign Affairs article (Schwab 2011) I suggested that negotiators should

try to salvage whatever partial agreements they can and then walk away from the rest

I mentioned a number of potential candidates such as trade facilitation and the largely

completed agricultural-export pillar (comprising proposed agreements on export credits

food aid state-trading firms and the elimination of export subsidies) Negotiators

might also try to complete two environment-related agreements one cutting subsidies

to industrial fishing fleets that are overfishing the worldrsquos oceans and the other ending

tariff and nontariff barriers to rdquogreenrdquo technologies in major producing and consuming

countries Taken together or individually each of these would benefit countries across

the spectrum of economic development

I am however sceptical that even these small agreements are achievable in the current

climate of mistrust and entrenched positions A troubling development during the course

of the Round has been how often countries seem to forget or forfeit their own economic

interests ndash let alone the greater good ndash in the face of peer pressure and group-think In

the current environment even these smaller deals might prove impossible to achieve

It is certainly worth trying to achieve a few deliverables by taking a run at a small

package but negotiators should not spend too much time on it They already know

exactly what the options are if they cannot get to ldquoyesrdquo in say two weeks they should

Next Steps Getting Past the Doha Round Crisis

29

give up and move on to the real challenge of launching a new series of multilateral

negotiations under WTO auspices

Getting past Doha

How to conclude the Doha Round One option would be for the Director-General and

a representative sample of WTO Ambassadors to come together in the interest of the

institution and to offer a declaration of Doharsquos demise along with their pledge to begin

building the future That would enable leaders at the November G20 meeting to pledge

their support for the rules-based trading system the WTO and its next steps rather than

for the ever elusive ldquobalanced and ambitiousrdquo Doha outcome

After a short period of grieving over the death of Doha and an opportunity to get

beyond the anger lead trading nations should refocus on getting the WTO back into

its mainstream business of negotiating mutually advantageous market opening and

updating the global rdquorules of the roadrdquo This approach offers the best promise of a

meaningful ldquodevelopmentrdquo outcome as well

How might this be achieved

It seems unrealistic to think WTO members would agree to launch another massive

all-or-nothing round in the near future Such broad negotiations however will be

necessary to tackle some of the worldrsquos most important market access challenges in

services manufacturing and agriculture along with such issues as farm subsidies

There are ways to build-up to the big-round model again where countries once more see

economic self-interest in the use of broad-based negotiations and trade-offs to achieve

both new market access and market reforms First however we must re-establish trust

and regain momentum

One way forward would be for ministers to agree to launch a number of confidence-

building negotiations For example ministers in December could decide to open talks

VOX Research-based policy analysis and commentary from leading economists

30

on expanding the 1997 Information Technology Agreement a number of nations

seem interested and the US Administration already has the authority to implement an

enhanced agreement If negotiators fail to work through the 850 brackets in the current

Doha trade facilitation text that could also be tackled as a stand-alone agreement since

each nation would benefit from more efficient movement of goods and services across

borders

Another confidence-building measure might be a merger of sectoral agreements geared

toward a widely-shared objective such as cheaper better healthcare A package that

included pharmaceuticals medical devices and healthcare services might attract

support from the broad array of WTO members across the development spectrum Given

the high-level of public interest in and awareness of environment issues a sectoral

negotiation on environmental goods and services might be another confidence-building

deal once it is removed from the straightjacket that Doha has become

Lessons from Doha for next steps and the next round

Confidence building agreements would offer modest economic and social contributions

and serve to prepare the atmospherics for launch the next Round This brings me to my

last topic ndash the lessons we should draw from a decade of Doha talks

One thing that is quite clear from years of struggling with the basic structure of Doha

is that the combination of formula and self-selected flexibilities has not worked It

resulted in a situation where every negotiator had to assume the worst case ndash knowing

the political costs they would pay for their own liberalisation but expecting their trading

partners to use flexibilities to negate any meaningful new market-access It is possible

to draw from the best of the Doha formulas ndash such as the higher the barrier the greater

the cut ndash while still creating real negotiations around them through requests and offers

delivered using above- and below-formula cuts

Next Steps Getting Past the Doha Round Crisis

31

Another key lesson is that lumping the worldrsquos very diverse economies into three

basic categories ndash developed developing and least developed ndash is a practice that no

longer fits 21st century economic and trade realities Nor is it a structure conducive to

negotiations and real progress based on an exchange of market access among nations

with large markets Yes the advanced economies should be expected to do more than

those at lesser stages of economic development but expectations should also reflect

the fact that many emerging economies are characterised by both poverty and sectors

where they are globally competitive trade powerhouses

The emerging economies have large markets represent over half of global GDP growth

and stand to be the biggest winners from any major trade agreement They should be

expected to contribute to the next Round accordingly Major trade agreements generally

take at least 12 years to implement from the time they are initially concluded What

should the world trading system look like in 2025 in terms of the absolute and relative

responsibilities of key trading nations

Concluding remarks

I am optimistic when it comes to the multilateral trading system and the WTOrsquos central

role in its governance The optimistic scenario is that we put the Doha Round behind

us Facing facts can invigorate and strengthen the trading system If we fail to act the

WTO risks losing its relevance

The Doha Round ndash which in my view cannot be concluded as it is conceived today ndash

should not be allowed to continue draining the WTOrsquos credibility and potential progress

on the multilateral front Now is the time to liberate the would-be trade liberalisers from

the Doha straightjacket and move on

VOX Research-based policy analysis and commentary from leading economists

32

References

Schwab Susan (2011) ldquoAfter Doha Why the negotiations are doomed and what we

should do about itrdquo Foreign Affairs MayJune

About the author

Ambassador Schwab has been a Professor at the University of Maryland School of

Public Policy since January 2009 and a strategic advisor to Mayer Brown LLP (global

law firm) since March 2010 Ambassador Schwab served as US Trade Representative

from June 2006 to January 2009 and as Deputy US Trade Representative from

October 2005 to June 2006 Prior to her service as Deputy US Trade Representative

Ambassador Schwab served as President and Chief Executive Officer of the University

System of Maryland Foundation from June 2004 to October 2005 as a consultant

for the US Department of Treasury from July 2003 to December 2003 and as Dean

of the University of Maryland School of Public Policy from July 1995 to July 2003

Ambassador Schwab serves on the boards of Boeing Company Caterpillar Inc and

FedEx Corporation

She holds a BA in Political Economy from Williams College a Masters in Development

Policy from Stanford University (Food Research Institute) and a PhD in Public

Administration and International Business from The George Washington University

33

Hopes for finishing Doha in 2011 are fading fast This essay suggests a three-track

approach for moving beyond the Doha crisis 1) Identify a package of ldquodeliverablesrsquo ndash

parts of the Round that could be agreed by December 2011 2) Assemble a package of

contentious issues for ongoing negotiation with clear terms of reference 3) Establish

a work programme to consider WTO institutional reform and forward-looking issues

For reasons that are too well known to be repeated the WTO finds itself at the crossroads

Decisions to be taken in the next few weeks will determine whether it can steer its

way to a successful conclusion of the Doha Round in the near future Failing this the

Round will continue to hang like an albatross around the WTOrsquos neck preventing it

from delivering the promised boost to least developed nations and freezing its ability

to address new challenges to the global trading system All countries would suffer from

such an outcome but especially the worldrsquos poorest and most vulnerable

The cost of a never-ending Doha Round

The adverse implications of a continuing Doha impasse on the future role of the WTO

are too compelling to be dismissed offhandedly

Several trade-linked global problems require global cooperation Food security energy

security trade-related aspects of climate change labour mobility commodity price

volatility and integration of regional liberalisation into the multilateral system are

problems that can only be solved with global cooperation

Ujal Singh BhatiaFormerly Indiarsquos Ambassador and Permanent Representative to the WTO

Next Steps Getting past the Doha Round crisis

3333

VOX Research-based policy analysis and commentary from leading economists

34

For example if food exporters continue to impose export barriers when prices rise

food importers may respond with import barriers to boost self-sufficiency This sort of

protectionist reverberation could lead the world to a situation in which all the players

are worse off but none can improve the situation unilaterally Avoiding this sort of

outcome would require global agreements There are very few global institutions that

could manage such cooperation indeed the WTO might be the only one A WTO locked

in endless Doha debates cannot be the centre of the rules based global trading system

There are many thinkers who believe that the structure of WTO rules is robust enough

to withstand a Doha failure It is true that the sky will not fall if Doha is terminated

without a conclusion Such analysts however tend to underestimate the significant

structural changes taking place in the global economy and the trading system The

WTO is working on a set of rules agreed upon in 1994 that were based on an agenda

set almost a quarter of century ago These are still useful and relevant for much of

world trade ndash but not all For instance the rules were not designed for the technology-

driven fragmentation of the manufacturing process and the distribution of the product

value chain across several geographical locations the intertwining of production with

related services the embedded intellectual property rights in components and sub-

components or the multiplicity of rules of origin All these require a different approach

to rule making

A WTO that remains preoccupied with the Doha Round cannot be expected to focus

on such issues Therefore the continuing relevance of the WTO and its primacy in

the global trading system are contingent upon a successful and early conclusion of

the Doha Round Notwithstanding this urgency it is now clear that a Doha package

cannot be wound up in 2011 along the lines agreed by G20 leaders in November 2010

To prevent this from tying the WTO in knots for years to come it is necessary to think

creatively about ways forward

Next Steps Getting Past the Doha Round Crisis

35

Ideas for moving beyond the impasse

Any effort to deal with the impasse in the negotiations needs to be based on a holistic

appreciation of the systemic implications of a continuing stalemate as much as on the

negotiating positions of various members The efforts for a solution acceptable to all

members therefore need to focus on issues in the Doha mandate as well as on issues for

a post Doha situation

Within this framework four constraints need to be borne in mind

bull A ldquoDoha Literdquo of reduced ambition will not work The outcome has to reflect a dec-

adersquos efforts of the global community Ambition however cannot be defined to suit

the convenience of a few members It must touch all aspects of the Doha mandate

bull Aspects of the Doha mandate that are more relevant to the development dimension

have to be ambitiously addressed and fast tracked

bull WTO needs to start work on a new work programme to address new challenges

bull The Doha Round cannot be completed in 2011 A down payment is necessary from

the Doha Round this year to convince the world that the WTO can deliver

A three-track approach

These constraints require the WTO to adopt a three-track approach during the next few

months leading up to the ministerial meeting in December 2011

Track 1 Identification of a list of issues that specially address the trading interests

of smaller developing countries and relatively less contentious issues for fast tracked

finalisation before the ministerial meeting

Track 2 Identification of a package of the more contentious issues for continuing

consultations with clear terms of reference

Track 3 Identification of appropriate terms of reference for a work programme on

WTO institutional reform and the forward-looking agenda

VOX Research-based policy analysis and commentary from leading economists

36

A possible timeline

These three tracks taken as a package would provide a way forward that respects all

four constraints Achieving consensus on them would be difficult ndash and require months

of preparatory work and negotiations

If the WTO membership starts immediately however there is still time to get the

package ready for finalisation by ministers at the December 2011 ministerial meeting

For this to happen it is essential that discussions on such a package begin this month

so that its contents can be finalised by the end of June 2011 This would leave about

four working months before the ministerial meeting to complete negotiations on the

selected areas

What the three tracks might contain

The first track would contain the Doha down-payment package As with any WTO

package the contents would need to be negotiated and it might require complementary

policies such as technical assistance initiatives

Such a list must include items that speak to development aspects of the Doha mandate

such as

bull The Implementation of the Hong Kong decision on duty-free quota-free treatment

for less developed countries

bull A ministerial decision on the Monitoring Mechanism for Special and Differential

Treatment provisions

bull A ministerial decision on the issues raised by the Sub-Saharan African cotton ex-

porters (the group known as the C-4) and

bull The finalisation of a less-developed-country (LDC) waiver in services so that pref-

erential treatment can be provided to LDCrsquos in services without extending it to

others

Next Steps Getting Past the Doha Round Crisis

37

It should also include areas of the negotiations that engage the interest of all members

such as

bull Trade Facilitation

bull All aspects of export competition in agriculture including export subsidies

bull The Transparency Mechanism for regional trade agreements (RTAs)

bull The non-tariff barriers (NTBs) package in non-agricultural market access (NAMA)

and

bull A ministerial decision on interactions and relationships between the WTOrsquos rules

and its committees on the one hand and existing multilateral environmental agree-

ments on the other (eg the Basel Convention on the Control of Transboundary

Movements of Hazardous Wastes and the Montreal Protocol on Substances that

Deplete the Ozone Layer)

While some members would like to exclude some of these areas from a fast tracked

process in the hope of using them for trade offs in the final stage it is important that the

package is as comprehensive as possible

Track two Items for further negotiation

The second track would gather all remaining items currently under negotiations This

would include

bull All aspects of market access in industrial goods agriculture and services

bull All aspects of subsidies in agriculture

bull Various aspects of rules including fisheries subsidies

bull Environmental goods and

bull Issues related to trade-related aspects of international property rights (TRIPS) re-

garding the protection of Geographical Indicators and the protection of traditional

VOX Research-based policy analysis and commentary from leading economists

38

knowledge and folklore that were are mentioned in the Convention on Biological

Diversity1

The need for a balanced package deserves emphasis It is often assumed that there

is a straight trade-off between agricultural subsidies and market access The situation

however is more complex The interest of countries like India China and Indonesia

in agricultural reform is more systemic than export related For them other incentives

within the mandate will be required

Track three Looking ahead

The underlying theme for the work programme would be an appraisal of the entire

negotiating and decision-making process in the WTO in the context of the present

realities both within and outside the organisation The objective would be to prepare

the WTO to address new challenges to the global trading system concurrently with the

ongoing work on the remaining parts of the Doha mandate

Closing remarks

The above proposals constitute a basic template for addressing the Doha conundrum

To what extent they are actually embraced will depend on how much political capital

the major members of the WTO are prepared to invest in moving the Doha Round

forward There is much scepticism about whether such political will exists It is time

for governments to prove the sceptics wrong

1 Specifically as specified in paragraphs 18 and 19 of the Doha Declaration

Next Steps Getting Past the Doha Round Crisis

39

About the author

Ambassador Bhatia Singh joined the Indian Administrative Service in 1974 holding

several senior positions in provincial administration in Orissa State between 1976 and

1995 He served as Joint Secretary Ministry of Commerce and Industry between 1995-

2000 in which capacity he handled a number of bilateral regional and multilateral trade

negotiations From 2004 to his retirement in 2010 he served as Indiarsquos Ambassador and

Permanent Representative to the WTO in Geneva

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

VOX Research-based policy analysis and commentary from leading economists

12

the existing elements even less likely Worse still a suspension would strengthen and

spread the belief that the WTO is not an appropriate venue for multilateral negotiations

As Ujal Singh Bhatia writes ldquothe Round will continue to hang like an albatross around

the WTOrsquos neck preventing it from addressing new challenges to the global trading

systemrdquo This would be particular worrisome since the world economy is moving into a

phase of great stress It is facing new challenges that will require multilateral solutions

ndash issues like food security natural-resource export restrictions and trade in goods

services and technology that are essential to climate-change adaption and mitigation

Road 3 A small package followed by a big package

The third road seems the most likely way to move past the Doha dilemma of not being

able to move forwards or backwards on the broad agenda The idea here is that the

agenda would be sorted into ldquodo-ablerdquo and ldquonot yet do-ablerdquo piles Nations would move

forward on a small package of do-ables for December 2011 while agreeing to discuss

the bigger issues later under revised ground rules that would be more likely to permit

the trade-offs necessary to make the big package acceptable to all members

As Stuart Harbinson puts it Doha is like a ship run aground a small package of

deliverables for December 2011 would act as a ldquopatchrdquo to keep the ldquogood ship Dohardquo

afloat until the high tide comes in and lifts the ship off the rocks ldquoIn this analogy the

lsquohigh tidersquo would be a change in the global economic and political seascape enabling

the major trading economies to settle their differences and bring the ship safely into

harbourrdquo he writes

Choices to make on the small package

All five experienced trade negotiators contributing to this eBook ndash and most of the WTO

delegations with whom we spoke ndash believe that it is worth trying to lock in agreement

on a small number of areas by the end of 2011 There are two critical issues to decide

Next Steps Getting Past the Doha Round Crisis

13

1 How much time should be spent on negotiating the small package

2 Which items should be in the small package

The contributors disagree over the first issue Susan Schwab argues for giving it not

more than 2 weeks others suggest longer They all however recognise that a prolonged

and contentious negotiation on a small package ndash especially one that ultimately proved

fruitless ndash would solve nothing and might harm the system

There is far more agreement on the second issue ndash possible composition of the small

package All the contributors and most of the WTO delegations with whom we spoke

suggest that some items on Doharsquos massive negotiating agenda are close to conclusion

Indeed the lists are remarkably similar despite the vast differences in the contributorsrsquo

perspectives They all point out however that striking even a very restrained list of

agreement will require abundant goodwill and hard negotiating

Suggestions for the small-package items include

bull Some sort of accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

bull A package of measures that promote ldquotrade facilitationrdquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impediments to trade

bull An agreement on a monitoring mechanism for special and differential treatment

bull An agreement to make permanent the transparency mechanism for regional trade

agreements that has been operating successfully for years

bull An agreement on certain non-tariff barriers

VOX Research-based policy analysis and commentary from leading economists

14

bull An agreement formalising cooperation between the WTO and various multilateral

environmental agreements

Other issues may ultimately prove tractable or necessary to provide balance Those most

often mentioned include a standstill agreement on fisheries subsidies certain aspects

of the less controversial rules negotiations and export subsidies Such a package could

also include other DDA matters for which the negotiations could be completed quickly

or non-DDA matters where the WTO membership is at one such as the promising

negotiations to upgrade the WTOrsquos Agreement on Government Procurement

The final issue is what to call the small package this is not a trivial matter

bull One option is to just boldly call the small package the ldquoDoha Roundrdquo ndash to declare

victory and move on

While this would clearly disappoint many it speaks to the objective of not letting the

Round drag down the WTO ndash not allowing the WTOrsquos credibility to be further damaged

by endless discussions that can never led to a happy ending

Of course this option would leave unsolved the core Doha issues ndash reducing distortions

in and improving market access for industrial goods agricultural products and services

trade and updating the rules But it might allow members to re-craft the parameters of

the negotiations in a way that would be more likely to lead to success This is clearly

the view taken by Susan Schwab and John Weekes As John Weekes puts it ldquoNot

completing the Doha Round would be a serious setback to the WTO and the multilateral

trading system However if it is clear that the Round cannot be concluded successfully

it is better to admit that and work constructively to develop an agenda for the future

work of the organisationrdquo

Another option would be to wrap up the collection of small agreements into a package

called the ldquoDoha down paymentrdquo or ldquoDoha deliverablesrdquo or ldquoDoha early harvestrdquo as a

way of stressing that all the Doha agenda items are still on the table

Next Steps Getting Past the Doha Round Crisis

15

A third option would be to view the individual items as standalone agreements to be

agreed by the ministers of WTO members at the December meeting without clear

reference to what comes next

This brings us to the next major element of the Road 3 pathway What to do with the

rest of the agenda

Choices to make on the big package

Albert Einstein once defined insanity as doing the same thing over and over and

expecting different results This makes it clear that any complete plan for a way past the

Doha dilemma must change something in the way the negotiations have been operating

Any multilateral trade negotiation involves choice on a series of negotiating rules

or conventions The Doha Round has accreted an odd constellation of these Some

are fundamental and therefore extremely difficult to change These include the idea

that everything must be agreed by all before anything is agreed (the so-called single-

undertaking principle) or the choice to focus on the particular tariff-cutting formula

known as the Swiss formulas But many of the choices are less central such as the exact

way in which flexibilities on tariff-cutting are to be decided

The ramifications of these procedures on the negotiating dynamic were not well

understood years ago when the original decisions were taken The lack of understanding

is even deeper when it comes to the joint operation and interaction among the

conventions

For these reasons the set of negotiating conventions that guide Round may no longer be

optimal Consideration of the pros and cons of alternatives might identify other ways of

finding a package of trade-offs that is acceptable to all

VOX Research-based policy analysis and commentary from leading economists

16

The forward-looking agenda

A number of contributors suggested that the process of rebuilding momentum and

confidence in the ultimate outcome could be boosted by agreeing to launch work

programmes (not actual negotiations) on how the WTO could address 21st-century

trade issues that have come to the fore since the Doha agenda was set in 2001

Here there are two basic lines The first would consider WTO institutional reform the

second would consider new issues such as new disciplines to underpin the increasing

convergence of trade investment and services (as is now routinely done in regional

trade agreements) setting limits on acceptable national climate policies with trade

implications or export restrictions

There certainly seems merit to these idea If nothing else it would interject new

dimensions to discussions that have been going on for a decade It would also make

it clear that we need to safeguard the WTO as a forum for multilateral discussions on

critical 21st-century issues

Concluding remarks

Many decent hard-working public servants have committed plenty of energy to the

Doha Round since its inception At this critical time any temptation for recriminations

or lapses into bitter disappointment should be set to one side to let governments chart a

new path for the WTO The circumstances facing WTO members in the middle of 2011

are hardly ideal and the set of options that stand any chance of acceptance is narrow In

times like these it would be a mistake to make the perfect the enemy of the good It is

time to think creatively and cooperatively about getting the WTO past the Doha crisis

A decision or non-decision that led to several more years of drift ndash years that will be

complicated by elections and changes in governments in some of the leading trading

powers ndash could turn out to be the beginning of the end for the WTOrsquos role as leader

of the global trading system The alternative ndash uncoordinated developments led by the

Next Steps Getting Past the Doha Round Crisis

17

Big-5 in their own systems of regional trade agreements ndash is a very plausible outcome

at this stage but not one that will ultimately serve anyonersquos long-run interests

References

Andre Nassar and Carlos Perez (2011) ldquoWhy WTO members should not give up the

Doha Round The case of agricultural traderdquo in Richard Baldwin and Simon Evenett

(eds) Why World Leaders Must Resist the False Promise of a Doha Delay VoxEU

April

19

Doha is stalled by gaps that are unbridgeable today Indonesiarsquos Trade Minister argues

that we need to be guided by priorities and pragmatism We should develop a set of

stepping stones that will help us complete the Doha Round eventually We should

identify the areas that are achievable in the very near future but which have an impact

on development while building confidence for the continued journey to a successful

Round We should never lose sight of the final goal ndash completing the Doha Round as a

single undertaking In short we are not looking for a ldquoPlan Brdquo we are looking for a

new way to execute Plan A

The importance of completing the Doha Development Agenda sooner rather than later

goes beyond bringing gains of $360 billion of additional trade with substantial benefits

for industrialised and developing economies (HLTE 2011) The importance also goes

beyond what pragmatic soothsayers who are telling us ldquoWhy are you worried the

WTO system will continue to be robust whether we conclude Doha or not Companies

and countries will continue to traderdquo As a developing country policy maker ndash and I

believe I speak for many other developing countries ndash I am greatly worried about the

costs and opportunity lost of not completing Doha

The costs of not completing Doha

I will point to four costs of not completing the Doha Round

bull First is what it could achieve for food security

Mari PangestuMinister of Trade Indonesia

There is no Plan B ndash only Plan A Towards completing Doha

1919

VOX Research-based policy analysis and commentary from leading economists

20

During the 2008 food crisis imbalances between supply and demand were partly

attributed to distorted agriculture prices caused by trade-distorting export subsidies

and domestic-support schemes The agriculture package in Doha will go some way to

address this In todayrsquos situation of high commodity prices now is the perfect time to

address the removal and elimination of such trade-distorting policies Removing these

distortions can only be achieved through multilateral negotiations not through bilateral

or regional agreements

Most importantly the winners would be the billions of hungry and poor people all over

the world correcting the system and ensuring the future supply of food and greater

price stability is very much in their interests For example in Indonesia a 10 increase

in the price of rice without any change in income would lead to a 1 increase in

poverty

bull Second keeping protection at bay

During the depth of the crisis benign protectionism was the order of the day according

to the self-reporting surveillance mechanism established by the WTO at the request of

G20 Leaders This allowed the rebound of trade to become one of the costless ways for

the global economy to recover It is ironical that in the recovery the latest report (WTO

2011) shows that there has been a slight increase in protectionism causing an estimated

impact of 06 to G20 exports

The main increase has been due to tariff increases automatic licenses and other

restrictions including export restrictions Whilst this is still ldquosmallrdquo it is nevertheless

double from the previous period Restoration of the confidence in the world trading

system through clear signals that we are progressing on completing the Round is crucial

to keeping protectionism at bay Developing countries such as Indonesia have a great

interest in this because only the multilateral trading system will provide the fair rules-

based trading system for us to face large and more developed partners on a fair and

equal standing

Next Steps Getting Past the Doha Round Crisis

21

bull Third the lack of progress on the Doha Round already has and will continue to raise

the pressure to undertake bilateral and regional free trade negotiations

In the ASEAN region there are already FTAs between ASEAN and all six of its dialog

partners (Australia China India Japan Korea New Zealand) and numerous bilateral

FTAs The EU has just completed negotiations with Korea which has put pressure

for the Korea-US FTA to be ratified as soon as possible The EU has also completed

negotiations with India and is negotiating with Singapore Malaysia and preparing

to do so with other ASEAN countries Recently China Korea and Japan announced

revitalization of their FTA initiative Furthermore we have the Trans-Pacific Partnership

initiative between 8 members of APEC

It is not the bilateral and regional free trade agreements which are problematic per

se it is negotiating them in the absence of a robust WTO system ndash a system which is

seen as meeting the needs of the current and future trade-linked issues Bilateral and

regional agreements can only work towards complementing the multilateral trading

system when they are ldquoWTO-plusrdquo not ldquoWTO-insteadrdquo

bull Fourth the potential dampening effect on unilateral reforms

The political economy of openness in trade policy and institutional reform have always

functioned better within the framework of international commitments Multilateral

rules impose an important caveat on what countries can or cannot do In a country like

Indonesia this has worked to our advantage in the way we frame our reforms and in fact

has functioned in the past to put bad policies to rest

For instance in the famous National Car case in the mid 1980s which violated the

MFN principle by allowing duty-free imports of cars only from one source country the

domestic politics at the time did not allow for policymakers to remove this policy The

policy was finally ended through the WTOrsquos dispute settlement mechanism It would

be too bad for reforms if the process is undertaken within weakened confidence of

multilateral trading system or one which will eventually not be relevant to the evolution

of 21st century trade issues

VOX Research-based policy analysis and commentary from leading economists

22

The Way Forward No Plan B

Despite G20 Leadersrsquo commitments and all the good intentions and intensive work in

Geneva that came after the push given by trade ministers during their informal meeting

in Davos in January 2011 it proved impossible to arrive at a draft text by the end-of-

April milestone There remains ldquounbridgeable gapsrdquo in a number of main negotiating

groups namely non-agriculture market access

Given this situation trade ministers met first during the APEC Ministers of Trade

Meeting in Big Sky Montana and then on the fringes of the OECD meeting in Paris

Fortunately all have agreed that we all remain committed to completing Doha as a single

undertaking However there was a sense of realism as to the timing and pathways to

achieve this desirable outcome in a timely way

From an Indonesian perspective there is no ldquoPlan Brdquo We do not support a ldquoDoha

Lightrdquo and we remain committed to a comprehensive ambitious and balanced package

building on what we have achieved to date

After almost 6 years of negotiations since the key Hong Kong WTO Ministerial I

believe we are more than 50 or some would say 80 of the way done A realistic way

forward is to identify the sequence of steps that would take us to the final outcome this

is necessary to avoid the costs and lost-opportunities I outlined above

This is not about an early harvest or ldquocherry pickingrdquo and then stopping It is about

identifying the steps forward in a meaningful way towards the final goal of the single

undertaking of Doha

Identifying stepping stones to a final Doha Round conclusion

There are areas within the negotiations that could be seen as steps towards the final

package Of course work and political will is still needed to find ways to bridge the

Next Steps Getting Past the Doha Round Crisis

23

unbridgeable gaps In identifying the areas where we could find convergence a number

of priorities stand out

bull First and foremost is areas of negotiations that will contribute and deliver to devel-

opment objectives such as the Least Developed Countries package andor an effec-

tive aid-for-trade and facilitation package this is after all a Development Round

bull Second areas where there would be clear benefits for development and the private

sector in facilitating and ensuring the benefits of trade are greater we need stake-

holders to be cheerleading the way forward

bull Third there could be areas where we would be able to address the food-security

challenge

One could also foresee that within each current area of negotiations there could be

items which could be wrapped up without disturbing the overall balance of elements

in that particular area It is important that we do not go into ldquonewrdquo negotiations in

identifying which areas We should go into the mode of identifying these pathways and

steps with the mindset and political will of win-win

We need to be guided by priorities and pragmatism That is to identify the areas that are

doable and achievable in the very near future but which have an impact on development

and increasing the benefits of trade while at the same time building confidence for us to

continue our journey to the final package Most importantly we should never lose sight

of the final goal of the single undertaking

Looking forward

It is also important to provide the signal in what we say and do elsewhere Beyond

talking about Doha we must ensure continued confidence in and implementation of the

rules-based open trading system

VOX Research-based policy analysis and commentary from leading economists

24

bull This would mean the commitments of G20 Leaders and others on refraining from

protectionism going beyond words the good intentions need to be strengthened

with commitments and actions

bull It also has implications for how we undertake bilateral and regional agreements

these should be done in a way that is not an alternative to and does not detract from

the multilateral trading system We should pursue regionalism in a way which is

going to contribute to and complement the system

Concluding remarks

In conclusion we should not underestimate the costs of not doing all this We will

need to draw upon the strength of our individual and collective political commitment

We need to call on the ability of some major economies to look beyond pure national

interests and to look at the impact and costs on the global system and economy And we

need to remember that there are many countries and billions of people ndash many of which

are impoverished ndash who are waiting for the Doha deliverables

References

HLTE (2011) ldquoWorld trade and the Doha roundrdquo final report of the High-Level Trade

Experts Group chaired by Jagdish Bhagwati and Peter Sutherland

WTO (2011) ldquoReports on G20 trade and investment measures (mid-October 2010 to

April 2011)rdquo WTO Secretariat 24 May

About the author

Mari Pangestu is Indonesiarsquos Minister of Trade since 2004 having served as Executive

Director of the Jakarta-based think tank the Center for Strategic and International

Studies and a lecturer in the Faculty of Economics at the University of Indonesia From

1991 to 1998 Dr Pangestu was the coordinator of the Trade Policy Forum of the Pacific

Next Steps Getting Past the Doha Round Crisis

25

Economic Cooperation Council and serves on the Board of the Overseas Development

Council World Gold Council and the Asian Journal of Business from The University

of Michigan Ann Arbor

She has published widely on a range of subjects including matters pertaining to

Indonesia as well as regional (ie Asian and Asia Pacific) and global issues She earned

her BA and MA in economics from Australian National University and a PhD in

economics from the University of California Davis

27

The Doha Round has failed according the former US Trade Representative Susan

Schwab This essay argues that prolonging Doha jeopardises the multilateral trading

system and threatens future prospects for WTO-led liberalisation Negotiators should

salvage whatever partial agreements they can from Doha and quickly drop the rest

to ensure the December ministerial meeting focuses on future work plans rather than

recriminations over Doha

The Doha Round has failed It is time for the international community to acknowledge

this sad fact and move on Prolonging the pretence that the Doha Round will succeed

is now a greater threat to the WTO and the multilateral trading system than facing the

truth

A great many smart hard-working and well-intentioned individuals have worked over

many years to realise Doharsquos potential to contribute to global economic growth and

development But what is on the table in Geneva has failed to deliver any outcome

let alone a meaningful one It is time for a swift clean break from the past and to

lay the groundwork for a future where the WTO and its members revive WTO-led

liberalisation and reform

End Doharsquos stranglehold and build towards near-term wins

To keep the multilateral trading system healthy it is necessary to end the Doha

Roundrsquos stranglehold on the system This should happen quickly in order to ensure

that the December 2011 ministerial meeting focuses on future work plans rather than

Susan SchwabUniversity of Marlyand former US Trade Representative

Acknowledge Doharsquos demise and move on to save the WTO

2727

VOX Research-based policy analysis and commentary from leading economists

28

recriminations about a Doha Development Agenda that has struggled through one failed

encounter after another

Negotiators should refocus their efforts on near-term wins and on building the next

Round ndash which need not be another behemoth but perhaps a ldquorolling roundrdquo of reforms

and new market access or a few highest-common-denominator plurilateral or WTO-

plus deals Ultimately these should lead to a broader-based market access and rules

agreement under the multilateral auspices of the WTO

The small package possibility

In my recent Foreign Affairs article (Schwab 2011) I suggested that negotiators should

try to salvage whatever partial agreements they can and then walk away from the rest

I mentioned a number of potential candidates such as trade facilitation and the largely

completed agricultural-export pillar (comprising proposed agreements on export credits

food aid state-trading firms and the elimination of export subsidies) Negotiators

might also try to complete two environment-related agreements one cutting subsidies

to industrial fishing fleets that are overfishing the worldrsquos oceans and the other ending

tariff and nontariff barriers to rdquogreenrdquo technologies in major producing and consuming

countries Taken together or individually each of these would benefit countries across

the spectrum of economic development

I am however sceptical that even these small agreements are achievable in the current

climate of mistrust and entrenched positions A troubling development during the course

of the Round has been how often countries seem to forget or forfeit their own economic

interests ndash let alone the greater good ndash in the face of peer pressure and group-think In

the current environment even these smaller deals might prove impossible to achieve

It is certainly worth trying to achieve a few deliverables by taking a run at a small

package but negotiators should not spend too much time on it They already know

exactly what the options are if they cannot get to ldquoyesrdquo in say two weeks they should

Next Steps Getting Past the Doha Round Crisis

29

give up and move on to the real challenge of launching a new series of multilateral

negotiations under WTO auspices

Getting past Doha

How to conclude the Doha Round One option would be for the Director-General and

a representative sample of WTO Ambassadors to come together in the interest of the

institution and to offer a declaration of Doharsquos demise along with their pledge to begin

building the future That would enable leaders at the November G20 meeting to pledge

their support for the rules-based trading system the WTO and its next steps rather than

for the ever elusive ldquobalanced and ambitiousrdquo Doha outcome

After a short period of grieving over the death of Doha and an opportunity to get

beyond the anger lead trading nations should refocus on getting the WTO back into

its mainstream business of negotiating mutually advantageous market opening and

updating the global rdquorules of the roadrdquo This approach offers the best promise of a

meaningful ldquodevelopmentrdquo outcome as well

How might this be achieved

It seems unrealistic to think WTO members would agree to launch another massive

all-or-nothing round in the near future Such broad negotiations however will be

necessary to tackle some of the worldrsquos most important market access challenges in

services manufacturing and agriculture along with such issues as farm subsidies

There are ways to build-up to the big-round model again where countries once more see

economic self-interest in the use of broad-based negotiations and trade-offs to achieve

both new market access and market reforms First however we must re-establish trust

and regain momentum

One way forward would be for ministers to agree to launch a number of confidence-

building negotiations For example ministers in December could decide to open talks

VOX Research-based policy analysis and commentary from leading economists

30

on expanding the 1997 Information Technology Agreement a number of nations

seem interested and the US Administration already has the authority to implement an

enhanced agreement If negotiators fail to work through the 850 brackets in the current

Doha trade facilitation text that could also be tackled as a stand-alone agreement since

each nation would benefit from more efficient movement of goods and services across

borders

Another confidence-building measure might be a merger of sectoral agreements geared

toward a widely-shared objective such as cheaper better healthcare A package that

included pharmaceuticals medical devices and healthcare services might attract

support from the broad array of WTO members across the development spectrum Given

the high-level of public interest in and awareness of environment issues a sectoral

negotiation on environmental goods and services might be another confidence-building

deal once it is removed from the straightjacket that Doha has become

Lessons from Doha for next steps and the next round

Confidence building agreements would offer modest economic and social contributions

and serve to prepare the atmospherics for launch the next Round This brings me to my

last topic ndash the lessons we should draw from a decade of Doha talks

One thing that is quite clear from years of struggling with the basic structure of Doha

is that the combination of formula and self-selected flexibilities has not worked It

resulted in a situation where every negotiator had to assume the worst case ndash knowing

the political costs they would pay for their own liberalisation but expecting their trading

partners to use flexibilities to negate any meaningful new market-access It is possible

to draw from the best of the Doha formulas ndash such as the higher the barrier the greater

the cut ndash while still creating real negotiations around them through requests and offers

delivered using above- and below-formula cuts

Next Steps Getting Past the Doha Round Crisis

31

Another key lesson is that lumping the worldrsquos very diverse economies into three

basic categories ndash developed developing and least developed ndash is a practice that no

longer fits 21st century economic and trade realities Nor is it a structure conducive to

negotiations and real progress based on an exchange of market access among nations

with large markets Yes the advanced economies should be expected to do more than

those at lesser stages of economic development but expectations should also reflect

the fact that many emerging economies are characterised by both poverty and sectors

where they are globally competitive trade powerhouses

The emerging economies have large markets represent over half of global GDP growth

and stand to be the biggest winners from any major trade agreement They should be

expected to contribute to the next Round accordingly Major trade agreements generally

take at least 12 years to implement from the time they are initially concluded What

should the world trading system look like in 2025 in terms of the absolute and relative

responsibilities of key trading nations

Concluding remarks

I am optimistic when it comes to the multilateral trading system and the WTOrsquos central

role in its governance The optimistic scenario is that we put the Doha Round behind

us Facing facts can invigorate and strengthen the trading system If we fail to act the

WTO risks losing its relevance

The Doha Round ndash which in my view cannot be concluded as it is conceived today ndash

should not be allowed to continue draining the WTOrsquos credibility and potential progress

on the multilateral front Now is the time to liberate the would-be trade liberalisers from

the Doha straightjacket and move on

VOX Research-based policy analysis and commentary from leading economists

32

References

Schwab Susan (2011) ldquoAfter Doha Why the negotiations are doomed and what we

should do about itrdquo Foreign Affairs MayJune

About the author

Ambassador Schwab has been a Professor at the University of Maryland School of

Public Policy since January 2009 and a strategic advisor to Mayer Brown LLP (global

law firm) since March 2010 Ambassador Schwab served as US Trade Representative

from June 2006 to January 2009 and as Deputy US Trade Representative from

October 2005 to June 2006 Prior to her service as Deputy US Trade Representative

Ambassador Schwab served as President and Chief Executive Officer of the University

System of Maryland Foundation from June 2004 to October 2005 as a consultant

for the US Department of Treasury from July 2003 to December 2003 and as Dean

of the University of Maryland School of Public Policy from July 1995 to July 2003

Ambassador Schwab serves on the boards of Boeing Company Caterpillar Inc and

FedEx Corporation

She holds a BA in Political Economy from Williams College a Masters in Development

Policy from Stanford University (Food Research Institute) and a PhD in Public

Administration and International Business from The George Washington University

33

Hopes for finishing Doha in 2011 are fading fast This essay suggests a three-track

approach for moving beyond the Doha crisis 1) Identify a package of ldquodeliverablesrsquo ndash

parts of the Round that could be agreed by December 2011 2) Assemble a package of

contentious issues for ongoing negotiation with clear terms of reference 3) Establish

a work programme to consider WTO institutional reform and forward-looking issues

For reasons that are too well known to be repeated the WTO finds itself at the crossroads

Decisions to be taken in the next few weeks will determine whether it can steer its

way to a successful conclusion of the Doha Round in the near future Failing this the

Round will continue to hang like an albatross around the WTOrsquos neck preventing it

from delivering the promised boost to least developed nations and freezing its ability

to address new challenges to the global trading system All countries would suffer from

such an outcome but especially the worldrsquos poorest and most vulnerable

The cost of a never-ending Doha Round

The adverse implications of a continuing Doha impasse on the future role of the WTO

are too compelling to be dismissed offhandedly

Several trade-linked global problems require global cooperation Food security energy

security trade-related aspects of climate change labour mobility commodity price

volatility and integration of regional liberalisation into the multilateral system are

problems that can only be solved with global cooperation

Ujal Singh BhatiaFormerly Indiarsquos Ambassador and Permanent Representative to the WTO

Next Steps Getting past the Doha Round crisis

3333

VOX Research-based policy analysis and commentary from leading economists

34

For example if food exporters continue to impose export barriers when prices rise

food importers may respond with import barriers to boost self-sufficiency This sort of

protectionist reverberation could lead the world to a situation in which all the players

are worse off but none can improve the situation unilaterally Avoiding this sort of

outcome would require global agreements There are very few global institutions that

could manage such cooperation indeed the WTO might be the only one A WTO locked

in endless Doha debates cannot be the centre of the rules based global trading system

There are many thinkers who believe that the structure of WTO rules is robust enough

to withstand a Doha failure It is true that the sky will not fall if Doha is terminated

without a conclusion Such analysts however tend to underestimate the significant

structural changes taking place in the global economy and the trading system The

WTO is working on a set of rules agreed upon in 1994 that were based on an agenda

set almost a quarter of century ago These are still useful and relevant for much of

world trade ndash but not all For instance the rules were not designed for the technology-

driven fragmentation of the manufacturing process and the distribution of the product

value chain across several geographical locations the intertwining of production with

related services the embedded intellectual property rights in components and sub-

components or the multiplicity of rules of origin All these require a different approach

to rule making

A WTO that remains preoccupied with the Doha Round cannot be expected to focus

on such issues Therefore the continuing relevance of the WTO and its primacy in

the global trading system are contingent upon a successful and early conclusion of

the Doha Round Notwithstanding this urgency it is now clear that a Doha package

cannot be wound up in 2011 along the lines agreed by G20 leaders in November 2010

To prevent this from tying the WTO in knots for years to come it is necessary to think

creatively about ways forward

Next Steps Getting Past the Doha Round Crisis

35

Ideas for moving beyond the impasse

Any effort to deal with the impasse in the negotiations needs to be based on a holistic

appreciation of the systemic implications of a continuing stalemate as much as on the

negotiating positions of various members The efforts for a solution acceptable to all

members therefore need to focus on issues in the Doha mandate as well as on issues for

a post Doha situation

Within this framework four constraints need to be borne in mind

bull A ldquoDoha Literdquo of reduced ambition will not work The outcome has to reflect a dec-

adersquos efforts of the global community Ambition however cannot be defined to suit

the convenience of a few members It must touch all aspects of the Doha mandate

bull Aspects of the Doha mandate that are more relevant to the development dimension

have to be ambitiously addressed and fast tracked

bull WTO needs to start work on a new work programme to address new challenges

bull The Doha Round cannot be completed in 2011 A down payment is necessary from

the Doha Round this year to convince the world that the WTO can deliver

A three-track approach

These constraints require the WTO to adopt a three-track approach during the next few

months leading up to the ministerial meeting in December 2011

Track 1 Identification of a list of issues that specially address the trading interests

of smaller developing countries and relatively less contentious issues for fast tracked

finalisation before the ministerial meeting

Track 2 Identification of a package of the more contentious issues for continuing

consultations with clear terms of reference

Track 3 Identification of appropriate terms of reference for a work programme on

WTO institutional reform and the forward-looking agenda

VOX Research-based policy analysis and commentary from leading economists

36

A possible timeline

These three tracks taken as a package would provide a way forward that respects all

four constraints Achieving consensus on them would be difficult ndash and require months

of preparatory work and negotiations

If the WTO membership starts immediately however there is still time to get the

package ready for finalisation by ministers at the December 2011 ministerial meeting

For this to happen it is essential that discussions on such a package begin this month

so that its contents can be finalised by the end of June 2011 This would leave about

four working months before the ministerial meeting to complete negotiations on the

selected areas

What the three tracks might contain

The first track would contain the Doha down-payment package As with any WTO

package the contents would need to be negotiated and it might require complementary

policies such as technical assistance initiatives

Such a list must include items that speak to development aspects of the Doha mandate

such as

bull The Implementation of the Hong Kong decision on duty-free quota-free treatment

for less developed countries

bull A ministerial decision on the Monitoring Mechanism for Special and Differential

Treatment provisions

bull A ministerial decision on the issues raised by the Sub-Saharan African cotton ex-

porters (the group known as the C-4) and

bull The finalisation of a less-developed-country (LDC) waiver in services so that pref-

erential treatment can be provided to LDCrsquos in services without extending it to

others

Next Steps Getting Past the Doha Round Crisis

37

It should also include areas of the negotiations that engage the interest of all members

such as

bull Trade Facilitation

bull All aspects of export competition in agriculture including export subsidies

bull The Transparency Mechanism for regional trade agreements (RTAs)

bull The non-tariff barriers (NTBs) package in non-agricultural market access (NAMA)

and

bull A ministerial decision on interactions and relationships between the WTOrsquos rules

and its committees on the one hand and existing multilateral environmental agree-

ments on the other (eg the Basel Convention on the Control of Transboundary

Movements of Hazardous Wastes and the Montreal Protocol on Substances that

Deplete the Ozone Layer)

While some members would like to exclude some of these areas from a fast tracked

process in the hope of using them for trade offs in the final stage it is important that the

package is as comprehensive as possible

Track two Items for further negotiation

The second track would gather all remaining items currently under negotiations This

would include

bull All aspects of market access in industrial goods agriculture and services

bull All aspects of subsidies in agriculture

bull Various aspects of rules including fisheries subsidies

bull Environmental goods and

bull Issues related to trade-related aspects of international property rights (TRIPS) re-

garding the protection of Geographical Indicators and the protection of traditional

VOX Research-based policy analysis and commentary from leading economists

38

knowledge and folklore that were are mentioned in the Convention on Biological

Diversity1

The need for a balanced package deserves emphasis It is often assumed that there

is a straight trade-off between agricultural subsidies and market access The situation

however is more complex The interest of countries like India China and Indonesia

in agricultural reform is more systemic than export related For them other incentives

within the mandate will be required

Track three Looking ahead

The underlying theme for the work programme would be an appraisal of the entire

negotiating and decision-making process in the WTO in the context of the present

realities both within and outside the organisation The objective would be to prepare

the WTO to address new challenges to the global trading system concurrently with the

ongoing work on the remaining parts of the Doha mandate

Closing remarks

The above proposals constitute a basic template for addressing the Doha conundrum

To what extent they are actually embraced will depend on how much political capital

the major members of the WTO are prepared to invest in moving the Doha Round

forward There is much scepticism about whether such political will exists It is time

for governments to prove the sceptics wrong

1 Specifically as specified in paragraphs 18 and 19 of the Doha Declaration

Next Steps Getting Past the Doha Round Crisis

39

About the author

Ambassador Bhatia Singh joined the Indian Administrative Service in 1974 holding

several senior positions in provincial administration in Orissa State between 1976 and

1995 He served as Joint Secretary Ministry of Commerce and Industry between 1995-

2000 in which capacity he handled a number of bilateral regional and multilateral trade

negotiations From 2004 to his retirement in 2010 he served as Indiarsquos Ambassador and

Permanent Representative to the WTO in Geneva

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

Next Steps Getting Past the Doha Round Crisis

13

1 How much time should be spent on negotiating the small package

2 Which items should be in the small package

The contributors disagree over the first issue Susan Schwab argues for giving it not

more than 2 weeks others suggest longer They all however recognise that a prolonged

and contentious negotiation on a small package ndash especially one that ultimately proved

fruitless ndash would solve nothing and might harm the system

There is far more agreement on the second issue ndash possible composition of the small

package All the contributors and most of the WTO delegations with whom we spoke

suggest that some items on Doharsquos massive negotiating agenda are close to conclusion

Indeed the lists are remarkably similar despite the vast differences in the contributorsrsquo

perspectives They all point out however that striking even a very restrained list of

agreement will require abundant goodwill and hard negotiating

Suggestions for the small-package items include

bull Some sort of accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

bull A package of measures that promote ldquotrade facilitationrdquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impediments to trade

bull An agreement on a monitoring mechanism for special and differential treatment

bull An agreement to make permanent the transparency mechanism for regional trade

agreements that has been operating successfully for years

bull An agreement on certain non-tariff barriers

VOX Research-based policy analysis and commentary from leading economists

14

bull An agreement formalising cooperation between the WTO and various multilateral

environmental agreements

Other issues may ultimately prove tractable or necessary to provide balance Those most

often mentioned include a standstill agreement on fisheries subsidies certain aspects

of the less controversial rules negotiations and export subsidies Such a package could

also include other DDA matters for which the negotiations could be completed quickly

or non-DDA matters where the WTO membership is at one such as the promising

negotiations to upgrade the WTOrsquos Agreement on Government Procurement

The final issue is what to call the small package this is not a trivial matter

bull One option is to just boldly call the small package the ldquoDoha Roundrdquo ndash to declare

victory and move on

While this would clearly disappoint many it speaks to the objective of not letting the

Round drag down the WTO ndash not allowing the WTOrsquos credibility to be further damaged

by endless discussions that can never led to a happy ending

Of course this option would leave unsolved the core Doha issues ndash reducing distortions

in and improving market access for industrial goods agricultural products and services

trade and updating the rules But it might allow members to re-craft the parameters of

the negotiations in a way that would be more likely to lead to success This is clearly

the view taken by Susan Schwab and John Weekes As John Weekes puts it ldquoNot

completing the Doha Round would be a serious setback to the WTO and the multilateral

trading system However if it is clear that the Round cannot be concluded successfully

it is better to admit that and work constructively to develop an agenda for the future

work of the organisationrdquo

Another option would be to wrap up the collection of small agreements into a package

called the ldquoDoha down paymentrdquo or ldquoDoha deliverablesrdquo or ldquoDoha early harvestrdquo as a

way of stressing that all the Doha agenda items are still on the table

Next Steps Getting Past the Doha Round Crisis

15

A third option would be to view the individual items as standalone agreements to be

agreed by the ministers of WTO members at the December meeting without clear

reference to what comes next

This brings us to the next major element of the Road 3 pathway What to do with the

rest of the agenda

Choices to make on the big package

Albert Einstein once defined insanity as doing the same thing over and over and

expecting different results This makes it clear that any complete plan for a way past the

Doha dilemma must change something in the way the negotiations have been operating

Any multilateral trade negotiation involves choice on a series of negotiating rules

or conventions The Doha Round has accreted an odd constellation of these Some

are fundamental and therefore extremely difficult to change These include the idea

that everything must be agreed by all before anything is agreed (the so-called single-

undertaking principle) or the choice to focus on the particular tariff-cutting formula

known as the Swiss formulas But many of the choices are less central such as the exact

way in which flexibilities on tariff-cutting are to be decided

The ramifications of these procedures on the negotiating dynamic were not well

understood years ago when the original decisions were taken The lack of understanding

is even deeper when it comes to the joint operation and interaction among the

conventions

For these reasons the set of negotiating conventions that guide Round may no longer be

optimal Consideration of the pros and cons of alternatives might identify other ways of

finding a package of trade-offs that is acceptable to all

VOX Research-based policy analysis and commentary from leading economists

16

The forward-looking agenda

A number of contributors suggested that the process of rebuilding momentum and

confidence in the ultimate outcome could be boosted by agreeing to launch work

programmes (not actual negotiations) on how the WTO could address 21st-century

trade issues that have come to the fore since the Doha agenda was set in 2001

Here there are two basic lines The first would consider WTO institutional reform the

second would consider new issues such as new disciplines to underpin the increasing

convergence of trade investment and services (as is now routinely done in regional

trade agreements) setting limits on acceptable national climate policies with trade

implications or export restrictions

There certainly seems merit to these idea If nothing else it would interject new

dimensions to discussions that have been going on for a decade It would also make

it clear that we need to safeguard the WTO as a forum for multilateral discussions on

critical 21st-century issues

Concluding remarks

Many decent hard-working public servants have committed plenty of energy to the

Doha Round since its inception At this critical time any temptation for recriminations

or lapses into bitter disappointment should be set to one side to let governments chart a

new path for the WTO The circumstances facing WTO members in the middle of 2011

are hardly ideal and the set of options that stand any chance of acceptance is narrow In

times like these it would be a mistake to make the perfect the enemy of the good It is

time to think creatively and cooperatively about getting the WTO past the Doha crisis

A decision or non-decision that led to several more years of drift ndash years that will be

complicated by elections and changes in governments in some of the leading trading

powers ndash could turn out to be the beginning of the end for the WTOrsquos role as leader

of the global trading system The alternative ndash uncoordinated developments led by the

Next Steps Getting Past the Doha Round Crisis

17

Big-5 in their own systems of regional trade agreements ndash is a very plausible outcome

at this stage but not one that will ultimately serve anyonersquos long-run interests

References

Andre Nassar and Carlos Perez (2011) ldquoWhy WTO members should not give up the

Doha Round The case of agricultural traderdquo in Richard Baldwin and Simon Evenett

(eds) Why World Leaders Must Resist the False Promise of a Doha Delay VoxEU

April

19

Doha is stalled by gaps that are unbridgeable today Indonesiarsquos Trade Minister argues

that we need to be guided by priorities and pragmatism We should develop a set of

stepping stones that will help us complete the Doha Round eventually We should

identify the areas that are achievable in the very near future but which have an impact

on development while building confidence for the continued journey to a successful

Round We should never lose sight of the final goal ndash completing the Doha Round as a

single undertaking In short we are not looking for a ldquoPlan Brdquo we are looking for a

new way to execute Plan A

The importance of completing the Doha Development Agenda sooner rather than later

goes beyond bringing gains of $360 billion of additional trade with substantial benefits

for industrialised and developing economies (HLTE 2011) The importance also goes

beyond what pragmatic soothsayers who are telling us ldquoWhy are you worried the

WTO system will continue to be robust whether we conclude Doha or not Companies

and countries will continue to traderdquo As a developing country policy maker ndash and I

believe I speak for many other developing countries ndash I am greatly worried about the

costs and opportunity lost of not completing Doha

The costs of not completing Doha

I will point to four costs of not completing the Doha Round

bull First is what it could achieve for food security

Mari PangestuMinister of Trade Indonesia

There is no Plan B ndash only Plan A Towards completing Doha

1919

VOX Research-based policy analysis and commentary from leading economists

20

During the 2008 food crisis imbalances between supply and demand were partly

attributed to distorted agriculture prices caused by trade-distorting export subsidies

and domestic-support schemes The agriculture package in Doha will go some way to

address this In todayrsquos situation of high commodity prices now is the perfect time to

address the removal and elimination of such trade-distorting policies Removing these

distortions can only be achieved through multilateral negotiations not through bilateral

or regional agreements

Most importantly the winners would be the billions of hungry and poor people all over

the world correcting the system and ensuring the future supply of food and greater

price stability is very much in their interests For example in Indonesia a 10 increase

in the price of rice without any change in income would lead to a 1 increase in

poverty

bull Second keeping protection at bay

During the depth of the crisis benign protectionism was the order of the day according

to the self-reporting surveillance mechanism established by the WTO at the request of

G20 Leaders This allowed the rebound of trade to become one of the costless ways for

the global economy to recover It is ironical that in the recovery the latest report (WTO

2011) shows that there has been a slight increase in protectionism causing an estimated

impact of 06 to G20 exports

The main increase has been due to tariff increases automatic licenses and other

restrictions including export restrictions Whilst this is still ldquosmallrdquo it is nevertheless

double from the previous period Restoration of the confidence in the world trading

system through clear signals that we are progressing on completing the Round is crucial

to keeping protectionism at bay Developing countries such as Indonesia have a great

interest in this because only the multilateral trading system will provide the fair rules-

based trading system for us to face large and more developed partners on a fair and

equal standing

Next Steps Getting Past the Doha Round Crisis

21

bull Third the lack of progress on the Doha Round already has and will continue to raise

the pressure to undertake bilateral and regional free trade negotiations

In the ASEAN region there are already FTAs between ASEAN and all six of its dialog

partners (Australia China India Japan Korea New Zealand) and numerous bilateral

FTAs The EU has just completed negotiations with Korea which has put pressure

for the Korea-US FTA to be ratified as soon as possible The EU has also completed

negotiations with India and is negotiating with Singapore Malaysia and preparing

to do so with other ASEAN countries Recently China Korea and Japan announced

revitalization of their FTA initiative Furthermore we have the Trans-Pacific Partnership

initiative between 8 members of APEC

It is not the bilateral and regional free trade agreements which are problematic per

se it is negotiating them in the absence of a robust WTO system ndash a system which is

seen as meeting the needs of the current and future trade-linked issues Bilateral and

regional agreements can only work towards complementing the multilateral trading

system when they are ldquoWTO-plusrdquo not ldquoWTO-insteadrdquo

bull Fourth the potential dampening effect on unilateral reforms

The political economy of openness in trade policy and institutional reform have always

functioned better within the framework of international commitments Multilateral

rules impose an important caveat on what countries can or cannot do In a country like

Indonesia this has worked to our advantage in the way we frame our reforms and in fact

has functioned in the past to put bad policies to rest

For instance in the famous National Car case in the mid 1980s which violated the

MFN principle by allowing duty-free imports of cars only from one source country the

domestic politics at the time did not allow for policymakers to remove this policy The

policy was finally ended through the WTOrsquos dispute settlement mechanism It would

be too bad for reforms if the process is undertaken within weakened confidence of

multilateral trading system or one which will eventually not be relevant to the evolution

of 21st century trade issues

VOX Research-based policy analysis and commentary from leading economists

22

The Way Forward No Plan B

Despite G20 Leadersrsquo commitments and all the good intentions and intensive work in

Geneva that came after the push given by trade ministers during their informal meeting

in Davos in January 2011 it proved impossible to arrive at a draft text by the end-of-

April milestone There remains ldquounbridgeable gapsrdquo in a number of main negotiating

groups namely non-agriculture market access

Given this situation trade ministers met first during the APEC Ministers of Trade

Meeting in Big Sky Montana and then on the fringes of the OECD meeting in Paris

Fortunately all have agreed that we all remain committed to completing Doha as a single

undertaking However there was a sense of realism as to the timing and pathways to

achieve this desirable outcome in a timely way

From an Indonesian perspective there is no ldquoPlan Brdquo We do not support a ldquoDoha

Lightrdquo and we remain committed to a comprehensive ambitious and balanced package

building on what we have achieved to date

After almost 6 years of negotiations since the key Hong Kong WTO Ministerial I

believe we are more than 50 or some would say 80 of the way done A realistic way

forward is to identify the sequence of steps that would take us to the final outcome this

is necessary to avoid the costs and lost-opportunities I outlined above

This is not about an early harvest or ldquocherry pickingrdquo and then stopping It is about

identifying the steps forward in a meaningful way towards the final goal of the single

undertaking of Doha

Identifying stepping stones to a final Doha Round conclusion

There are areas within the negotiations that could be seen as steps towards the final

package Of course work and political will is still needed to find ways to bridge the

Next Steps Getting Past the Doha Round Crisis

23

unbridgeable gaps In identifying the areas where we could find convergence a number

of priorities stand out

bull First and foremost is areas of negotiations that will contribute and deliver to devel-

opment objectives such as the Least Developed Countries package andor an effec-

tive aid-for-trade and facilitation package this is after all a Development Round

bull Second areas where there would be clear benefits for development and the private

sector in facilitating and ensuring the benefits of trade are greater we need stake-

holders to be cheerleading the way forward

bull Third there could be areas where we would be able to address the food-security

challenge

One could also foresee that within each current area of negotiations there could be

items which could be wrapped up without disturbing the overall balance of elements

in that particular area It is important that we do not go into ldquonewrdquo negotiations in

identifying which areas We should go into the mode of identifying these pathways and

steps with the mindset and political will of win-win

We need to be guided by priorities and pragmatism That is to identify the areas that are

doable and achievable in the very near future but which have an impact on development

and increasing the benefits of trade while at the same time building confidence for us to

continue our journey to the final package Most importantly we should never lose sight

of the final goal of the single undertaking

Looking forward

It is also important to provide the signal in what we say and do elsewhere Beyond

talking about Doha we must ensure continued confidence in and implementation of the

rules-based open trading system

VOX Research-based policy analysis and commentary from leading economists

24

bull This would mean the commitments of G20 Leaders and others on refraining from

protectionism going beyond words the good intentions need to be strengthened

with commitments and actions

bull It also has implications for how we undertake bilateral and regional agreements

these should be done in a way that is not an alternative to and does not detract from

the multilateral trading system We should pursue regionalism in a way which is

going to contribute to and complement the system

Concluding remarks

In conclusion we should not underestimate the costs of not doing all this We will

need to draw upon the strength of our individual and collective political commitment

We need to call on the ability of some major economies to look beyond pure national

interests and to look at the impact and costs on the global system and economy And we

need to remember that there are many countries and billions of people ndash many of which

are impoverished ndash who are waiting for the Doha deliverables

References

HLTE (2011) ldquoWorld trade and the Doha roundrdquo final report of the High-Level Trade

Experts Group chaired by Jagdish Bhagwati and Peter Sutherland

WTO (2011) ldquoReports on G20 trade and investment measures (mid-October 2010 to

April 2011)rdquo WTO Secretariat 24 May

About the author

Mari Pangestu is Indonesiarsquos Minister of Trade since 2004 having served as Executive

Director of the Jakarta-based think tank the Center for Strategic and International

Studies and a lecturer in the Faculty of Economics at the University of Indonesia From

1991 to 1998 Dr Pangestu was the coordinator of the Trade Policy Forum of the Pacific

Next Steps Getting Past the Doha Round Crisis

25

Economic Cooperation Council and serves on the Board of the Overseas Development

Council World Gold Council and the Asian Journal of Business from The University

of Michigan Ann Arbor

She has published widely on a range of subjects including matters pertaining to

Indonesia as well as regional (ie Asian and Asia Pacific) and global issues She earned

her BA and MA in economics from Australian National University and a PhD in

economics from the University of California Davis

27

The Doha Round has failed according the former US Trade Representative Susan

Schwab This essay argues that prolonging Doha jeopardises the multilateral trading

system and threatens future prospects for WTO-led liberalisation Negotiators should

salvage whatever partial agreements they can from Doha and quickly drop the rest

to ensure the December ministerial meeting focuses on future work plans rather than

recriminations over Doha

The Doha Round has failed It is time for the international community to acknowledge

this sad fact and move on Prolonging the pretence that the Doha Round will succeed

is now a greater threat to the WTO and the multilateral trading system than facing the

truth

A great many smart hard-working and well-intentioned individuals have worked over

many years to realise Doharsquos potential to contribute to global economic growth and

development But what is on the table in Geneva has failed to deliver any outcome

let alone a meaningful one It is time for a swift clean break from the past and to

lay the groundwork for a future where the WTO and its members revive WTO-led

liberalisation and reform

End Doharsquos stranglehold and build towards near-term wins

To keep the multilateral trading system healthy it is necessary to end the Doha

Roundrsquos stranglehold on the system This should happen quickly in order to ensure

that the December 2011 ministerial meeting focuses on future work plans rather than

Susan SchwabUniversity of Marlyand former US Trade Representative

Acknowledge Doharsquos demise and move on to save the WTO

2727

VOX Research-based policy analysis and commentary from leading economists

28

recriminations about a Doha Development Agenda that has struggled through one failed

encounter after another

Negotiators should refocus their efforts on near-term wins and on building the next

Round ndash which need not be another behemoth but perhaps a ldquorolling roundrdquo of reforms

and new market access or a few highest-common-denominator plurilateral or WTO-

plus deals Ultimately these should lead to a broader-based market access and rules

agreement under the multilateral auspices of the WTO

The small package possibility

In my recent Foreign Affairs article (Schwab 2011) I suggested that negotiators should

try to salvage whatever partial agreements they can and then walk away from the rest

I mentioned a number of potential candidates such as trade facilitation and the largely

completed agricultural-export pillar (comprising proposed agreements on export credits

food aid state-trading firms and the elimination of export subsidies) Negotiators

might also try to complete two environment-related agreements one cutting subsidies

to industrial fishing fleets that are overfishing the worldrsquos oceans and the other ending

tariff and nontariff barriers to rdquogreenrdquo technologies in major producing and consuming

countries Taken together or individually each of these would benefit countries across

the spectrum of economic development

I am however sceptical that even these small agreements are achievable in the current

climate of mistrust and entrenched positions A troubling development during the course

of the Round has been how often countries seem to forget or forfeit their own economic

interests ndash let alone the greater good ndash in the face of peer pressure and group-think In

the current environment even these smaller deals might prove impossible to achieve

It is certainly worth trying to achieve a few deliverables by taking a run at a small

package but negotiators should not spend too much time on it They already know

exactly what the options are if they cannot get to ldquoyesrdquo in say two weeks they should

Next Steps Getting Past the Doha Round Crisis

29

give up and move on to the real challenge of launching a new series of multilateral

negotiations under WTO auspices

Getting past Doha

How to conclude the Doha Round One option would be for the Director-General and

a representative sample of WTO Ambassadors to come together in the interest of the

institution and to offer a declaration of Doharsquos demise along with their pledge to begin

building the future That would enable leaders at the November G20 meeting to pledge

their support for the rules-based trading system the WTO and its next steps rather than

for the ever elusive ldquobalanced and ambitiousrdquo Doha outcome

After a short period of grieving over the death of Doha and an opportunity to get

beyond the anger lead trading nations should refocus on getting the WTO back into

its mainstream business of negotiating mutually advantageous market opening and

updating the global rdquorules of the roadrdquo This approach offers the best promise of a

meaningful ldquodevelopmentrdquo outcome as well

How might this be achieved

It seems unrealistic to think WTO members would agree to launch another massive

all-or-nothing round in the near future Such broad negotiations however will be

necessary to tackle some of the worldrsquos most important market access challenges in

services manufacturing and agriculture along with such issues as farm subsidies

There are ways to build-up to the big-round model again where countries once more see

economic self-interest in the use of broad-based negotiations and trade-offs to achieve

both new market access and market reforms First however we must re-establish trust

and regain momentum

One way forward would be for ministers to agree to launch a number of confidence-

building negotiations For example ministers in December could decide to open talks

VOX Research-based policy analysis and commentary from leading economists

30

on expanding the 1997 Information Technology Agreement a number of nations

seem interested and the US Administration already has the authority to implement an

enhanced agreement If negotiators fail to work through the 850 brackets in the current

Doha trade facilitation text that could also be tackled as a stand-alone agreement since

each nation would benefit from more efficient movement of goods and services across

borders

Another confidence-building measure might be a merger of sectoral agreements geared

toward a widely-shared objective such as cheaper better healthcare A package that

included pharmaceuticals medical devices and healthcare services might attract

support from the broad array of WTO members across the development spectrum Given

the high-level of public interest in and awareness of environment issues a sectoral

negotiation on environmental goods and services might be another confidence-building

deal once it is removed from the straightjacket that Doha has become

Lessons from Doha for next steps and the next round

Confidence building agreements would offer modest economic and social contributions

and serve to prepare the atmospherics for launch the next Round This brings me to my

last topic ndash the lessons we should draw from a decade of Doha talks

One thing that is quite clear from years of struggling with the basic structure of Doha

is that the combination of formula and self-selected flexibilities has not worked It

resulted in a situation where every negotiator had to assume the worst case ndash knowing

the political costs they would pay for their own liberalisation but expecting their trading

partners to use flexibilities to negate any meaningful new market-access It is possible

to draw from the best of the Doha formulas ndash such as the higher the barrier the greater

the cut ndash while still creating real negotiations around them through requests and offers

delivered using above- and below-formula cuts

Next Steps Getting Past the Doha Round Crisis

31

Another key lesson is that lumping the worldrsquos very diverse economies into three

basic categories ndash developed developing and least developed ndash is a practice that no

longer fits 21st century economic and trade realities Nor is it a structure conducive to

negotiations and real progress based on an exchange of market access among nations

with large markets Yes the advanced economies should be expected to do more than

those at lesser stages of economic development but expectations should also reflect

the fact that many emerging economies are characterised by both poverty and sectors

where they are globally competitive trade powerhouses

The emerging economies have large markets represent over half of global GDP growth

and stand to be the biggest winners from any major trade agreement They should be

expected to contribute to the next Round accordingly Major trade agreements generally

take at least 12 years to implement from the time they are initially concluded What

should the world trading system look like in 2025 in terms of the absolute and relative

responsibilities of key trading nations

Concluding remarks

I am optimistic when it comes to the multilateral trading system and the WTOrsquos central

role in its governance The optimistic scenario is that we put the Doha Round behind

us Facing facts can invigorate and strengthen the trading system If we fail to act the

WTO risks losing its relevance

The Doha Round ndash which in my view cannot be concluded as it is conceived today ndash

should not be allowed to continue draining the WTOrsquos credibility and potential progress

on the multilateral front Now is the time to liberate the would-be trade liberalisers from

the Doha straightjacket and move on

VOX Research-based policy analysis and commentary from leading economists

32

References

Schwab Susan (2011) ldquoAfter Doha Why the negotiations are doomed and what we

should do about itrdquo Foreign Affairs MayJune

About the author

Ambassador Schwab has been a Professor at the University of Maryland School of

Public Policy since January 2009 and a strategic advisor to Mayer Brown LLP (global

law firm) since March 2010 Ambassador Schwab served as US Trade Representative

from June 2006 to January 2009 and as Deputy US Trade Representative from

October 2005 to June 2006 Prior to her service as Deputy US Trade Representative

Ambassador Schwab served as President and Chief Executive Officer of the University

System of Maryland Foundation from June 2004 to October 2005 as a consultant

for the US Department of Treasury from July 2003 to December 2003 and as Dean

of the University of Maryland School of Public Policy from July 1995 to July 2003

Ambassador Schwab serves on the boards of Boeing Company Caterpillar Inc and

FedEx Corporation

She holds a BA in Political Economy from Williams College a Masters in Development

Policy from Stanford University (Food Research Institute) and a PhD in Public

Administration and International Business from The George Washington University

33

Hopes for finishing Doha in 2011 are fading fast This essay suggests a three-track

approach for moving beyond the Doha crisis 1) Identify a package of ldquodeliverablesrsquo ndash

parts of the Round that could be agreed by December 2011 2) Assemble a package of

contentious issues for ongoing negotiation with clear terms of reference 3) Establish

a work programme to consider WTO institutional reform and forward-looking issues

For reasons that are too well known to be repeated the WTO finds itself at the crossroads

Decisions to be taken in the next few weeks will determine whether it can steer its

way to a successful conclusion of the Doha Round in the near future Failing this the

Round will continue to hang like an albatross around the WTOrsquos neck preventing it

from delivering the promised boost to least developed nations and freezing its ability

to address new challenges to the global trading system All countries would suffer from

such an outcome but especially the worldrsquos poorest and most vulnerable

The cost of a never-ending Doha Round

The adverse implications of a continuing Doha impasse on the future role of the WTO

are too compelling to be dismissed offhandedly

Several trade-linked global problems require global cooperation Food security energy

security trade-related aspects of climate change labour mobility commodity price

volatility and integration of regional liberalisation into the multilateral system are

problems that can only be solved with global cooperation

Ujal Singh BhatiaFormerly Indiarsquos Ambassador and Permanent Representative to the WTO

Next Steps Getting past the Doha Round crisis

3333

VOX Research-based policy analysis and commentary from leading economists

34

For example if food exporters continue to impose export barriers when prices rise

food importers may respond with import barriers to boost self-sufficiency This sort of

protectionist reverberation could lead the world to a situation in which all the players

are worse off but none can improve the situation unilaterally Avoiding this sort of

outcome would require global agreements There are very few global institutions that

could manage such cooperation indeed the WTO might be the only one A WTO locked

in endless Doha debates cannot be the centre of the rules based global trading system

There are many thinkers who believe that the structure of WTO rules is robust enough

to withstand a Doha failure It is true that the sky will not fall if Doha is terminated

without a conclusion Such analysts however tend to underestimate the significant

structural changes taking place in the global economy and the trading system The

WTO is working on a set of rules agreed upon in 1994 that were based on an agenda

set almost a quarter of century ago These are still useful and relevant for much of

world trade ndash but not all For instance the rules were not designed for the technology-

driven fragmentation of the manufacturing process and the distribution of the product

value chain across several geographical locations the intertwining of production with

related services the embedded intellectual property rights in components and sub-

components or the multiplicity of rules of origin All these require a different approach

to rule making

A WTO that remains preoccupied with the Doha Round cannot be expected to focus

on such issues Therefore the continuing relevance of the WTO and its primacy in

the global trading system are contingent upon a successful and early conclusion of

the Doha Round Notwithstanding this urgency it is now clear that a Doha package

cannot be wound up in 2011 along the lines agreed by G20 leaders in November 2010

To prevent this from tying the WTO in knots for years to come it is necessary to think

creatively about ways forward

Next Steps Getting Past the Doha Round Crisis

35

Ideas for moving beyond the impasse

Any effort to deal with the impasse in the negotiations needs to be based on a holistic

appreciation of the systemic implications of a continuing stalemate as much as on the

negotiating positions of various members The efforts for a solution acceptable to all

members therefore need to focus on issues in the Doha mandate as well as on issues for

a post Doha situation

Within this framework four constraints need to be borne in mind

bull A ldquoDoha Literdquo of reduced ambition will not work The outcome has to reflect a dec-

adersquos efforts of the global community Ambition however cannot be defined to suit

the convenience of a few members It must touch all aspects of the Doha mandate

bull Aspects of the Doha mandate that are more relevant to the development dimension

have to be ambitiously addressed and fast tracked

bull WTO needs to start work on a new work programme to address new challenges

bull The Doha Round cannot be completed in 2011 A down payment is necessary from

the Doha Round this year to convince the world that the WTO can deliver

A three-track approach

These constraints require the WTO to adopt a three-track approach during the next few

months leading up to the ministerial meeting in December 2011

Track 1 Identification of a list of issues that specially address the trading interests

of smaller developing countries and relatively less contentious issues for fast tracked

finalisation before the ministerial meeting

Track 2 Identification of a package of the more contentious issues for continuing

consultations with clear terms of reference

Track 3 Identification of appropriate terms of reference for a work programme on

WTO institutional reform and the forward-looking agenda

VOX Research-based policy analysis and commentary from leading economists

36

A possible timeline

These three tracks taken as a package would provide a way forward that respects all

four constraints Achieving consensus on them would be difficult ndash and require months

of preparatory work and negotiations

If the WTO membership starts immediately however there is still time to get the

package ready for finalisation by ministers at the December 2011 ministerial meeting

For this to happen it is essential that discussions on such a package begin this month

so that its contents can be finalised by the end of June 2011 This would leave about

four working months before the ministerial meeting to complete negotiations on the

selected areas

What the three tracks might contain

The first track would contain the Doha down-payment package As with any WTO

package the contents would need to be negotiated and it might require complementary

policies such as technical assistance initiatives

Such a list must include items that speak to development aspects of the Doha mandate

such as

bull The Implementation of the Hong Kong decision on duty-free quota-free treatment

for less developed countries

bull A ministerial decision on the Monitoring Mechanism for Special and Differential

Treatment provisions

bull A ministerial decision on the issues raised by the Sub-Saharan African cotton ex-

porters (the group known as the C-4) and

bull The finalisation of a less-developed-country (LDC) waiver in services so that pref-

erential treatment can be provided to LDCrsquos in services without extending it to

others

Next Steps Getting Past the Doha Round Crisis

37

It should also include areas of the negotiations that engage the interest of all members

such as

bull Trade Facilitation

bull All aspects of export competition in agriculture including export subsidies

bull The Transparency Mechanism for regional trade agreements (RTAs)

bull The non-tariff barriers (NTBs) package in non-agricultural market access (NAMA)

and

bull A ministerial decision on interactions and relationships between the WTOrsquos rules

and its committees on the one hand and existing multilateral environmental agree-

ments on the other (eg the Basel Convention on the Control of Transboundary

Movements of Hazardous Wastes and the Montreal Protocol on Substances that

Deplete the Ozone Layer)

While some members would like to exclude some of these areas from a fast tracked

process in the hope of using them for trade offs in the final stage it is important that the

package is as comprehensive as possible

Track two Items for further negotiation

The second track would gather all remaining items currently under negotiations This

would include

bull All aspects of market access in industrial goods agriculture and services

bull All aspects of subsidies in agriculture

bull Various aspects of rules including fisheries subsidies

bull Environmental goods and

bull Issues related to trade-related aspects of international property rights (TRIPS) re-

garding the protection of Geographical Indicators and the protection of traditional

VOX Research-based policy analysis and commentary from leading economists

38

knowledge and folklore that were are mentioned in the Convention on Biological

Diversity1

The need for a balanced package deserves emphasis It is often assumed that there

is a straight trade-off between agricultural subsidies and market access The situation

however is more complex The interest of countries like India China and Indonesia

in agricultural reform is more systemic than export related For them other incentives

within the mandate will be required

Track three Looking ahead

The underlying theme for the work programme would be an appraisal of the entire

negotiating and decision-making process in the WTO in the context of the present

realities both within and outside the organisation The objective would be to prepare

the WTO to address new challenges to the global trading system concurrently with the

ongoing work on the remaining parts of the Doha mandate

Closing remarks

The above proposals constitute a basic template for addressing the Doha conundrum

To what extent they are actually embraced will depend on how much political capital

the major members of the WTO are prepared to invest in moving the Doha Round

forward There is much scepticism about whether such political will exists It is time

for governments to prove the sceptics wrong

1 Specifically as specified in paragraphs 18 and 19 of the Doha Declaration

Next Steps Getting Past the Doha Round Crisis

39

About the author

Ambassador Bhatia Singh joined the Indian Administrative Service in 1974 holding

several senior positions in provincial administration in Orissa State between 1976 and

1995 He served as Joint Secretary Ministry of Commerce and Industry between 1995-

2000 in which capacity he handled a number of bilateral regional and multilateral trade

negotiations From 2004 to his retirement in 2010 he served as Indiarsquos Ambassador and

Permanent Representative to the WTO in Geneva

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

VOX Research-based policy analysis and commentary from leading economists

14

bull An agreement formalising cooperation between the WTO and various multilateral

environmental agreements

Other issues may ultimately prove tractable or necessary to provide balance Those most

often mentioned include a standstill agreement on fisheries subsidies certain aspects

of the less controversial rules negotiations and export subsidies Such a package could

also include other DDA matters for which the negotiations could be completed quickly

or non-DDA matters where the WTO membership is at one such as the promising

negotiations to upgrade the WTOrsquos Agreement on Government Procurement

The final issue is what to call the small package this is not a trivial matter

bull One option is to just boldly call the small package the ldquoDoha Roundrdquo ndash to declare

victory and move on

While this would clearly disappoint many it speaks to the objective of not letting the

Round drag down the WTO ndash not allowing the WTOrsquos credibility to be further damaged

by endless discussions that can never led to a happy ending

Of course this option would leave unsolved the core Doha issues ndash reducing distortions

in and improving market access for industrial goods agricultural products and services

trade and updating the rules But it might allow members to re-craft the parameters of

the negotiations in a way that would be more likely to lead to success This is clearly

the view taken by Susan Schwab and John Weekes As John Weekes puts it ldquoNot

completing the Doha Round would be a serious setback to the WTO and the multilateral

trading system However if it is clear that the Round cannot be concluded successfully

it is better to admit that and work constructively to develop an agenda for the future

work of the organisationrdquo

Another option would be to wrap up the collection of small agreements into a package

called the ldquoDoha down paymentrdquo or ldquoDoha deliverablesrdquo or ldquoDoha early harvestrdquo as a

way of stressing that all the Doha agenda items are still on the table

Next Steps Getting Past the Doha Round Crisis

15

A third option would be to view the individual items as standalone agreements to be

agreed by the ministers of WTO members at the December meeting without clear

reference to what comes next

This brings us to the next major element of the Road 3 pathway What to do with the

rest of the agenda

Choices to make on the big package

Albert Einstein once defined insanity as doing the same thing over and over and

expecting different results This makes it clear that any complete plan for a way past the

Doha dilemma must change something in the way the negotiations have been operating

Any multilateral trade negotiation involves choice on a series of negotiating rules

or conventions The Doha Round has accreted an odd constellation of these Some

are fundamental and therefore extremely difficult to change These include the idea

that everything must be agreed by all before anything is agreed (the so-called single-

undertaking principle) or the choice to focus on the particular tariff-cutting formula

known as the Swiss formulas But many of the choices are less central such as the exact

way in which flexibilities on tariff-cutting are to be decided

The ramifications of these procedures on the negotiating dynamic were not well

understood years ago when the original decisions were taken The lack of understanding

is even deeper when it comes to the joint operation and interaction among the

conventions

For these reasons the set of negotiating conventions that guide Round may no longer be

optimal Consideration of the pros and cons of alternatives might identify other ways of

finding a package of trade-offs that is acceptable to all

VOX Research-based policy analysis and commentary from leading economists

16

The forward-looking agenda

A number of contributors suggested that the process of rebuilding momentum and

confidence in the ultimate outcome could be boosted by agreeing to launch work

programmes (not actual negotiations) on how the WTO could address 21st-century

trade issues that have come to the fore since the Doha agenda was set in 2001

Here there are two basic lines The first would consider WTO institutional reform the

second would consider new issues such as new disciplines to underpin the increasing

convergence of trade investment and services (as is now routinely done in regional

trade agreements) setting limits on acceptable national climate policies with trade

implications or export restrictions

There certainly seems merit to these idea If nothing else it would interject new

dimensions to discussions that have been going on for a decade It would also make

it clear that we need to safeguard the WTO as a forum for multilateral discussions on

critical 21st-century issues

Concluding remarks

Many decent hard-working public servants have committed plenty of energy to the

Doha Round since its inception At this critical time any temptation for recriminations

or lapses into bitter disappointment should be set to one side to let governments chart a

new path for the WTO The circumstances facing WTO members in the middle of 2011

are hardly ideal and the set of options that stand any chance of acceptance is narrow In

times like these it would be a mistake to make the perfect the enemy of the good It is

time to think creatively and cooperatively about getting the WTO past the Doha crisis

A decision or non-decision that led to several more years of drift ndash years that will be

complicated by elections and changes in governments in some of the leading trading

powers ndash could turn out to be the beginning of the end for the WTOrsquos role as leader

of the global trading system The alternative ndash uncoordinated developments led by the

Next Steps Getting Past the Doha Round Crisis

17

Big-5 in their own systems of regional trade agreements ndash is a very plausible outcome

at this stage but not one that will ultimately serve anyonersquos long-run interests

References

Andre Nassar and Carlos Perez (2011) ldquoWhy WTO members should not give up the

Doha Round The case of agricultural traderdquo in Richard Baldwin and Simon Evenett

(eds) Why World Leaders Must Resist the False Promise of a Doha Delay VoxEU

April

19

Doha is stalled by gaps that are unbridgeable today Indonesiarsquos Trade Minister argues

that we need to be guided by priorities and pragmatism We should develop a set of

stepping stones that will help us complete the Doha Round eventually We should

identify the areas that are achievable in the very near future but which have an impact

on development while building confidence for the continued journey to a successful

Round We should never lose sight of the final goal ndash completing the Doha Round as a

single undertaking In short we are not looking for a ldquoPlan Brdquo we are looking for a

new way to execute Plan A

The importance of completing the Doha Development Agenda sooner rather than later

goes beyond bringing gains of $360 billion of additional trade with substantial benefits

for industrialised and developing economies (HLTE 2011) The importance also goes

beyond what pragmatic soothsayers who are telling us ldquoWhy are you worried the

WTO system will continue to be robust whether we conclude Doha or not Companies

and countries will continue to traderdquo As a developing country policy maker ndash and I

believe I speak for many other developing countries ndash I am greatly worried about the

costs and opportunity lost of not completing Doha

The costs of not completing Doha

I will point to four costs of not completing the Doha Round

bull First is what it could achieve for food security

Mari PangestuMinister of Trade Indonesia

There is no Plan B ndash only Plan A Towards completing Doha

1919

VOX Research-based policy analysis and commentary from leading economists

20

During the 2008 food crisis imbalances between supply and demand were partly

attributed to distorted agriculture prices caused by trade-distorting export subsidies

and domestic-support schemes The agriculture package in Doha will go some way to

address this In todayrsquos situation of high commodity prices now is the perfect time to

address the removal and elimination of such trade-distorting policies Removing these

distortions can only be achieved through multilateral negotiations not through bilateral

or regional agreements

Most importantly the winners would be the billions of hungry and poor people all over

the world correcting the system and ensuring the future supply of food and greater

price stability is very much in their interests For example in Indonesia a 10 increase

in the price of rice without any change in income would lead to a 1 increase in

poverty

bull Second keeping protection at bay

During the depth of the crisis benign protectionism was the order of the day according

to the self-reporting surveillance mechanism established by the WTO at the request of

G20 Leaders This allowed the rebound of trade to become one of the costless ways for

the global economy to recover It is ironical that in the recovery the latest report (WTO

2011) shows that there has been a slight increase in protectionism causing an estimated

impact of 06 to G20 exports

The main increase has been due to tariff increases automatic licenses and other

restrictions including export restrictions Whilst this is still ldquosmallrdquo it is nevertheless

double from the previous period Restoration of the confidence in the world trading

system through clear signals that we are progressing on completing the Round is crucial

to keeping protectionism at bay Developing countries such as Indonesia have a great

interest in this because only the multilateral trading system will provide the fair rules-

based trading system for us to face large and more developed partners on a fair and

equal standing

Next Steps Getting Past the Doha Round Crisis

21

bull Third the lack of progress on the Doha Round already has and will continue to raise

the pressure to undertake bilateral and regional free trade negotiations

In the ASEAN region there are already FTAs between ASEAN and all six of its dialog

partners (Australia China India Japan Korea New Zealand) and numerous bilateral

FTAs The EU has just completed negotiations with Korea which has put pressure

for the Korea-US FTA to be ratified as soon as possible The EU has also completed

negotiations with India and is negotiating with Singapore Malaysia and preparing

to do so with other ASEAN countries Recently China Korea and Japan announced

revitalization of their FTA initiative Furthermore we have the Trans-Pacific Partnership

initiative between 8 members of APEC

It is not the bilateral and regional free trade agreements which are problematic per

se it is negotiating them in the absence of a robust WTO system ndash a system which is

seen as meeting the needs of the current and future trade-linked issues Bilateral and

regional agreements can only work towards complementing the multilateral trading

system when they are ldquoWTO-plusrdquo not ldquoWTO-insteadrdquo

bull Fourth the potential dampening effect on unilateral reforms

The political economy of openness in trade policy and institutional reform have always

functioned better within the framework of international commitments Multilateral

rules impose an important caveat on what countries can or cannot do In a country like

Indonesia this has worked to our advantage in the way we frame our reforms and in fact

has functioned in the past to put bad policies to rest

For instance in the famous National Car case in the mid 1980s which violated the

MFN principle by allowing duty-free imports of cars only from one source country the

domestic politics at the time did not allow for policymakers to remove this policy The

policy was finally ended through the WTOrsquos dispute settlement mechanism It would

be too bad for reforms if the process is undertaken within weakened confidence of

multilateral trading system or one which will eventually not be relevant to the evolution

of 21st century trade issues

VOX Research-based policy analysis and commentary from leading economists

22

The Way Forward No Plan B

Despite G20 Leadersrsquo commitments and all the good intentions and intensive work in

Geneva that came after the push given by trade ministers during their informal meeting

in Davos in January 2011 it proved impossible to arrive at a draft text by the end-of-

April milestone There remains ldquounbridgeable gapsrdquo in a number of main negotiating

groups namely non-agriculture market access

Given this situation trade ministers met first during the APEC Ministers of Trade

Meeting in Big Sky Montana and then on the fringes of the OECD meeting in Paris

Fortunately all have agreed that we all remain committed to completing Doha as a single

undertaking However there was a sense of realism as to the timing and pathways to

achieve this desirable outcome in a timely way

From an Indonesian perspective there is no ldquoPlan Brdquo We do not support a ldquoDoha

Lightrdquo and we remain committed to a comprehensive ambitious and balanced package

building on what we have achieved to date

After almost 6 years of negotiations since the key Hong Kong WTO Ministerial I

believe we are more than 50 or some would say 80 of the way done A realistic way

forward is to identify the sequence of steps that would take us to the final outcome this

is necessary to avoid the costs and lost-opportunities I outlined above

This is not about an early harvest or ldquocherry pickingrdquo and then stopping It is about

identifying the steps forward in a meaningful way towards the final goal of the single

undertaking of Doha

Identifying stepping stones to a final Doha Round conclusion

There are areas within the negotiations that could be seen as steps towards the final

package Of course work and political will is still needed to find ways to bridge the

Next Steps Getting Past the Doha Round Crisis

23

unbridgeable gaps In identifying the areas where we could find convergence a number

of priorities stand out

bull First and foremost is areas of negotiations that will contribute and deliver to devel-

opment objectives such as the Least Developed Countries package andor an effec-

tive aid-for-trade and facilitation package this is after all a Development Round

bull Second areas where there would be clear benefits for development and the private

sector in facilitating and ensuring the benefits of trade are greater we need stake-

holders to be cheerleading the way forward

bull Third there could be areas where we would be able to address the food-security

challenge

One could also foresee that within each current area of negotiations there could be

items which could be wrapped up without disturbing the overall balance of elements

in that particular area It is important that we do not go into ldquonewrdquo negotiations in

identifying which areas We should go into the mode of identifying these pathways and

steps with the mindset and political will of win-win

We need to be guided by priorities and pragmatism That is to identify the areas that are

doable and achievable in the very near future but which have an impact on development

and increasing the benefits of trade while at the same time building confidence for us to

continue our journey to the final package Most importantly we should never lose sight

of the final goal of the single undertaking

Looking forward

It is also important to provide the signal in what we say and do elsewhere Beyond

talking about Doha we must ensure continued confidence in and implementation of the

rules-based open trading system

VOX Research-based policy analysis and commentary from leading economists

24

bull This would mean the commitments of G20 Leaders and others on refraining from

protectionism going beyond words the good intentions need to be strengthened

with commitments and actions

bull It also has implications for how we undertake bilateral and regional agreements

these should be done in a way that is not an alternative to and does not detract from

the multilateral trading system We should pursue regionalism in a way which is

going to contribute to and complement the system

Concluding remarks

In conclusion we should not underestimate the costs of not doing all this We will

need to draw upon the strength of our individual and collective political commitment

We need to call on the ability of some major economies to look beyond pure national

interests and to look at the impact and costs on the global system and economy And we

need to remember that there are many countries and billions of people ndash many of which

are impoverished ndash who are waiting for the Doha deliverables

References

HLTE (2011) ldquoWorld trade and the Doha roundrdquo final report of the High-Level Trade

Experts Group chaired by Jagdish Bhagwati and Peter Sutherland

WTO (2011) ldquoReports on G20 trade and investment measures (mid-October 2010 to

April 2011)rdquo WTO Secretariat 24 May

About the author

Mari Pangestu is Indonesiarsquos Minister of Trade since 2004 having served as Executive

Director of the Jakarta-based think tank the Center for Strategic and International

Studies and a lecturer in the Faculty of Economics at the University of Indonesia From

1991 to 1998 Dr Pangestu was the coordinator of the Trade Policy Forum of the Pacific

Next Steps Getting Past the Doha Round Crisis

25

Economic Cooperation Council and serves on the Board of the Overseas Development

Council World Gold Council and the Asian Journal of Business from The University

of Michigan Ann Arbor

She has published widely on a range of subjects including matters pertaining to

Indonesia as well as regional (ie Asian and Asia Pacific) and global issues She earned

her BA and MA in economics from Australian National University and a PhD in

economics from the University of California Davis

27

The Doha Round has failed according the former US Trade Representative Susan

Schwab This essay argues that prolonging Doha jeopardises the multilateral trading

system and threatens future prospects for WTO-led liberalisation Negotiators should

salvage whatever partial agreements they can from Doha and quickly drop the rest

to ensure the December ministerial meeting focuses on future work plans rather than

recriminations over Doha

The Doha Round has failed It is time for the international community to acknowledge

this sad fact and move on Prolonging the pretence that the Doha Round will succeed

is now a greater threat to the WTO and the multilateral trading system than facing the

truth

A great many smart hard-working and well-intentioned individuals have worked over

many years to realise Doharsquos potential to contribute to global economic growth and

development But what is on the table in Geneva has failed to deliver any outcome

let alone a meaningful one It is time for a swift clean break from the past and to

lay the groundwork for a future where the WTO and its members revive WTO-led

liberalisation and reform

End Doharsquos stranglehold and build towards near-term wins

To keep the multilateral trading system healthy it is necessary to end the Doha

Roundrsquos stranglehold on the system This should happen quickly in order to ensure

that the December 2011 ministerial meeting focuses on future work plans rather than

Susan SchwabUniversity of Marlyand former US Trade Representative

Acknowledge Doharsquos demise and move on to save the WTO

2727

VOX Research-based policy analysis and commentary from leading economists

28

recriminations about a Doha Development Agenda that has struggled through one failed

encounter after another

Negotiators should refocus their efforts on near-term wins and on building the next

Round ndash which need not be another behemoth but perhaps a ldquorolling roundrdquo of reforms

and new market access or a few highest-common-denominator plurilateral or WTO-

plus deals Ultimately these should lead to a broader-based market access and rules

agreement under the multilateral auspices of the WTO

The small package possibility

In my recent Foreign Affairs article (Schwab 2011) I suggested that negotiators should

try to salvage whatever partial agreements they can and then walk away from the rest

I mentioned a number of potential candidates such as trade facilitation and the largely

completed agricultural-export pillar (comprising proposed agreements on export credits

food aid state-trading firms and the elimination of export subsidies) Negotiators

might also try to complete two environment-related agreements one cutting subsidies

to industrial fishing fleets that are overfishing the worldrsquos oceans and the other ending

tariff and nontariff barriers to rdquogreenrdquo technologies in major producing and consuming

countries Taken together or individually each of these would benefit countries across

the spectrum of economic development

I am however sceptical that even these small agreements are achievable in the current

climate of mistrust and entrenched positions A troubling development during the course

of the Round has been how often countries seem to forget or forfeit their own economic

interests ndash let alone the greater good ndash in the face of peer pressure and group-think In

the current environment even these smaller deals might prove impossible to achieve

It is certainly worth trying to achieve a few deliverables by taking a run at a small

package but negotiators should not spend too much time on it They already know

exactly what the options are if they cannot get to ldquoyesrdquo in say two weeks they should

Next Steps Getting Past the Doha Round Crisis

29

give up and move on to the real challenge of launching a new series of multilateral

negotiations under WTO auspices

Getting past Doha

How to conclude the Doha Round One option would be for the Director-General and

a representative sample of WTO Ambassadors to come together in the interest of the

institution and to offer a declaration of Doharsquos demise along with their pledge to begin

building the future That would enable leaders at the November G20 meeting to pledge

their support for the rules-based trading system the WTO and its next steps rather than

for the ever elusive ldquobalanced and ambitiousrdquo Doha outcome

After a short period of grieving over the death of Doha and an opportunity to get

beyond the anger lead trading nations should refocus on getting the WTO back into

its mainstream business of negotiating mutually advantageous market opening and

updating the global rdquorules of the roadrdquo This approach offers the best promise of a

meaningful ldquodevelopmentrdquo outcome as well

How might this be achieved

It seems unrealistic to think WTO members would agree to launch another massive

all-or-nothing round in the near future Such broad negotiations however will be

necessary to tackle some of the worldrsquos most important market access challenges in

services manufacturing and agriculture along with such issues as farm subsidies

There are ways to build-up to the big-round model again where countries once more see

economic self-interest in the use of broad-based negotiations and trade-offs to achieve

both new market access and market reforms First however we must re-establish trust

and regain momentum

One way forward would be for ministers to agree to launch a number of confidence-

building negotiations For example ministers in December could decide to open talks

VOX Research-based policy analysis and commentary from leading economists

30

on expanding the 1997 Information Technology Agreement a number of nations

seem interested and the US Administration already has the authority to implement an

enhanced agreement If negotiators fail to work through the 850 brackets in the current

Doha trade facilitation text that could also be tackled as a stand-alone agreement since

each nation would benefit from more efficient movement of goods and services across

borders

Another confidence-building measure might be a merger of sectoral agreements geared

toward a widely-shared objective such as cheaper better healthcare A package that

included pharmaceuticals medical devices and healthcare services might attract

support from the broad array of WTO members across the development spectrum Given

the high-level of public interest in and awareness of environment issues a sectoral

negotiation on environmental goods and services might be another confidence-building

deal once it is removed from the straightjacket that Doha has become

Lessons from Doha for next steps and the next round

Confidence building agreements would offer modest economic and social contributions

and serve to prepare the atmospherics for launch the next Round This brings me to my

last topic ndash the lessons we should draw from a decade of Doha talks

One thing that is quite clear from years of struggling with the basic structure of Doha

is that the combination of formula and self-selected flexibilities has not worked It

resulted in a situation where every negotiator had to assume the worst case ndash knowing

the political costs they would pay for their own liberalisation but expecting their trading

partners to use flexibilities to negate any meaningful new market-access It is possible

to draw from the best of the Doha formulas ndash such as the higher the barrier the greater

the cut ndash while still creating real negotiations around them through requests and offers

delivered using above- and below-formula cuts

Next Steps Getting Past the Doha Round Crisis

31

Another key lesson is that lumping the worldrsquos very diverse economies into three

basic categories ndash developed developing and least developed ndash is a practice that no

longer fits 21st century economic and trade realities Nor is it a structure conducive to

negotiations and real progress based on an exchange of market access among nations

with large markets Yes the advanced economies should be expected to do more than

those at lesser stages of economic development but expectations should also reflect

the fact that many emerging economies are characterised by both poverty and sectors

where they are globally competitive trade powerhouses

The emerging economies have large markets represent over half of global GDP growth

and stand to be the biggest winners from any major trade agreement They should be

expected to contribute to the next Round accordingly Major trade agreements generally

take at least 12 years to implement from the time they are initially concluded What

should the world trading system look like in 2025 in terms of the absolute and relative

responsibilities of key trading nations

Concluding remarks

I am optimistic when it comes to the multilateral trading system and the WTOrsquos central

role in its governance The optimistic scenario is that we put the Doha Round behind

us Facing facts can invigorate and strengthen the trading system If we fail to act the

WTO risks losing its relevance

The Doha Round ndash which in my view cannot be concluded as it is conceived today ndash

should not be allowed to continue draining the WTOrsquos credibility and potential progress

on the multilateral front Now is the time to liberate the would-be trade liberalisers from

the Doha straightjacket and move on

VOX Research-based policy analysis and commentary from leading economists

32

References

Schwab Susan (2011) ldquoAfter Doha Why the negotiations are doomed and what we

should do about itrdquo Foreign Affairs MayJune

About the author

Ambassador Schwab has been a Professor at the University of Maryland School of

Public Policy since January 2009 and a strategic advisor to Mayer Brown LLP (global

law firm) since March 2010 Ambassador Schwab served as US Trade Representative

from June 2006 to January 2009 and as Deputy US Trade Representative from

October 2005 to June 2006 Prior to her service as Deputy US Trade Representative

Ambassador Schwab served as President and Chief Executive Officer of the University

System of Maryland Foundation from June 2004 to October 2005 as a consultant

for the US Department of Treasury from July 2003 to December 2003 and as Dean

of the University of Maryland School of Public Policy from July 1995 to July 2003

Ambassador Schwab serves on the boards of Boeing Company Caterpillar Inc and

FedEx Corporation

She holds a BA in Political Economy from Williams College a Masters in Development

Policy from Stanford University (Food Research Institute) and a PhD in Public

Administration and International Business from The George Washington University

33

Hopes for finishing Doha in 2011 are fading fast This essay suggests a three-track

approach for moving beyond the Doha crisis 1) Identify a package of ldquodeliverablesrsquo ndash

parts of the Round that could be agreed by December 2011 2) Assemble a package of

contentious issues for ongoing negotiation with clear terms of reference 3) Establish

a work programme to consider WTO institutional reform and forward-looking issues

For reasons that are too well known to be repeated the WTO finds itself at the crossroads

Decisions to be taken in the next few weeks will determine whether it can steer its

way to a successful conclusion of the Doha Round in the near future Failing this the

Round will continue to hang like an albatross around the WTOrsquos neck preventing it

from delivering the promised boost to least developed nations and freezing its ability

to address new challenges to the global trading system All countries would suffer from

such an outcome but especially the worldrsquos poorest and most vulnerable

The cost of a never-ending Doha Round

The adverse implications of a continuing Doha impasse on the future role of the WTO

are too compelling to be dismissed offhandedly

Several trade-linked global problems require global cooperation Food security energy

security trade-related aspects of climate change labour mobility commodity price

volatility and integration of regional liberalisation into the multilateral system are

problems that can only be solved with global cooperation

Ujal Singh BhatiaFormerly Indiarsquos Ambassador and Permanent Representative to the WTO

Next Steps Getting past the Doha Round crisis

3333

VOX Research-based policy analysis and commentary from leading economists

34

For example if food exporters continue to impose export barriers when prices rise

food importers may respond with import barriers to boost self-sufficiency This sort of

protectionist reverberation could lead the world to a situation in which all the players

are worse off but none can improve the situation unilaterally Avoiding this sort of

outcome would require global agreements There are very few global institutions that

could manage such cooperation indeed the WTO might be the only one A WTO locked

in endless Doha debates cannot be the centre of the rules based global trading system

There are many thinkers who believe that the structure of WTO rules is robust enough

to withstand a Doha failure It is true that the sky will not fall if Doha is terminated

without a conclusion Such analysts however tend to underestimate the significant

structural changes taking place in the global economy and the trading system The

WTO is working on a set of rules agreed upon in 1994 that were based on an agenda

set almost a quarter of century ago These are still useful and relevant for much of

world trade ndash but not all For instance the rules were not designed for the technology-

driven fragmentation of the manufacturing process and the distribution of the product

value chain across several geographical locations the intertwining of production with

related services the embedded intellectual property rights in components and sub-

components or the multiplicity of rules of origin All these require a different approach

to rule making

A WTO that remains preoccupied with the Doha Round cannot be expected to focus

on such issues Therefore the continuing relevance of the WTO and its primacy in

the global trading system are contingent upon a successful and early conclusion of

the Doha Round Notwithstanding this urgency it is now clear that a Doha package

cannot be wound up in 2011 along the lines agreed by G20 leaders in November 2010

To prevent this from tying the WTO in knots for years to come it is necessary to think

creatively about ways forward

Next Steps Getting Past the Doha Round Crisis

35

Ideas for moving beyond the impasse

Any effort to deal with the impasse in the negotiations needs to be based on a holistic

appreciation of the systemic implications of a continuing stalemate as much as on the

negotiating positions of various members The efforts for a solution acceptable to all

members therefore need to focus on issues in the Doha mandate as well as on issues for

a post Doha situation

Within this framework four constraints need to be borne in mind

bull A ldquoDoha Literdquo of reduced ambition will not work The outcome has to reflect a dec-

adersquos efforts of the global community Ambition however cannot be defined to suit

the convenience of a few members It must touch all aspects of the Doha mandate

bull Aspects of the Doha mandate that are more relevant to the development dimension

have to be ambitiously addressed and fast tracked

bull WTO needs to start work on a new work programme to address new challenges

bull The Doha Round cannot be completed in 2011 A down payment is necessary from

the Doha Round this year to convince the world that the WTO can deliver

A three-track approach

These constraints require the WTO to adopt a three-track approach during the next few

months leading up to the ministerial meeting in December 2011

Track 1 Identification of a list of issues that specially address the trading interests

of smaller developing countries and relatively less contentious issues for fast tracked

finalisation before the ministerial meeting

Track 2 Identification of a package of the more contentious issues for continuing

consultations with clear terms of reference

Track 3 Identification of appropriate terms of reference for a work programme on

WTO institutional reform and the forward-looking agenda

VOX Research-based policy analysis and commentary from leading economists

36

A possible timeline

These three tracks taken as a package would provide a way forward that respects all

four constraints Achieving consensus on them would be difficult ndash and require months

of preparatory work and negotiations

If the WTO membership starts immediately however there is still time to get the

package ready for finalisation by ministers at the December 2011 ministerial meeting

For this to happen it is essential that discussions on such a package begin this month

so that its contents can be finalised by the end of June 2011 This would leave about

four working months before the ministerial meeting to complete negotiations on the

selected areas

What the three tracks might contain

The first track would contain the Doha down-payment package As with any WTO

package the contents would need to be negotiated and it might require complementary

policies such as technical assistance initiatives

Such a list must include items that speak to development aspects of the Doha mandate

such as

bull The Implementation of the Hong Kong decision on duty-free quota-free treatment

for less developed countries

bull A ministerial decision on the Monitoring Mechanism for Special and Differential

Treatment provisions

bull A ministerial decision on the issues raised by the Sub-Saharan African cotton ex-

porters (the group known as the C-4) and

bull The finalisation of a less-developed-country (LDC) waiver in services so that pref-

erential treatment can be provided to LDCrsquos in services without extending it to

others

Next Steps Getting Past the Doha Round Crisis

37

It should also include areas of the negotiations that engage the interest of all members

such as

bull Trade Facilitation

bull All aspects of export competition in agriculture including export subsidies

bull The Transparency Mechanism for regional trade agreements (RTAs)

bull The non-tariff barriers (NTBs) package in non-agricultural market access (NAMA)

and

bull A ministerial decision on interactions and relationships between the WTOrsquos rules

and its committees on the one hand and existing multilateral environmental agree-

ments on the other (eg the Basel Convention on the Control of Transboundary

Movements of Hazardous Wastes and the Montreal Protocol on Substances that

Deplete the Ozone Layer)

While some members would like to exclude some of these areas from a fast tracked

process in the hope of using them for trade offs in the final stage it is important that the

package is as comprehensive as possible

Track two Items for further negotiation

The second track would gather all remaining items currently under negotiations This

would include

bull All aspects of market access in industrial goods agriculture and services

bull All aspects of subsidies in agriculture

bull Various aspects of rules including fisheries subsidies

bull Environmental goods and

bull Issues related to trade-related aspects of international property rights (TRIPS) re-

garding the protection of Geographical Indicators and the protection of traditional

VOX Research-based policy analysis and commentary from leading economists

38

knowledge and folklore that were are mentioned in the Convention on Biological

Diversity1

The need for a balanced package deserves emphasis It is often assumed that there

is a straight trade-off between agricultural subsidies and market access The situation

however is more complex The interest of countries like India China and Indonesia

in agricultural reform is more systemic than export related For them other incentives

within the mandate will be required

Track three Looking ahead

The underlying theme for the work programme would be an appraisal of the entire

negotiating and decision-making process in the WTO in the context of the present

realities both within and outside the organisation The objective would be to prepare

the WTO to address new challenges to the global trading system concurrently with the

ongoing work on the remaining parts of the Doha mandate

Closing remarks

The above proposals constitute a basic template for addressing the Doha conundrum

To what extent they are actually embraced will depend on how much political capital

the major members of the WTO are prepared to invest in moving the Doha Round

forward There is much scepticism about whether such political will exists It is time

for governments to prove the sceptics wrong

1 Specifically as specified in paragraphs 18 and 19 of the Doha Declaration

Next Steps Getting Past the Doha Round Crisis

39

About the author

Ambassador Bhatia Singh joined the Indian Administrative Service in 1974 holding

several senior positions in provincial administration in Orissa State between 1976 and

1995 He served as Joint Secretary Ministry of Commerce and Industry between 1995-

2000 in which capacity he handled a number of bilateral regional and multilateral trade

negotiations From 2004 to his retirement in 2010 he served as Indiarsquos Ambassador and

Permanent Representative to the WTO in Geneva

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

Next Steps Getting Past the Doha Round Crisis

15

A third option would be to view the individual items as standalone agreements to be

agreed by the ministers of WTO members at the December meeting without clear

reference to what comes next

This brings us to the next major element of the Road 3 pathway What to do with the

rest of the agenda

Choices to make on the big package

Albert Einstein once defined insanity as doing the same thing over and over and

expecting different results This makes it clear that any complete plan for a way past the

Doha dilemma must change something in the way the negotiations have been operating

Any multilateral trade negotiation involves choice on a series of negotiating rules

or conventions The Doha Round has accreted an odd constellation of these Some

are fundamental and therefore extremely difficult to change These include the idea

that everything must be agreed by all before anything is agreed (the so-called single-

undertaking principle) or the choice to focus on the particular tariff-cutting formula

known as the Swiss formulas But many of the choices are less central such as the exact

way in which flexibilities on tariff-cutting are to be decided

The ramifications of these procedures on the negotiating dynamic were not well

understood years ago when the original decisions were taken The lack of understanding

is even deeper when it comes to the joint operation and interaction among the

conventions

For these reasons the set of negotiating conventions that guide Round may no longer be

optimal Consideration of the pros and cons of alternatives might identify other ways of

finding a package of trade-offs that is acceptable to all

VOX Research-based policy analysis and commentary from leading economists

16

The forward-looking agenda

A number of contributors suggested that the process of rebuilding momentum and

confidence in the ultimate outcome could be boosted by agreeing to launch work

programmes (not actual negotiations) on how the WTO could address 21st-century

trade issues that have come to the fore since the Doha agenda was set in 2001

Here there are two basic lines The first would consider WTO institutional reform the

second would consider new issues such as new disciplines to underpin the increasing

convergence of trade investment and services (as is now routinely done in regional

trade agreements) setting limits on acceptable national climate policies with trade

implications or export restrictions

There certainly seems merit to these idea If nothing else it would interject new

dimensions to discussions that have been going on for a decade It would also make

it clear that we need to safeguard the WTO as a forum for multilateral discussions on

critical 21st-century issues

Concluding remarks

Many decent hard-working public servants have committed plenty of energy to the

Doha Round since its inception At this critical time any temptation for recriminations

or lapses into bitter disappointment should be set to one side to let governments chart a

new path for the WTO The circumstances facing WTO members in the middle of 2011

are hardly ideal and the set of options that stand any chance of acceptance is narrow In

times like these it would be a mistake to make the perfect the enemy of the good It is

time to think creatively and cooperatively about getting the WTO past the Doha crisis

A decision or non-decision that led to several more years of drift ndash years that will be

complicated by elections and changes in governments in some of the leading trading

powers ndash could turn out to be the beginning of the end for the WTOrsquos role as leader

of the global trading system The alternative ndash uncoordinated developments led by the

Next Steps Getting Past the Doha Round Crisis

17

Big-5 in their own systems of regional trade agreements ndash is a very plausible outcome

at this stage but not one that will ultimately serve anyonersquos long-run interests

References

Andre Nassar and Carlos Perez (2011) ldquoWhy WTO members should not give up the

Doha Round The case of agricultural traderdquo in Richard Baldwin and Simon Evenett

(eds) Why World Leaders Must Resist the False Promise of a Doha Delay VoxEU

April

19

Doha is stalled by gaps that are unbridgeable today Indonesiarsquos Trade Minister argues

that we need to be guided by priorities and pragmatism We should develop a set of

stepping stones that will help us complete the Doha Round eventually We should

identify the areas that are achievable in the very near future but which have an impact

on development while building confidence for the continued journey to a successful

Round We should never lose sight of the final goal ndash completing the Doha Round as a

single undertaking In short we are not looking for a ldquoPlan Brdquo we are looking for a

new way to execute Plan A

The importance of completing the Doha Development Agenda sooner rather than later

goes beyond bringing gains of $360 billion of additional trade with substantial benefits

for industrialised and developing economies (HLTE 2011) The importance also goes

beyond what pragmatic soothsayers who are telling us ldquoWhy are you worried the

WTO system will continue to be robust whether we conclude Doha or not Companies

and countries will continue to traderdquo As a developing country policy maker ndash and I

believe I speak for many other developing countries ndash I am greatly worried about the

costs and opportunity lost of not completing Doha

The costs of not completing Doha

I will point to four costs of not completing the Doha Round

bull First is what it could achieve for food security

Mari PangestuMinister of Trade Indonesia

There is no Plan B ndash only Plan A Towards completing Doha

1919

VOX Research-based policy analysis and commentary from leading economists

20

During the 2008 food crisis imbalances between supply and demand were partly

attributed to distorted agriculture prices caused by trade-distorting export subsidies

and domestic-support schemes The agriculture package in Doha will go some way to

address this In todayrsquos situation of high commodity prices now is the perfect time to

address the removal and elimination of such trade-distorting policies Removing these

distortions can only be achieved through multilateral negotiations not through bilateral

or regional agreements

Most importantly the winners would be the billions of hungry and poor people all over

the world correcting the system and ensuring the future supply of food and greater

price stability is very much in their interests For example in Indonesia a 10 increase

in the price of rice without any change in income would lead to a 1 increase in

poverty

bull Second keeping protection at bay

During the depth of the crisis benign protectionism was the order of the day according

to the self-reporting surveillance mechanism established by the WTO at the request of

G20 Leaders This allowed the rebound of trade to become one of the costless ways for

the global economy to recover It is ironical that in the recovery the latest report (WTO

2011) shows that there has been a slight increase in protectionism causing an estimated

impact of 06 to G20 exports

The main increase has been due to tariff increases automatic licenses and other

restrictions including export restrictions Whilst this is still ldquosmallrdquo it is nevertheless

double from the previous period Restoration of the confidence in the world trading

system through clear signals that we are progressing on completing the Round is crucial

to keeping protectionism at bay Developing countries such as Indonesia have a great

interest in this because only the multilateral trading system will provide the fair rules-

based trading system for us to face large and more developed partners on a fair and

equal standing

Next Steps Getting Past the Doha Round Crisis

21

bull Third the lack of progress on the Doha Round already has and will continue to raise

the pressure to undertake bilateral and regional free trade negotiations

In the ASEAN region there are already FTAs between ASEAN and all six of its dialog

partners (Australia China India Japan Korea New Zealand) and numerous bilateral

FTAs The EU has just completed negotiations with Korea which has put pressure

for the Korea-US FTA to be ratified as soon as possible The EU has also completed

negotiations with India and is negotiating with Singapore Malaysia and preparing

to do so with other ASEAN countries Recently China Korea and Japan announced

revitalization of their FTA initiative Furthermore we have the Trans-Pacific Partnership

initiative between 8 members of APEC

It is not the bilateral and regional free trade agreements which are problematic per

se it is negotiating them in the absence of a robust WTO system ndash a system which is

seen as meeting the needs of the current and future trade-linked issues Bilateral and

regional agreements can only work towards complementing the multilateral trading

system when they are ldquoWTO-plusrdquo not ldquoWTO-insteadrdquo

bull Fourth the potential dampening effect on unilateral reforms

The political economy of openness in trade policy and institutional reform have always

functioned better within the framework of international commitments Multilateral

rules impose an important caveat on what countries can or cannot do In a country like

Indonesia this has worked to our advantage in the way we frame our reforms and in fact

has functioned in the past to put bad policies to rest

For instance in the famous National Car case in the mid 1980s which violated the

MFN principle by allowing duty-free imports of cars only from one source country the

domestic politics at the time did not allow for policymakers to remove this policy The

policy was finally ended through the WTOrsquos dispute settlement mechanism It would

be too bad for reforms if the process is undertaken within weakened confidence of

multilateral trading system or one which will eventually not be relevant to the evolution

of 21st century trade issues

VOX Research-based policy analysis and commentary from leading economists

22

The Way Forward No Plan B

Despite G20 Leadersrsquo commitments and all the good intentions and intensive work in

Geneva that came after the push given by trade ministers during their informal meeting

in Davos in January 2011 it proved impossible to arrive at a draft text by the end-of-

April milestone There remains ldquounbridgeable gapsrdquo in a number of main negotiating

groups namely non-agriculture market access

Given this situation trade ministers met first during the APEC Ministers of Trade

Meeting in Big Sky Montana and then on the fringes of the OECD meeting in Paris

Fortunately all have agreed that we all remain committed to completing Doha as a single

undertaking However there was a sense of realism as to the timing and pathways to

achieve this desirable outcome in a timely way

From an Indonesian perspective there is no ldquoPlan Brdquo We do not support a ldquoDoha

Lightrdquo and we remain committed to a comprehensive ambitious and balanced package

building on what we have achieved to date

After almost 6 years of negotiations since the key Hong Kong WTO Ministerial I

believe we are more than 50 or some would say 80 of the way done A realistic way

forward is to identify the sequence of steps that would take us to the final outcome this

is necessary to avoid the costs and lost-opportunities I outlined above

This is not about an early harvest or ldquocherry pickingrdquo and then stopping It is about

identifying the steps forward in a meaningful way towards the final goal of the single

undertaking of Doha

Identifying stepping stones to a final Doha Round conclusion

There are areas within the negotiations that could be seen as steps towards the final

package Of course work and political will is still needed to find ways to bridge the

Next Steps Getting Past the Doha Round Crisis

23

unbridgeable gaps In identifying the areas where we could find convergence a number

of priorities stand out

bull First and foremost is areas of negotiations that will contribute and deliver to devel-

opment objectives such as the Least Developed Countries package andor an effec-

tive aid-for-trade and facilitation package this is after all a Development Round

bull Second areas where there would be clear benefits for development and the private

sector in facilitating and ensuring the benefits of trade are greater we need stake-

holders to be cheerleading the way forward

bull Third there could be areas where we would be able to address the food-security

challenge

One could also foresee that within each current area of negotiations there could be

items which could be wrapped up without disturbing the overall balance of elements

in that particular area It is important that we do not go into ldquonewrdquo negotiations in

identifying which areas We should go into the mode of identifying these pathways and

steps with the mindset and political will of win-win

We need to be guided by priorities and pragmatism That is to identify the areas that are

doable and achievable in the very near future but which have an impact on development

and increasing the benefits of trade while at the same time building confidence for us to

continue our journey to the final package Most importantly we should never lose sight

of the final goal of the single undertaking

Looking forward

It is also important to provide the signal in what we say and do elsewhere Beyond

talking about Doha we must ensure continued confidence in and implementation of the

rules-based open trading system

VOX Research-based policy analysis and commentary from leading economists

24

bull This would mean the commitments of G20 Leaders and others on refraining from

protectionism going beyond words the good intentions need to be strengthened

with commitments and actions

bull It also has implications for how we undertake bilateral and regional agreements

these should be done in a way that is not an alternative to and does not detract from

the multilateral trading system We should pursue regionalism in a way which is

going to contribute to and complement the system

Concluding remarks

In conclusion we should not underestimate the costs of not doing all this We will

need to draw upon the strength of our individual and collective political commitment

We need to call on the ability of some major economies to look beyond pure national

interests and to look at the impact and costs on the global system and economy And we

need to remember that there are many countries and billions of people ndash many of which

are impoverished ndash who are waiting for the Doha deliverables

References

HLTE (2011) ldquoWorld trade and the Doha roundrdquo final report of the High-Level Trade

Experts Group chaired by Jagdish Bhagwati and Peter Sutherland

WTO (2011) ldquoReports on G20 trade and investment measures (mid-October 2010 to

April 2011)rdquo WTO Secretariat 24 May

About the author

Mari Pangestu is Indonesiarsquos Minister of Trade since 2004 having served as Executive

Director of the Jakarta-based think tank the Center for Strategic and International

Studies and a lecturer in the Faculty of Economics at the University of Indonesia From

1991 to 1998 Dr Pangestu was the coordinator of the Trade Policy Forum of the Pacific

Next Steps Getting Past the Doha Round Crisis

25

Economic Cooperation Council and serves on the Board of the Overseas Development

Council World Gold Council and the Asian Journal of Business from The University

of Michigan Ann Arbor

She has published widely on a range of subjects including matters pertaining to

Indonesia as well as regional (ie Asian and Asia Pacific) and global issues She earned

her BA and MA in economics from Australian National University and a PhD in

economics from the University of California Davis

27

The Doha Round has failed according the former US Trade Representative Susan

Schwab This essay argues that prolonging Doha jeopardises the multilateral trading

system and threatens future prospects for WTO-led liberalisation Negotiators should

salvage whatever partial agreements they can from Doha and quickly drop the rest

to ensure the December ministerial meeting focuses on future work plans rather than

recriminations over Doha

The Doha Round has failed It is time for the international community to acknowledge

this sad fact and move on Prolonging the pretence that the Doha Round will succeed

is now a greater threat to the WTO and the multilateral trading system than facing the

truth

A great many smart hard-working and well-intentioned individuals have worked over

many years to realise Doharsquos potential to contribute to global economic growth and

development But what is on the table in Geneva has failed to deliver any outcome

let alone a meaningful one It is time for a swift clean break from the past and to

lay the groundwork for a future where the WTO and its members revive WTO-led

liberalisation and reform

End Doharsquos stranglehold and build towards near-term wins

To keep the multilateral trading system healthy it is necessary to end the Doha

Roundrsquos stranglehold on the system This should happen quickly in order to ensure

that the December 2011 ministerial meeting focuses on future work plans rather than

Susan SchwabUniversity of Marlyand former US Trade Representative

Acknowledge Doharsquos demise and move on to save the WTO

2727

VOX Research-based policy analysis and commentary from leading economists

28

recriminations about a Doha Development Agenda that has struggled through one failed

encounter after another

Negotiators should refocus their efforts on near-term wins and on building the next

Round ndash which need not be another behemoth but perhaps a ldquorolling roundrdquo of reforms

and new market access or a few highest-common-denominator plurilateral or WTO-

plus deals Ultimately these should lead to a broader-based market access and rules

agreement under the multilateral auspices of the WTO

The small package possibility

In my recent Foreign Affairs article (Schwab 2011) I suggested that negotiators should

try to salvage whatever partial agreements they can and then walk away from the rest

I mentioned a number of potential candidates such as trade facilitation and the largely

completed agricultural-export pillar (comprising proposed agreements on export credits

food aid state-trading firms and the elimination of export subsidies) Negotiators

might also try to complete two environment-related agreements one cutting subsidies

to industrial fishing fleets that are overfishing the worldrsquos oceans and the other ending

tariff and nontariff barriers to rdquogreenrdquo technologies in major producing and consuming

countries Taken together or individually each of these would benefit countries across

the spectrum of economic development

I am however sceptical that even these small agreements are achievable in the current

climate of mistrust and entrenched positions A troubling development during the course

of the Round has been how often countries seem to forget or forfeit their own economic

interests ndash let alone the greater good ndash in the face of peer pressure and group-think In

the current environment even these smaller deals might prove impossible to achieve

It is certainly worth trying to achieve a few deliverables by taking a run at a small

package but negotiators should not spend too much time on it They already know

exactly what the options are if they cannot get to ldquoyesrdquo in say two weeks they should

Next Steps Getting Past the Doha Round Crisis

29

give up and move on to the real challenge of launching a new series of multilateral

negotiations under WTO auspices

Getting past Doha

How to conclude the Doha Round One option would be for the Director-General and

a representative sample of WTO Ambassadors to come together in the interest of the

institution and to offer a declaration of Doharsquos demise along with their pledge to begin

building the future That would enable leaders at the November G20 meeting to pledge

their support for the rules-based trading system the WTO and its next steps rather than

for the ever elusive ldquobalanced and ambitiousrdquo Doha outcome

After a short period of grieving over the death of Doha and an opportunity to get

beyond the anger lead trading nations should refocus on getting the WTO back into

its mainstream business of negotiating mutually advantageous market opening and

updating the global rdquorules of the roadrdquo This approach offers the best promise of a

meaningful ldquodevelopmentrdquo outcome as well

How might this be achieved

It seems unrealistic to think WTO members would agree to launch another massive

all-or-nothing round in the near future Such broad negotiations however will be

necessary to tackle some of the worldrsquos most important market access challenges in

services manufacturing and agriculture along with such issues as farm subsidies

There are ways to build-up to the big-round model again where countries once more see

economic self-interest in the use of broad-based negotiations and trade-offs to achieve

both new market access and market reforms First however we must re-establish trust

and regain momentum

One way forward would be for ministers to agree to launch a number of confidence-

building negotiations For example ministers in December could decide to open talks

VOX Research-based policy analysis and commentary from leading economists

30

on expanding the 1997 Information Technology Agreement a number of nations

seem interested and the US Administration already has the authority to implement an

enhanced agreement If negotiators fail to work through the 850 brackets in the current

Doha trade facilitation text that could also be tackled as a stand-alone agreement since

each nation would benefit from more efficient movement of goods and services across

borders

Another confidence-building measure might be a merger of sectoral agreements geared

toward a widely-shared objective such as cheaper better healthcare A package that

included pharmaceuticals medical devices and healthcare services might attract

support from the broad array of WTO members across the development spectrum Given

the high-level of public interest in and awareness of environment issues a sectoral

negotiation on environmental goods and services might be another confidence-building

deal once it is removed from the straightjacket that Doha has become

Lessons from Doha for next steps and the next round

Confidence building agreements would offer modest economic and social contributions

and serve to prepare the atmospherics for launch the next Round This brings me to my

last topic ndash the lessons we should draw from a decade of Doha talks

One thing that is quite clear from years of struggling with the basic structure of Doha

is that the combination of formula and self-selected flexibilities has not worked It

resulted in a situation where every negotiator had to assume the worst case ndash knowing

the political costs they would pay for their own liberalisation but expecting their trading

partners to use flexibilities to negate any meaningful new market-access It is possible

to draw from the best of the Doha formulas ndash such as the higher the barrier the greater

the cut ndash while still creating real negotiations around them through requests and offers

delivered using above- and below-formula cuts

Next Steps Getting Past the Doha Round Crisis

31

Another key lesson is that lumping the worldrsquos very diverse economies into three

basic categories ndash developed developing and least developed ndash is a practice that no

longer fits 21st century economic and trade realities Nor is it a structure conducive to

negotiations and real progress based on an exchange of market access among nations

with large markets Yes the advanced economies should be expected to do more than

those at lesser stages of economic development but expectations should also reflect

the fact that many emerging economies are characterised by both poverty and sectors

where they are globally competitive trade powerhouses

The emerging economies have large markets represent over half of global GDP growth

and stand to be the biggest winners from any major trade agreement They should be

expected to contribute to the next Round accordingly Major trade agreements generally

take at least 12 years to implement from the time they are initially concluded What

should the world trading system look like in 2025 in terms of the absolute and relative

responsibilities of key trading nations

Concluding remarks

I am optimistic when it comes to the multilateral trading system and the WTOrsquos central

role in its governance The optimistic scenario is that we put the Doha Round behind

us Facing facts can invigorate and strengthen the trading system If we fail to act the

WTO risks losing its relevance

The Doha Round ndash which in my view cannot be concluded as it is conceived today ndash

should not be allowed to continue draining the WTOrsquos credibility and potential progress

on the multilateral front Now is the time to liberate the would-be trade liberalisers from

the Doha straightjacket and move on

VOX Research-based policy analysis and commentary from leading economists

32

References

Schwab Susan (2011) ldquoAfter Doha Why the negotiations are doomed and what we

should do about itrdquo Foreign Affairs MayJune

About the author

Ambassador Schwab has been a Professor at the University of Maryland School of

Public Policy since January 2009 and a strategic advisor to Mayer Brown LLP (global

law firm) since March 2010 Ambassador Schwab served as US Trade Representative

from June 2006 to January 2009 and as Deputy US Trade Representative from

October 2005 to June 2006 Prior to her service as Deputy US Trade Representative

Ambassador Schwab served as President and Chief Executive Officer of the University

System of Maryland Foundation from June 2004 to October 2005 as a consultant

for the US Department of Treasury from July 2003 to December 2003 and as Dean

of the University of Maryland School of Public Policy from July 1995 to July 2003

Ambassador Schwab serves on the boards of Boeing Company Caterpillar Inc and

FedEx Corporation

She holds a BA in Political Economy from Williams College a Masters in Development

Policy from Stanford University (Food Research Institute) and a PhD in Public

Administration and International Business from The George Washington University

33

Hopes for finishing Doha in 2011 are fading fast This essay suggests a three-track

approach for moving beyond the Doha crisis 1) Identify a package of ldquodeliverablesrsquo ndash

parts of the Round that could be agreed by December 2011 2) Assemble a package of

contentious issues for ongoing negotiation with clear terms of reference 3) Establish

a work programme to consider WTO institutional reform and forward-looking issues

For reasons that are too well known to be repeated the WTO finds itself at the crossroads

Decisions to be taken in the next few weeks will determine whether it can steer its

way to a successful conclusion of the Doha Round in the near future Failing this the

Round will continue to hang like an albatross around the WTOrsquos neck preventing it

from delivering the promised boost to least developed nations and freezing its ability

to address new challenges to the global trading system All countries would suffer from

such an outcome but especially the worldrsquos poorest and most vulnerable

The cost of a never-ending Doha Round

The adverse implications of a continuing Doha impasse on the future role of the WTO

are too compelling to be dismissed offhandedly

Several trade-linked global problems require global cooperation Food security energy

security trade-related aspects of climate change labour mobility commodity price

volatility and integration of regional liberalisation into the multilateral system are

problems that can only be solved with global cooperation

Ujal Singh BhatiaFormerly Indiarsquos Ambassador and Permanent Representative to the WTO

Next Steps Getting past the Doha Round crisis

3333

VOX Research-based policy analysis and commentary from leading economists

34

For example if food exporters continue to impose export barriers when prices rise

food importers may respond with import barriers to boost self-sufficiency This sort of

protectionist reverberation could lead the world to a situation in which all the players

are worse off but none can improve the situation unilaterally Avoiding this sort of

outcome would require global agreements There are very few global institutions that

could manage such cooperation indeed the WTO might be the only one A WTO locked

in endless Doha debates cannot be the centre of the rules based global trading system

There are many thinkers who believe that the structure of WTO rules is robust enough

to withstand a Doha failure It is true that the sky will not fall if Doha is terminated

without a conclusion Such analysts however tend to underestimate the significant

structural changes taking place in the global economy and the trading system The

WTO is working on a set of rules agreed upon in 1994 that were based on an agenda

set almost a quarter of century ago These are still useful and relevant for much of

world trade ndash but not all For instance the rules were not designed for the technology-

driven fragmentation of the manufacturing process and the distribution of the product

value chain across several geographical locations the intertwining of production with

related services the embedded intellectual property rights in components and sub-

components or the multiplicity of rules of origin All these require a different approach

to rule making

A WTO that remains preoccupied with the Doha Round cannot be expected to focus

on such issues Therefore the continuing relevance of the WTO and its primacy in

the global trading system are contingent upon a successful and early conclusion of

the Doha Round Notwithstanding this urgency it is now clear that a Doha package

cannot be wound up in 2011 along the lines agreed by G20 leaders in November 2010

To prevent this from tying the WTO in knots for years to come it is necessary to think

creatively about ways forward

Next Steps Getting Past the Doha Round Crisis

35

Ideas for moving beyond the impasse

Any effort to deal with the impasse in the negotiations needs to be based on a holistic

appreciation of the systemic implications of a continuing stalemate as much as on the

negotiating positions of various members The efforts for a solution acceptable to all

members therefore need to focus on issues in the Doha mandate as well as on issues for

a post Doha situation

Within this framework four constraints need to be borne in mind

bull A ldquoDoha Literdquo of reduced ambition will not work The outcome has to reflect a dec-

adersquos efforts of the global community Ambition however cannot be defined to suit

the convenience of a few members It must touch all aspects of the Doha mandate

bull Aspects of the Doha mandate that are more relevant to the development dimension

have to be ambitiously addressed and fast tracked

bull WTO needs to start work on a new work programme to address new challenges

bull The Doha Round cannot be completed in 2011 A down payment is necessary from

the Doha Round this year to convince the world that the WTO can deliver

A three-track approach

These constraints require the WTO to adopt a three-track approach during the next few

months leading up to the ministerial meeting in December 2011

Track 1 Identification of a list of issues that specially address the trading interests

of smaller developing countries and relatively less contentious issues for fast tracked

finalisation before the ministerial meeting

Track 2 Identification of a package of the more contentious issues for continuing

consultations with clear terms of reference

Track 3 Identification of appropriate terms of reference for a work programme on

WTO institutional reform and the forward-looking agenda

VOX Research-based policy analysis and commentary from leading economists

36

A possible timeline

These three tracks taken as a package would provide a way forward that respects all

four constraints Achieving consensus on them would be difficult ndash and require months

of preparatory work and negotiations

If the WTO membership starts immediately however there is still time to get the

package ready for finalisation by ministers at the December 2011 ministerial meeting

For this to happen it is essential that discussions on such a package begin this month

so that its contents can be finalised by the end of June 2011 This would leave about

four working months before the ministerial meeting to complete negotiations on the

selected areas

What the three tracks might contain

The first track would contain the Doha down-payment package As with any WTO

package the contents would need to be negotiated and it might require complementary

policies such as technical assistance initiatives

Such a list must include items that speak to development aspects of the Doha mandate

such as

bull The Implementation of the Hong Kong decision on duty-free quota-free treatment

for less developed countries

bull A ministerial decision on the Monitoring Mechanism for Special and Differential

Treatment provisions

bull A ministerial decision on the issues raised by the Sub-Saharan African cotton ex-

porters (the group known as the C-4) and

bull The finalisation of a less-developed-country (LDC) waiver in services so that pref-

erential treatment can be provided to LDCrsquos in services without extending it to

others

Next Steps Getting Past the Doha Round Crisis

37

It should also include areas of the negotiations that engage the interest of all members

such as

bull Trade Facilitation

bull All aspects of export competition in agriculture including export subsidies

bull The Transparency Mechanism for regional trade agreements (RTAs)

bull The non-tariff barriers (NTBs) package in non-agricultural market access (NAMA)

and

bull A ministerial decision on interactions and relationships between the WTOrsquos rules

and its committees on the one hand and existing multilateral environmental agree-

ments on the other (eg the Basel Convention on the Control of Transboundary

Movements of Hazardous Wastes and the Montreal Protocol on Substances that

Deplete the Ozone Layer)

While some members would like to exclude some of these areas from a fast tracked

process in the hope of using them for trade offs in the final stage it is important that the

package is as comprehensive as possible

Track two Items for further negotiation

The second track would gather all remaining items currently under negotiations This

would include

bull All aspects of market access in industrial goods agriculture and services

bull All aspects of subsidies in agriculture

bull Various aspects of rules including fisheries subsidies

bull Environmental goods and

bull Issues related to trade-related aspects of international property rights (TRIPS) re-

garding the protection of Geographical Indicators and the protection of traditional

VOX Research-based policy analysis and commentary from leading economists

38

knowledge and folklore that were are mentioned in the Convention on Biological

Diversity1

The need for a balanced package deserves emphasis It is often assumed that there

is a straight trade-off between agricultural subsidies and market access The situation

however is more complex The interest of countries like India China and Indonesia

in agricultural reform is more systemic than export related For them other incentives

within the mandate will be required

Track three Looking ahead

The underlying theme for the work programme would be an appraisal of the entire

negotiating and decision-making process in the WTO in the context of the present

realities both within and outside the organisation The objective would be to prepare

the WTO to address new challenges to the global trading system concurrently with the

ongoing work on the remaining parts of the Doha mandate

Closing remarks

The above proposals constitute a basic template for addressing the Doha conundrum

To what extent they are actually embraced will depend on how much political capital

the major members of the WTO are prepared to invest in moving the Doha Round

forward There is much scepticism about whether such political will exists It is time

for governments to prove the sceptics wrong

1 Specifically as specified in paragraphs 18 and 19 of the Doha Declaration

Next Steps Getting Past the Doha Round Crisis

39

About the author

Ambassador Bhatia Singh joined the Indian Administrative Service in 1974 holding

several senior positions in provincial administration in Orissa State between 1976 and

1995 He served as Joint Secretary Ministry of Commerce and Industry between 1995-

2000 in which capacity he handled a number of bilateral regional and multilateral trade

negotiations From 2004 to his retirement in 2010 he served as Indiarsquos Ambassador and

Permanent Representative to the WTO in Geneva

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

VOX Research-based policy analysis and commentary from leading economists

16

The forward-looking agenda

A number of contributors suggested that the process of rebuilding momentum and

confidence in the ultimate outcome could be boosted by agreeing to launch work

programmes (not actual negotiations) on how the WTO could address 21st-century

trade issues that have come to the fore since the Doha agenda was set in 2001

Here there are two basic lines The first would consider WTO institutional reform the

second would consider new issues such as new disciplines to underpin the increasing

convergence of trade investment and services (as is now routinely done in regional

trade agreements) setting limits on acceptable national climate policies with trade

implications or export restrictions

There certainly seems merit to these idea If nothing else it would interject new

dimensions to discussions that have been going on for a decade It would also make

it clear that we need to safeguard the WTO as a forum for multilateral discussions on

critical 21st-century issues

Concluding remarks

Many decent hard-working public servants have committed plenty of energy to the

Doha Round since its inception At this critical time any temptation for recriminations

or lapses into bitter disappointment should be set to one side to let governments chart a

new path for the WTO The circumstances facing WTO members in the middle of 2011

are hardly ideal and the set of options that stand any chance of acceptance is narrow In

times like these it would be a mistake to make the perfect the enemy of the good It is

time to think creatively and cooperatively about getting the WTO past the Doha crisis

A decision or non-decision that led to several more years of drift ndash years that will be

complicated by elections and changes in governments in some of the leading trading

powers ndash could turn out to be the beginning of the end for the WTOrsquos role as leader

of the global trading system The alternative ndash uncoordinated developments led by the

Next Steps Getting Past the Doha Round Crisis

17

Big-5 in their own systems of regional trade agreements ndash is a very plausible outcome

at this stage but not one that will ultimately serve anyonersquos long-run interests

References

Andre Nassar and Carlos Perez (2011) ldquoWhy WTO members should not give up the

Doha Round The case of agricultural traderdquo in Richard Baldwin and Simon Evenett

(eds) Why World Leaders Must Resist the False Promise of a Doha Delay VoxEU

April

19

Doha is stalled by gaps that are unbridgeable today Indonesiarsquos Trade Minister argues

that we need to be guided by priorities and pragmatism We should develop a set of

stepping stones that will help us complete the Doha Round eventually We should

identify the areas that are achievable in the very near future but which have an impact

on development while building confidence for the continued journey to a successful

Round We should never lose sight of the final goal ndash completing the Doha Round as a

single undertaking In short we are not looking for a ldquoPlan Brdquo we are looking for a

new way to execute Plan A

The importance of completing the Doha Development Agenda sooner rather than later

goes beyond bringing gains of $360 billion of additional trade with substantial benefits

for industrialised and developing economies (HLTE 2011) The importance also goes

beyond what pragmatic soothsayers who are telling us ldquoWhy are you worried the

WTO system will continue to be robust whether we conclude Doha or not Companies

and countries will continue to traderdquo As a developing country policy maker ndash and I

believe I speak for many other developing countries ndash I am greatly worried about the

costs and opportunity lost of not completing Doha

The costs of not completing Doha

I will point to four costs of not completing the Doha Round

bull First is what it could achieve for food security

Mari PangestuMinister of Trade Indonesia

There is no Plan B ndash only Plan A Towards completing Doha

1919

VOX Research-based policy analysis and commentary from leading economists

20

During the 2008 food crisis imbalances between supply and demand were partly

attributed to distorted agriculture prices caused by trade-distorting export subsidies

and domestic-support schemes The agriculture package in Doha will go some way to

address this In todayrsquos situation of high commodity prices now is the perfect time to

address the removal and elimination of such trade-distorting policies Removing these

distortions can only be achieved through multilateral negotiations not through bilateral

or regional agreements

Most importantly the winners would be the billions of hungry and poor people all over

the world correcting the system and ensuring the future supply of food and greater

price stability is very much in their interests For example in Indonesia a 10 increase

in the price of rice without any change in income would lead to a 1 increase in

poverty

bull Second keeping protection at bay

During the depth of the crisis benign protectionism was the order of the day according

to the self-reporting surveillance mechanism established by the WTO at the request of

G20 Leaders This allowed the rebound of trade to become one of the costless ways for

the global economy to recover It is ironical that in the recovery the latest report (WTO

2011) shows that there has been a slight increase in protectionism causing an estimated

impact of 06 to G20 exports

The main increase has been due to tariff increases automatic licenses and other

restrictions including export restrictions Whilst this is still ldquosmallrdquo it is nevertheless

double from the previous period Restoration of the confidence in the world trading

system through clear signals that we are progressing on completing the Round is crucial

to keeping protectionism at bay Developing countries such as Indonesia have a great

interest in this because only the multilateral trading system will provide the fair rules-

based trading system for us to face large and more developed partners on a fair and

equal standing

Next Steps Getting Past the Doha Round Crisis

21

bull Third the lack of progress on the Doha Round already has and will continue to raise

the pressure to undertake bilateral and regional free trade negotiations

In the ASEAN region there are already FTAs between ASEAN and all six of its dialog

partners (Australia China India Japan Korea New Zealand) and numerous bilateral

FTAs The EU has just completed negotiations with Korea which has put pressure

for the Korea-US FTA to be ratified as soon as possible The EU has also completed

negotiations with India and is negotiating with Singapore Malaysia and preparing

to do so with other ASEAN countries Recently China Korea and Japan announced

revitalization of their FTA initiative Furthermore we have the Trans-Pacific Partnership

initiative between 8 members of APEC

It is not the bilateral and regional free trade agreements which are problematic per

se it is negotiating them in the absence of a robust WTO system ndash a system which is

seen as meeting the needs of the current and future trade-linked issues Bilateral and

regional agreements can only work towards complementing the multilateral trading

system when they are ldquoWTO-plusrdquo not ldquoWTO-insteadrdquo

bull Fourth the potential dampening effect on unilateral reforms

The political economy of openness in trade policy and institutional reform have always

functioned better within the framework of international commitments Multilateral

rules impose an important caveat on what countries can or cannot do In a country like

Indonesia this has worked to our advantage in the way we frame our reforms and in fact

has functioned in the past to put bad policies to rest

For instance in the famous National Car case in the mid 1980s which violated the

MFN principle by allowing duty-free imports of cars only from one source country the

domestic politics at the time did not allow for policymakers to remove this policy The

policy was finally ended through the WTOrsquos dispute settlement mechanism It would

be too bad for reforms if the process is undertaken within weakened confidence of

multilateral trading system or one which will eventually not be relevant to the evolution

of 21st century trade issues

VOX Research-based policy analysis and commentary from leading economists

22

The Way Forward No Plan B

Despite G20 Leadersrsquo commitments and all the good intentions and intensive work in

Geneva that came after the push given by trade ministers during their informal meeting

in Davos in January 2011 it proved impossible to arrive at a draft text by the end-of-

April milestone There remains ldquounbridgeable gapsrdquo in a number of main negotiating

groups namely non-agriculture market access

Given this situation trade ministers met first during the APEC Ministers of Trade

Meeting in Big Sky Montana and then on the fringes of the OECD meeting in Paris

Fortunately all have agreed that we all remain committed to completing Doha as a single

undertaking However there was a sense of realism as to the timing and pathways to

achieve this desirable outcome in a timely way

From an Indonesian perspective there is no ldquoPlan Brdquo We do not support a ldquoDoha

Lightrdquo and we remain committed to a comprehensive ambitious and balanced package

building on what we have achieved to date

After almost 6 years of negotiations since the key Hong Kong WTO Ministerial I

believe we are more than 50 or some would say 80 of the way done A realistic way

forward is to identify the sequence of steps that would take us to the final outcome this

is necessary to avoid the costs and lost-opportunities I outlined above

This is not about an early harvest or ldquocherry pickingrdquo and then stopping It is about

identifying the steps forward in a meaningful way towards the final goal of the single

undertaking of Doha

Identifying stepping stones to a final Doha Round conclusion

There are areas within the negotiations that could be seen as steps towards the final

package Of course work and political will is still needed to find ways to bridge the

Next Steps Getting Past the Doha Round Crisis

23

unbridgeable gaps In identifying the areas where we could find convergence a number

of priorities stand out

bull First and foremost is areas of negotiations that will contribute and deliver to devel-

opment objectives such as the Least Developed Countries package andor an effec-

tive aid-for-trade and facilitation package this is after all a Development Round

bull Second areas where there would be clear benefits for development and the private

sector in facilitating and ensuring the benefits of trade are greater we need stake-

holders to be cheerleading the way forward

bull Third there could be areas where we would be able to address the food-security

challenge

One could also foresee that within each current area of negotiations there could be

items which could be wrapped up without disturbing the overall balance of elements

in that particular area It is important that we do not go into ldquonewrdquo negotiations in

identifying which areas We should go into the mode of identifying these pathways and

steps with the mindset and political will of win-win

We need to be guided by priorities and pragmatism That is to identify the areas that are

doable and achievable in the very near future but which have an impact on development

and increasing the benefits of trade while at the same time building confidence for us to

continue our journey to the final package Most importantly we should never lose sight

of the final goal of the single undertaking

Looking forward

It is also important to provide the signal in what we say and do elsewhere Beyond

talking about Doha we must ensure continued confidence in and implementation of the

rules-based open trading system

VOX Research-based policy analysis and commentary from leading economists

24

bull This would mean the commitments of G20 Leaders and others on refraining from

protectionism going beyond words the good intentions need to be strengthened

with commitments and actions

bull It also has implications for how we undertake bilateral and regional agreements

these should be done in a way that is not an alternative to and does not detract from

the multilateral trading system We should pursue regionalism in a way which is

going to contribute to and complement the system

Concluding remarks

In conclusion we should not underestimate the costs of not doing all this We will

need to draw upon the strength of our individual and collective political commitment

We need to call on the ability of some major economies to look beyond pure national

interests and to look at the impact and costs on the global system and economy And we

need to remember that there are many countries and billions of people ndash many of which

are impoverished ndash who are waiting for the Doha deliverables

References

HLTE (2011) ldquoWorld trade and the Doha roundrdquo final report of the High-Level Trade

Experts Group chaired by Jagdish Bhagwati and Peter Sutherland

WTO (2011) ldquoReports on G20 trade and investment measures (mid-October 2010 to

April 2011)rdquo WTO Secretariat 24 May

About the author

Mari Pangestu is Indonesiarsquos Minister of Trade since 2004 having served as Executive

Director of the Jakarta-based think tank the Center for Strategic and International

Studies and a lecturer in the Faculty of Economics at the University of Indonesia From

1991 to 1998 Dr Pangestu was the coordinator of the Trade Policy Forum of the Pacific

Next Steps Getting Past the Doha Round Crisis

25

Economic Cooperation Council and serves on the Board of the Overseas Development

Council World Gold Council and the Asian Journal of Business from The University

of Michigan Ann Arbor

She has published widely on a range of subjects including matters pertaining to

Indonesia as well as regional (ie Asian and Asia Pacific) and global issues She earned

her BA and MA in economics from Australian National University and a PhD in

economics from the University of California Davis

27

The Doha Round has failed according the former US Trade Representative Susan

Schwab This essay argues that prolonging Doha jeopardises the multilateral trading

system and threatens future prospects for WTO-led liberalisation Negotiators should

salvage whatever partial agreements they can from Doha and quickly drop the rest

to ensure the December ministerial meeting focuses on future work plans rather than

recriminations over Doha

The Doha Round has failed It is time for the international community to acknowledge

this sad fact and move on Prolonging the pretence that the Doha Round will succeed

is now a greater threat to the WTO and the multilateral trading system than facing the

truth

A great many smart hard-working and well-intentioned individuals have worked over

many years to realise Doharsquos potential to contribute to global economic growth and

development But what is on the table in Geneva has failed to deliver any outcome

let alone a meaningful one It is time for a swift clean break from the past and to

lay the groundwork for a future where the WTO and its members revive WTO-led

liberalisation and reform

End Doharsquos stranglehold and build towards near-term wins

To keep the multilateral trading system healthy it is necessary to end the Doha

Roundrsquos stranglehold on the system This should happen quickly in order to ensure

that the December 2011 ministerial meeting focuses on future work plans rather than

Susan SchwabUniversity of Marlyand former US Trade Representative

Acknowledge Doharsquos demise and move on to save the WTO

2727

VOX Research-based policy analysis and commentary from leading economists

28

recriminations about a Doha Development Agenda that has struggled through one failed

encounter after another

Negotiators should refocus their efforts on near-term wins and on building the next

Round ndash which need not be another behemoth but perhaps a ldquorolling roundrdquo of reforms

and new market access or a few highest-common-denominator plurilateral or WTO-

plus deals Ultimately these should lead to a broader-based market access and rules

agreement under the multilateral auspices of the WTO

The small package possibility

In my recent Foreign Affairs article (Schwab 2011) I suggested that negotiators should

try to salvage whatever partial agreements they can and then walk away from the rest

I mentioned a number of potential candidates such as trade facilitation and the largely

completed agricultural-export pillar (comprising proposed agreements on export credits

food aid state-trading firms and the elimination of export subsidies) Negotiators

might also try to complete two environment-related agreements one cutting subsidies

to industrial fishing fleets that are overfishing the worldrsquos oceans and the other ending

tariff and nontariff barriers to rdquogreenrdquo technologies in major producing and consuming

countries Taken together or individually each of these would benefit countries across

the spectrum of economic development

I am however sceptical that even these small agreements are achievable in the current

climate of mistrust and entrenched positions A troubling development during the course

of the Round has been how often countries seem to forget or forfeit their own economic

interests ndash let alone the greater good ndash in the face of peer pressure and group-think In

the current environment even these smaller deals might prove impossible to achieve

It is certainly worth trying to achieve a few deliverables by taking a run at a small

package but negotiators should not spend too much time on it They already know

exactly what the options are if they cannot get to ldquoyesrdquo in say two weeks they should

Next Steps Getting Past the Doha Round Crisis

29

give up and move on to the real challenge of launching a new series of multilateral

negotiations under WTO auspices

Getting past Doha

How to conclude the Doha Round One option would be for the Director-General and

a representative sample of WTO Ambassadors to come together in the interest of the

institution and to offer a declaration of Doharsquos demise along with their pledge to begin

building the future That would enable leaders at the November G20 meeting to pledge

their support for the rules-based trading system the WTO and its next steps rather than

for the ever elusive ldquobalanced and ambitiousrdquo Doha outcome

After a short period of grieving over the death of Doha and an opportunity to get

beyond the anger lead trading nations should refocus on getting the WTO back into

its mainstream business of negotiating mutually advantageous market opening and

updating the global rdquorules of the roadrdquo This approach offers the best promise of a

meaningful ldquodevelopmentrdquo outcome as well

How might this be achieved

It seems unrealistic to think WTO members would agree to launch another massive

all-or-nothing round in the near future Such broad negotiations however will be

necessary to tackle some of the worldrsquos most important market access challenges in

services manufacturing and agriculture along with such issues as farm subsidies

There are ways to build-up to the big-round model again where countries once more see

economic self-interest in the use of broad-based negotiations and trade-offs to achieve

both new market access and market reforms First however we must re-establish trust

and regain momentum

One way forward would be for ministers to agree to launch a number of confidence-

building negotiations For example ministers in December could decide to open talks

VOX Research-based policy analysis and commentary from leading economists

30

on expanding the 1997 Information Technology Agreement a number of nations

seem interested and the US Administration already has the authority to implement an

enhanced agreement If negotiators fail to work through the 850 brackets in the current

Doha trade facilitation text that could also be tackled as a stand-alone agreement since

each nation would benefit from more efficient movement of goods and services across

borders

Another confidence-building measure might be a merger of sectoral agreements geared

toward a widely-shared objective such as cheaper better healthcare A package that

included pharmaceuticals medical devices and healthcare services might attract

support from the broad array of WTO members across the development spectrum Given

the high-level of public interest in and awareness of environment issues a sectoral

negotiation on environmental goods and services might be another confidence-building

deal once it is removed from the straightjacket that Doha has become

Lessons from Doha for next steps and the next round

Confidence building agreements would offer modest economic and social contributions

and serve to prepare the atmospherics for launch the next Round This brings me to my

last topic ndash the lessons we should draw from a decade of Doha talks

One thing that is quite clear from years of struggling with the basic structure of Doha

is that the combination of formula and self-selected flexibilities has not worked It

resulted in a situation where every negotiator had to assume the worst case ndash knowing

the political costs they would pay for their own liberalisation but expecting their trading

partners to use flexibilities to negate any meaningful new market-access It is possible

to draw from the best of the Doha formulas ndash such as the higher the barrier the greater

the cut ndash while still creating real negotiations around them through requests and offers

delivered using above- and below-formula cuts

Next Steps Getting Past the Doha Round Crisis

31

Another key lesson is that lumping the worldrsquos very diverse economies into three

basic categories ndash developed developing and least developed ndash is a practice that no

longer fits 21st century economic and trade realities Nor is it a structure conducive to

negotiations and real progress based on an exchange of market access among nations

with large markets Yes the advanced economies should be expected to do more than

those at lesser stages of economic development but expectations should also reflect

the fact that many emerging economies are characterised by both poverty and sectors

where they are globally competitive trade powerhouses

The emerging economies have large markets represent over half of global GDP growth

and stand to be the biggest winners from any major trade agreement They should be

expected to contribute to the next Round accordingly Major trade agreements generally

take at least 12 years to implement from the time they are initially concluded What

should the world trading system look like in 2025 in terms of the absolute and relative

responsibilities of key trading nations

Concluding remarks

I am optimistic when it comes to the multilateral trading system and the WTOrsquos central

role in its governance The optimistic scenario is that we put the Doha Round behind

us Facing facts can invigorate and strengthen the trading system If we fail to act the

WTO risks losing its relevance

The Doha Round ndash which in my view cannot be concluded as it is conceived today ndash

should not be allowed to continue draining the WTOrsquos credibility and potential progress

on the multilateral front Now is the time to liberate the would-be trade liberalisers from

the Doha straightjacket and move on

VOX Research-based policy analysis and commentary from leading economists

32

References

Schwab Susan (2011) ldquoAfter Doha Why the negotiations are doomed and what we

should do about itrdquo Foreign Affairs MayJune

About the author

Ambassador Schwab has been a Professor at the University of Maryland School of

Public Policy since January 2009 and a strategic advisor to Mayer Brown LLP (global

law firm) since March 2010 Ambassador Schwab served as US Trade Representative

from June 2006 to January 2009 and as Deputy US Trade Representative from

October 2005 to June 2006 Prior to her service as Deputy US Trade Representative

Ambassador Schwab served as President and Chief Executive Officer of the University

System of Maryland Foundation from June 2004 to October 2005 as a consultant

for the US Department of Treasury from July 2003 to December 2003 and as Dean

of the University of Maryland School of Public Policy from July 1995 to July 2003

Ambassador Schwab serves on the boards of Boeing Company Caterpillar Inc and

FedEx Corporation

She holds a BA in Political Economy from Williams College a Masters in Development

Policy from Stanford University (Food Research Institute) and a PhD in Public

Administration and International Business from The George Washington University

33

Hopes for finishing Doha in 2011 are fading fast This essay suggests a three-track

approach for moving beyond the Doha crisis 1) Identify a package of ldquodeliverablesrsquo ndash

parts of the Round that could be agreed by December 2011 2) Assemble a package of

contentious issues for ongoing negotiation with clear terms of reference 3) Establish

a work programme to consider WTO institutional reform and forward-looking issues

For reasons that are too well known to be repeated the WTO finds itself at the crossroads

Decisions to be taken in the next few weeks will determine whether it can steer its

way to a successful conclusion of the Doha Round in the near future Failing this the

Round will continue to hang like an albatross around the WTOrsquos neck preventing it

from delivering the promised boost to least developed nations and freezing its ability

to address new challenges to the global trading system All countries would suffer from

such an outcome but especially the worldrsquos poorest and most vulnerable

The cost of a never-ending Doha Round

The adverse implications of a continuing Doha impasse on the future role of the WTO

are too compelling to be dismissed offhandedly

Several trade-linked global problems require global cooperation Food security energy

security trade-related aspects of climate change labour mobility commodity price

volatility and integration of regional liberalisation into the multilateral system are

problems that can only be solved with global cooperation

Ujal Singh BhatiaFormerly Indiarsquos Ambassador and Permanent Representative to the WTO

Next Steps Getting past the Doha Round crisis

3333

VOX Research-based policy analysis and commentary from leading economists

34

For example if food exporters continue to impose export barriers when prices rise

food importers may respond with import barriers to boost self-sufficiency This sort of

protectionist reverberation could lead the world to a situation in which all the players

are worse off but none can improve the situation unilaterally Avoiding this sort of

outcome would require global agreements There are very few global institutions that

could manage such cooperation indeed the WTO might be the only one A WTO locked

in endless Doha debates cannot be the centre of the rules based global trading system

There are many thinkers who believe that the structure of WTO rules is robust enough

to withstand a Doha failure It is true that the sky will not fall if Doha is terminated

without a conclusion Such analysts however tend to underestimate the significant

structural changes taking place in the global economy and the trading system The

WTO is working on a set of rules agreed upon in 1994 that were based on an agenda

set almost a quarter of century ago These are still useful and relevant for much of

world trade ndash but not all For instance the rules were not designed for the technology-

driven fragmentation of the manufacturing process and the distribution of the product

value chain across several geographical locations the intertwining of production with

related services the embedded intellectual property rights in components and sub-

components or the multiplicity of rules of origin All these require a different approach

to rule making

A WTO that remains preoccupied with the Doha Round cannot be expected to focus

on such issues Therefore the continuing relevance of the WTO and its primacy in

the global trading system are contingent upon a successful and early conclusion of

the Doha Round Notwithstanding this urgency it is now clear that a Doha package

cannot be wound up in 2011 along the lines agreed by G20 leaders in November 2010

To prevent this from tying the WTO in knots for years to come it is necessary to think

creatively about ways forward

Next Steps Getting Past the Doha Round Crisis

35

Ideas for moving beyond the impasse

Any effort to deal with the impasse in the negotiations needs to be based on a holistic

appreciation of the systemic implications of a continuing stalemate as much as on the

negotiating positions of various members The efforts for a solution acceptable to all

members therefore need to focus on issues in the Doha mandate as well as on issues for

a post Doha situation

Within this framework four constraints need to be borne in mind

bull A ldquoDoha Literdquo of reduced ambition will not work The outcome has to reflect a dec-

adersquos efforts of the global community Ambition however cannot be defined to suit

the convenience of a few members It must touch all aspects of the Doha mandate

bull Aspects of the Doha mandate that are more relevant to the development dimension

have to be ambitiously addressed and fast tracked

bull WTO needs to start work on a new work programme to address new challenges

bull The Doha Round cannot be completed in 2011 A down payment is necessary from

the Doha Round this year to convince the world that the WTO can deliver

A three-track approach

These constraints require the WTO to adopt a three-track approach during the next few

months leading up to the ministerial meeting in December 2011

Track 1 Identification of a list of issues that specially address the trading interests

of smaller developing countries and relatively less contentious issues for fast tracked

finalisation before the ministerial meeting

Track 2 Identification of a package of the more contentious issues for continuing

consultations with clear terms of reference

Track 3 Identification of appropriate terms of reference for a work programme on

WTO institutional reform and the forward-looking agenda

VOX Research-based policy analysis and commentary from leading economists

36

A possible timeline

These three tracks taken as a package would provide a way forward that respects all

four constraints Achieving consensus on them would be difficult ndash and require months

of preparatory work and negotiations

If the WTO membership starts immediately however there is still time to get the

package ready for finalisation by ministers at the December 2011 ministerial meeting

For this to happen it is essential that discussions on such a package begin this month

so that its contents can be finalised by the end of June 2011 This would leave about

four working months before the ministerial meeting to complete negotiations on the

selected areas

What the three tracks might contain

The first track would contain the Doha down-payment package As with any WTO

package the contents would need to be negotiated and it might require complementary

policies such as technical assistance initiatives

Such a list must include items that speak to development aspects of the Doha mandate

such as

bull The Implementation of the Hong Kong decision on duty-free quota-free treatment

for less developed countries

bull A ministerial decision on the Monitoring Mechanism for Special and Differential

Treatment provisions

bull A ministerial decision on the issues raised by the Sub-Saharan African cotton ex-

porters (the group known as the C-4) and

bull The finalisation of a less-developed-country (LDC) waiver in services so that pref-

erential treatment can be provided to LDCrsquos in services without extending it to

others

Next Steps Getting Past the Doha Round Crisis

37

It should also include areas of the negotiations that engage the interest of all members

such as

bull Trade Facilitation

bull All aspects of export competition in agriculture including export subsidies

bull The Transparency Mechanism for regional trade agreements (RTAs)

bull The non-tariff barriers (NTBs) package in non-agricultural market access (NAMA)

and

bull A ministerial decision on interactions and relationships between the WTOrsquos rules

and its committees on the one hand and existing multilateral environmental agree-

ments on the other (eg the Basel Convention on the Control of Transboundary

Movements of Hazardous Wastes and the Montreal Protocol on Substances that

Deplete the Ozone Layer)

While some members would like to exclude some of these areas from a fast tracked

process in the hope of using them for trade offs in the final stage it is important that the

package is as comprehensive as possible

Track two Items for further negotiation

The second track would gather all remaining items currently under negotiations This

would include

bull All aspects of market access in industrial goods agriculture and services

bull All aspects of subsidies in agriculture

bull Various aspects of rules including fisheries subsidies

bull Environmental goods and

bull Issues related to trade-related aspects of international property rights (TRIPS) re-

garding the protection of Geographical Indicators and the protection of traditional

VOX Research-based policy analysis and commentary from leading economists

38

knowledge and folklore that were are mentioned in the Convention on Biological

Diversity1

The need for a balanced package deserves emphasis It is often assumed that there

is a straight trade-off between agricultural subsidies and market access The situation

however is more complex The interest of countries like India China and Indonesia

in agricultural reform is more systemic than export related For them other incentives

within the mandate will be required

Track three Looking ahead

The underlying theme for the work programme would be an appraisal of the entire

negotiating and decision-making process in the WTO in the context of the present

realities both within and outside the organisation The objective would be to prepare

the WTO to address new challenges to the global trading system concurrently with the

ongoing work on the remaining parts of the Doha mandate

Closing remarks

The above proposals constitute a basic template for addressing the Doha conundrum

To what extent they are actually embraced will depend on how much political capital

the major members of the WTO are prepared to invest in moving the Doha Round

forward There is much scepticism about whether such political will exists It is time

for governments to prove the sceptics wrong

1 Specifically as specified in paragraphs 18 and 19 of the Doha Declaration

Next Steps Getting Past the Doha Round Crisis

39

About the author

Ambassador Bhatia Singh joined the Indian Administrative Service in 1974 holding

several senior positions in provincial administration in Orissa State between 1976 and

1995 He served as Joint Secretary Ministry of Commerce and Industry between 1995-

2000 in which capacity he handled a number of bilateral regional and multilateral trade

negotiations From 2004 to his retirement in 2010 he served as Indiarsquos Ambassador and

Permanent Representative to the WTO in Geneva

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

Next Steps Getting Past the Doha Round Crisis

17

Big-5 in their own systems of regional trade agreements ndash is a very plausible outcome

at this stage but not one that will ultimately serve anyonersquos long-run interests

References

Andre Nassar and Carlos Perez (2011) ldquoWhy WTO members should not give up the

Doha Round The case of agricultural traderdquo in Richard Baldwin and Simon Evenett

(eds) Why World Leaders Must Resist the False Promise of a Doha Delay VoxEU

April

19

Doha is stalled by gaps that are unbridgeable today Indonesiarsquos Trade Minister argues

that we need to be guided by priorities and pragmatism We should develop a set of

stepping stones that will help us complete the Doha Round eventually We should

identify the areas that are achievable in the very near future but which have an impact

on development while building confidence for the continued journey to a successful

Round We should never lose sight of the final goal ndash completing the Doha Round as a

single undertaking In short we are not looking for a ldquoPlan Brdquo we are looking for a

new way to execute Plan A

The importance of completing the Doha Development Agenda sooner rather than later

goes beyond bringing gains of $360 billion of additional trade with substantial benefits

for industrialised and developing economies (HLTE 2011) The importance also goes

beyond what pragmatic soothsayers who are telling us ldquoWhy are you worried the

WTO system will continue to be robust whether we conclude Doha or not Companies

and countries will continue to traderdquo As a developing country policy maker ndash and I

believe I speak for many other developing countries ndash I am greatly worried about the

costs and opportunity lost of not completing Doha

The costs of not completing Doha

I will point to four costs of not completing the Doha Round

bull First is what it could achieve for food security

Mari PangestuMinister of Trade Indonesia

There is no Plan B ndash only Plan A Towards completing Doha

1919

VOX Research-based policy analysis and commentary from leading economists

20

During the 2008 food crisis imbalances between supply and demand were partly

attributed to distorted agriculture prices caused by trade-distorting export subsidies

and domestic-support schemes The agriculture package in Doha will go some way to

address this In todayrsquos situation of high commodity prices now is the perfect time to

address the removal and elimination of such trade-distorting policies Removing these

distortions can only be achieved through multilateral negotiations not through bilateral

or regional agreements

Most importantly the winners would be the billions of hungry and poor people all over

the world correcting the system and ensuring the future supply of food and greater

price stability is very much in their interests For example in Indonesia a 10 increase

in the price of rice without any change in income would lead to a 1 increase in

poverty

bull Second keeping protection at bay

During the depth of the crisis benign protectionism was the order of the day according

to the self-reporting surveillance mechanism established by the WTO at the request of

G20 Leaders This allowed the rebound of trade to become one of the costless ways for

the global economy to recover It is ironical that in the recovery the latest report (WTO

2011) shows that there has been a slight increase in protectionism causing an estimated

impact of 06 to G20 exports

The main increase has been due to tariff increases automatic licenses and other

restrictions including export restrictions Whilst this is still ldquosmallrdquo it is nevertheless

double from the previous period Restoration of the confidence in the world trading

system through clear signals that we are progressing on completing the Round is crucial

to keeping protectionism at bay Developing countries such as Indonesia have a great

interest in this because only the multilateral trading system will provide the fair rules-

based trading system for us to face large and more developed partners on a fair and

equal standing

Next Steps Getting Past the Doha Round Crisis

21

bull Third the lack of progress on the Doha Round already has and will continue to raise

the pressure to undertake bilateral and regional free trade negotiations

In the ASEAN region there are already FTAs between ASEAN and all six of its dialog

partners (Australia China India Japan Korea New Zealand) and numerous bilateral

FTAs The EU has just completed negotiations with Korea which has put pressure

for the Korea-US FTA to be ratified as soon as possible The EU has also completed

negotiations with India and is negotiating with Singapore Malaysia and preparing

to do so with other ASEAN countries Recently China Korea and Japan announced

revitalization of their FTA initiative Furthermore we have the Trans-Pacific Partnership

initiative between 8 members of APEC

It is not the bilateral and regional free trade agreements which are problematic per

se it is negotiating them in the absence of a robust WTO system ndash a system which is

seen as meeting the needs of the current and future trade-linked issues Bilateral and

regional agreements can only work towards complementing the multilateral trading

system when they are ldquoWTO-plusrdquo not ldquoWTO-insteadrdquo

bull Fourth the potential dampening effect on unilateral reforms

The political economy of openness in trade policy and institutional reform have always

functioned better within the framework of international commitments Multilateral

rules impose an important caveat on what countries can or cannot do In a country like

Indonesia this has worked to our advantage in the way we frame our reforms and in fact

has functioned in the past to put bad policies to rest

For instance in the famous National Car case in the mid 1980s which violated the

MFN principle by allowing duty-free imports of cars only from one source country the

domestic politics at the time did not allow for policymakers to remove this policy The

policy was finally ended through the WTOrsquos dispute settlement mechanism It would

be too bad for reforms if the process is undertaken within weakened confidence of

multilateral trading system or one which will eventually not be relevant to the evolution

of 21st century trade issues

VOX Research-based policy analysis and commentary from leading economists

22

The Way Forward No Plan B

Despite G20 Leadersrsquo commitments and all the good intentions and intensive work in

Geneva that came after the push given by trade ministers during their informal meeting

in Davos in January 2011 it proved impossible to arrive at a draft text by the end-of-

April milestone There remains ldquounbridgeable gapsrdquo in a number of main negotiating

groups namely non-agriculture market access

Given this situation trade ministers met first during the APEC Ministers of Trade

Meeting in Big Sky Montana and then on the fringes of the OECD meeting in Paris

Fortunately all have agreed that we all remain committed to completing Doha as a single

undertaking However there was a sense of realism as to the timing and pathways to

achieve this desirable outcome in a timely way

From an Indonesian perspective there is no ldquoPlan Brdquo We do not support a ldquoDoha

Lightrdquo and we remain committed to a comprehensive ambitious and balanced package

building on what we have achieved to date

After almost 6 years of negotiations since the key Hong Kong WTO Ministerial I

believe we are more than 50 or some would say 80 of the way done A realistic way

forward is to identify the sequence of steps that would take us to the final outcome this

is necessary to avoid the costs and lost-opportunities I outlined above

This is not about an early harvest or ldquocherry pickingrdquo and then stopping It is about

identifying the steps forward in a meaningful way towards the final goal of the single

undertaking of Doha

Identifying stepping stones to a final Doha Round conclusion

There are areas within the negotiations that could be seen as steps towards the final

package Of course work and political will is still needed to find ways to bridge the

Next Steps Getting Past the Doha Round Crisis

23

unbridgeable gaps In identifying the areas where we could find convergence a number

of priorities stand out

bull First and foremost is areas of negotiations that will contribute and deliver to devel-

opment objectives such as the Least Developed Countries package andor an effec-

tive aid-for-trade and facilitation package this is after all a Development Round

bull Second areas where there would be clear benefits for development and the private

sector in facilitating and ensuring the benefits of trade are greater we need stake-

holders to be cheerleading the way forward

bull Third there could be areas where we would be able to address the food-security

challenge

One could also foresee that within each current area of negotiations there could be

items which could be wrapped up without disturbing the overall balance of elements

in that particular area It is important that we do not go into ldquonewrdquo negotiations in

identifying which areas We should go into the mode of identifying these pathways and

steps with the mindset and political will of win-win

We need to be guided by priorities and pragmatism That is to identify the areas that are

doable and achievable in the very near future but which have an impact on development

and increasing the benefits of trade while at the same time building confidence for us to

continue our journey to the final package Most importantly we should never lose sight

of the final goal of the single undertaking

Looking forward

It is also important to provide the signal in what we say and do elsewhere Beyond

talking about Doha we must ensure continued confidence in and implementation of the

rules-based open trading system

VOX Research-based policy analysis and commentary from leading economists

24

bull This would mean the commitments of G20 Leaders and others on refraining from

protectionism going beyond words the good intentions need to be strengthened

with commitments and actions

bull It also has implications for how we undertake bilateral and regional agreements

these should be done in a way that is not an alternative to and does not detract from

the multilateral trading system We should pursue regionalism in a way which is

going to contribute to and complement the system

Concluding remarks

In conclusion we should not underestimate the costs of not doing all this We will

need to draw upon the strength of our individual and collective political commitment

We need to call on the ability of some major economies to look beyond pure national

interests and to look at the impact and costs on the global system and economy And we

need to remember that there are many countries and billions of people ndash many of which

are impoverished ndash who are waiting for the Doha deliverables

References

HLTE (2011) ldquoWorld trade and the Doha roundrdquo final report of the High-Level Trade

Experts Group chaired by Jagdish Bhagwati and Peter Sutherland

WTO (2011) ldquoReports on G20 trade and investment measures (mid-October 2010 to

April 2011)rdquo WTO Secretariat 24 May

About the author

Mari Pangestu is Indonesiarsquos Minister of Trade since 2004 having served as Executive

Director of the Jakarta-based think tank the Center for Strategic and International

Studies and a lecturer in the Faculty of Economics at the University of Indonesia From

1991 to 1998 Dr Pangestu was the coordinator of the Trade Policy Forum of the Pacific

Next Steps Getting Past the Doha Round Crisis

25

Economic Cooperation Council and serves on the Board of the Overseas Development

Council World Gold Council and the Asian Journal of Business from The University

of Michigan Ann Arbor

She has published widely on a range of subjects including matters pertaining to

Indonesia as well as regional (ie Asian and Asia Pacific) and global issues She earned

her BA and MA in economics from Australian National University and a PhD in

economics from the University of California Davis

27

The Doha Round has failed according the former US Trade Representative Susan

Schwab This essay argues that prolonging Doha jeopardises the multilateral trading

system and threatens future prospects for WTO-led liberalisation Negotiators should

salvage whatever partial agreements they can from Doha and quickly drop the rest

to ensure the December ministerial meeting focuses on future work plans rather than

recriminations over Doha

The Doha Round has failed It is time for the international community to acknowledge

this sad fact and move on Prolonging the pretence that the Doha Round will succeed

is now a greater threat to the WTO and the multilateral trading system than facing the

truth

A great many smart hard-working and well-intentioned individuals have worked over

many years to realise Doharsquos potential to contribute to global economic growth and

development But what is on the table in Geneva has failed to deliver any outcome

let alone a meaningful one It is time for a swift clean break from the past and to

lay the groundwork for a future where the WTO and its members revive WTO-led

liberalisation and reform

End Doharsquos stranglehold and build towards near-term wins

To keep the multilateral trading system healthy it is necessary to end the Doha

Roundrsquos stranglehold on the system This should happen quickly in order to ensure

that the December 2011 ministerial meeting focuses on future work plans rather than

Susan SchwabUniversity of Marlyand former US Trade Representative

Acknowledge Doharsquos demise and move on to save the WTO

2727

VOX Research-based policy analysis and commentary from leading economists

28

recriminations about a Doha Development Agenda that has struggled through one failed

encounter after another

Negotiators should refocus their efforts on near-term wins and on building the next

Round ndash which need not be another behemoth but perhaps a ldquorolling roundrdquo of reforms

and new market access or a few highest-common-denominator plurilateral or WTO-

plus deals Ultimately these should lead to a broader-based market access and rules

agreement under the multilateral auspices of the WTO

The small package possibility

In my recent Foreign Affairs article (Schwab 2011) I suggested that negotiators should

try to salvage whatever partial agreements they can and then walk away from the rest

I mentioned a number of potential candidates such as trade facilitation and the largely

completed agricultural-export pillar (comprising proposed agreements on export credits

food aid state-trading firms and the elimination of export subsidies) Negotiators

might also try to complete two environment-related agreements one cutting subsidies

to industrial fishing fleets that are overfishing the worldrsquos oceans and the other ending

tariff and nontariff barriers to rdquogreenrdquo technologies in major producing and consuming

countries Taken together or individually each of these would benefit countries across

the spectrum of economic development

I am however sceptical that even these small agreements are achievable in the current

climate of mistrust and entrenched positions A troubling development during the course

of the Round has been how often countries seem to forget or forfeit their own economic

interests ndash let alone the greater good ndash in the face of peer pressure and group-think In

the current environment even these smaller deals might prove impossible to achieve

It is certainly worth trying to achieve a few deliverables by taking a run at a small

package but negotiators should not spend too much time on it They already know

exactly what the options are if they cannot get to ldquoyesrdquo in say two weeks they should

Next Steps Getting Past the Doha Round Crisis

29

give up and move on to the real challenge of launching a new series of multilateral

negotiations under WTO auspices

Getting past Doha

How to conclude the Doha Round One option would be for the Director-General and

a representative sample of WTO Ambassadors to come together in the interest of the

institution and to offer a declaration of Doharsquos demise along with their pledge to begin

building the future That would enable leaders at the November G20 meeting to pledge

their support for the rules-based trading system the WTO and its next steps rather than

for the ever elusive ldquobalanced and ambitiousrdquo Doha outcome

After a short period of grieving over the death of Doha and an opportunity to get

beyond the anger lead trading nations should refocus on getting the WTO back into

its mainstream business of negotiating mutually advantageous market opening and

updating the global rdquorules of the roadrdquo This approach offers the best promise of a

meaningful ldquodevelopmentrdquo outcome as well

How might this be achieved

It seems unrealistic to think WTO members would agree to launch another massive

all-or-nothing round in the near future Such broad negotiations however will be

necessary to tackle some of the worldrsquos most important market access challenges in

services manufacturing and agriculture along with such issues as farm subsidies

There are ways to build-up to the big-round model again where countries once more see

economic self-interest in the use of broad-based negotiations and trade-offs to achieve

both new market access and market reforms First however we must re-establish trust

and regain momentum

One way forward would be for ministers to agree to launch a number of confidence-

building negotiations For example ministers in December could decide to open talks

VOX Research-based policy analysis and commentary from leading economists

30

on expanding the 1997 Information Technology Agreement a number of nations

seem interested and the US Administration already has the authority to implement an

enhanced agreement If negotiators fail to work through the 850 brackets in the current

Doha trade facilitation text that could also be tackled as a stand-alone agreement since

each nation would benefit from more efficient movement of goods and services across

borders

Another confidence-building measure might be a merger of sectoral agreements geared

toward a widely-shared objective such as cheaper better healthcare A package that

included pharmaceuticals medical devices and healthcare services might attract

support from the broad array of WTO members across the development spectrum Given

the high-level of public interest in and awareness of environment issues a sectoral

negotiation on environmental goods and services might be another confidence-building

deal once it is removed from the straightjacket that Doha has become

Lessons from Doha for next steps and the next round

Confidence building agreements would offer modest economic and social contributions

and serve to prepare the atmospherics for launch the next Round This brings me to my

last topic ndash the lessons we should draw from a decade of Doha talks

One thing that is quite clear from years of struggling with the basic structure of Doha

is that the combination of formula and self-selected flexibilities has not worked It

resulted in a situation where every negotiator had to assume the worst case ndash knowing

the political costs they would pay for their own liberalisation but expecting their trading

partners to use flexibilities to negate any meaningful new market-access It is possible

to draw from the best of the Doha formulas ndash such as the higher the barrier the greater

the cut ndash while still creating real negotiations around them through requests and offers

delivered using above- and below-formula cuts

Next Steps Getting Past the Doha Round Crisis

31

Another key lesson is that lumping the worldrsquos very diverse economies into three

basic categories ndash developed developing and least developed ndash is a practice that no

longer fits 21st century economic and trade realities Nor is it a structure conducive to

negotiations and real progress based on an exchange of market access among nations

with large markets Yes the advanced economies should be expected to do more than

those at lesser stages of economic development but expectations should also reflect

the fact that many emerging economies are characterised by both poverty and sectors

where they are globally competitive trade powerhouses

The emerging economies have large markets represent over half of global GDP growth

and stand to be the biggest winners from any major trade agreement They should be

expected to contribute to the next Round accordingly Major trade agreements generally

take at least 12 years to implement from the time they are initially concluded What

should the world trading system look like in 2025 in terms of the absolute and relative

responsibilities of key trading nations

Concluding remarks

I am optimistic when it comes to the multilateral trading system and the WTOrsquos central

role in its governance The optimistic scenario is that we put the Doha Round behind

us Facing facts can invigorate and strengthen the trading system If we fail to act the

WTO risks losing its relevance

The Doha Round ndash which in my view cannot be concluded as it is conceived today ndash

should not be allowed to continue draining the WTOrsquos credibility and potential progress

on the multilateral front Now is the time to liberate the would-be trade liberalisers from

the Doha straightjacket and move on

VOX Research-based policy analysis and commentary from leading economists

32

References

Schwab Susan (2011) ldquoAfter Doha Why the negotiations are doomed and what we

should do about itrdquo Foreign Affairs MayJune

About the author

Ambassador Schwab has been a Professor at the University of Maryland School of

Public Policy since January 2009 and a strategic advisor to Mayer Brown LLP (global

law firm) since March 2010 Ambassador Schwab served as US Trade Representative

from June 2006 to January 2009 and as Deputy US Trade Representative from

October 2005 to June 2006 Prior to her service as Deputy US Trade Representative

Ambassador Schwab served as President and Chief Executive Officer of the University

System of Maryland Foundation from June 2004 to October 2005 as a consultant

for the US Department of Treasury from July 2003 to December 2003 and as Dean

of the University of Maryland School of Public Policy from July 1995 to July 2003

Ambassador Schwab serves on the boards of Boeing Company Caterpillar Inc and

FedEx Corporation

She holds a BA in Political Economy from Williams College a Masters in Development

Policy from Stanford University (Food Research Institute) and a PhD in Public

Administration and International Business from The George Washington University

33

Hopes for finishing Doha in 2011 are fading fast This essay suggests a three-track

approach for moving beyond the Doha crisis 1) Identify a package of ldquodeliverablesrsquo ndash

parts of the Round that could be agreed by December 2011 2) Assemble a package of

contentious issues for ongoing negotiation with clear terms of reference 3) Establish

a work programme to consider WTO institutional reform and forward-looking issues

For reasons that are too well known to be repeated the WTO finds itself at the crossroads

Decisions to be taken in the next few weeks will determine whether it can steer its

way to a successful conclusion of the Doha Round in the near future Failing this the

Round will continue to hang like an albatross around the WTOrsquos neck preventing it

from delivering the promised boost to least developed nations and freezing its ability

to address new challenges to the global trading system All countries would suffer from

such an outcome but especially the worldrsquos poorest and most vulnerable

The cost of a never-ending Doha Round

The adverse implications of a continuing Doha impasse on the future role of the WTO

are too compelling to be dismissed offhandedly

Several trade-linked global problems require global cooperation Food security energy

security trade-related aspects of climate change labour mobility commodity price

volatility and integration of regional liberalisation into the multilateral system are

problems that can only be solved with global cooperation

Ujal Singh BhatiaFormerly Indiarsquos Ambassador and Permanent Representative to the WTO

Next Steps Getting past the Doha Round crisis

3333

VOX Research-based policy analysis and commentary from leading economists

34

For example if food exporters continue to impose export barriers when prices rise

food importers may respond with import barriers to boost self-sufficiency This sort of

protectionist reverberation could lead the world to a situation in which all the players

are worse off but none can improve the situation unilaterally Avoiding this sort of

outcome would require global agreements There are very few global institutions that

could manage such cooperation indeed the WTO might be the only one A WTO locked

in endless Doha debates cannot be the centre of the rules based global trading system

There are many thinkers who believe that the structure of WTO rules is robust enough

to withstand a Doha failure It is true that the sky will not fall if Doha is terminated

without a conclusion Such analysts however tend to underestimate the significant

structural changes taking place in the global economy and the trading system The

WTO is working on a set of rules agreed upon in 1994 that were based on an agenda

set almost a quarter of century ago These are still useful and relevant for much of

world trade ndash but not all For instance the rules were not designed for the technology-

driven fragmentation of the manufacturing process and the distribution of the product

value chain across several geographical locations the intertwining of production with

related services the embedded intellectual property rights in components and sub-

components or the multiplicity of rules of origin All these require a different approach

to rule making

A WTO that remains preoccupied with the Doha Round cannot be expected to focus

on such issues Therefore the continuing relevance of the WTO and its primacy in

the global trading system are contingent upon a successful and early conclusion of

the Doha Round Notwithstanding this urgency it is now clear that a Doha package

cannot be wound up in 2011 along the lines agreed by G20 leaders in November 2010

To prevent this from tying the WTO in knots for years to come it is necessary to think

creatively about ways forward

Next Steps Getting Past the Doha Round Crisis

35

Ideas for moving beyond the impasse

Any effort to deal with the impasse in the negotiations needs to be based on a holistic

appreciation of the systemic implications of a continuing stalemate as much as on the

negotiating positions of various members The efforts for a solution acceptable to all

members therefore need to focus on issues in the Doha mandate as well as on issues for

a post Doha situation

Within this framework four constraints need to be borne in mind

bull A ldquoDoha Literdquo of reduced ambition will not work The outcome has to reflect a dec-

adersquos efforts of the global community Ambition however cannot be defined to suit

the convenience of a few members It must touch all aspects of the Doha mandate

bull Aspects of the Doha mandate that are more relevant to the development dimension

have to be ambitiously addressed and fast tracked

bull WTO needs to start work on a new work programme to address new challenges

bull The Doha Round cannot be completed in 2011 A down payment is necessary from

the Doha Round this year to convince the world that the WTO can deliver

A three-track approach

These constraints require the WTO to adopt a three-track approach during the next few

months leading up to the ministerial meeting in December 2011

Track 1 Identification of a list of issues that specially address the trading interests

of smaller developing countries and relatively less contentious issues for fast tracked

finalisation before the ministerial meeting

Track 2 Identification of a package of the more contentious issues for continuing

consultations with clear terms of reference

Track 3 Identification of appropriate terms of reference for a work programme on

WTO institutional reform and the forward-looking agenda

VOX Research-based policy analysis and commentary from leading economists

36

A possible timeline

These three tracks taken as a package would provide a way forward that respects all

four constraints Achieving consensus on them would be difficult ndash and require months

of preparatory work and negotiations

If the WTO membership starts immediately however there is still time to get the

package ready for finalisation by ministers at the December 2011 ministerial meeting

For this to happen it is essential that discussions on such a package begin this month

so that its contents can be finalised by the end of June 2011 This would leave about

four working months before the ministerial meeting to complete negotiations on the

selected areas

What the three tracks might contain

The first track would contain the Doha down-payment package As with any WTO

package the contents would need to be negotiated and it might require complementary

policies such as technical assistance initiatives

Such a list must include items that speak to development aspects of the Doha mandate

such as

bull The Implementation of the Hong Kong decision on duty-free quota-free treatment

for less developed countries

bull A ministerial decision on the Monitoring Mechanism for Special and Differential

Treatment provisions

bull A ministerial decision on the issues raised by the Sub-Saharan African cotton ex-

porters (the group known as the C-4) and

bull The finalisation of a less-developed-country (LDC) waiver in services so that pref-

erential treatment can be provided to LDCrsquos in services without extending it to

others

Next Steps Getting Past the Doha Round Crisis

37

It should also include areas of the negotiations that engage the interest of all members

such as

bull Trade Facilitation

bull All aspects of export competition in agriculture including export subsidies

bull The Transparency Mechanism for regional trade agreements (RTAs)

bull The non-tariff barriers (NTBs) package in non-agricultural market access (NAMA)

and

bull A ministerial decision on interactions and relationships between the WTOrsquos rules

and its committees on the one hand and existing multilateral environmental agree-

ments on the other (eg the Basel Convention on the Control of Transboundary

Movements of Hazardous Wastes and the Montreal Protocol on Substances that

Deplete the Ozone Layer)

While some members would like to exclude some of these areas from a fast tracked

process in the hope of using them for trade offs in the final stage it is important that the

package is as comprehensive as possible

Track two Items for further negotiation

The second track would gather all remaining items currently under negotiations This

would include

bull All aspects of market access in industrial goods agriculture and services

bull All aspects of subsidies in agriculture

bull Various aspects of rules including fisheries subsidies

bull Environmental goods and

bull Issues related to trade-related aspects of international property rights (TRIPS) re-

garding the protection of Geographical Indicators and the protection of traditional

VOX Research-based policy analysis and commentary from leading economists

38

knowledge and folklore that were are mentioned in the Convention on Biological

Diversity1

The need for a balanced package deserves emphasis It is often assumed that there

is a straight trade-off between agricultural subsidies and market access The situation

however is more complex The interest of countries like India China and Indonesia

in agricultural reform is more systemic than export related For them other incentives

within the mandate will be required

Track three Looking ahead

The underlying theme for the work programme would be an appraisal of the entire

negotiating and decision-making process in the WTO in the context of the present

realities both within and outside the organisation The objective would be to prepare

the WTO to address new challenges to the global trading system concurrently with the

ongoing work on the remaining parts of the Doha mandate

Closing remarks

The above proposals constitute a basic template for addressing the Doha conundrum

To what extent they are actually embraced will depend on how much political capital

the major members of the WTO are prepared to invest in moving the Doha Round

forward There is much scepticism about whether such political will exists It is time

for governments to prove the sceptics wrong

1 Specifically as specified in paragraphs 18 and 19 of the Doha Declaration

Next Steps Getting Past the Doha Round Crisis

39

About the author

Ambassador Bhatia Singh joined the Indian Administrative Service in 1974 holding

several senior positions in provincial administration in Orissa State between 1976 and

1995 He served as Joint Secretary Ministry of Commerce and Industry between 1995-

2000 in which capacity he handled a number of bilateral regional and multilateral trade

negotiations From 2004 to his retirement in 2010 he served as Indiarsquos Ambassador and

Permanent Representative to the WTO in Geneva

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

19

Doha is stalled by gaps that are unbridgeable today Indonesiarsquos Trade Minister argues

that we need to be guided by priorities and pragmatism We should develop a set of

stepping stones that will help us complete the Doha Round eventually We should

identify the areas that are achievable in the very near future but which have an impact

on development while building confidence for the continued journey to a successful

Round We should never lose sight of the final goal ndash completing the Doha Round as a

single undertaking In short we are not looking for a ldquoPlan Brdquo we are looking for a

new way to execute Plan A

The importance of completing the Doha Development Agenda sooner rather than later

goes beyond bringing gains of $360 billion of additional trade with substantial benefits

for industrialised and developing economies (HLTE 2011) The importance also goes

beyond what pragmatic soothsayers who are telling us ldquoWhy are you worried the

WTO system will continue to be robust whether we conclude Doha or not Companies

and countries will continue to traderdquo As a developing country policy maker ndash and I

believe I speak for many other developing countries ndash I am greatly worried about the

costs and opportunity lost of not completing Doha

The costs of not completing Doha

I will point to four costs of not completing the Doha Round

bull First is what it could achieve for food security

Mari PangestuMinister of Trade Indonesia

There is no Plan B ndash only Plan A Towards completing Doha

1919

VOX Research-based policy analysis and commentary from leading economists

20

During the 2008 food crisis imbalances between supply and demand were partly

attributed to distorted agriculture prices caused by trade-distorting export subsidies

and domestic-support schemes The agriculture package in Doha will go some way to

address this In todayrsquos situation of high commodity prices now is the perfect time to

address the removal and elimination of such trade-distorting policies Removing these

distortions can only be achieved through multilateral negotiations not through bilateral

or regional agreements

Most importantly the winners would be the billions of hungry and poor people all over

the world correcting the system and ensuring the future supply of food and greater

price stability is very much in their interests For example in Indonesia a 10 increase

in the price of rice without any change in income would lead to a 1 increase in

poverty

bull Second keeping protection at bay

During the depth of the crisis benign protectionism was the order of the day according

to the self-reporting surveillance mechanism established by the WTO at the request of

G20 Leaders This allowed the rebound of trade to become one of the costless ways for

the global economy to recover It is ironical that in the recovery the latest report (WTO

2011) shows that there has been a slight increase in protectionism causing an estimated

impact of 06 to G20 exports

The main increase has been due to tariff increases automatic licenses and other

restrictions including export restrictions Whilst this is still ldquosmallrdquo it is nevertheless

double from the previous period Restoration of the confidence in the world trading

system through clear signals that we are progressing on completing the Round is crucial

to keeping protectionism at bay Developing countries such as Indonesia have a great

interest in this because only the multilateral trading system will provide the fair rules-

based trading system for us to face large and more developed partners on a fair and

equal standing

Next Steps Getting Past the Doha Round Crisis

21

bull Third the lack of progress on the Doha Round already has and will continue to raise

the pressure to undertake bilateral and regional free trade negotiations

In the ASEAN region there are already FTAs between ASEAN and all six of its dialog

partners (Australia China India Japan Korea New Zealand) and numerous bilateral

FTAs The EU has just completed negotiations with Korea which has put pressure

for the Korea-US FTA to be ratified as soon as possible The EU has also completed

negotiations with India and is negotiating with Singapore Malaysia and preparing

to do so with other ASEAN countries Recently China Korea and Japan announced

revitalization of their FTA initiative Furthermore we have the Trans-Pacific Partnership

initiative between 8 members of APEC

It is not the bilateral and regional free trade agreements which are problematic per

se it is negotiating them in the absence of a robust WTO system ndash a system which is

seen as meeting the needs of the current and future trade-linked issues Bilateral and

regional agreements can only work towards complementing the multilateral trading

system when they are ldquoWTO-plusrdquo not ldquoWTO-insteadrdquo

bull Fourth the potential dampening effect on unilateral reforms

The political economy of openness in trade policy and institutional reform have always

functioned better within the framework of international commitments Multilateral

rules impose an important caveat on what countries can or cannot do In a country like

Indonesia this has worked to our advantage in the way we frame our reforms and in fact

has functioned in the past to put bad policies to rest

For instance in the famous National Car case in the mid 1980s which violated the

MFN principle by allowing duty-free imports of cars only from one source country the

domestic politics at the time did not allow for policymakers to remove this policy The

policy was finally ended through the WTOrsquos dispute settlement mechanism It would

be too bad for reforms if the process is undertaken within weakened confidence of

multilateral trading system or one which will eventually not be relevant to the evolution

of 21st century trade issues

VOX Research-based policy analysis and commentary from leading economists

22

The Way Forward No Plan B

Despite G20 Leadersrsquo commitments and all the good intentions and intensive work in

Geneva that came after the push given by trade ministers during their informal meeting

in Davos in January 2011 it proved impossible to arrive at a draft text by the end-of-

April milestone There remains ldquounbridgeable gapsrdquo in a number of main negotiating

groups namely non-agriculture market access

Given this situation trade ministers met first during the APEC Ministers of Trade

Meeting in Big Sky Montana and then on the fringes of the OECD meeting in Paris

Fortunately all have agreed that we all remain committed to completing Doha as a single

undertaking However there was a sense of realism as to the timing and pathways to

achieve this desirable outcome in a timely way

From an Indonesian perspective there is no ldquoPlan Brdquo We do not support a ldquoDoha

Lightrdquo and we remain committed to a comprehensive ambitious and balanced package

building on what we have achieved to date

After almost 6 years of negotiations since the key Hong Kong WTO Ministerial I

believe we are more than 50 or some would say 80 of the way done A realistic way

forward is to identify the sequence of steps that would take us to the final outcome this

is necessary to avoid the costs and lost-opportunities I outlined above

This is not about an early harvest or ldquocherry pickingrdquo and then stopping It is about

identifying the steps forward in a meaningful way towards the final goal of the single

undertaking of Doha

Identifying stepping stones to a final Doha Round conclusion

There are areas within the negotiations that could be seen as steps towards the final

package Of course work and political will is still needed to find ways to bridge the

Next Steps Getting Past the Doha Round Crisis

23

unbridgeable gaps In identifying the areas where we could find convergence a number

of priorities stand out

bull First and foremost is areas of negotiations that will contribute and deliver to devel-

opment objectives such as the Least Developed Countries package andor an effec-

tive aid-for-trade and facilitation package this is after all a Development Round

bull Second areas where there would be clear benefits for development and the private

sector in facilitating and ensuring the benefits of trade are greater we need stake-

holders to be cheerleading the way forward

bull Third there could be areas where we would be able to address the food-security

challenge

One could also foresee that within each current area of negotiations there could be

items which could be wrapped up without disturbing the overall balance of elements

in that particular area It is important that we do not go into ldquonewrdquo negotiations in

identifying which areas We should go into the mode of identifying these pathways and

steps with the mindset and political will of win-win

We need to be guided by priorities and pragmatism That is to identify the areas that are

doable and achievable in the very near future but which have an impact on development

and increasing the benefits of trade while at the same time building confidence for us to

continue our journey to the final package Most importantly we should never lose sight

of the final goal of the single undertaking

Looking forward

It is also important to provide the signal in what we say and do elsewhere Beyond

talking about Doha we must ensure continued confidence in and implementation of the

rules-based open trading system

VOX Research-based policy analysis and commentary from leading economists

24

bull This would mean the commitments of G20 Leaders and others on refraining from

protectionism going beyond words the good intentions need to be strengthened

with commitments and actions

bull It also has implications for how we undertake bilateral and regional agreements

these should be done in a way that is not an alternative to and does not detract from

the multilateral trading system We should pursue regionalism in a way which is

going to contribute to and complement the system

Concluding remarks

In conclusion we should not underestimate the costs of not doing all this We will

need to draw upon the strength of our individual and collective political commitment

We need to call on the ability of some major economies to look beyond pure national

interests and to look at the impact and costs on the global system and economy And we

need to remember that there are many countries and billions of people ndash many of which

are impoverished ndash who are waiting for the Doha deliverables

References

HLTE (2011) ldquoWorld trade and the Doha roundrdquo final report of the High-Level Trade

Experts Group chaired by Jagdish Bhagwati and Peter Sutherland

WTO (2011) ldquoReports on G20 trade and investment measures (mid-October 2010 to

April 2011)rdquo WTO Secretariat 24 May

About the author

Mari Pangestu is Indonesiarsquos Minister of Trade since 2004 having served as Executive

Director of the Jakarta-based think tank the Center for Strategic and International

Studies and a lecturer in the Faculty of Economics at the University of Indonesia From

1991 to 1998 Dr Pangestu was the coordinator of the Trade Policy Forum of the Pacific

Next Steps Getting Past the Doha Round Crisis

25

Economic Cooperation Council and serves on the Board of the Overseas Development

Council World Gold Council and the Asian Journal of Business from The University

of Michigan Ann Arbor

She has published widely on a range of subjects including matters pertaining to

Indonesia as well as regional (ie Asian and Asia Pacific) and global issues She earned

her BA and MA in economics from Australian National University and a PhD in

economics from the University of California Davis

27

The Doha Round has failed according the former US Trade Representative Susan

Schwab This essay argues that prolonging Doha jeopardises the multilateral trading

system and threatens future prospects for WTO-led liberalisation Negotiators should

salvage whatever partial agreements they can from Doha and quickly drop the rest

to ensure the December ministerial meeting focuses on future work plans rather than

recriminations over Doha

The Doha Round has failed It is time for the international community to acknowledge

this sad fact and move on Prolonging the pretence that the Doha Round will succeed

is now a greater threat to the WTO and the multilateral trading system than facing the

truth

A great many smart hard-working and well-intentioned individuals have worked over

many years to realise Doharsquos potential to contribute to global economic growth and

development But what is on the table in Geneva has failed to deliver any outcome

let alone a meaningful one It is time for a swift clean break from the past and to

lay the groundwork for a future where the WTO and its members revive WTO-led

liberalisation and reform

End Doharsquos stranglehold and build towards near-term wins

To keep the multilateral trading system healthy it is necessary to end the Doha

Roundrsquos stranglehold on the system This should happen quickly in order to ensure

that the December 2011 ministerial meeting focuses on future work plans rather than

Susan SchwabUniversity of Marlyand former US Trade Representative

Acknowledge Doharsquos demise and move on to save the WTO

2727

VOX Research-based policy analysis and commentary from leading economists

28

recriminations about a Doha Development Agenda that has struggled through one failed

encounter after another

Negotiators should refocus their efforts on near-term wins and on building the next

Round ndash which need not be another behemoth but perhaps a ldquorolling roundrdquo of reforms

and new market access or a few highest-common-denominator plurilateral or WTO-

plus deals Ultimately these should lead to a broader-based market access and rules

agreement under the multilateral auspices of the WTO

The small package possibility

In my recent Foreign Affairs article (Schwab 2011) I suggested that negotiators should

try to salvage whatever partial agreements they can and then walk away from the rest

I mentioned a number of potential candidates such as trade facilitation and the largely

completed agricultural-export pillar (comprising proposed agreements on export credits

food aid state-trading firms and the elimination of export subsidies) Negotiators

might also try to complete two environment-related agreements one cutting subsidies

to industrial fishing fleets that are overfishing the worldrsquos oceans and the other ending

tariff and nontariff barriers to rdquogreenrdquo technologies in major producing and consuming

countries Taken together or individually each of these would benefit countries across

the spectrum of economic development

I am however sceptical that even these small agreements are achievable in the current

climate of mistrust and entrenched positions A troubling development during the course

of the Round has been how often countries seem to forget or forfeit their own economic

interests ndash let alone the greater good ndash in the face of peer pressure and group-think In

the current environment even these smaller deals might prove impossible to achieve

It is certainly worth trying to achieve a few deliverables by taking a run at a small

package but negotiators should not spend too much time on it They already know

exactly what the options are if they cannot get to ldquoyesrdquo in say two weeks they should

Next Steps Getting Past the Doha Round Crisis

29

give up and move on to the real challenge of launching a new series of multilateral

negotiations under WTO auspices

Getting past Doha

How to conclude the Doha Round One option would be for the Director-General and

a representative sample of WTO Ambassadors to come together in the interest of the

institution and to offer a declaration of Doharsquos demise along with their pledge to begin

building the future That would enable leaders at the November G20 meeting to pledge

their support for the rules-based trading system the WTO and its next steps rather than

for the ever elusive ldquobalanced and ambitiousrdquo Doha outcome

After a short period of grieving over the death of Doha and an opportunity to get

beyond the anger lead trading nations should refocus on getting the WTO back into

its mainstream business of negotiating mutually advantageous market opening and

updating the global rdquorules of the roadrdquo This approach offers the best promise of a

meaningful ldquodevelopmentrdquo outcome as well

How might this be achieved

It seems unrealistic to think WTO members would agree to launch another massive

all-or-nothing round in the near future Such broad negotiations however will be

necessary to tackle some of the worldrsquos most important market access challenges in

services manufacturing and agriculture along with such issues as farm subsidies

There are ways to build-up to the big-round model again where countries once more see

economic self-interest in the use of broad-based negotiations and trade-offs to achieve

both new market access and market reforms First however we must re-establish trust

and regain momentum

One way forward would be for ministers to agree to launch a number of confidence-

building negotiations For example ministers in December could decide to open talks

VOX Research-based policy analysis and commentary from leading economists

30

on expanding the 1997 Information Technology Agreement a number of nations

seem interested and the US Administration already has the authority to implement an

enhanced agreement If negotiators fail to work through the 850 brackets in the current

Doha trade facilitation text that could also be tackled as a stand-alone agreement since

each nation would benefit from more efficient movement of goods and services across

borders

Another confidence-building measure might be a merger of sectoral agreements geared

toward a widely-shared objective such as cheaper better healthcare A package that

included pharmaceuticals medical devices and healthcare services might attract

support from the broad array of WTO members across the development spectrum Given

the high-level of public interest in and awareness of environment issues a sectoral

negotiation on environmental goods and services might be another confidence-building

deal once it is removed from the straightjacket that Doha has become

Lessons from Doha for next steps and the next round

Confidence building agreements would offer modest economic and social contributions

and serve to prepare the atmospherics for launch the next Round This brings me to my

last topic ndash the lessons we should draw from a decade of Doha talks

One thing that is quite clear from years of struggling with the basic structure of Doha

is that the combination of formula and self-selected flexibilities has not worked It

resulted in a situation where every negotiator had to assume the worst case ndash knowing

the political costs they would pay for their own liberalisation but expecting their trading

partners to use flexibilities to negate any meaningful new market-access It is possible

to draw from the best of the Doha formulas ndash such as the higher the barrier the greater

the cut ndash while still creating real negotiations around them through requests and offers

delivered using above- and below-formula cuts

Next Steps Getting Past the Doha Round Crisis

31

Another key lesson is that lumping the worldrsquos very diverse economies into three

basic categories ndash developed developing and least developed ndash is a practice that no

longer fits 21st century economic and trade realities Nor is it a structure conducive to

negotiations and real progress based on an exchange of market access among nations

with large markets Yes the advanced economies should be expected to do more than

those at lesser stages of economic development but expectations should also reflect

the fact that many emerging economies are characterised by both poverty and sectors

where they are globally competitive trade powerhouses

The emerging economies have large markets represent over half of global GDP growth

and stand to be the biggest winners from any major trade agreement They should be

expected to contribute to the next Round accordingly Major trade agreements generally

take at least 12 years to implement from the time they are initially concluded What

should the world trading system look like in 2025 in terms of the absolute and relative

responsibilities of key trading nations

Concluding remarks

I am optimistic when it comes to the multilateral trading system and the WTOrsquos central

role in its governance The optimistic scenario is that we put the Doha Round behind

us Facing facts can invigorate and strengthen the trading system If we fail to act the

WTO risks losing its relevance

The Doha Round ndash which in my view cannot be concluded as it is conceived today ndash

should not be allowed to continue draining the WTOrsquos credibility and potential progress

on the multilateral front Now is the time to liberate the would-be trade liberalisers from

the Doha straightjacket and move on

VOX Research-based policy analysis and commentary from leading economists

32

References

Schwab Susan (2011) ldquoAfter Doha Why the negotiations are doomed and what we

should do about itrdquo Foreign Affairs MayJune

About the author

Ambassador Schwab has been a Professor at the University of Maryland School of

Public Policy since January 2009 and a strategic advisor to Mayer Brown LLP (global

law firm) since March 2010 Ambassador Schwab served as US Trade Representative

from June 2006 to January 2009 and as Deputy US Trade Representative from

October 2005 to June 2006 Prior to her service as Deputy US Trade Representative

Ambassador Schwab served as President and Chief Executive Officer of the University

System of Maryland Foundation from June 2004 to October 2005 as a consultant

for the US Department of Treasury from July 2003 to December 2003 and as Dean

of the University of Maryland School of Public Policy from July 1995 to July 2003

Ambassador Schwab serves on the boards of Boeing Company Caterpillar Inc and

FedEx Corporation

She holds a BA in Political Economy from Williams College a Masters in Development

Policy from Stanford University (Food Research Institute) and a PhD in Public

Administration and International Business from The George Washington University

33

Hopes for finishing Doha in 2011 are fading fast This essay suggests a three-track

approach for moving beyond the Doha crisis 1) Identify a package of ldquodeliverablesrsquo ndash

parts of the Round that could be agreed by December 2011 2) Assemble a package of

contentious issues for ongoing negotiation with clear terms of reference 3) Establish

a work programme to consider WTO institutional reform and forward-looking issues

For reasons that are too well known to be repeated the WTO finds itself at the crossroads

Decisions to be taken in the next few weeks will determine whether it can steer its

way to a successful conclusion of the Doha Round in the near future Failing this the

Round will continue to hang like an albatross around the WTOrsquos neck preventing it

from delivering the promised boost to least developed nations and freezing its ability

to address new challenges to the global trading system All countries would suffer from

such an outcome but especially the worldrsquos poorest and most vulnerable

The cost of a never-ending Doha Round

The adverse implications of a continuing Doha impasse on the future role of the WTO

are too compelling to be dismissed offhandedly

Several trade-linked global problems require global cooperation Food security energy

security trade-related aspects of climate change labour mobility commodity price

volatility and integration of regional liberalisation into the multilateral system are

problems that can only be solved with global cooperation

Ujal Singh BhatiaFormerly Indiarsquos Ambassador and Permanent Representative to the WTO

Next Steps Getting past the Doha Round crisis

3333

VOX Research-based policy analysis and commentary from leading economists

34

For example if food exporters continue to impose export barriers when prices rise

food importers may respond with import barriers to boost self-sufficiency This sort of

protectionist reverberation could lead the world to a situation in which all the players

are worse off but none can improve the situation unilaterally Avoiding this sort of

outcome would require global agreements There are very few global institutions that

could manage such cooperation indeed the WTO might be the only one A WTO locked

in endless Doha debates cannot be the centre of the rules based global trading system

There are many thinkers who believe that the structure of WTO rules is robust enough

to withstand a Doha failure It is true that the sky will not fall if Doha is terminated

without a conclusion Such analysts however tend to underestimate the significant

structural changes taking place in the global economy and the trading system The

WTO is working on a set of rules agreed upon in 1994 that were based on an agenda

set almost a quarter of century ago These are still useful and relevant for much of

world trade ndash but not all For instance the rules were not designed for the technology-

driven fragmentation of the manufacturing process and the distribution of the product

value chain across several geographical locations the intertwining of production with

related services the embedded intellectual property rights in components and sub-

components or the multiplicity of rules of origin All these require a different approach

to rule making

A WTO that remains preoccupied with the Doha Round cannot be expected to focus

on such issues Therefore the continuing relevance of the WTO and its primacy in

the global trading system are contingent upon a successful and early conclusion of

the Doha Round Notwithstanding this urgency it is now clear that a Doha package

cannot be wound up in 2011 along the lines agreed by G20 leaders in November 2010

To prevent this from tying the WTO in knots for years to come it is necessary to think

creatively about ways forward

Next Steps Getting Past the Doha Round Crisis

35

Ideas for moving beyond the impasse

Any effort to deal with the impasse in the negotiations needs to be based on a holistic

appreciation of the systemic implications of a continuing stalemate as much as on the

negotiating positions of various members The efforts for a solution acceptable to all

members therefore need to focus on issues in the Doha mandate as well as on issues for

a post Doha situation

Within this framework four constraints need to be borne in mind

bull A ldquoDoha Literdquo of reduced ambition will not work The outcome has to reflect a dec-

adersquos efforts of the global community Ambition however cannot be defined to suit

the convenience of a few members It must touch all aspects of the Doha mandate

bull Aspects of the Doha mandate that are more relevant to the development dimension

have to be ambitiously addressed and fast tracked

bull WTO needs to start work on a new work programme to address new challenges

bull The Doha Round cannot be completed in 2011 A down payment is necessary from

the Doha Round this year to convince the world that the WTO can deliver

A three-track approach

These constraints require the WTO to adopt a three-track approach during the next few

months leading up to the ministerial meeting in December 2011

Track 1 Identification of a list of issues that specially address the trading interests

of smaller developing countries and relatively less contentious issues for fast tracked

finalisation before the ministerial meeting

Track 2 Identification of a package of the more contentious issues for continuing

consultations with clear terms of reference

Track 3 Identification of appropriate terms of reference for a work programme on

WTO institutional reform and the forward-looking agenda

VOX Research-based policy analysis and commentary from leading economists

36

A possible timeline

These three tracks taken as a package would provide a way forward that respects all

four constraints Achieving consensus on them would be difficult ndash and require months

of preparatory work and negotiations

If the WTO membership starts immediately however there is still time to get the

package ready for finalisation by ministers at the December 2011 ministerial meeting

For this to happen it is essential that discussions on such a package begin this month

so that its contents can be finalised by the end of June 2011 This would leave about

four working months before the ministerial meeting to complete negotiations on the

selected areas

What the three tracks might contain

The first track would contain the Doha down-payment package As with any WTO

package the contents would need to be negotiated and it might require complementary

policies such as technical assistance initiatives

Such a list must include items that speak to development aspects of the Doha mandate

such as

bull The Implementation of the Hong Kong decision on duty-free quota-free treatment

for less developed countries

bull A ministerial decision on the Monitoring Mechanism for Special and Differential

Treatment provisions

bull A ministerial decision on the issues raised by the Sub-Saharan African cotton ex-

porters (the group known as the C-4) and

bull The finalisation of a less-developed-country (LDC) waiver in services so that pref-

erential treatment can be provided to LDCrsquos in services without extending it to

others

Next Steps Getting Past the Doha Round Crisis

37

It should also include areas of the negotiations that engage the interest of all members

such as

bull Trade Facilitation

bull All aspects of export competition in agriculture including export subsidies

bull The Transparency Mechanism for regional trade agreements (RTAs)

bull The non-tariff barriers (NTBs) package in non-agricultural market access (NAMA)

and

bull A ministerial decision on interactions and relationships between the WTOrsquos rules

and its committees on the one hand and existing multilateral environmental agree-

ments on the other (eg the Basel Convention on the Control of Transboundary

Movements of Hazardous Wastes and the Montreal Protocol on Substances that

Deplete the Ozone Layer)

While some members would like to exclude some of these areas from a fast tracked

process in the hope of using them for trade offs in the final stage it is important that the

package is as comprehensive as possible

Track two Items for further negotiation

The second track would gather all remaining items currently under negotiations This

would include

bull All aspects of market access in industrial goods agriculture and services

bull All aspects of subsidies in agriculture

bull Various aspects of rules including fisheries subsidies

bull Environmental goods and

bull Issues related to trade-related aspects of international property rights (TRIPS) re-

garding the protection of Geographical Indicators and the protection of traditional

VOX Research-based policy analysis and commentary from leading economists

38

knowledge and folklore that were are mentioned in the Convention on Biological

Diversity1

The need for a balanced package deserves emphasis It is often assumed that there

is a straight trade-off between agricultural subsidies and market access The situation

however is more complex The interest of countries like India China and Indonesia

in agricultural reform is more systemic than export related For them other incentives

within the mandate will be required

Track three Looking ahead

The underlying theme for the work programme would be an appraisal of the entire

negotiating and decision-making process in the WTO in the context of the present

realities both within and outside the organisation The objective would be to prepare

the WTO to address new challenges to the global trading system concurrently with the

ongoing work on the remaining parts of the Doha mandate

Closing remarks

The above proposals constitute a basic template for addressing the Doha conundrum

To what extent they are actually embraced will depend on how much political capital

the major members of the WTO are prepared to invest in moving the Doha Round

forward There is much scepticism about whether such political will exists It is time

for governments to prove the sceptics wrong

1 Specifically as specified in paragraphs 18 and 19 of the Doha Declaration

Next Steps Getting Past the Doha Round Crisis

39

About the author

Ambassador Bhatia Singh joined the Indian Administrative Service in 1974 holding

several senior positions in provincial administration in Orissa State between 1976 and

1995 He served as Joint Secretary Ministry of Commerce and Industry between 1995-

2000 in which capacity he handled a number of bilateral regional and multilateral trade

negotiations From 2004 to his retirement in 2010 he served as Indiarsquos Ambassador and

Permanent Representative to the WTO in Geneva

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

VOX Research-based policy analysis and commentary from leading economists

20

During the 2008 food crisis imbalances between supply and demand were partly

attributed to distorted agriculture prices caused by trade-distorting export subsidies

and domestic-support schemes The agriculture package in Doha will go some way to

address this In todayrsquos situation of high commodity prices now is the perfect time to

address the removal and elimination of such trade-distorting policies Removing these

distortions can only be achieved through multilateral negotiations not through bilateral

or regional agreements

Most importantly the winners would be the billions of hungry and poor people all over

the world correcting the system and ensuring the future supply of food and greater

price stability is very much in their interests For example in Indonesia a 10 increase

in the price of rice without any change in income would lead to a 1 increase in

poverty

bull Second keeping protection at bay

During the depth of the crisis benign protectionism was the order of the day according

to the self-reporting surveillance mechanism established by the WTO at the request of

G20 Leaders This allowed the rebound of trade to become one of the costless ways for

the global economy to recover It is ironical that in the recovery the latest report (WTO

2011) shows that there has been a slight increase in protectionism causing an estimated

impact of 06 to G20 exports

The main increase has been due to tariff increases automatic licenses and other

restrictions including export restrictions Whilst this is still ldquosmallrdquo it is nevertheless

double from the previous period Restoration of the confidence in the world trading

system through clear signals that we are progressing on completing the Round is crucial

to keeping protectionism at bay Developing countries such as Indonesia have a great

interest in this because only the multilateral trading system will provide the fair rules-

based trading system for us to face large and more developed partners on a fair and

equal standing

Next Steps Getting Past the Doha Round Crisis

21

bull Third the lack of progress on the Doha Round already has and will continue to raise

the pressure to undertake bilateral and regional free trade negotiations

In the ASEAN region there are already FTAs between ASEAN and all six of its dialog

partners (Australia China India Japan Korea New Zealand) and numerous bilateral

FTAs The EU has just completed negotiations with Korea which has put pressure

for the Korea-US FTA to be ratified as soon as possible The EU has also completed

negotiations with India and is negotiating with Singapore Malaysia and preparing

to do so with other ASEAN countries Recently China Korea and Japan announced

revitalization of their FTA initiative Furthermore we have the Trans-Pacific Partnership

initiative between 8 members of APEC

It is not the bilateral and regional free trade agreements which are problematic per

se it is negotiating them in the absence of a robust WTO system ndash a system which is

seen as meeting the needs of the current and future trade-linked issues Bilateral and

regional agreements can only work towards complementing the multilateral trading

system when they are ldquoWTO-plusrdquo not ldquoWTO-insteadrdquo

bull Fourth the potential dampening effect on unilateral reforms

The political economy of openness in trade policy and institutional reform have always

functioned better within the framework of international commitments Multilateral

rules impose an important caveat on what countries can or cannot do In a country like

Indonesia this has worked to our advantage in the way we frame our reforms and in fact

has functioned in the past to put bad policies to rest

For instance in the famous National Car case in the mid 1980s which violated the

MFN principle by allowing duty-free imports of cars only from one source country the

domestic politics at the time did not allow for policymakers to remove this policy The

policy was finally ended through the WTOrsquos dispute settlement mechanism It would

be too bad for reforms if the process is undertaken within weakened confidence of

multilateral trading system or one which will eventually not be relevant to the evolution

of 21st century trade issues

VOX Research-based policy analysis and commentary from leading economists

22

The Way Forward No Plan B

Despite G20 Leadersrsquo commitments and all the good intentions and intensive work in

Geneva that came after the push given by trade ministers during their informal meeting

in Davos in January 2011 it proved impossible to arrive at a draft text by the end-of-

April milestone There remains ldquounbridgeable gapsrdquo in a number of main negotiating

groups namely non-agriculture market access

Given this situation trade ministers met first during the APEC Ministers of Trade

Meeting in Big Sky Montana and then on the fringes of the OECD meeting in Paris

Fortunately all have agreed that we all remain committed to completing Doha as a single

undertaking However there was a sense of realism as to the timing and pathways to

achieve this desirable outcome in a timely way

From an Indonesian perspective there is no ldquoPlan Brdquo We do not support a ldquoDoha

Lightrdquo and we remain committed to a comprehensive ambitious and balanced package

building on what we have achieved to date

After almost 6 years of negotiations since the key Hong Kong WTO Ministerial I

believe we are more than 50 or some would say 80 of the way done A realistic way

forward is to identify the sequence of steps that would take us to the final outcome this

is necessary to avoid the costs and lost-opportunities I outlined above

This is not about an early harvest or ldquocherry pickingrdquo and then stopping It is about

identifying the steps forward in a meaningful way towards the final goal of the single

undertaking of Doha

Identifying stepping stones to a final Doha Round conclusion

There are areas within the negotiations that could be seen as steps towards the final

package Of course work and political will is still needed to find ways to bridge the

Next Steps Getting Past the Doha Round Crisis

23

unbridgeable gaps In identifying the areas where we could find convergence a number

of priorities stand out

bull First and foremost is areas of negotiations that will contribute and deliver to devel-

opment objectives such as the Least Developed Countries package andor an effec-

tive aid-for-trade and facilitation package this is after all a Development Round

bull Second areas where there would be clear benefits for development and the private

sector in facilitating and ensuring the benefits of trade are greater we need stake-

holders to be cheerleading the way forward

bull Third there could be areas where we would be able to address the food-security

challenge

One could also foresee that within each current area of negotiations there could be

items which could be wrapped up without disturbing the overall balance of elements

in that particular area It is important that we do not go into ldquonewrdquo negotiations in

identifying which areas We should go into the mode of identifying these pathways and

steps with the mindset and political will of win-win

We need to be guided by priorities and pragmatism That is to identify the areas that are

doable and achievable in the very near future but which have an impact on development

and increasing the benefits of trade while at the same time building confidence for us to

continue our journey to the final package Most importantly we should never lose sight

of the final goal of the single undertaking

Looking forward

It is also important to provide the signal in what we say and do elsewhere Beyond

talking about Doha we must ensure continued confidence in and implementation of the

rules-based open trading system

VOX Research-based policy analysis and commentary from leading economists

24

bull This would mean the commitments of G20 Leaders and others on refraining from

protectionism going beyond words the good intentions need to be strengthened

with commitments and actions

bull It also has implications for how we undertake bilateral and regional agreements

these should be done in a way that is not an alternative to and does not detract from

the multilateral trading system We should pursue regionalism in a way which is

going to contribute to and complement the system

Concluding remarks

In conclusion we should not underestimate the costs of not doing all this We will

need to draw upon the strength of our individual and collective political commitment

We need to call on the ability of some major economies to look beyond pure national

interests and to look at the impact and costs on the global system and economy And we

need to remember that there are many countries and billions of people ndash many of which

are impoverished ndash who are waiting for the Doha deliverables

References

HLTE (2011) ldquoWorld trade and the Doha roundrdquo final report of the High-Level Trade

Experts Group chaired by Jagdish Bhagwati and Peter Sutherland

WTO (2011) ldquoReports on G20 trade and investment measures (mid-October 2010 to

April 2011)rdquo WTO Secretariat 24 May

About the author

Mari Pangestu is Indonesiarsquos Minister of Trade since 2004 having served as Executive

Director of the Jakarta-based think tank the Center for Strategic and International

Studies and a lecturer in the Faculty of Economics at the University of Indonesia From

1991 to 1998 Dr Pangestu was the coordinator of the Trade Policy Forum of the Pacific

Next Steps Getting Past the Doha Round Crisis

25

Economic Cooperation Council and serves on the Board of the Overseas Development

Council World Gold Council and the Asian Journal of Business from The University

of Michigan Ann Arbor

She has published widely on a range of subjects including matters pertaining to

Indonesia as well as regional (ie Asian and Asia Pacific) and global issues She earned

her BA and MA in economics from Australian National University and a PhD in

economics from the University of California Davis

27

The Doha Round has failed according the former US Trade Representative Susan

Schwab This essay argues that prolonging Doha jeopardises the multilateral trading

system and threatens future prospects for WTO-led liberalisation Negotiators should

salvage whatever partial agreements they can from Doha and quickly drop the rest

to ensure the December ministerial meeting focuses on future work plans rather than

recriminations over Doha

The Doha Round has failed It is time for the international community to acknowledge

this sad fact and move on Prolonging the pretence that the Doha Round will succeed

is now a greater threat to the WTO and the multilateral trading system than facing the

truth

A great many smart hard-working and well-intentioned individuals have worked over

many years to realise Doharsquos potential to contribute to global economic growth and

development But what is on the table in Geneva has failed to deliver any outcome

let alone a meaningful one It is time for a swift clean break from the past and to

lay the groundwork for a future where the WTO and its members revive WTO-led

liberalisation and reform

End Doharsquos stranglehold and build towards near-term wins

To keep the multilateral trading system healthy it is necessary to end the Doha

Roundrsquos stranglehold on the system This should happen quickly in order to ensure

that the December 2011 ministerial meeting focuses on future work plans rather than

Susan SchwabUniversity of Marlyand former US Trade Representative

Acknowledge Doharsquos demise and move on to save the WTO

2727

VOX Research-based policy analysis and commentary from leading economists

28

recriminations about a Doha Development Agenda that has struggled through one failed

encounter after another

Negotiators should refocus their efforts on near-term wins and on building the next

Round ndash which need not be another behemoth but perhaps a ldquorolling roundrdquo of reforms

and new market access or a few highest-common-denominator plurilateral or WTO-

plus deals Ultimately these should lead to a broader-based market access and rules

agreement under the multilateral auspices of the WTO

The small package possibility

In my recent Foreign Affairs article (Schwab 2011) I suggested that negotiators should

try to salvage whatever partial agreements they can and then walk away from the rest

I mentioned a number of potential candidates such as trade facilitation and the largely

completed agricultural-export pillar (comprising proposed agreements on export credits

food aid state-trading firms and the elimination of export subsidies) Negotiators

might also try to complete two environment-related agreements one cutting subsidies

to industrial fishing fleets that are overfishing the worldrsquos oceans and the other ending

tariff and nontariff barriers to rdquogreenrdquo technologies in major producing and consuming

countries Taken together or individually each of these would benefit countries across

the spectrum of economic development

I am however sceptical that even these small agreements are achievable in the current

climate of mistrust and entrenched positions A troubling development during the course

of the Round has been how often countries seem to forget or forfeit their own economic

interests ndash let alone the greater good ndash in the face of peer pressure and group-think In

the current environment even these smaller deals might prove impossible to achieve

It is certainly worth trying to achieve a few deliverables by taking a run at a small

package but negotiators should not spend too much time on it They already know

exactly what the options are if they cannot get to ldquoyesrdquo in say two weeks they should

Next Steps Getting Past the Doha Round Crisis

29

give up and move on to the real challenge of launching a new series of multilateral

negotiations under WTO auspices

Getting past Doha

How to conclude the Doha Round One option would be for the Director-General and

a representative sample of WTO Ambassadors to come together in the interest of the

institution and to offer a declaration of Doharsquos demise along with their pledge to begin

building the future That would enable leaders at the November G20 meeting to pledge

their support for the rules-based trading system the WTO and its next steps rather than

for the ever elusive ldquobalanced and ambitiousrdquo Doha outcome

After a short period of grieving over the death of Doha and an opportunity to get

beyond the anger lead trading nations should refocus on getting the WTO back into

its mainstream business of negotiating mutually advantageous market opening and

updating the global rdquorules of the roadrdquo This approach offers the best promise of a

meaningful ldquodevelopmentrdquo outcome as well

How might this be achieved

It seems unrealistic to think WTO members would agree to launch another massive

all-or-nothing round in the near future Such broad negotiations however will be

necessary to tackle some of the worldrsquos most important market access challenges in

services manufacturing and agriculture along with such issues as farm subsidies

There are ways to build-up to the big-round model again where countries once more see

economic self-interest in the use of broad-based negotiations and trade-offs to achieve

both new market access and market reforms First however we must re-establish trust

and regain momentum

One way forward would be for ministers to agree to launch a number of confidence-

building negotiations For example ministers in December could decide to open talks

VOX Research-based policy analysis and commentary from leading economists

30

on expanding the 1997 Information Technology Agreement a number of nations

seem interested and the US Administration already has the authority to implement an

enhanced agreement If negotiators fail to work through the 850 brackets in the current

Doha trade facilitation text that could also be tackled as a stand-alone agreement since

each nation would benefit from more efficient movement of goods and services across

borders

Another confidence-building measure might be a merger of sectoral agreements geared

toward a widely-shared objective such as cheaper better healthcare A package that

included pharmaceuticals medical devices and healthcare services might attract

support from the broad array of WTO members across the development spectrum Given

the high-level of public interest in and awareness of environment issues a sectoral

negotiation on environmental goods and services might be another confidence-building

deal once it is removed from the straightjacket that Doha has become

Lessons from Doha for next steps and the next round

Confidence building agreements would offer modest economic and social contributions

and serve to prepare the atmospherics for launch the next Round This brings me to my

last topic ndash the lessons we should draw from a decade of Doha talks

One thing that is quite clear from years of struggling with the basic structure of Doha

is that the combination of formula and self-selected flexibilities has not worked It

resulted in a situation where every negotiator had to assume the worst case ndash knowing

the political costs they would pay for their own liberalisation but expecting their trading

partners to use flexibilities to negate any meaningful new market-access It is possible

to draw from the best of the Doha formulas ndash such as the higher the barrier the greater

the cut ndash while still creating real negotiations around them through requests and offers

delivered using above- and below-formula cuts

Next Steps Getting Past the Doha Round Crisis

31

Another key lesson is that lumping the worldrsquos very diverse economies into three

basic categories ndash developed developing and least developed ndash is a practice that no

longer fits 21st century economic and trade realities Nor is it a structure conducive to

negotiations and real progress based on an exchange of market access among nations

with large markets Yes the advanced economies should be expected to do more than

those at lesser stages of economic development but expectations should also reflect

the fact that many emerging economies are characterised by both poverty and sectors

where they are globally competitive trade powerhouses

The emerging economies have large markets represent over half of global GDP growth

and stand to be the biggest winners from any major trade agreement They should be

expected to contribute to the next Round accordingly Major trade agreements generally

take at least 12 years to implement from the time they are initially concluded What

should the world trading system look like in 2025 in terms of the absolute and relative

responsibilities of key trading nations

Concluding remarks

I am optimistic when it comes to the multilateral trading system and the WTOrsquos central

role in its governance The optimistic scenario is that we put the Doha Round behind

us Facing facts can invigorate and strengthen the trading system If we fail to act the

WTO risks losing its relevance

The Doha Round ndash which in my view cannot be concluded as it is conceived today ndash

should not be allowed to continue draining the WTOrsquos credibility and potential progress

on the multilateral front Now is the time to liberate the would-be trade liberalisers from

the Doha straightjacket and move on

VOX Research-based policy analysis and commentary from leading economists

32

References

Schwab Susan (2011) ldquoAfter Doha Why the negotiations are doomed and what we

should do about itrdquo Foreign Affairs MayJune

About the author

Ambassador Schwab has been a Professor at the University of Maryland School of

Public Policy since January 2009 and a strategic advisor to Mayer Brown LLP (global

law firm) since March 2010 Ambassador Schwab served as US Trade Representative

from June 2006 to January 2009 and as Deputy US Trade Representative from

October 2005 to June 2006 Prior to her service as Deputy US Trade Representative

Ambassador Schwab served as President and Chief Executive Officer of the University

System of Maryland Foundation from June 2004 to October 2005 as a consultant

for the US Department of Treasury from July 2003 to December 2003 and as Dean

of the University of Maryland School of Public Policy from July 1995 to July 2003

Ambassador Schwab serves on the boards of Boeing Company Caterpillar Inc and

FedEx Corporation

She holds a BA in Political Economy from Williams College a Masters in Development

Policy from Stanford University (Food Research Institute) and a PhD in Public

Administration and International Business from The George Washington University

33

Hopes for finishing Doha in 2011 are fading fast This essay suggests a three-track

approach for moving beyond the Doha crisis 1) Identify a package of ldquodeliverablesrsquo ndash

parts of the Round that could be agreed by December 2011 2) Assemble a package of

contentious issues for ongoing negotiation with clear terms of reference 3) Establish

a work programme to consider WTO institutional reform and forward-looking issues

For reasons that are too well known to be repeated the WTO finds itself at the crossroads

Decisions to be taken in the next few weeks will determine whether it can steer its

way to a successful conclusion of the Doha Round in the near future Failing this the

Round will continue to hang like an albatross around the WTOrsquos neck preventing it

from delivering the promised boost to least developed nations and freezing its ability

to address new challenges to the global trading system All countries would suffer from

such an outcome but especially the worldrsquos poorest and most vulnerable

The cost of a never-ending Doha Round

The adverse implications of a continuing Doha impasse on the future role of the WTO

are too compelling to be dismissed offhandedly

Several trade-linked global problems require global cooperation Food security energy

security trade-related aspects of climate change labour mobility commodity price

volatility and integration of regional liberalisation into the multilateral system are

problems that can only be solved with global cooperation

Ujal Singh BhatiaFormerly Indiarsquos Ambassador and Permanent Representative to the WTO

Next Steps Getting past the Doha Round crisis

3333

VOX Research-based policy analysis and commentary from leading economists

34

For example if food exporters continue to impose export barriers when prices rise

food importers may respond with import barriers to boost self-sufficiency This sort of

protectionist reverberation could lead the world to a situation in which all the players

are worse off but none can improve the situation unilaterally Avoiding this sort of

outcome would require global agreements There are very few global institutions that

could manage such cooperation indeed the WTO might be the only one A WTO locked

in endless Doha debates cannot be the centre of the rules based global trading system

There are many thinkers who believe that the structure of WTO rules is robust enough

to withstand a Doha failure It is true that the sky will not fall if Doha is terminated

without a conclusion Such analysts however tend to underestimate the significant

structural changes taking place in the global economy and the trading system The

WTO is working on a set of rules agreed upon in 1994 that were based on an agenda

set almost a quarter of century ago These are still useful and relevant for much of

world trade ndash but not all For instance the rules were not designed for the technology-

driven fragmentation of the manufacturing process and the distribution of the product

value chain across several geographical locations the intertwining of production with

related services the embedded intellectual property rights in components and sub-

components or the multiplicity of rules of origin All these require a different approach

to rule making

A WTO that remains preoccupied with the Doha Round cannot be expected to focus

on such issues Therefore the continuing relevance of the WTO and its primacy in

the global trading system are contingent upon a successful and early conclusion of

the Doha Round Notwithstanding this urgency it is now clear that a Doha package

cannot be wound up in 2011 along the lines agreed by G20 leaders in November 2010

To prevent this from tying the WTO in knots for years to come it is necessary to think

creatively about ways forward

Next Steps Getting Past the Doha Round Crisis

35

Ideas for moving beyond the impasse

Any effort to deal with the impasse in the negotiations needs to be based on a holistic

appreciation of the systemic implications of a continuing stalemate as much as on the

negotiating positions of various members The efforts for a solution acceptable to all

members therefore need to focus on issues in the Doha mandate as well as on issues for

a post Doha situation

Within this framework four constraints need to be borne in mind

bull A ldquoDoha Literdquo of reduced ambition will not work The outcome has to reflect a dec-

adersquos efforts of the global community Ambition however cannot be defined to suit

the convenience of a few members It must touch all aspects of the Doha mandate

bull Aspects of the Doha mandate that are more relevant to the development dimension

have to be ambitiously addressed and fast tracked

bull WTO needs to start work on a new work programme to address new challenges

bull The Doha Round cannot be completed in 2011 A down payment is necessary from

the Doha Round this year to convince the world that the WTO can deliver

A three-track approach

These constraints require the WTO to adopt a three-track approach during the next few

months leading up to the ministerial meeting in December 2011

Track 1 Identification of a list of issues that specially address the trading interests

of smaller developing countries and relatively less contentious issues for fast tracked

finalisation before the ministerial meeting

Track 2 Identification of a package of the more contentious issues for continuing

consultations with clear terms of reference

Track 3 Identification of appropriate terms of reference for a work programme on

WTO institutional reform and the forward-looking agenda

VOX Research-based policy analysis and commentary from leading economists

36

A possible timeline

These three tracks taken as a package would provide a way forward that respects all

four constraints Achieving consensus on them would be difficult ndash and require months

of preparatory work and negotiations

If the WTO membership starts immediately however there is still time to get the

package ready for finalisation by ministers at the December 2011 ministerial meeting

For this to happen it is essential that discussions on such a package begin this month

so that its contents can be finalised by the end of June 2011 This would leave about

four working months before the ministerial meeting to complete negotiations on the

selected areas

What the three tracks might contain

The first track would contain the Doha down-payment package As with any WTO

package the contents would need to be negotiated and it might require complementary

policies such as technical assistance initiatives

Such a list must include items that speak to development aspects of the Doha mandate

such as

bull The Implementation of the Hong Kong decision on duty-free quota-free treatment

for less developed countries

bull A ministerial decision on the Monitoring Mechanism for Special and Differential

Treatment provisions

bull A ministerial decision on the issues raised by the Sub-Saharan African cotton ex-

porters (the group known as the C-4) and

bull The finalisation of a less-developed-country (LDC) waiver in services so that pref-

erential treatment can be provided to LDCrsquos in services without extending it to

others

Next Steps Getting Past the Doha Round Crisis

37

It should also include areas of the negotiations that engage the interest of all members

such as

bull Trade Facilitation

bull All aspects of export competition in agriculture including export subsidies

bull The Transparency Mechanism for regional trade agreements (RTAs)

bull The non-tariff barriers (NTBs) package in non-agricultural market access (NAMA)

and

bull A ministerial decision on interactions and relationships between the WTOrsquos rules

and its committees on the one hand and existing multilateral environmental agree-

ments on the other (eg the Basel Convention on the Control of Transboundary

Movements of Hazardous Wastes and the Montreal Protocol on Substances that

Deplete the Ozone Layer)

While some members would like to exclude some of these areas from a fast tracked

process in the hope of using them for trade offs in the final stage it is important that the

package is as comprehensive as possible

Track two Items for further negotiation

The second track would gather all remaining items currently under negotiations This

would include

bull All aspects of market access in industrial goods agriculture and services

bull All aspects of subsidies in agriculture

bull Various aspects of rules including fisheries subsidies

bull Environmental goods and

bull Issues related to trade-related aspects of international property rights (TRIPS) re-

garding the protection of Geographical Indicators and the protection of traditional

VOX Research-based policy analysis and commentary from leading economists

38

knowledge and folklore that were are mentioned in the Convention on Biological

Diversity1

The need for a balanced package deserves emphasis It is often assumed that there

is a straight trade-off between agricultural subsidies and market access The situation

however is more complex The interest of countries like India China and Indonesia

in agricultural reform is more systemic than export related For them other incentives

within the mandate will be required

Track three Looking ahead

The underlying theme for the work programme would be an appraisal of the entire

negotiating and decision-making process in the WTO in the context of the present

realities both within and outside the organisation The objective would be to prepare

the WTO to address new challenges to the global trading system concurrently with the

ongoing work on the remaining parts of the Doha mandate

Closing remarks

The above proposals constitute a basic template for addressing the Doha conundrum

To what extent they are actually embraced will depend on how much political capital

the major members of the WTO are prepared to invest in moving the Doha Round

forward There is much scepticism about whether such political will exists It is time

for governments to prove the sceptics wrong

1 Specifically as specified in paragraphs 18 and 19 of the Doha Declaration

Next Steps Getting Past the Doha Round Crisis

39

About the author

Ambassador Bhatia Singh joined the Indian Administrative Service in 1974 holding

several senior positions in provincial administration in Orissa State between 1976 and

1995 He served as Joint Secretary Ministry of Commerce and Industry between 1995-

2000 in which capacity he handled a number of bilateral regional and multilateral trade

negotiations From 2004 to his retirement in 2010 he served as Indiarsquos Ambassador and

Permanent Representative to the WTO in Geneva

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

Next Steps Getting Past the Doha Round Crisis

21

bull Third the lack of progress on the Doha Round already has and will continue to raise

the pressure to undertake bilateral and regional free trade negotiations

In the ASEAN region there are already FTAs between ASEAN and all six of its dialog

partners (Australia China India Japan Korea New Zealand) and numerous bilateral

FTAs The EU has just completed negotiations with Korea which has put pressure

for the Korea-US FTA to be ratified as soon as possible The EU has also completed

negotiations with India and is negotiating with Singapore Malaysia and preparing

to do so with other ASEAN countries Recently China Korea and Japan announced

revitalization of their FTA initiative Furthermore we have the Trans-Pacific Partnership

initiative between 8 members of APEC

It is not the bilateral and regional free trade agreements which are problematic per

se it is negotiating them in the absence of a robust WTO system ndash a system which is

seen as meeting the needs of the current and future trade-linked issues Bilateral and

regional agreements can only work towards complementing the multilateral trading

system when they are ldquoWTO-plusrdquo not ldquoWTO-insteadrdquo

bull Fourth the potential dampening effect on unilateral reforms

The political economy of openness in trade policy and institutional reform have always

functioned better within the framework of international commitments Multilateral

rules impose an important caveat on what countries can or cannot do In a country like

Indonesia this has worked to our advantage in the way we frame our reforms and in fact

has functioned in the past to put bad policies to rest

For instance in the famous National Car case in the mid 1980s which violated the

MFN principle by allowing duty-free imports of cars only from one source country the

domestic politics at the time did not allow for policymakers to remove this policy The

policy was finally ended through the WTOrsquos dispute settlement mechanism It would

be too bad for reforms if the process is undertaken within weakened confidence of

multilateral trading system or one which will eventually not be relevant to the evolution

of 21st century trade issues

VOX Research-based policy analysis and commentary from leading economists

22

The Way Forward No Plan B

Despite G20 Leadersrsquo commitments and all the good intentions and intensive work in

Geneva that came after the push given by trade ministers during their informal meeting

in Davos in January 2011 it proved impossible to arrive at a draft text by the end-of-

April milestone There remains ldquounbridgeable gapsrdquo in a number of main negotiating

groups namely non-agriculture market access

Given this situation trade ministers met first during the APEC Ministers of Trade

Meeting in Big Sky Montana and then on the fringes of the OECD meeting in Paris

Fortunately all have agreed that we all remain committed to completing Doha as a single

undertaking However there was a sense of realism as to the timing and pathways to

achieve this desirable outcome in a timely way

From an Indonesian perspective there is no ldquoPlan Brdquo We do not support a ldquoDoha

Lightrdquo and we remain committed to a comprehensive ambitious and balanced package

building on what we have achieved to date

After almost 6 years of negotiations since the key Hong Kong WTO Ministerial I

believe we are more than 50 or some would say 80 of the way done A realistic way

forward is to identify the sequence of steps that would take us to the final outcome this

is necessary to avoid the costs and lost-opportunities I outlined above

This is not about an early harvest or ldquocherry pickingrdquo and then stopping It is about

identifying the steps forward in a meaningful way towards the final goal of the single

undertaking of Doha

Identifying stepping stones to a final Doha Round conclusion

There are areas within the negotiations that could be seen as steps towards the final

package Of course work and political will is still needed to find ways to bridge the

Next Steps Getting Past the Doha Round Crisis

23

unbridgeable gaps In identifying the areas where we could find convergence a number

of priorities stand out

bull First and foremost is areas of negotiations that will contribute and deliver to devel-

opment objectives such as the Least Developed Countries package andor an effec-

tive aid-for-trade and facilitation package this is after all a Development Round

bull Second areas where there would be clear benefits for development and the private

sector in facilitating and ensuring the benefits of trade are greater we need stake-

holders to be cheerleading the way forward

bull Third there could be areas where we would be able to address the food-security

challenge

One could also foresee that within each current area of negotiations there could be

items which could be wrapped up without disturbing the overall balance of elements

in that particular area It is important that we do not go into ldquonewrdquo negotiations in

identifying which areas We should go into the mode of identifying these pathways and

steps with the mindset and political will of win-win

We need to be guided by priorities and pragmatism That is to identify the areas that are

doable and achievable in the very near future but which have an impact on development

and increasing the benefits of trade while at the same time building confidence for us to

continue our journey to the final package Most importantly we should never lose sight

of the final goal of the single undertaking

Looking forward

It is also important to provide the signal in what we say and do elsewhere Beyond

talking about Doha we must ensure continued confidence in and implementation of the

rules-based open trading system

VOX Research-based policy analysis and commentary from leading economists

24

bull This would mean the commitments of G20 Leaders and others on refraining from

protectionism going beyond words the good intentions need to be strengthened

with commitments and actions

bull It also has implications for how we undertake bilateral and regional agreements

these should be done in a way that is not an alternative to and does not detract from

the multilateral trading system We should pursue regionalism in a way which is

going to contribute to and complement the system

Concluding remarks

In conclusion we should not underestimate the costs of not doing all this We will

need to draw upon the strength of our individual and collective political commitment

We need to call on the ability of some major economies to look beyond pure national

interests and to look at the impact and costs on the global system and economy And we

need to remember that there are many countries and billions of people ndash many of which

are impoverished ndash who are waiting for the Doha deliverables

References

HLTE (2011) ldquoWorld trade and the Doha roundrdquo final report of the High-Level Trade

Experts Group chaired by Jagdish Bhagwati and Peter Sutherland

WTO (2011) ldquoReports on G20 trade and investment measures (mid-October 2010 to

April 2011)rdquo WTO Secretariat 24 May

About the author

Mari Pangestu is Indonesiarsquos Minister of Trade since 2004 having served as Executive

Director of the Jakarta-based think tank the Center for Strategic and International

Studies and a lecturer in the Faculty of Economics at the University of Indonesia From

1991 to 1998 Dr Pangestu was the coordinator of the Trade Policy Forum of the Pacific

Next Steps Getting Past the Doha Round Crisis

25

Economic Cooperation Council and serves on the Board of the Overseas Development

Council World Gold Council and the Asian Journal of Business from The University

of Michigan Ann Arbor

She has published widely on a range of subjects including matters pertaining to

Indonesia as well as regional (ie Asian and Asia Pacific) and global issues She earned

her BA and MA in economics from Australian National University and a PhD in

economics from the University of California Davis

27

The Doha Round has failed according the former US Trade Representative Susan

Schwab This essay argues that prolonging Doha jeopardises the multilateral trading

system and threatens future prospects for WTO-led liberalisation Negotiators should

salvage whatever partial agreements they can from Doha and quickly drop the rest

to ensure the December ministerial meeting focuses on future work plans rather than

recriminations over Doha

The Doha Round has failed It is time for the international community to acknowledge

this sad fact and move on Prolonging the pretence that the Doha Round will succeed

is now a greater threat to the WTO and the multilateral trading system than facing the

truth

A great many smart hard-working and well-intentioned individuals have worked over

many years to realise Doharsquos potential to contribute to global economic growth and

development But what is on the table in Geneva has failed to deliver any outcome

let alone a meaningful one It is time for a swift clean break from the past and to

lay the groundwork for a future where the WTO and its members revive WTO-led

liberalisation and reform

End Doharsquos stranglehold and build towards near-term wins

To keep the multilateral trading system healthy it is necessary to end the Doha

Roundrsquos stranglehold on the system This should happen quickly in order to ensure

that the December 2011 ministerial meeting focuses on future work plans rather than

Susan SchwabUniversity of Marlyand former US Trade Representative

Acknowledge Doharsquos demise and move on to save the WTO

2727

VOX Research-based policy analysis and commentary from leading economists

28

recriminations about a Doha Development Agenda that has struggled through one failed

encounter after another

Negotiators should refocus their efforts on near-term wins and on building the next

Round ndash which need not be another behemoth but perhaps a ldquorolling roundrdquo of reforms

and new market access or a few highest-common-denominator plurilateral or WTO-

plus deals Ultimately these should lead to a broader-based market access and rules

agreement under the multilateral auspices of the WTO

The small package possibility

In my recent Foreign Affairs article (Schwab 2011) I suggested that negotiators should

try to salvage whatever partial agreements they can and then walk away from the rest

I mentioned a number of potential candidates such as trade facilitation and the largely

completed agricultural-export pillar (comprising proposed agreements on export credits

food aid state-trading firms and the elimination of export subsidies) Negotiators

might also try to complete two environment-related agreements one cutting subsidies

to industrial fishing fleets that are overfishing the worldrsquos oceans and the other ending

tariff and nontariff barriers to rdquogreenrdquo technologies in major producing and consuming

countries Taken together or individually each of these would benefit countries across

the spectrum of economic development

I am however sceptical that even these small agreements are achievable in the current

climate of mistrust and entrenched positions A troubling development during the course

of the Round has been how often countries seem to forget or forfeit their own economic

interests ndash let alone the greater good ndash in the face of peer pressure and group-think In

the current environment even these smaller deals might prove impossible to achieve

It is certainly worth trying to achieve a few deliverables by taking a run at a small

package but negotiators should not spend too much time on it They already know

exactly what the options are if they cannot get to ldquoyesrdquo in say two weeks they should

Next Steps Getting Past the Doha Round Crisis

29

give up and move on to the real challenge of launching a new series of multilateral

negotiations under WTO auspices

Getting past Doha

How to conclude the Doha Round One option would be for the Director-General and

a representative sample of WTO Ambassadors to come together in the interest of the

institution and to offer a declaration of Doharsquos demise along with their pledge to begin

building the future That would enable leaders at the November G20 meeting to pledge

their support for the rules-based trading system the WTO and its next steps rather than

for the ever elusive ldquobalanced and ambitiousrdquo Doha outcome

After a short period of grieving over the death of Doha and an opportunity to get

beyond the anger lead trading nations should refocus on getting the WTO back into

its mainstream business of negotiating mutually advantageous market opening and

updating the global rdquorules of the roadrdquo This approach offers the best promise of a

meaningful ldquodevelopmentrdquo outcome as well

How might this be achieved

It seems unrealistic to think WTO members would agree to launch another massive

all-or-nothing round in the near future Such broad negotiations however will be

necessary to tackle some of the worldrsquos most important market access challenges in

services manufacturing and agriculture along with such issues as farm subsidies

There are ways to build-up to the big-round model again where countries once more see

economic self-interest in the use of broad-based negotiations and trade-offs to achieve

both new market access and market reforms First however we must re-establish trust

and regain momentum

One way forward would be for ministers to agree to launch a number of confidence-

building negotiations For example ministers in December could decide to open talks

VOX Research-based policy analysis and commentary from leading economists

30

on expanding the 1997 Information Technology Agreement a number of nations

seem interested and the US Administration already has the authority to implement an

enhanced agreement If negotiators fail to work through the 850 brackets in the current

Doha trade facilitation text that could also be tackled as a stand-alone agreement since

each nation would benefit from more efficient movement of goods and services across

borders

Another confidence-building measure might be a merger of sectoral agreements geared

toward a widely-shared objective such as cheaper better healthcare A package that

included pharmaceuticals medical devices and healthcare services might attract

support from the broad array of WTO members across the development spectrum Given

the high-level of public interest in and awareness of environment issues a sectoral

negotiation on environmental goods and services might be another confidence-building

deal once it is removed from the straightjacket that Doha has become

Lessons from Doha for next steps and the next round

Confidence building agreements would offer modest economic and social contributions

and serve to prepare the atmospherics for launch the next Round This brings me to my

last topic ndash the lessons we should draw from a decade of Doha talks

One thing that is quite clear from years of struggling with the basic structure of Doha

is that the combination of formula and self-selected flexibilities has not worked It

resulted in a situation where every negotiator had to assume the worst case ndash knowing

the political costs they would pay for their own liberalisation but expecting their trading

partners to use flexibilities to negate any meaningful new market-access It is possible

to draw from the best of the Doha formulas ndash such as the higher the barrier the greater

the cut ndash while still creating real negotiations around them through requests and offers

delivered using above- and below-formula cuts

Next Steps Getting Past the Doha Round Crisis

31

Another key lesson is that lumping the worldrsquos very diverse economies into three

basic categories ndash developed developing and least developed ndash is a practice that no

longer fits 21st century economic and trade realities Nor is it a structure conducive to

negotiations and real progress based on an exchange of market access among nations

with large markets Yes the advanced economies should be expected to do more than

those at lesser stages of economic development but expectations should also reflect

the fact that many emerging economies are characterised by both poverty and sectors

where they are globally competitive trade powerhouses

The emerging economies have large markets represent over half of global GDP growth

and stand to be the biggest winners from any major trade agreement They should be

expected to contribute to the next Round accordingly Major trade agreements generally

take at least 12 years to implement from the time they are initially concluded What

should the world trading system look like in 2025 in terms of the absolute and relative

responsibilities of key trading nations

Concluding remarks

I am optimistic when it comes to the multilateral trading system and the WTOrsquos central

role in its governance The optimistic scenario is that we put the Doha Round behind

us Facing facts can invigorate and strengthen the trading system If we fail to act the

WTO risks losing its relevance

The Doha Round ndash which in my view cannot be concluded as it is conceived today ndash

should not be allowed to continue draining the WTOrsquos credibility and potential progress

on the multilateral front Now is the time to liberate the would-be trade liberalisers from

the Doha straightjacket and move on

VOX Research-based policy analysis and commentary from leading economists

32

References

Schwab Susan (2011) ldquoAfter Doha Why the negotiations are doomed and what we

should do about itrdquo Foreign Affairs MayJune

About the author

Ambassador Schwab has been a Professor at the University of Maryland School of

Public Policy since January 2009 and a strategic advisor to Mayer Brown LLP (global

law firm) since March 2010 Ambassador Schwab served as US Trade Representative

from June 2006 to January 2009 and as Deputy US Trade Representative from

October 2005 to June 2006 Prior to her service as Deputy US Trade Representative

Ambassador Schwab served as President and Chief Executive Officer of the University

System of Maryland Foundation from June 2004 to October 2005 as a consultant

for the US Department of Treasury from July 2003 to December 2003 and as Dean

of the University of Maryland School of Public Policy from July 1995 to July 2003

Ambassador Schwab serves on the boards of Boeing Company Caterpillar Inc and

FedEx Corporation

She holds a BA in Political Economy from Williams College a Masters in Development

Policy from Stanford University (Food Research Institute) and a PhD in Public

Administration and International Business from The George Washington University

33

Hopes for finishing Doha in 2011 are fading fast This essay suggests a three-track

approach for moving beyond the Doha crisis 1) Identify a package of ldquodeliverablesrsquo ndash

parts of the Round that could be agreed by December 2011 2) Assemble a package of

contentious issues for ongoing negotiation with clear terms of reference 3) Establish

a work programme to consider WTO institutional reform and forward-looking issues

For reasons that are too well known to be repeated the WTO finds itself at the crossroads

Decisions to be taken in the next few weeks will determine whether it can steer its

way to a successful conclusion of the Doha Round in the near future Failing this the

Round will continue to hang like an albatross around the WTOrsquos neck preventing it

from delivering the promised boost to least developed nations and freezing its ability

to address new challenges to the global trading system All countries would suffer from

such an outcome but especially the worldrsquos poorest and most vulnerable

The cost of a never-ending Doha Round

The adverse implications of a continuing Doha impasse on the future role of the WTO

are too compelling to be dismissed offhandedly

Several trade-linked global problems require global cooperation Food security energy

security trade-related aspects of climate change labour mobility commodity price

volatility and integration of regional liberalisation into the multilateral system are

problems that can only be solved with global cooperation

Ujal Singh BhatiaFormerly Indiarsquos Ambassador and Permanent Representative to the WTO

Next Steps Getting past the Doha Round crisis

3333

VOX Research-based policy analysis and commentary from leading economists

34

For example if food exporters continue to impose export barriers when prices rise

food importers may respond with import barriers to boost self-sufficiency This sort of

protectionist reverberation could lead the world to a situation in which all the players

are worse off but none can improve the situation unilaterally Avoiding this sort of

outcome would require global agreements There are very few global institutions that

could manage such cooperation indeed the WTO might be the only one A WTO locked

in endless Doha debates cannot be the centre of the rules based global trading system

There are many thinkers who believe that the structure of WTO rules is robust enough

to withstand a Doha failure It is true that the sky will not fall if Doha is terminated

without a conclusion Such analysts however tend to underestimate the significant

structural changes taking place in the global economy and the trading system The

WTO is working on a set of rules agreed upon in 1994 that were based on an agenda

set almost a quarter of century ago These are still useful and relevant for much of

world trade ndash but not all For instance the rules were not designed for the technology-

driven fragmentation of the manufacturing process and the distribution of the product

value chain across several geographical locations the intertwining of production with

related services the embedded intellectual property rights in components and sub-

components or the multiplicity of rules of origin All these require a different approach

to rule making

A WTO that remains preoccupied with the Doha Round cannot be expected to focus

on such issues Therefore the continuing relevance of the WTO and its primacy in

the global trading system are contingent upon a successful and early conclusion of

the Doha Round Notwithstanding this urgency it is now clear that a Doha package

cannot be wound up in 2011 along the lines agreed by G20 leaders in November 2010

To prevent this from tying the WTO in knots for years to come it is necessary to think

creatively about ways forward

Next Steps Getting Past the Doha Round Crisis

35

Ideas for moving beyond the impasse

Any effort to deal with the impasse in the negotiations needs to be based on a holistic

appreciation of the systemic implications of a continuing stalemate as much as on the

negotiating positions of various members The efforts for a solution acceptable to all

members therefore need to focus on issues in the Doha mandate as well as on issues for

a post Doha situation

Within this framework four constraints need to be borne in mind

bull A ldquoDoha Literdquo of reduced ambition will not work The outcome has to reflect a dec-

adersquos efforts of the global community Ambition however cannot be defined to suit

the convenience of a few members It must touch all aspects of the Doha mandate

bull Aspects of the Doha mandate that are more relevant to the development dimension

have to be ambitiously addressed and fast tracked

bull WTO needs to start work on a new work programme to address new challenges

bull The Doha Round cannot be completed in 2011 A down payment is necessary from

the Doha Round this year to convince the world that the WTO can deliver

A three-track approach

These constraints require the WTO to adopt a three-track approach during the next few

months leading up to the ministerial meeting in December 2011

Track 1 Identification of a list of issues that specially address the trading interests

of smaller developing countries and relatively less contentious issues for fast tracked

finalisation before the ministerial meeting

Track 2 Identification of a package of the more contentious issues for continuing

consultations with clear terms of reference

Track 3 Identification of appropriate terms of reference for a work programme on

WTO institutional reform and the forward-looking agenda

VOX Research-based policy analysis and commentary from leading economists

36

A possible timeline

These three tracks taken as a package would provide a way forward that respects all

four constraints Achieving consensus on them would be difficult ndash and require months

of preparatory work and negotiations

If the WTO membership starts immediately however there is still time to get the

package ready for finalisation by ministers at the December 2011 ministerial meeting

For this to happen it is essential that discussions on such a package begin this month

so that its contents can be finalised by the end of June 2011 This would leave about

four working months before the ministerial meeting to complete negotiations on the

selected areas

What the three tracks might contain

The first track would contain the Doha down-payment package As with any WTO

package the contents would need to be negotiated and it might require complementary

policies such as technical assistance initiatives

Such a list must include items that speak to development aspects of the Doha mandate

such as

bull The Implementation of the Hong Kong decision on duty-free quota-free treatment

for less developed countries

bull A ministerial decision on the Monitoring Mechanism for Special and Differential

Treatment provisions

bull A ministerial decision on the issues raised by the Sub-Saharan African cotton ex-

porters (the group known as the C-4) and

bull The finalisation of a less-developed-country (LDC) waiver in services so that pref-

erential treatment can be provided to LDCrsquos in services without extending it to

others

Next Steps Getting Past the Doha Round Crisis

37

It should also include areas of the negotiations that engage the interest of all members

such as

bull Trade Facilitation

bull All aspects of export competition in agriculture including export subsidies

bull The Transparency Mechanism for regional trade agreements (RTAs)

bull The non-tariff barriers (NTBs) package in non-agricultural market access (NAMA)

and

bull A ministerial decision on interactions and relationships between the WTOrsquos rules

and its committees on the one hand and existing multilateral environmental agree-

ments on the other (eg the Basel Convention on the Control of Transboundary

Movements of Hazardous Wastes and the Montreal Protocol on Substances that

Deplete the Ozone Layer)

While some members would like to exclude some of these areas from a fast tracked

process in the hope of using them for trade offs in the final stage it is important that the

package is as comprehensive as possible

Track two Items for further negotiation

The second track would gather all remaining items currently under negotiations This

would include

bull All aspects of market access in industrial goods agriculture and services

bull All aspects of subsidies in agriculture

bull Various aspects of rules including fisheries subsidies

bull Environmental goods and

bull Issues related to trade-related aspects of international property rights (TRIPS) re-

garding the protection of Geographical Indicators and the protection of traditional

VOX Research-based policy analysis and commentary from leading economists

38

knowledge and folklore that were are mentioned in the Convention on Biological

Diversity1

The need for a balanced package deserves emphasis It is often assumed that there

is a straight trade-off between agricultural subsidies and market access The situation

however is more complex The interest of countries like India China and Indonesia

in agricultural reform is more systemic than export related For them other incentives

within the mandate will be required

Track three Looking ahead

The underlying theme for the work programme would be an appraisal of the entire

negotiating and decision-making process in the WTO in the context of the present

realities both within and outside the organisation The objective would be to prepare

the WTO to address new challenges to the global trading system concurrently with the

ongoing work on the remaining parts of the Doha mandate

Closing remarks

The above proposals constitute a basic template for addressing the Doha conundrum

To what extent they are actually embraced will depend on how much political capital

the major members of the WTO are prepared to invest in moving the Doha Round

forward There is much scepticism about whether such political will exists It is time

for governments to prove the sceptics wrong

1 Specifically as specified in paragraphs 18 and 19 of the Doha Declaration

Next Steps Getting Past the Doha Round Crisis

39

About the author

Ambassador Bhatia Singh joined the Indian Administrative Service in 1974 holding

several senior positions in provincial administration in Orissa State between 1976 and

1995 He served as Joint Secretary Ministry of Commerce and Industry between 1995-

2000 in which capacity he handled a number of bilateral regional and multilateral trade

negotiations From 2004 to his retirement in 2010 he served as Indiarsquos Ambassador and

Permanent Representative to the WTO in Geneva

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

VOX Research-based policy analysis and commentary from leading economists

22

The Way Forward No Plan B

Despite G20 Leadersrsquo commitments and all the good intentions and intensive work in

Geneva that came after the push given by trade ministers during their informal meeting

in Davos in January 2011 it proved impossible to arrive at a draft text by the end-of-

April milestone There remains ldquounbridgeable gapsrdquo in a number of main negotiating

groups namely non-agriculture market access

Given this situation trade ministers met first during the APEC Ministers of Trade

Meeting in Big Sky Montana and then on the fringes of the OECD meeting in Paris

Fortunately all have agreed that we all remain committed to completing Doha as a single

undertaking However there was a sense of realism as to the timing and pathways to

achieve this desirable outcome in a timely way

From an Indonesian perspective there is no ldquoPlan Brdquo We do not support a ldquoDoha

Lightrdquo and we remain committed to a comprehensive ambitious and balanced package

building on what we have achieved to date

After almost 6 years of negotiations since the key Hong Kong WTO Ministerial I

believe we are more than 50 or some would say 80 of the way done A realistic way

forward is to identify the sequence of steps that would take us to the final outcome this

is necessary to avoid the costs and lost-opportunities I outlined above

This is not about an early harvest or ldquocherry pickingrdquo and then stopping It is about

identifying the steps forward in a meaningful way towards the final goal of the single

undertaking of Doha

Identifying stepping stones to a final Doha Round conclusion

There are areas within the negotiations that could be seen as steps towards the final

package Of course work and political will is still needed to find ways to bridge the

Next Steps Getting Past the Doha Round Crisis

23

unbridgeable gaps In identifying the areas where we could find convergence a number

of priorities stand out

bull First and foremost is areas of negotiations that will contribute and deliver to devel-

opment objectives such as the Least Developed Countries package andor an effec-

tive aid-for-trade and facilitation package this is after all a Development Round

bull Second areas where there would be clear benefits for development and the private

sector in facilitating and ensuring the benefits of trade are greater we need stake-

holders to be cheerleading the way forward

bull Third there could be areas where we would be able to address the food-security

challenge

One could also foresee that within each current area of negotiations there could be

items which could be wrapped up without disturbing the overall balance of elements

in that particular area It is important that we do not go into ldquonewrdquo negotiations in

identifying which areas We should go into the mode of identifying these pathways and

steps with the mindset and political will of win-win

We need to be guided by priorities and pragmatism That is to identify the areas that are

doable and achievable in the very near future but which have an impact on development

and increasing the benefits of trade while at the same time building confidence for us to

continue our journey to the final package Most importantly we should never lose sight

of the final goal of the single undertaking

Looking forward

It is also important to provide the signal in what we say and do elsewhere Beyond

talking about Doha we must ensure continued confidence in and implementation of the

rules-based open trading system

VOX Research-based policy analysis and commentary from leading economists

24

bull This would mean the commitments of G20 Leaders and others on refraining from

protectionism going beyond words the good intentions need to be strengthened

with commitments and actions

bull It also has implications for how we undertake bilateral and regional agreements

these should be done in a way that is not an alternative to and does not detract from

the multilateral trading system We should pursue regionalism in a way which is

going to contribute to and complement the system

Concluding remarks

In conclusion we should not underestimate the costs of not doing all this We will

need to draw upon the strength of our individual and collective political commitment

We need to call on the ability of some major economies to look beyond pure national

interests and to look at the impact and costs on the global system and economy And we

need to remember that there are many countries and billions of people ndash many of which

are impoverished ndash who are waiting for the Doha deliverables

References

HLTE (2011) ldquoWorld trade and the Doha roundrdquo final report of the High-Level Trade

Experts Group chaired by Jagdish Bhagwati and Peter Sutherland

WTO (2011) ldquoReports on G20 trade and investment measures (mid-October 2010 to

April 2011)rdquo WTO Secretariat 24 May

About the author

Mari Pangestu is Indonesiarsquos Minister of Trade since 2004 having served as Executive

Director of the Jakarta-based think tank the Center for Strategic and International

Studies and a lecturer in the Faculty of Economics at the University of Indonesia From

1991 to 1998 Dr Pangestu was the coordinator of the Trade Policy Forum of the Pacific

Next Steps Getting Past the Doha Round Crisis

25

Economic Cooperation Council and serves on the Board of the Overseas Development

Council World Gold Council and the Asian Journal of Business from The University

of Michigan Ann Arbor

She has published widely on a range of subjects including matters pertaining to

Indonesia as well as regional (ie Asian and Asia Pacific) and global issues She earned

her BA and MA in economics from Australian National University and a PhD in

economics from the University of California Davis

27

The Doha Round has failed according the former US Trade Representative Susan

Schwab This essay argues that prolonging Doha jeopardises the multilateral trading

system and threatens future prospects for WTO-led liberalisation Negotiators should

salvage whatever partial agreements they can from Doha and quickly drop the rest

to ensure the December ministerial meeting focuses on future work plans rather than

recriminations over Doha

The Doha Round has failed It is time for the international community to acknowledge

this sad fact and move on Prolonging the pretence that the Doha Round will succeed

is now a greater threat to the WTO and the multilateral trading system than facing the

truth

A great many smart hard-working and well-intentioned individuals have worked over

many years to realise Doharsquos potential to contribute to global economic growth and

development But what is on the table in Geneva has failed to deliver any outcome

let alone a meaningful one It is time for a swift clean break from the past and to

lay the groundwork for a future where the WTO and its members revive WTO-led

liberalisation and reform

End Doharsquos stranglehold and build towards near-term wins

To keep the multilateral trading system healthy it is necessary to end the Doha

Roundrsquos stranglehold on the system This should happen quickly in order to ensure

that the December 2011 ministerial meeting focuses on future work plans rather than

Susan SchwabUniversity of Marlyand former US Trade Representative

Acknowledge Doharsquos demise and move on to save the WTO

2727

VOX Research-based policy analysis and commentary from leading economists

28

recriminations about a Doha Development Agenda that has struggled through one failed

encounter after another

Negotiators should refocus their efforts on near-term wins and on building the next

Round ndash which need not be another behemoth but perhaps a ldquorolling roundrdquo of reforms

and new market access or a few highest-common-denominator plurilateral or WTO-

plus deals Ultimately these should lead to a broader-based market access and rules

agreement under the multilateral auspices of the WTO

The small package possibility

In my recent Foreign Affairs article (Schwab 2011) I suggested that negotiators should

try to salvage whatever partial agreements they can and then walk away from the rest

I mentioned a number of potential candidates such as trade facilitation and the largely

completed agricultural-export pillar (comprising proposed agreements on export credits

food aid state-trading firms and the elimination of export subsidies) Negotiators

might also try to complete two environment-related agreements one cutting subsidies

to industrial fishing fleets that are overfishing the worldrsquos oceans and the other ending

tariff and nontariff barriers to rdquogreenrdquo technologies in major producing and consuming

countries Taken together or individually each of these would benefit countries across

the spectrum of economic development

I am however sceptical that even these small agreements are achievable in the current

climate of mistrust and entrenched positions A troubling development during the course

of the Round has been how often countries seem to forget or forfeit their own economic

interests ndash let alone the greater good ndash in the face of peer pressure and group-think In

the current environment even these smaller deals might prove impossible to achieve

It is certainly worth trying to achieve a few deliverables by taking a run at a small

package but negotiators should not spend too much time on it They already know

exactly what the options are if they cannot get to ldquoyesrdquo in say two weeks they should

Next Steps Getting Past the Doha Round Crisis

29

give up and move on to the real challenge of launching a new series of multilateral

negotiations under WTO auspices

Getting past Doha

How to conclude the Doha Round One option would be for the Director-General and

a representative sample of WTO Ambassadors to come together in the interest of the

institution and to offer a declaration of Doharsquos demise along with their pledge to begin

building the future That would enable leaders at the November G20 meeting to pledge

their support for the rules-based trading system the WTO and its next steps rather than

for the ever elusive ldquobalanced and ambitiousrdquo Doha outcome

After a short period of grieving over the death of Doha and an opportunity to get

beyond the anger lead trading nations should refocus on getting the WTO back into

its mainstream business of negotiating mutually advantageous market opening and

updating the global rdquorules of the roadrdquo This approach offers the best promise of a

meaningful ldquodevelopmentrdquo outcome as well

How might this be achieved

It seems unrealistic to think WTO members would agree to launch another massive

all-or-nothing round in the near future Such broad negotiations however will be

necessary to tackle some of the worldrsquos most important market access challenges in

services manufacturing and agriculture along with such issues as farm subsidies

There are ways to build-up to the big-round model again where countries once more see

economic self-interest in the use of broad-based negotiations and trade-offs to achieve

both new market access and market reforms First however we must re-establish trust

and regain momentum

One way forward would be for ministers to agree to launch a number of confidence-

building negotiations For example ministers in December could decide to open talks

VOX Research-based policy analysis and commentary from leading economists

30

on expanding the 1997 Information Technology Agreement a number of nations

seem interested and the US Administration already has the authority to implement an

enhanced agreement If negotiators fail to work through the 850 brackets in the current

Doha trade facilitation text that could also be tackled as a stand-alone agreement since

each nation would benefit from more efficient movement of goods and services across

borders

Another confidence-building measure might be a merger of sectoral agreements geared

toward a widely-shared objective such as cheaper better healthcare A package that

included pharmaceuticals medical devices and healthcare services might attract

support from the broad array of WTO members across the development spectrum Given

the high-level of public interest in and awareness of environment issues a sectoral

negotiation on environmental goods and services might be another confidence-building

deal once it is removed from the straightjacket that Doha has become

Lessons from Doha for next steps and the next round

Confidence building agreements would offer modest economic and social contributions

and serve to prepare the atmospherics for launch the next Round This brings me to my

last topic ndash the lessons we should draw from a decade of Doha talks

One thing that is quite clear from years of struggling with the basic structure of Doha

is that the combination of formula and self-selected flexibilities has not worked It

resulted in a situation where every negotiator had to assume the worst case ndash knowing

the political costs they would pay for their own liberalisation but expecting their trading

partners to use flexibilities to negate any meaningful new market-access It is possible

to draw from the best of the Doha formulas ndash such as the higher the barrier the greater

the cut ndash while still creating real negotiations around them through requests and offers

delivered using above- and below-formula cuts

Next Steps Getting Past the Doha Round Crisis

31

Another key lesson is that lumping the worldrsquos very diverse economies into three

basic categories ndash developed developing and least developed ndash is a practice that no

longer fits 21st century economic and trade realities Nor is it a structure conducive to

negotiations and real progress based on an exchange of market access among nations

with large markets Yes the advanced economies should be expected to do more than

those at lesser stages of economic development but expectations should also reflect

the fact that many emerging economies are characterised by both poverty and sectors

where they are globally competitive trade powerhouses

The emerging economies have large markets represent over half of global GDP growth

and stand to be the biggest winners from any major trade agreement They should be

expected to contribute to the next Round accordingly Major trade agreements generally

take at least 12 years to implement from the time they are initially concluded What

should the world trading system look like in 2025 in terms of the absolute and relative

responsibilities of key trading nations

Concluding remarks

I am optimistic when it comes to the multilateral trading system and the WTOrsquos central

role in its governance The optimistic scenario is that we put the Doha Round behind

us Facing facts can invigorate and strengthen the trading system If we fail to act the

WTO risks losing its relevance

The Doha Round ndash which in my view cannot be concluded as it is conceived today ndash

should not be allowed to continue draining the WTOrsquos credibility and potential progress

on the multilateral front Now is the time to liberate the would-be trade liberalisers from

the Doha straightjacket and move on

VOX Research-based policy analysis and commentary from leading economists

32

References

Schwab Susan (2011) ldquoAfter Doha Why the negotiations are doomed and what we

should do about itrdquo Foreign Affairs MayJune

About the author

Ambassador Schwab has been a Professor at the University of Maryland School of

Public Policy since January 2009 and a strategic advisor to Mayer Brown LLP (global

law firm) since March 2010 Ambassador Schwab served as US Trade Representative

from June 2006 to January 2009 and as Deputy US Trade Representative from

October 2005 to June 2006 Prior to her service as Deputy US Trade Representative

Ambassador Schwab served as President and Chief Executive Officer of the University

System of Maryland Foundation from June 2004 to October 2005 as a consultant

for the US Department of Treasury from July 2003 to December 2003 and as Dean

of the University of Maryland School of Public Policy from July 1995 to July 2003

Ambassador Schwab serves on the boards of Boeing Company Caterpillar Inc and

FedEx Corporation

She holds a BA in Political Economy from Williams College a Masters in Development

Policy from Stanford University (Food Research Institute) and a PhD in Public

Administration and International Business from The George Washington University

33

Hopes for finishing Doha in 2011 are fading fast This essay suggests a three-track

approach for moving beyond the Doha crisis 1) Identify a package of ldquodeliverablesrsquo ndash

parts of the Round that could be agreed by December 2011 2) Assemble a package of

contentious issues for ongoing negotiation with clear terms of reference 3) Establish

a work programme to consider WTO institutional reform and forward-looking issues

For reasons that are too well known to be repeated the WTO finds itself at the crossroads

Decisions to be taken in the next few weeks will determine whether it can steer its

way to a successful conclusion of the Doha Round in the near future Failing this the

Round will continue to hang like an albatross around the WTOrsquos neck preventing it

from delivering the promised boost to least developed nations and freezing its ability

to address new challenges to the global trading system All countries would suffer from

such an outcome but especially the worldrsquos poorest and most vulnerable

The cost of a never-ending Doha Round

The adverse implications of a continuing Doha impasse on the future role of the WTO

are too compelling to be dismissed offhandedly

Several trade-linked global problems require global cooperation Food security energy

security trade-related aspects of climate change labour mobility commodity price

volatility and integration of regional liberalisation into the multilateral system are

problems that can only be solved with global cooperation

Ujal Singh BhatiaFormerly Indiarsquos Ambassador and Permanent Representative to the WTO

Next Steps Getting past the Doha Round crisis

3333

VOX Research-based policy analysis and commentary from leading economists

34

For example if food exporters continue to impose export barriers when prices rise

food importers may respond with import barriers to boost self-sufficiency This sort of

protectionist reverberation could lead the world to a situation in which all the players

are worse off but none can improve the situation unilaterally Avoiding this sort of

outcome would require global agreements There are very few global institutions that

could manage such cooperation indeed the WTO might be the only one A WTO locked

in endless Doha debates cannot be the centre of the rules based global trading system

There are many thinkers who believe that the structure of WTO rules is robust enough

to withstand a Doha failure It is true that the sky will not fall if Doha is terminated

without a conclusion Such analysts however tend to underestimate the significant

structural changes taking place in the global economy and the trading system The

WTO is working on a set of rules agreed upon in 1994 that were based on an agenda

set almost a quarter of century ago These are still useful and relevant for much of

world trade ndash but not all For instance the rules were not designed for the technology-

driven fragmentation of the manufacturing process and the distribution of the product

value chain across several geographical locations the intertwining of production with

related services the embedded intellectual property rights in components and sub-

components or the multiplicity of rules of origin All these require a different approach

to rule making

A WTO that remains preoccupied with the Doha Round cannot be expected to focus

on such issues Therefore the continuing relevance of the WTO and its primacy in

the global trading system are contingent upon a successful and early conclusion of

the Doha Round Notwithstanding this urgency it is now clear that a Doha package

cannot be wound up in 2011 along the lines agreed by G20 leaders in November 2010

To prevent this from tying the WTO in knots for years to come it is necessary to think

creatively about ways forward

Next Steps Getting Past the Doha Round Crisis

35

Ideas for moving beyond the impasse

Any effort to deal with the impasse in the negotiations needs to be based on a holistic

appreciation of the systemic implications of a continuing stalemate as much as on the

negotiating positions of various members The efforts for a solution acceptable to all

members therefore need to focus on issues in the Doha mandate as well as on issues for

a post Doha situation

Within this framework four constraints need to be borne in mind

bull A ldquoDoha Literdquo of reduced ambition will not work The outcome has to reflect a dec-

adersquos efforts of the global community Ambition however cannot be defined to suit

the convenience of a few members It must touch all aspects of the Doha mandate

bull Aspects of the Doha mandate that are more relevant to the development dimension

have to be ambitiously addressed and fast tracked

bull WTO needs to start work on a new work programme to address new challenges

bull The Doha Round cannot be completed in 2011 A down payment is necessary from

the Doha Round this year to convince the world that the WTO can deliver

A three-track approach

These constraints require the WTO to adopt a three-track approach during the next few

months leading up to the ministerial meeting in December 2011

Track 1 Identification of a list of issues that specially address the trading interests

of smaller developing countries and relatively less contentious issues for fast tracked

finalisation before the ministerial meeting

Track 2 Identification of a package of the more contentious issues for continuing

consultations with clear terms of reference

Track 3 Identification of appropriate terms of reference for a work programme on

WTO institutional reform and the forward-looking agenda

VOX Research-based policy analysis and commentary from leading economists

36

A possible timeline

These three tracks taken as a package would provide a way forward that respects all

four constraints Achieving consensus on them would be difficult ndash and require months

of preparatory work and negotiations

If the WTO membership starts immediately however there is still time to get the

package ready for finalisation by ministers at the December 2011 ministerial meeting

For this to happen it is essential that discussions on such a package begin this month

so that its contents can be finalised by the end of June 2011 This would leave about

four working months before the ministerial meeting to complete negotiations on the

selected areas

What the three tracks might contain

The first track would contain the Doha down-payment package As with any WTO

package the contents would need to be negotiated and it might require complementary

policies such as technical assistance initiatives

Such a list must include items that speak to development aspects of the Doha mandate

such as

bull The Implementation of the Hong Kong decision on duty-free quota-free treatment

for less developed countries

bull A ministerial decision on the Monitoring Mechanism for Special and Differential

Treatment provisions

bull A ministerial decision on the issues raised by the Sub-Saharan African cotton ex-

porters (the group known as the C-4) and

bull The finalisation of a less-developed-country (LDC) waiver in services so that pref-

erential treatment can be provided to LDCrsquos in services without extending it to

others

Next Steps Getting Past the Doha Round Crisis

37

It should also include areas of the negotiations that engage the interest of all members

such as

bull Trade Facilitation

bull All aspects of export competition in agriculture including export subsidies

bull The Transparency Mechanism for regional trade agreements (RTAs)

bull The non-tariff barriers (NTBs) package in non-agricultural market access (NAMA)

and

bull A ministerial decision on interactions and relationships between the WTOrsquos rules

and its committees on the one hand and existing multilateral environmental agree-

ments on the other (eg the Basel Convention on the Control of Transboundary

Movements of Hazardous Wastes and the Montreal Protocol on Substances that

Deplete the Ozone Layer)

While some members would like to exclude some of these areas from a fast tracked

process in the hope of using them for trade offs in the final stage it is important that the

package is as comprehensive as possible

Track two Items for further negotiation

The second track would gather all remaining items currently under negotiations This

would include

bull All aspects of market access in industrial goods agriculture and services

bull All aspects of subsidies in agriculture

bull Various aspects of rules including fisheries subsidies

bull Environmental goods and

bull Issues related to trade-related aspects of international property rights (TRIPS) re-

garding the protection of Geographical Indicators and the protection of traditional

VOX Research-based policy analysis and commentary from leading economists

38

knowledge and folklore that were are mentioned in the Convention on Biological

Diversity1

The need for a balanced package deserves emphasis It is often assumed that there

is a straight trade-off between agricultural subsidies and market access The situation

however is more complex The interest of countries like India China and Indonesia

in agricultural reform is more systemic than export related For them other incentives

within the mandate will be required

Track three Looking ahead

The underlying theme for the work programme would be an appraisal of the entire

negotiating and decision-making process in the WTO in the context of the present

realities both within and outside the organisation The objective would be to prepare

the WTO to address new challenges to the global trading system concurrently with the

ongoing work on the remaining parts of the Doha mandate

Closing remarks

The above proposals constitute a basic template for addressing the Doha conundrum

To what extent they are actually embraced will depend on how much political capital

the major members of the WTO are prepared to invest in moving the Doha Round

forward There is much scepticism about whether such political will exists It is time

for governments to prove the sceptics wrong

1 Specifically as specified in paragraphs 18 and 19 of the Doha Declaration

Next Steps Getting Past the Doha Round Crisis

39

About the author

Ambassador Bhatia Singh joined the Indian Administrative Service in 1974 holding

several senior positions in provincial administration in Orissa State between 1976 and

1995 He served as Joint Secretary Ministry of Commerce and Industry between 1995-

2000 in which capacity he handled a number of bilateral regional and multilateral trade

negotiations From 2004 to his retirement in 2010 he served as Indiarsquos Ambassador and

Permanent Representative to the WTO in Geneva

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

Next Steps Getting Past the Doha Round Crisis

23

unbridgeable gaps In identifying the areas where we could find convergence a number

of priorities stand out

bull First and foremost is areas of negotiations that will contribute and deliver to devel-

opment objectives such as the Least Developed Countries package andor an effec-

tive aid-for-trade and facilitation package this is after all a Development Round

bull Second areas where there would be clear benefits for development and the private

sector in facilitating and ensuring the benefits of trade are greater we need stake-

holders to be cheerleading the way forward

bull Third there could be areas where we would be able to address the food-security

challenge

One could also foresee that within each current area of negotiations there could be

items which could be wrapped up without disturbing the overall balance of elements

in that particular area It is important that we do not go into ldquonewrdquo negotiations in

identifying which areas We should go into the mode of identifying these pathways and

steps with the mindset and political will of win-win

We need to be guided by priorities and pragmatism That is to identify the areas that are

doable and achievable in the very near future but which have an impact on development

and increasing the benefits of trade while at the same time building confidence for us to

continue our journey to the final package Most importantly we should never lose sight

of the final goal of the single undertaking

Looking forward

It is also important to provide the signal in what we say and do elsewhere Beyond

talking about Doha we must ensure continued confidence in and implementation of the

rules-based open trading system

VOX Research-based policy analysis and commentary from leading economists

24

bull This would mean the commitments of G20 Leaders and others on refraining from

protectionism going beyond words the good intentions need to be strengthened

with commitments and actions

bull It also has implications for how we undertake bilateral and regional agreements

these should be done in a way that is not an alternative to and does not detract from

the multilateral trading system We should pursue regionalism in a way which is

going to contribute to and complement the system

Concluding remarks

In conclusion we should not underestimate the costs of not doing all this We will

need to draw upon the strength of our individual and collective political commitment

We need to call on the ability of some major economies to look beyond pure national

interests and to look at the impact and costs on the global system and economy And we

need to remember that there are many countries and billions of people ndash many of which

are impoverished ndash who are waiting for the Doha deliverables

References

HLTE (2011) ldquoWorld trade and the Doha roundrdquo final report of the High-Level Trade

Experts Group chaired by Jagdish Bhagwati and Peter Sutherland

WTO (2011) ldquoReports on G20 trade and investment measures (mid-October 2010 to

April 2011)rdquo WTO Secretariat 24 May

About the author

Mari Pangestu is Indonesiarsquos Minister of Trade since 2004 having served as Executive

Director of the Jakarta-based think tank the Center for Strategic and International

Studies and a lecturer in the Faculty of Economics at the University of Indonesia From

1991 to 1998 Dr Pangestu was the coordinator of the Trade Policy Forum of the Pacific

Next Steps Getting Past the Doha Round Crisis

25

Economic Cooperation Council and serves on the Board of the Overseas Development

Council World Gold Council and the Asian Journal of Business from The University

of Michigan Ann Arbor

She has published widely on a range of subjects including matters pertaining to

Indonesia as well as regional (ie Asian and Asia Pacific) and global issues She earned

her BA and MA in economics from Australian National University and a PhD in

economics from the University of California Davis

27

The Doha Round has failed according the former US Trade Representative Susan

Schwab This essay argues that prolonging Doha jeopardises the multilateral trading

system and threatens future prospects for WTO-led liberalisation Negotiators should

salvage whatever partial agreements they can from Doha and quickly drop the rest

to ensure the December ministerial meeting focuses on future work plans rather than

recriminations over Doha

The Doha Round has failed It is time for the international community to acknowledge

this sad fact and move on Prolonging the pretence that the Doha Round will succeed

is now a greater threat to the WTO and the multilateral trading system than facing the

truth

A great many smart hard-working and well-intentioned individuals have worked over

many years to realise Doharsquos potential to contribute to global economic growth and

development But what is on the table in Geneva has failed to deliver any outcome

let alone a meaningful one It is time for a swift clean break from the past and to

lay the groundwork for a future where the WTO and its members revive WTO-led

liberalisation and reform

End Doharsquos stranglehold and build towards near-term wins

To keep the multilateral trading system healthy it is necessary to end the Doha

Roundrsquos stranglehold on the system This should happen quickly in order to ensure

that the December 2011 ministerial meeting focuses on future work plans rather than

Susan SchwabUniversity of Marlyand former US Trade Representative

Acknowledge Doharsquos demise and move on to save the WTO

2727

VOX Research-based policy analysis and commentary from leading economists

28

recriminations about a Doha Development Agenda that has struggled through one failed

encounter after another

Negotiators should refocus their efforts on near-term wins and on building the next

Round ndash which need not be another behemoth but perhaps a ldquorolling roundrdquo of reforms

and new market access or a few highest-common-denominator plurilateral or WTO-

plus deals Ultimately these should lead to a broader-based market access and rules

agreement under the multilateral auspices of the WTO

The small package possibility

In my recent Foreign Affairs article (Schwab 2011) I suggested that negotiators should

try to salvage whatever partial agreements they can and then walk away from the rest

I mentioned a number of potential candidates such as trade facilitation and the largely

completed agricultural-export pillar (comprising proposed agreements on export credits

food aid state-trading firms and the elimination of export subsidies) Negotiators

might also try to complete two environment-related agreements one cutting subsidies

to industrial fishing fleets that are overfishing the worldrsquos oceans and the other ending

tariff and nontariff barriers to rdquogreenrdquo technologies in major producing and consuming

countries Taken together or individually each of these would benefit countries across

the spectrum of economic development

I am however sceptical that even these small agreements are achievable in the current

climate of mistrust and entrenched positions A troubling development during the course

of the Round has been how often countries seem to forget or forfeit their own economic

interests ndash let alone the greater good ndash in the face of peer pressure and group-think In

the current environment even these smaller deals might prove impossible to achieve

It is certainly worth trying to achieve a few deliverables by taking a run at a small

package but negotiators should not spend too much time on it They already know

exactly what the options are if they cannot get to ldquoyesrdquo in say two weeks they should

Next Steps Getting Past the Doha Round Crisis

29

give up and move on to the real challenge of launching a new series of multilateral

negotiations under WTO auspices

Getting past Doha

How to conclude the Doha Round One option would be for the Director-General and

a representative sample of WTO Ambassadors to come together in the interest of the

institution and to offer a declaration of Doharsquos demise along with their pledge to begin

building the future That would enable leaders at the November G20 meeting to pledge

their support for the rules-based trading system the WTO and its next steps rather than

for the ever elusive ldquobalanced and ambitiousrdquo Doha outcome

After a short period of grieving over the death of Doha and an opportunity to get

beyond the anger lead trading nations should refocus on getting the WTO back into

its mainstream business of negotiating mutually advantageous market opening and

updating the global rdquorules of the roadrdquo This approach offers the best promise of a

meaningful ldquodevelopmentrdquo outcome as well

How might this be achieved

It seems unrealistic to think WTO members would agree to launch another massive

all-or-nothing round in the near future Such broad negotiations however will be

necessary to tackle some of the worldrsquos most important market access challenges in

services manufacturing and agriculture along with such issues as farm subsidies

There are ways to build-up to the big-round model again where countries once more see

economic self-interest in the use of broad-based negotiations and trade-offs to achieve

both new market access and market reforms First however we must re-establish trust

and regain momentum

One way forward would be for ministers to agree to launch a number of confidence-

building negotiations For example ministers in December could decide to open talks

VOX Research-based policy analysis and commentary from leading economists

30

on expanding the 1997 Information Technology Agreement a number of nations

seem interested and the US Administration already has the authority to implement an

enhanced agreement If negotiators fail to work through the 850 brackets in the current

Doha trade facilitation text that could also be tackled as a stand-alone agreement since

each nation would benefit from more efficient movement of goods and services across

borders

Another confidence-building measure might be a merger of sectoral agreements geared

toward a widely-shared objective such as cheaper better healthcare A package that

included pharmaceuticals medical devices and healthcare services might attract

support from the broad array of WTO members across the development spectrum Given

the high-level of public interest in and awareness of environment issues a sectoral

negotiation on environmental goods and services might be another confidence-building

deal once it is removed from the straightjacket that Doha has become

Lessons from Doha for next steps and the next round

Confidence building agreements would offer modest economic and social contributions

and serve to prepare the atmospherics for launch the next Round This brings me to my

last topic ndash the lessons we should draw from a decade of Doha talks

One thing that is quite clear from years of struggling with the basic structure of Doha

is that the combination of formula and self-selected flexibilities has not worked It

resulted in a situation where every negotiator had to assume the worst case ndash knowing

the political costs they would pay for their own liberalisation but expecting their trading

partners to use flexibilities to negate any meaningful new market-access It is possible

to draw from the best of the Doha formulas ndash such as the higher the barrier the greater

the cut ndash while still creating real negotiations around them through requests and offers

delivered using above- and below-formula cuts

Next Steps Getting Past the Doha Round Crisis

31

Another key lesson is that lumping the worldrsquos very diverse economies into three

basic categories ndash developed developing and least developed ndash is a practice that no

longer fits 21st century economic and trade realities Nor is it a structure conducive to

negotiations and real progress based on an exchange of market access among nations

with large markets Yes the advanced economies should be expected to do more than

those at lesser stages of economic development but expectations should also reflect

the fact that many emerging economies are characterised by both poverty and sectors

where they are globally competitive trade powerhouses

The emerging economies have large markets represent over half of global GDP growth

and stand to be the biggest winners from any major trade agreement They should be

expected to contribute to the next Round accordingly Major trade agreements generally

take at least 12 years to implement from the time they are initially concluded What

should the world trading system look like in 2025 in terms of the absolute and relative

responsibilities of key trading nations

Concluding remarks

I am optimistic when it comes to the multilateral trading system and the WTOrsquos central

role in its governance The optimistic scenario is that we put the Doha Round behind

us Facing facts can invigorate and strengthen the trading system If we fail to act the

WTO risks losing its relevance

The Doha Round ndash which in my view cannot be concluded as it is conceived today ndash

should not be allowed to continue draining the WTOrsquos credibility and potential progress

on the multilateral front Now is the time to liberate the would-be trade liberalisers from

the Doha straightjacket and move on

VOX Research-based policy analysis and commentary from leading economists

32

References

Schwab Susan (2011) ldquoAfter Doha Why the negotiations are doomed and what we

should do about itrdquo Foreign Affairs MayJune

About the author

Ambassador Schwab has been a Professor at the University of Maryland School of

Public Policy since January 2009 and a strategic advisor to Mayer Brown LLP (global

law firm) since March 2010 Ambassador Schwab served as US Trade Representative

from June 2006 to January 2009 and as Deputy US Trade Representative from

October 2005 to June 2006 Prior to her service as Deputy US Trade Representative

Ambassador Schwab served as President and Chief Executive Officer of the University

System of Maryland Foundation from June 2004 to October 2005 as a consultant

for the US Department of Treasury from July 2003 to December 2003 and as Dean

of the University of Maryland School of Public Policy from July 1995 to July 2003

Ambassador Schwab serves on the boards of Boeing Company Caterpillar Inc and

FedEx Corporation

She holds a BA in Political Economy from Williams College a Masters in Development

Policy from Stanford University (Food Research Institute) and a PhD in Public

Administration and International Business from The George Washington University

33

Hopes for finishing Doha in 2011 are fading fast This essay suggests a three-track

approach for moving beyond the Doha crisis 1) Identify a package of ldquodeliverablesrsquo ndash

parts of the Round that could be agreed by December 2011 2) Assemble a package of

contentious issues for ongoing negotiation with clear terms of reference 3) Establish

a work programme to consider WTO institutional reform and forward-looking issues

For reasons that are too well known to be repeated the WTO finds itself at the crossroads

Decisions to be taken in the next few weeks will determine whether it can steer its

way to a successful conclusion of the Doha Round in the near future Failing this the

Round will continue to hang like an albatross around the WTOrsquos neck preventing it

from delivering the promised boost to least developed nations and freezing its ability

to address new challenges to the global trading system All countries would suffer from

such an outcome but especially the worldrsquos poorest and most vulnerable

The cost of a never-ending Doha Round

The adverse implications of a continuing Doha impasse on the future role of the WTO

are too compelling to be dismissed offhandedly

Several trade-linked global problems require global cooperation Food security energy

security trade-related aspects of climate change labour mobility commodity price

volatility and integration of regional liberalisation into the multilateral system are

problems that can only be solved with global cooperation

Ujal Singh BhatiaFormerly Indiarsquos Ambassador and Permanent Representative to the WTO

Next Steps Getting past the Doha Round crisis

3333

VOX Research-based policy analysis and commentary from leading economists

34

For example if food exporters continue to impose export barriers when prices rise

food importers may respond with import barriers to boost self-sufficiency This sort of

protectionist reverberation could lead the world to a situation in which all the players

are worse off but none can improve the situation unilaterally Avoiding this sort of

outcome would require global agreements There are very few global institutions that

could manage such cooperation indeed the WTO might be the only one A WTO locked

in endless Doha debates cannot be the centre of the rules based global trading system

There are many thinkers who believe that the structure of WTO rules is robust enough

to withstand a Doha failure It is true that the sky will not fall if Doha is terminated

without a conclusion Such analysts however tend to underestimate the significant

structural changes taking place in the global economy and the trading system The

WTO is working on a set of rules agreed upon in 1994 that were based on an agenda

set almost a quarter of century ago These are still useful and relevant for much of

world trade ndash but not all For instance the rules were not designed for the technology-

driven fragmentation of the manufacturing process and the distribution of the product

value chain across several geographical locations the intertwining of production with

related services the embedded intellectual property rights in components and sub-

components or the multiplicity of rules of origin All these require a different approach

to rule making

A WTO that remains preoccupied with the Doha Round cannot be expected to focus

on such issues Therefore the continuing relevance of the WTO and its primacy in

the global trading system are contingent upon a successful and early conclusion of

the Doha Round Notwithstanding this urgency it is now clear that a Doha package

cannot be wound up in 2011 along the lines agreed by G20 leaders in November 2010

To prevent this from tying the WTO in knots for years to come it is necessary to think

creatively about ways forward

Next Steps Getting Past the Doha Round Crisis

35

Ideas for moving beyond the impasse

Any effort to deal with the impasse in the negotiations needs to be based on a holistic

appreciation of the systemic implications of a continuing stalemate as much as on the

negotiating positions of various members The efforts for a solution acceptable to all

members therefore need to focus on issues in the Doha mandate as well as on issues for

a post Doha situation

Within this framework four constraints need to be borne in mind

bull A ldquoDoha Literdquo of reduced ambition will not work The outcome has to reflect a dec-

adersquos efforts of the global community Ambition however cannot be defined to suit

the convenience of a few members It must touch all aspects of the Doha mandate

bull Aspects of the Doha mandate that are more relevant to the development dimension

have to be ambitiously addressed and fast tracked

bull WTO needs to start work on a new work programme to address new challenges

bull The Doha Round cannot be completed in 2011 A down payment is necessary from

the Doha Round this year to convince the world that the WTO can deliver

A three-track approach

These constraints require the WTO to adopt a three-track approach during the next few

months leading up to the ministerial meeting in December 2011

Track 1 Identification of a list of issues that specially address the trading interests

of smaller developing countries and relatively less contentious issues for fast tracked

finalisation before the ministerial meeting

Track 2 Identification of a package of the more contentious issues for continuing

consultations with clear terms of reference

Track 3 Identification of appropriate terms of reference for a work programme on

WTO institutional reform and the forward-looking agenda

VOX Research-based policy analysis and commentary from leading economists

36

A possible timeline

These three tracks taken as a package would provide a way forward that respects all

four constraints Achieving consensus on them would be difficult ndash and require months

of preparatory work and negotiations

If the WTO membership starts immediately however there is still time to get the

package ready for finalisation by ministers at the December 2011 ministerial meeting

For this to happen it is essential that discussions on such a package begin this month

so that its contents can be finalised by the end of June 2011 This would leave about

four working months before the ministerial meeting to complete negotiations on the

selected areas

What the three tracks might contain

The first track would contain the Doha down-payment package As with any WTO

package the contents would need to be negotiated and it might require complementary

policies such as technical assistance initiatives

Such a list must include items that speak to development aspects of the Doha mandate

such as

bull The Implementation of the Hong Kong decision on duty-free quota-free treatment

for less developed countries

bull A ministerial decision on the Monitoring Mechanism for Special and Differential

Treatment provisions

bull A ministerial decision on the issues raised by the Sub-Saharan African cotton ex-

porters (the group known as the C-4) and

bull The finalisation of a less-developed-country (LDC) waiver in services so that pref-

erential treatment can be provided to LDCrsquos in services without extending it to

others

Next Steps Getting Past the Doha Round Crisis

37

It should also include areas of the negotiations that engage the interest of all members

such as

bull Trade Facilitation

bull All aspects of export competition in agriculture including export subsidies

bull The Transparency Mechanism for regional trade agreements (RTAs)

bull The non-tariff barriers (NTBs) package in non-agricultural market access (NAMA)

and

bull A ministerial decision on interactions and relationships between the WTOrsquos rules

and its committees on the one hand and existing multilateral environmental agree-

ments on the other (eg the Basel Convention on the Control of Transboundary

Movements of Hazardous Wastes and the Montreal Protocol on Substances that

Deplete the Ozone Layer)

While some members would like to exclude some of these areas from a fast tracked

process in the hope of using them for trade offs in the final stage it is important that the

package is as comprehensive as possible

Track two Items for further negotiation

The second track would gather all remaining items currently under negotiations This

would include

bull All aspects of market access in industrial goods agriculture and services

bull All aspects of subsidies in agriculture

bull Various aspects of rules including fisheries subsidies

bull Environmental goods and

bull Issues related to trade-related aspects of international property rights (TRIPS) re-

garding the protection of Geographical Indicators and the protection of traditional

VOX Research-based policy analysis and commentary from leading economists

38

knowledge and folklore that were are mentioned in the Convention on Biological

Diversity1

The need for a balanced package deserves emphasis It is often assumed that there

is a straight trade-off between agricultural subsidies and market access The situation

however is more complex The interest of countries like India China and Indonesia

in agricultural reform is more systemic than export related For them other incentives

within the mandate will be required

Track three Looking ahead

The underlying theme for the work programme would be an appraisal of the entire

negotiating and decision-making process in the WTO in the context of the present

realities both within and outside the organisation The objective would be to prepare

the WTO to address new challenges to the global trading system concurrently with the

ongoing work on the remaining parts of the Doha mandate

Closing remarks

The above proposals constitute a basic template for addressing the Doha conundrum

To what extent they are actually embraced will depend on how much political capital

the major members of the WTO are prepared to invest in moving the Doha Round

forward There is much scepticism about whether such political will exists It is time

for governments to prove the sceptics wrong

1 Specifically as specified in paragraphs 18 and 19 of the Doha Declaration

Next Steps Getting Past the Doha Round Crisis

39

About the author

Ambassador Bhatia Singh joined the Indian Administrative Service in 1974 holding

several senior positions in provincial administration in Orissa State between 1976 and

1995 He served as Joint Secretary Ministry of Commerce and Industry between 1995-

2000 in which capacity he handled a number of bilateral regional and multilateral trade

negotiations From 2004 to his retirement in 2010 he served as Indiarsquos Ambassador and

Permanent Representative to the WTO in Geneva

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

VOX Research-based policy analysis and commentary from leading economists

24

bull This would mean the commitments of G20 Leaders and others on refraining from

protectionism going beyond words the good intentions need to be strengthened

with commitments and actions

bull It also has implications for how we undertake bilateral and regional agreements

these should be done in a way that is not an alternative to and does not detract from

the multilateral trading system We should pursue regionalism in a way which is

going to contribute to and complement the system

Concluding remarks

In conclusion we should not underestimate the costs of not doing all this We will

need to draw upon the strength of our individual and collective political commitment

We need to call on the ability of some major economies to look beyond pure national

interests and to look at the impact and costs on the global system and economy And we

need to remember that there are many countries and billions of people ndash many of which

are impoverished ndash who are waiting for the Doha deliverables

References

HLTE (2011) ldquoWorld trade and the Doha roundrdquo final report of the High-Level Trade

Experts Group chaired by Jagdish Bhagwati and Peter Sutherland

WTO (2011) ldquoReports on G20 trade and investment measures (mid-October 2010 to

April 2011)rdquo WTO Secretariat 24 May

About the author

Mari Pangestu is Indonesiarsquos Minister of Trade since 2004 having served as Executive

Director of the Jakarta-based think tank the Center for Strategic and International

Studies and a lecturer in the Faculty of Economics at the University of Indonesia From

1991 to 1998 Dr Pangestu was the coordinator of the Trade Policy Forum of the Pacific

Next Steps Getting Past the Doha Round Crisis

25

Economic Cooperation Council and serves on the Board of the Overseas Development

Council World Gold Council and the Asian Journal of Business from The University

of Michigan Ann Arbor

She has published widely on a range of subjects including matters pertaining to

Indonesia as well as regional (ie Asian and Asia Pacific) and global issues She earned

her BA and MA in economics from Australian National University and a PhD in

economics from the University of California Davis

27

The Doha Round has failed according the former US Trade Representative Susan

Schwab This essay argues that prolonging Doha jeopardises the multilateral trading

system and threatens future prospects for WTO-led liberalisation Negotiators should

salvage whatever partial agreements they can from Doha and quickly drop the rest

to ensure the December ministerial meeting focuses on future work plans rather than

recriminations over Doha

The Doha Round has failed It is time for the international community to acknowledge

this sad fact and move on Prolonging the pretence that the Doha Round will succeed

is now a greater threat to the WTO and the multilateral trading system than facing the

truth

A great many smart hard-working and well-intentioned individuals have worked over

many years to realise Doharsquos potential to contribute to global economic growth and

development But what is on the table in Geneva has failed to deliver any outcome

let alone a meaningful one It is time for a swift clean break from the past and to

lay the groundwork for a future where the WTO and its members revive WTO-led

liberalisation and reform

End Doharsquos stranglehold and build towards near-term wins

To keep the multilateral trading system healthy it is necessary to end the Doha

Roundrsquos stranglehold on the system This should happen quickly in order to ensure

that the December 2011 ministerial meeting focuses on future work plans rather than

Susan SchwabUniversity of Marlyand former US Trade Representative

Acknowledge Doharsquos demise and move on to save the WTO

2727

VOX Research-based policy analysis and commentary from leading economists

28

recriminations about a Doha Development Agenda that has struggled through one failed

encounter after another

Negotiators should refocus their efforts on near-term wins and on building the next

Round ndash which need not be another behemoth but perhaps a ldquorolling roundrdquo of reforms

and new market access or a few highest-common-denominator plurilateral or WTO-

plus deals Ultimately these should lead to a broader-based market access and rules

agreement under the multilateral auspices of the WTO

The small package possibility

In my recent Foreign Affairs article (Schwab 2011) I suggested that negotiators should

try to salvage whatever partial agreements they can and then walk away from the rest

I mentioned a number of potential candidates such as trade facilitation and the largely

completed agricultural-export pillar (comprising proposed agreements on export credits

food aid state-trading firms and the elimination of export subsidies) Negotiators

might also try to complete two environment-related agreements one cutting subsidies

to industrial fishing fleets that are overfishing the worldrsquos oceans and the other ending

tariff and nontariff barriers to rdquogreenrdquo technologies in major producing and consuming

countries Taken together or individually each of these would benefit countries across

the spectrum of economic development

I am however sceptical that even these small agreements are achievable in the current

climate of mistrust and entrenched positions A troubling development during the course

of the Round has been how often countries seem to forget or forfeit their own economic

interests ndash let alone the greater good ndash in the face of peer pressure and group-think In

the current environment even these smaller deals might prove impossible to achieve

It is certainly worth trying to achieve a few deliverables by taking a run at a small

package but negotiators should not spend too much time on it They already know

exactly what the options are if they cannot get to ldquoyesrdquo in say two weeks they should

Next Steps Getting Past the Doha Round Crisis

29

give up and move on to the real challenge of launching a new series of multilateral

negotiations under WTO auspices

Getting past Doha

How to conclude the Doha Round One option would be for the Director-General and

a representative sample of WTO Ambassadors to come together in the interest of the

institution and to offer a declaration of Doharsquos demise along with their pledge to begin

building the future That would enable leaders at the November G20 meeting to pledge

their support for the rules-based trading system the WTO and its next steps rather than

for the ever elusive ldquobalanced and ambitiousrdquo Doha outcome

After a short period of grieving over the death of Doha and an opportunity to get

beyond the anger lead trading nations should refocus on getting the WTO back into

its mainstream business of negotiating mutually advantageous market opening and

updating the global rdquorules of the roadrdquo This approach offers the best promise of a

meaningful ldquodevelopmentrdquo outcome as well

How might this be achieved

It seems unrealistic to think WTO members would agree to launch another massive

all-or-nothing round in the near future Such broad negotiations however will be

necessary to tackle some of the worldrsquos most important market access challenges in

services manufacturing and agriculture along with such issues as farm subsidies

There are ways to build-up to the big-round model again where countries once more see

economic self-interest in the use of broad-based negotiations and trade-offs to achieve

both new market access and market reforms First however we must re-establish trust

and regain momentum

One way forward would be for ministers to agree to launch a number of confidence-

building negotiations For example ministers in December could decide to open talks

VOX Research-based policy analysis and commentary from leading economists

30

on expanding the 1997 Information Technology Agreement a number of nations

seem interested and the US Administration already has the authority to implement an

enhanced agreement If negotiators fail to work through the 850 brackets in the current

Doha trade facilitation text that could also be tackled as a stand-alone agreement since

each nation would benefit from more efficient movement of goods and services across

borders

Another confidence-building measure might be a merger of sectoral agreements geared

toward a widely-shared objective such as cheaper better healthcare A package that

included pharmaceuticals medical devices and healthcare services might attract

support from the broad array of WTO members across the development spectrum Given

the high-level of public interest in and awareness of environment issues a sectoral

negotiation on environmental goods and services might be another confidence-building

deal once it is removed from the straightjacket that Doha has become

Lessons from Doha for next steps and the next round

Confidence building agreements would offer modest economic and social contributions

and serve to prepare the atmospherics for launch the next Round This brings me to my

last topic ndash the lessons we should draw from a decade of Doha talks

One thing that is quite clear from years of struggling with the basic structure of Doha

is that the combination of formula and self-selected flexibilities has not worked It

resulted in a situation where every negotiator had to assume the worst case ndash knowing

the political costs they would pay for their own liberalisation but expecting their trading

partners to use flexibilities to negate any meaningful new market-access It is possible

to draw from the best of the Doha formulas ndash such as the higher the barrier the greater

the cut ndash while still creating real negotiations around them through requests and offers

delivered using above- and below-formula cuts

Next Steps Getting Past the Doha Round Crisis

31

Another key lesson is that lumping the worldrsquos very diverse economies into three

basic categories ndash developed developing and least developed ndash is a practice that no

longer fits 21st century economic and trade realities Nor is it a structure conducive to

negotiations and real progress based on an exchange of market access among nations

with large markets Yes the advanced economies should be expected to do more than

those at lesser stages of economic development but expectations should also reflect

the fact that many emerging economies are characterised by both poverty and sectors

where they are globally competitive trade powerhouses

The emerging economies have large markets represent over half of global GDP growth

and stand to be the biggest winners from any major trade agreement They should be

expected to contribute to the next Round accordingly Major trade agreements generally

take at least 12 years to implement from the time they are initially concluded What

should the world trading system look like in 2025 in terms of the absolute and relative

responsibilities of key trading nations

Concluding remarks

I am optimistic when it comes to the multilateral trading system and the WTOrsquos central

role in its governance The optimistic scenario is that we put the Doha Round behind

us Facing facts can invigorate and strengthen the trading system If we fail to act the

WTO risks losing its relevance

The Doha Round ndash which in my view cannot be concluded as it is conceived today ndash

should not be allowed to continue draining the WTOrsquos credibility and potential progress

on the multilateral front Now is the time to liberate the would-be trade liberalisers from

the Doha straightjacket and move on

VOX Research-based policy analysis and commentary from leading economists

32

References

Schwab Susan (2011) ldquoAfter Doha Why the negotiations are doomed and what we

should do about itrdquo Foreign Affairs MayJune

About the author

Ambassador Schwab has been a Professor at the University of Maryland School of

Public Policy since January 2009 and a strategic advisor to Mayer Brown LLP (global

law firm) since March 2010 Ambassador Schwab served as US Trade Representative

from June 2006 to January 2009 and as Deputy US Trade Representative from

October 2005 to June 2006 Prior to her service as Deputy US Trade Representative

Ambassador Schwab served as President and Chief Executive Officer of the University

System of Maryland Foundation from June 2004 to October 2005 as a consultant

for the US Department of Treasury from July 2003 to December 2003 and as Dean

of the University of Maryland School of Public Policy from July 1995 to July 2003

Ambassador Schwab serves on the boards of Boeing Company Caterpillar Inc and

FedEx Corporation

She holds a BA in Political Economy from Williams College a Masters in Development

Policy from Stanford University (Food Research Institute) and a PhD in Public

Administration and International Business from The George Washington University

33

Hopes for finishing Doha in 2011 are fading fast This essay suggests a three-track

approach for moving beyond the Doha crisis 1) Identify a package of ldquodeliverablesrsquo ndash

parts of the Round that could be agreed by December 2011 2) Assemble a package of

contentious issues for ongoing negotiation with clear terms of reference 3) Establish

a work programme to consider WTO institutional reform and forward-looking issues

For reasons that are too well known to be repeated the WTO finds itself at the crossroads

Decisions to be taken in the next few weeks will determine whether it can steer its

way to a successful conclusion of the Doha Round in the near future Failing this the

Round will continue to hang like an albatross around the WTOrsquos neck preventing it

from delivering the promised boost to least developed nations and freezing its ability

to address new challenges to the global trading system All countries would suffer from

such an outcome but especially the worldrsquos poorest and most vulnerable

The cost of a never-ending Doha Round

The adverse implications of a continuing Doha impasse on the future role of the WTO

are too compelling to be dismissed offhandedly

Several trade-linked global problems require global cooperation Food security energy

security trade-related aspects of climate change labour mobility commodity price

volatility and integration of regional liberalisation into the multilateral system are

problems that can only be solved with global cooperation

Ujal Singh BhatiaFormerly Indiarsquos Ambassador and Permanent Representative to the WTO

Next Steps Getting past the Doha Round crisis

3333

VOX Research-based policy analysis and commentary from leading economists

34

For example if food exporters continue to impose export barriers when prices rise

food importers may respond with import barriers to boost self-sufficiency This sort of

protectionist reverberation could lead the world to a situation in which all the players

are worse off but none can improve the situation unilaterally Avoiding this sort of

outcome would require global agreements There are very few global institutions that

could manage such cooperation indeed the WTO might be the only one A WTO locked

in endless Doha debates cannot be the centre of the rules based global trading system

There are many thinkers who believe that the structure of WTO rules is robust enough

to withstand a Doha failure It is true that the sky will not fall if Doha is terminated

without a conclusion Such analysts however tend to underestimate the significant

structural changes taking place in the global economy and the trading system The

WTO is working on a set of rules agreed upon in 1994 that were based on an agenda

set almost a quarter of century ago These are still useful and relevant for much of

world trade ndash but not all For instance the rules were not designed for the technology-

driven fragmentation of the manufacturing process and the distribution of the product

value chain across several geographical locations the intertwining of production with

related services the embedded intellectual property rights in components and sub-

components or the multiplicity of rules of origin All these require a different approach

to rule making

A WTO that remains preoccupied with the Doha Round cannot be expected to focus

on such issues Therefore the continuing relevance of the WTO and its primacy in

the global trading system are contingent upon a successful and early conclusion of

the Doha Round Notwithstanding this urgency it is now clear that a Doha package

cannot be wound up in 2011 along the lines agreed by G20 leaders in November 2010

To prevent this from tying the WTO in knots for years to come it is necessary to think

creatively about ways forward

Next Steps Getting Past the Doha Round Crisis

35

Ideas for moving beyond the impasse

Any effort to deal with the impasse in the negotiations needs to be based on a holistic

appreciation of the systemic implications of a continuing stalemate as much as on the

negotiating positions of various members The efforts for a solution acceptable to all

members therefore need to focus on issues in the Doha mandate as well as on issues for

a post Doha situation

Within this framework four constraints need to be borne in mind

bull A ldquoDoha Literdquo of reduced ambition will not work The outcome has to reflect a dec-

adersquos efforts of the global community Ambition however cannot be defined to suit

the convenience of a few members It must touch all aspects of the Doha mandate

bull Aspects of the Doha mandate that are more relevant to the development dimension

have to be ambitiously addressed and fast tracked

bull WTO needs to start work on a new work programme to address new challenges

bull The Doha Round cannot be completed in 2011 A down payment is necessary from

the Doha Round this year to convince the world that the WTO can deliver

A three-track approach

These constraints require the WTO to adopt a three-track approach during the next few

months leading up to the ministerial meeting in December 2011

Track 1 Identification of a list of issues that specially address the trading interests

of smaller developing countries and relatively less contentious issues for fast tracked

finalisation before the ministerial meeting

Track 2 Identification of a package of the more contentious issues for continuing

consultations with clear terms of reference

Track 3 Identification of appropriate terms of reference for a work programme on

WTO institutional reform and the forward-looking agenda

VOX Research-based policy analysis and commentary from leading economists

36

A possible timeline

These three tracks taken as a package would provide a way forward that respects all

four constraints Achieving consensus on them would be difficult ndash and require months

of preparatory work and negotiations

If the WTO membership starts immediately however there is still time to get the

package ready for finalisation by ministers at the December 2011 ministerial meeting

For this to happen it is essential that discussions on such a package begin this month

so that its contents can be finalised by the end of June 2011 This would leave about

four working months before the ministerial meeting to complete negotiations on the

selected areas

What the three tracks might contain

The first track would contain the Doha down-payment package As with any WTO

package the contents would need to be negotiated and it might require complementary

policies such as technical assistance initiatives

Such a list must include items that speak to development aspects of the Doha mandate

such as

bull The Implementation of the Hong Kong decision on duty-free quota-free treatment

for less developed countries

bull A ministerial decision on the Monitoring Mechanism for Special and Differential

Treatment provisions

bull A ministerial decision on the issues raised by the Sub-Saharan African cotton ex-

porters (the group known as the C-4) and

bull The finalisation of a less-developed-country (LDC) waiver in services so that pref-

erential treatment can be provided to LDCrsquos in services without extending it to

others

Next Steps Getting Past the Doha Round Crisis

37

It should also include areas of the negotiations that engage the interest of all members

such as

bull Trade Facilitation

bull All aspects of export competition in agriculture including export subsidies

bull The Transparency Mechanism for regional trade agreements (RTAs)

bull The non-tariff barriers (NTBs) package in non-agricultural market access (NAMA)

and

bull A ministerial decision on interactions and relationships between the WTOrsquos rules

and its committees on the one hand and existing multilateral environmental agree-

ments on the other (eg the Basel Convention on the Control of Transboundary

Movements of Hazardous Wastes and the Montreal Protocol on Substances that

Deplete the Ozone Layer)

While some members would like to exclude some of these areas from a fast tracked

process in the hope of using them for trade offs in the final stage it is important that the

package is as comprehensive as possible

Track two Items for further negotiation

The second track would gather all remaining items currently under negotiations This

would include

bull All aspects of market access in industrial goods agriculture and services

bull All aspects of subsidies in agriculture

bull Various aspects of rules including fisheries subsidies

bull Environmental goods and

bull Issues related to trade-related aspects of international property rights (TRIPS) re-

garding the protection of Geographical Indicators and the protection of traditional

VOX Research-based policy analysis and commentary from leading economists

38

knowledge and folklore that were are mentioned in the Convention on Biological

Diversity1

The need for a balanced package deserves emphasis It is often assumed that there

is a straight trade-off between agricultural subsidies and market access The situation

however is more complex The interest of countries like India China and Indonesia

in agricultural reform is more systemic than export related For them other incentives

within the mandate will be required

Track three Looking ahead

The underlying theme for the work programme would be an appraisal of the entire

negotiating and decision-making process in the WTO in the context of the present

realities both within and outside the organisation The objective would be to prepare

the WTO to address new challenges to the global trading system concurrently with the

ongoing work on the remaining parts of the Doha mandate

Closing remarks

The above proposals constitute a basic template for addressing the Doha conundrum

To what extent they are actually embraced will depend on how much political capital

the major members of the WTO are prepared to invest in moving the Doha Round

forward There is much scepticism about whether such political will exists It is time

for governments to prove the sceptics wrong

1 Specifically as specified in paragraphs 18 and 19 of the Doha Declaration

Next Steps Getting Past the Doha Round Crisis

39

About the author

Ambassador Bhatia Singh joined the Indian Administrative Service in 1974 holding

several senior positions in provincial administration in Orissa State between 1976 and

1995 He served as Joint Secretary Ministry of Commerce and Industry between 1995-

2000 in which capacity he handled a number of bilateral regional and multilateral trade

negotiations From 2004 to his retirement in 2010 he served as Indiarsquos Ambassador and

Permanent Representative to the WTO in Geneva

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

Next Steps Getting Past the Doha Round Crisis

25

Economic Cooperation Council and serves on the Board of the Overseas Development

Council World Gold Council and the Asian Journal of Business from The University

of Michigan Ann Arbor

She has published widely on a range of subjects including matters pertaining to

Indonesia as well as regional (ie Asian and Asia Pacific) and global issues She earned

her BA and MA in economics from Australian National University and a PhD in

economics from the University of California Davis

27

The Doha Round has failed according the former US Trade Representative Susan

Schwab This essay argues that prolonging Doha jeopardises the multilateral trading

system and threatens future prospects for WTO-led liberalisation Negotiators should

salvage whatever partial agreements they can from Doha and quickly drop the rest

to ensure the December ministerial meeting focuses on future work plans rather than

recriminations over Doha

The Doha Round has failed It is time for the international community to acknowledge

this sad fact and move on Prolonging the pretence that the Doha Round will succeed

is now a greater threat to the WTO and the multilateral trading system than facing the

truth

A great many smart hard-working and well-intentioned individuals have worked over

many years to realise Doharsquos potential to contribute to global economic growth and

development But what is on the table in Geneva has failed to deliver any outcome

let alone a meaningful one It is time for a swift clean break from the past and to

lay the groundwork for a future where the WTO and its members revive WTO-led

liberalisation and reform

End Doharsquos stranglehold and build towards near-term wins

To keep the multilateral trading system healthy it is necessary to end the Doha

Roundrsquos stranglehold on the system This should happen quickly in order to ensure

that the December 2011 ministerial meeting focuses on future work plans rather than

Susan SchwabUniversity of Marlyand former US Trade Representative

Acknowledge Doharsquos demise and move on to save the WTO

2727

VOX Research-based policy analysis and commentary from leading economists

28

recriminations about a Doha Development Agenda that has struggled through one failed

encounter after another

Negotiators should refocus their efforts on near-term wins and on building the next

Round ndash which need not be another behemoth but perhaps a ldquorolling roundrdquo of reforms

and new market access or a few highest-common-denominator plurilateral or WTO-

plus deals Ultimately these should lead to a broader-based market access and rules

agreement under the multilateral auspices of the WTO

The small package possibility

In my recent Foreign Affairs article (Schwab 2011) I suggested that negotiators should

try to salvage whatever partial agreements they can and then walk away from the rest

I mentioned a number of potential candidates such as trade facilitation and the largely

completed agricultural-export pillar (comprising proposed agreements on export credits

food aid state-trading firms and the elimination of export subsidies) Negotiators

might also try to complete two environment-related agreements one cutting subsidies

to industrial fishing fleets that are overfishing the worldrsquos oceans and the other ending

tariff and nontariff barriers to rdquogreenrdquo technologies in major producing and consuming

countries Taken together or individually each of these would benefit countries across

the spectrum of economic development

I am however sceptical that even these small agreements are achievable in the current

climate of mistrust and entrenched positions A troubling development during the course

of the Round has been how often countries seem to forget or forfeit their own economic

interests ndash let alone the greater good ndash in the face of peer pressure and group-think In

the current environment even these smaller deals might prove impossible to achieve

It is certainly worth trying to achieve a few deliverables by taking a run at a small

package but negotiators should not spend too much time on it They already know

exactly what the options are if they cannot get to ldquoyesrdquo in say two weeks they should

Next Steps Getting Past the Doha Round Crisis

29

give up and move on to the real challenge of launching a new series of multilateral

negotiations under WTO auspices

Getting past Doha

How to conclude the Doha Round One option would be for the Director-General and

a representative sample of WTO Ambassadors to come together in the interest of the

institution and to offer a declaration of Doharsquos demise along with their pledge to begin

building the future That would enable leaders at the November G20 meeting to pledge

their support for the rules-based trading system the WTO and its next steps rather than

for the ever elusive ldquobalanced and ambitiousrdquo Doha outcome

After a short period of grieving over the death of Doha and an opportunity to get

beyond the anger lead trading nations should refocus on getting the WTO back into

its mainstream business of negotiating mutually advantageous market opening and

updating the global rdquorules of the roadrdquo This approach offers the best promise of a

meaningful ldquodevelopmentrdquo outcome as well

How might this be achieved

It seems unrealistic to think WTO members would agree to launch another massive

all-or-nothing round in the near future Such broad negotiations however will be

necessary to tackle some of the worldrsquos most important market access challenges in

services manufacturing and agriculture along with such issues as farm subsidies

There are ways to build-up to the big-round model again where countries once more see

economic self-interest in the use of broad-based negotiations and trade-offs to achieve

both new market access and market reforms First however we must re-establish trust

and regain momentum

One way forward would be for ministers to agree to launch a number of confidence-

building negotiations For example ministers in December could decide to open talks

VOX Research-based policy analysis and commentary from leading economists

30

on expanding the 1997 Information Technology Agreement a number of nations

seem interested and the US Administration already has the authority to implement an

enhanced agreement If negotiators fail to work through the 850 brackets in the current

Doha trade facilitation text that could also be tackled as a stand-alone agreement since

each nation would benefit from more efficient movement of goods and services across

borders

Another confidence-building measure might be a merger of sectoral agreements geared

toward a widely-shared objective such as cheaper better healthcare A package that

included pharmaceuticals medical devices and healthcare services might attract

support from the broad array of WTO members across the development spectrum Given

the high-level of public interest in and awareness of environment issues a sectoral

negotiation on environmental goods and services might be another confidence-building

deal once it is removed from the straightjacket that Doha has become

Lessons from Doha for next steps and the next round

Confidence building agreements would offer modest economic and social contributions

and serve to prepare the atmospherics for launch the next Round This brings me to my

last topic ndash the lessons we should draw from a decade of Doha talks

One thing that is quite clear from years of struggling with the basic structure of Doha

is that the combination of formula and self-selected flexibilities has not worked It

resulted in a situation where every negotiator had to assume the worst case ndash knowing

the political costs they would pay for their own liberalisation but expecting their trading

partners to use flexibilities to negate any meaningful new market-access It is possible

to draw from the best of the Doha formulas ndash such as the higher the barrier the greater

the cut ndash while still creating real negotiations around them through requests and offers

delivered using above- and below-formula cuts

Next Steps Getting Past the Doha Round Crisis

31

Another key lesson is that lumping the worldrsquos very diverse economies into three

basic categories ndash developed developing and least developed ndash is a practice that no

longer fits 21st century economic and trade realities Nor is it a structure conducive to

negotiations and real progress based on an exchange of market access among nations

with large markets Yes the advanced economies should be expected to do more than

those at lesser stages of economic development but expectations should also reflect

the fact that many emerging economies are characterised by both poverty and sectors

where they are globally competitive trade powerhouses

The emerging economies have large markets represent over half of global GDP growth

and stand to be the biggest winners from any major trade agreement They should be

expected to contribute to the next Round accordingly Major trade agreements generally

take at least 12 years to implement from the time they are initially concluded What

should the world trading system look like in 2025 in terms of the absolute and relative

responsibilities of key trading nations

Concluding remarks

I am optimistic when it comes to the multilateral trading system and the WTOrsquos central

role in its governance The optimistic scenario is that we put the Doha Round behind

us Facing facts can invigorate and strengthen the trading system If we fail to act the

WTO risks losing its relevance

The Doha Round ndash which in my view cannot be concluded as it is conceived today ndash

should not be allowed to continue draining the WTOrsquos credibility and potential progress

on the multilateral front Now is the time to liberate the would-be trade liberalisers from

the Doha straightjacket and move on

VOX Research-based policy analysis and commentary from leading economists

32

References

Schwab Susan (2011) ldquoAfter Doha Why the negotiations are doomed and what we

should do about itrdquo Foreign Affairs MayJune

About the author

Ambassador Schwab has been a Professor at the University of Maryland School of

Public Policy since January 2009 and a strategic advisor to Mayer Brown LLP (global

law firm) since March 2010 Ambassador Schwab served as US Trade Representative

from June 2006 to January 2009 and as Deputy US Trade Representative from

October 2005 to June 2006 Prior to her service as Deputy US Trade Representative

Ambassador Schwab served as President and Chief Executive Officer of the University

System of Maryland Foundation from June 2004 to October 2005 as a consultant

for the US Department of Treasury from July 2003 to December 2003 and as Dean

of the University of Maryland School of Public Policy from July 1995 to July 2003

Ambassador Schwab serves on the boards of Boeing Company Caterpillar Inc and

FedEx Corporation

She holds a BA in Political Economy from Williams College a Masters in Development

Policy from Stanford University (Food Research Institute) and a PhD in Public

Administration and International Business from The George Washington University

33

Hopes for finishing Doha in 2011 are fading fast This essay suggests a three-track

approach for moving beyond the Doha crisis 1) Identify a package of ldquodeliverablesrsquo ndash

parts of the Round that could be agreed by December 2011 2) Assemble a package of

contentious issues for ongoing negotiation with clear terms of reference 3) Establish

a work programme to consider WTO institutional reform and forward-looking issues

For reasons that are too well known to be repeated the WTO finds itself at the crossroads

Decisions to be taken in the next few weeks will determine whether it can steer its

way to a successful conclusion of the Doha Round in the near future Failing this the

Round will continue to hang like an albatross around the WTOrsquos neck preventing it

from delivering the promised boost to least developed nations and freezing its ability

to address new challenges to the global trading system All countries would suffer from

such an outcome but especially the worldrsquos poorest and most vulnerable

The cost of a never-ending Doha Round

The adverse implications of a continuing Doha impasse on the future role of the WTO

are too compelling to be dismissed offhandedly

Several trade-linked global problems require global cooperation Food security energy

security trade-related aspects of climate change labour mobility commodity price

volatility and integration of regional liberalisation into the multilateral system are

problems that can only be solved with global cooperation

Ujal Singh BhatiaFormerly Indiarsquos Ambassador and Permanent Representative to the WTO

Next Steps Getting past the Doha Round crisis

3333

VOX Research-based policy analysis and commentary from leading economists

34

For example if food exporters continue to impose export barriers when prices rise

food importers may respond with import barriers to boost self-sufficiency This sort of

protectionist reverberation could lead the world to a situation in which all the players

are worse off but none can improve the situation unilaterally Avoiding this sort of

outcome would require global agreements There are very few global institutions that

could manage such cooperation indeed the WTO might be the only one A WTO locked

in endless Doha debates cannot be the centre of the rules based global trading system

There are many thinkers who believe that the structure of WTO rules is robust enough

to withstand a Doha failure It is true that the sky will not fall if Doha is terminated

without a conclusion Such analysts however tend to underestimate the significant

structural changes taking place in the global economy and the trading system The

WTO is working on a set of rules agreed upon in 1994 that were based on an agenda

set almost a quarter of century ago These are still useful and relevant for much of

world trade ndash but not all For instance the rules were not designed for the technology-

driven fragmentation of the manufacturing process and the distribution of the product

value chain across several geographical locations the intertwining of production with

related services the embedded intellectual property rights in components and sub-

components or the multiplicity of rules of origin All these require a different approach

to rule making

A WTO that remains preoccupied with the Doha Round cannot be expected to focus

on such issues Therefore the continuing relevance of the WTO and its primacy in

the global trading system are contingent upon a successful and early conclusion of

the Doha Round Notwithstanding this urgency it is now clear that a Doha package

cannot be wound up in 2011 along the lines agreed by G20 leaders in November 2010

To prevent this from tying the WTO in knots for years to come it is necessary to think

creatively about ways forward

Next Steps Getting Past the Doha Round Crisis

35

Ideas for moving beyond the impasse

Any effort to deal with the impasse in the negotiations needs to be based on a holistic

appreciation of the systemic implications of a continuing stalemate as much as on the

negotiating positions of various members The efforts for a solution acceptable to all

members therefore need to focus on issues in the Doha mandate as well as on issues for

a post Doha situation

Within this framework four constraints need to be borne in mind

bull A ldquoDoha Literdquo of reduced ambition will not work The outcome has to reflect a dec-

adersquos efforts of the global community Ambition however cannot be defined to suit

the convenience of a few members It must touch all aspects of the Doha mandate

bull Aspects of the Doha mandate that are more relevant to the development dimension

have to be ambitiously addressed and fast tracked

bull WTO needs to start work on a new work programme to address new challenges

bull The Doha Round cannot be completed in 2011 A down payment is necessary from

the Doha Round this year to convince the world that the WTO can deliver

A three-track approach

These constraints require the WTO to adopt a three-track approach during the next few

months leading up to the ministerial meeting in December 2011

Track 1 Identification of a list of issues that specially address the trading interests

of smaller developing countries and relatively less contentious issues for fast tracked

finalisation before the ministerial meeting

Track 2 Identification of a package of the more contentious issues for continuing

consultations with clear terms of reference

Track 3 Identification of appropriate terms of reference for a work programme on

WTO institutional reform and the forward-looking agenda

VOX Research-based policy analysis and commentary from leading economists

36

A possible timeline

These three tracks taken as a package would provide a way forward that respects all

four constraints Achieving consensus on them would be difficult ndash and require months

of preparatory work and negotiations

If the WTO membership starts immediately however there is still time to get the

package ready for finalisation by ministers at the December 2011 ministerial meeting

For this to happen it is essential that discussions on such a package begin this month

so that its contents can be finalised by the end of June 2011 This would leave about

four working months before the ministerial meeting to complete negotiations on the

selected areas

What the three tracks might contain

The first track would contain the Doha down-payment package As with any WTO

package the contents would need to be negotiated and it might require complementary

policies such as technical assistance initiatives

Such a list must include items that speak to development aspects of the Doha mandate

such as

bull The Implementation of the Hong Kong decision on duty-free quota-free treatment

for less developed countries

bull A ministerial decision on the Monitoring Mechanism for Special and Differential

Treatment provisions

bull A ministerial decision on the issues raised by the Sub-Saharan African cotton ex-

porters (the group known as the C-4) and

bull The finalisation of a less-developed-country (LDC) waiver in services so that pref-

erential treatment can be provided to LDCrsquos in services without extending it to

others

Next Steps Getting Past the Doha Round Crisis

37

It should also include areas of the negotiations that engage the interest of all members

such as

bull Trade Facilitation

bull All aspects of export competition in agriculture including export subsidies

bull The Transparency Mechanism for regional trade agreements (RTAs)

bull The non-tariff barriers (NTBs) package in non-agricultural market access (NAMA)

and

bull A ministerial decision on interactions and relationships between the WTOrsquos rules

and its committees on the one hand and existing multilateral environmental agree-

ments on the other (eg the Basel Convention on the Control of Transboundary

Movements of Hazardous Wastes and the Montreal Protocol on Substances that

Deplete the Ozone Layer)

While some members would like to exclude some of these areas from a fast tracked

process in the hope of using them for trade offs in the final stage it is important that the

package is as comprehensive as possible

Track two Items for further negotiation

The second track would gather all remaining items currently under negotiations This

would include

bull All aspects of market access in industrial goods agriculture and services

bull All aspects of subsidies in agriculture

bull Various aspects of rules including fisheries subsidies

bull Environmental goods and

bull Issues related to trade-related aspects of international property rights (TRIPS) re-

garding the protection of Geographical Indicators and the protection of traditional

VOX Research-based policy analysis and commentary from leading economists

38

knowledge and folklore that were are mentioned in the Convention on Biological

Diversity1

The need for a balanced package deserves emphasis It is often assumed that there

is a straight trade-off between agricultural subsidies and market access The situation

however is more complex The interest of countries like India China and Indonesia

in agricultural reform is more systemic than export related For them other incentives

within the mandate will be required

Track three Looking ahead

The underlying theme for the work programme would be an appraisal of the entire

negotiating and decision-making process in the WTO in the context of the present

realities both within and outside the organisation The objective would be to prepare

the WTO to address new challenges to the global trading system concurrently with the

ongoing work on the remaining parts of the Doha mandate

Closing remarks

The above proposals constitute a basic template for addressing the Doha conundrum

To what extent they are actually embraced will depend on how much political capital

the major members of the WTO are prepared to invest in moving the Doha Round

forward There is much scepticism about whether such political will exists It is time

for governments to prove the sceptics wrong

1 Specifically as specified in paragraphs 18 and 19 of the Doha Declaration

Next Steps Getting Past the Doha Round Crisis

39

About the author

Ambassador Bhatia Singh joined the Indian Administrative Service in 1974 holding

several senior positions in provincial administration in Orissa State between 1976 and

1995 He served as Joint Secretary Ministry of Commerce and Industry between 1995-

2000 in which capacity he handled a number of bilateral regional and multilateral trade

negotiations From 2004 to his retirement in 2010 he served as Indiarsquos Ambassador and

Permanent Representative to the WTO in Geneva

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

27

The Doha Round has failed according the former US Trade Representative Susan

Schwab This essay argues that prolonging Doha jeopardises the multilateral trading

system and threatens future prospects for WTO-led liberalisation Negotiators should

salvage whatever partial agreements they can from Doha and quickly drop the rest

to ensure the December ministerial meeting focuses on future work plans rather than

recriminations over Doha

The Doha Round has failed It is time for the international community to acknowledge

this sad fact and move on Prolonging the pretence that the Doha Round will succeed

is now a greater threat to the WTO and the multilateral trading system than facing the

truth

A great many smart hard-working and well-intentioned individuals have worked over

many years to realise Doharsquos potential to contribute to global economic growth and

development But what is on the table in Geneva has failed to deliver any outcome

let alone a meaningful one It is time for a swift clean break from the past and to

lay the groundwork for a future where the WTO and its members revive WTO-led

liberalisation and reform

End Doharsquos stranglehold and build towards near-term wins

To keep the multilateral trading system healthy it is necessary to end the Doha

Roundrsquos stranglehold on the system This should happen quickly in order to ensure

that the December 2011 ministerial meeting focuses on future work plans rather than

Susan SchwabUniversity of Marlyand former US Trade Representative

Acknowledge Doharsquos demise and move on to save the WTO

2727

VOX Research-based policy analysis and commentary from leading economists

28

recriminations about a Doha Development Agenda that has struggled through one failed

encounter after another

Negotiators should refocus their efforts on near-term wins and on building the next

Round ndash which need not be another behemoth but perhaps a ldquorolling roundrdquo of reforms

and new market access or a few highest-common-denominator plurilateral or WTO-

plus deals Ultimately these should lead to a broader-based market access and rules

agreement under the multilateral auspices of the WTO

The small package possibility

In my recent Foreign Affairs article (Schwab 2011) I suggested that negotiators should

try to salvage whatever partial agreements they can and then walk away from the rest

I mentioned a number of potential candidates such as trade facilitation and the largely

completed agricultural-export pillar (comprising proposed agreements on export credits

food aid state-trading firms and the elimination of export subsidies) Negotiators

might also try to complete two environment-related agreements one cutting subsidies

to industrial fishing fleets that are overfishing the worldrsquos oceans and the other ending

tariff and nontariff barriers to rdquogreenrdquo technologies in major producing and consuming

countries Taken together or individually each of these would benefit countries across

the spectrum of economic development

I am however sceptical that even these small agreements are achievable in the current

climate of mistrust and entrenched positions A troubling development during the course

of the Round has been how often countries seem to forget or forfeit their own economic

interests ndash let alone the greater good ndash in the face of peer pressure and group-think In

the current environment even these smaller deals might prove impossible to achieve

It is certainly worth trying to achieve a few deliverables by taking a run at a small

package but negotiators should not spend too much time on it They already know

exactly what the options are if they cannot get to ldquoyesrdquo in say two weeks they should

Next Steps Getting Past the Doha Round Crisis

29

give up and move on to the real challenge of launching a new series of multilateral

negotiations under WTO auspices

Getting past Doha

How to conclude the Doha Round One option would be for the Director-General and

a representative sample of WTO Ambassadors to come together in the interest of the

institution and to offer a declaration of Doharsquos demise along with their pledge to begin

building the future That would enable leaders at the November G20 meeting to pledge

their support for the rules-based trading system the WTO and its next steps rather than

for the ever elusive ldquobalanced and ambitiousrdquo Doha outcome

After a short period of grieving over the death of Doha and an opportunity to get

beyond the anger lead trading nations should refocus on getting the WTO back into

its mainstream business of negotiating mutually advantageous market opening and

updating the global rdquorules of the roadrdquo This approach offers the best promise of a

meaningful ldquodevelopmentrdquo outcome as well

How might this be achieved

It seems unrealistic to think WTO members would agree to launch another massive

all-or-nothing round in the near future Such broad negotiations however will be

necessary to tackle some of the worldrsquos most important market access challenges in

services manufacturing and agriculture along with such issues as farm subsidies

There are ways to build-up to the big-round model again where countries once more see

economic self-interest in the use of broad-based negotiations and trade-offs to achieve

both new market access and market reforms First however we must re-establish trust

and regain momentum

One way forward would be for ministers to agree to launch a number of confidence-

building negotiations For example ministers in December could decide to open talks

VOX Research-based policy analysis and commentary from leading economists

30

on expanding the 1997 Information Technology Agreement a number of nations

seem interested and the US Administration already has the authority to implement an

enhanced agreement If negotiators fail to work through the 850 brackets in the current

Doha trade facilitation text that could also be tackled as a stand-alone agreement since

each nation would benefit from more efficient movement of goods and services across

borders

Another confidence-building measure might be a merger of sectoral agreements geared

toward a widely-shared objective such as cheaper better healthcare A package that

included pharmaceuticals medical devices and healthcare services might attract

support from the broad array of WTO members across the development spectrum Given

the high-level of public interest in and awareness of environment issues a sectoral

negotiation on environmental goods and services might be another confidence-building

deal once it is removed from the straightjacket that Doha has become

Lessons from Doha for next steps and the next round

Confidence building agreements would offer modest economic and social contributions

and serve to prepare the atmospherics for launch the next Round This brings me to my

last topic ndash the lessons we should draw from a decade of Doha talks

One thing that is quite clear from years of struggling with the basic structure of Doha

is that the combination of formula and self-selected flexibilities has not worked It

resulted in a situation where every negotiator had to assume the worst case ndash knowing

the political costs they would pay for their own liberalisation but expecting their trading

partners to use flexibilities to negate any meaningful new market-access It is possible

to draw from the best of the Doha formulas ndash such as the higher the barrier the greater

the cut ndash while still creating real negotiations around them through requests and offers

delivered using above- and below-formula cuts

Next Steps Getting Past the Doha Round Crisis

31

Another key lesson is that lumping the worldrsquos very diverse economies into three

basic categories ndash developed developing and least developed ndash is a practice that no

longer fits 21st century economic and trade realities Nor is it a structure conducive to

negotiations and real progress based on an exchange of market access among nations

with large markets Yes the advanced economies should be expected to do more than

those at lesser stages of economic development but expectations should also reflect

the fact that many emerging economies are characterised by both poverty and sectors

where they are globally competitive trade powerhouses

The emerging economies have large markets represent over half of global GDP growth

and stand to be the biggest winners from any major trade agreement They should be

expected to contribute to the next Round accordingly Major trade agreements generally

take at least 12 years to implement from the time they are initially concluded What

should the world trading system look like in 2025 in terms of the absolute and relative

responsibilities of key trading nations

Concluding remarks

I am optimistic when it comes to the multilateral trading system and the WTOrsquos central

role in its governance The optimistic scenario is that we put the Doha Round behind

us Facing facts can invigorate and strengthen the trading system If we fail to act the

WTO risks losing its relevance

The Doha Round ndash which in my view cannot be concluded as it is conceived today ndash

should not be allowed to continue draining the WTOrsquos credibility and potential progress

on the multilateral front Now is the time to liberate the would-be trade liberalisers from

the Doha straightjacket and move on

VOX Research-based policy analysis and commentary from leading economists

32

References

Schwab Susan (2011) ldquoAfter Doha Why the negotiations are doomed and what we

should do about itrdquo Foreign Affairs MayJune

About the author

Ambassador Schwab has been a Professor at the University of Maryland School of

Public Policy since January 2009 and a strategic advisor to Mayer Brown LLP (global

law firm) since March 2010 Ambassador Schwab served as US Trade Representative

from June 2006 to January 2009 and as Deputy US Trade Representative from

October 2005 to June 2006 Prior to her service as Deputy US Trade Representative

Ambassador Schwab served as President and Chief Executive Officer of the University

System of Maryland Foundation from June 2004 to October 2005 as a consultant

for the US Department of Treasury from July 2003 to December 2003 and as Dean

of the University of Maryland School of Public Policy from July 1995 to July 2003

Ambassador Schwab serves on the boards of Boeing Company Caterpillar Inc and

FedEx Corporation

She holds a BA in Political Economy from Williams College a Masters in Development

Policy from Stanford University (Food Research Institute) and a PhD in Public

Administration and International Business from The George Washington University

33

Hopes for finishing Doha in 2011 are fading fast This essay suggests a three-track

approach for moving beyond the Doha crisis 1) Identify a package of ldquodeliverablesrsquo ndash

parts of the Round that could be agreed by December 2011 2) Assemble a package of

contentious issues for ongoing negotiation with clear terms of reference 3) Establish

a work programme to consider WTO institutional reform and forward-looking issues

For reasons that are too well known to be repeated the WTO finds itself at the crossroads

Decisions to be taken in the next few weeks will determine whether it can steer its

way to a successful conclusion of the Doha Round in the near future Failing this the

Round will continue to hang like an albatross around the WTOrsquos neck preventing it

from delivering the promised boost to least developed nations and freezing its ability

to address new challenges to the global trading system All countries would suffer from

such an outcome but especially the worldrsquos poorest and most vulnerable

The cost of a never-ending Doha Round

The adverse implications of a continuing Doha impasse on the future role of the WTO

are too compelling to be dismissed offhandedly

Several trade-linked global problems require global cooperation Food security energy

security trade-related aspects of climate change labour mobility commodity price

volatility and integration of regional liberalisation into the multilateral system are

problems that can only be solved with global cooperation

Ujal Singh BhatiaFormerly Indiarsquos Ambassador and Permanent Representative to the WTO

Next Steps Getting past the Doha Round crisis

3333

VOX Research-based policy analysis and commentary from leading economists

34

For example if food exporters continue to impose export barriers when prices rise

food importers may respond with import barriers to boost self-sufficiency This sort of

protectionist reverberation could lead the world to a situation in which all the players

are worse off but none can improve the situation unilaterally Avoiding this sort of

outcome would require global agreements There are very few global institutions that

could manage such cooperation indeed the WTO might be the only one A WTO locked

in endless Doha debates cannot be the centre of the rules based global trading system

There are many thinkers who believe that the structure of WTO rules is robust enough

to withstand a Doha failure It is true that the sky will not fall if Doha is terminated

without a conclusion Such analysts however tend to underestimate the significant

structural changes taking place in the global economy and the trading system The

WTO is working on a set of rules agreed upon in 1994 that were based on an agenda

set almost a quarter of century ago These are still useful and relevant for much of

world trade ndash but not all For instance the rules were not designed for the technology-

driven fragmentation of the manufacturing process and the distribution of the product

value chain across several geographical locations the intertwining of production with

related services the embedded intellectual property rights in components and sub-

components or the multiplicity of rules of origin All these require a different approach

to rule making

A WTO that remains preoccupied with the Doha Round cannot be expected to focus

on such issues Therefore the continuing relevance of the WTO and its primacy in

the global trading system are contingent upon a successful and early conclusion of

the Doha Round Notwithstanding this urgency it is now clear that a Doha package

cannot be wound up in 2011 along the lines agreed by G20 leaders in November 2010

To prevent this from tying the WTO in knots for years to come it is necessary to think

creatively about ways forward

Next Steps Getting Past the Doha Round Crisis

35

Ideas for moving beyond the impasse

Any effort to deal with the impasse in the negotiations needs to be based on a holistic

appreciation of the systemic implications of a continuing stalemate as much as on the

negotiating positions of various members The efforts for a solution acceptable to all

members therefore need to focus on issues in the Doha mandate as well as on issues for

a post Doha situation

Within this framework four constraints need to be borne in mind

bull A ldquoDoha Literdquo of reduced ambition will not work The outcome has to reflect a dec-

adersquos efforts of the global community Ambition however cannot be defined to suit

the convenience of a few members It must touch all aspects of the Doha mandate

bull Aspects of the Doha mandate that are more relevant to the development dimension

have to be ambitiously addressed and fast tracked

bull WTO needs to start work on a new work programme to address new challenges

bull The Doha Round cannot be completed in 2011 A down payment is necessary from

the Doha Round this year to convince the world that the WTO can deliver

A three-track approach

These constraints require the WTO to adopt a three-track approach during the next few

months leading up to the ministerial meeting in December 2011

Track 1 Identification of a list of issues that specially address the trading interests

of smaller developing countries and relatively less contentious issues for fast tracked

finalisation before the ministerial meeting

Track 2 Identification of a package of the more contentious issues for continuing

consultations with clear terms of reference

Track 3 Identification of appropriate terms of reference for a work programme on

WTO institutional reform and the forward-looking agenda

VOX Research-based policy analysis and commentary from leading economists

36

A possible timeline

These three tracks taken as a package would provide a way forward that respects all

four constraints Achieving consensus on them would be difficult ndash and require months

of preparatory work and negotiations

If the WTO membership starts immediately however there is still time to get the

package ready for finalisation by ministers at the December 2011 ministerial meeting

For this to happen it is essential that discussions on such a package begin this month

so that its contents can be finalised by the end of June 2011 This would leave about

four working months before the ministerial meeting to complete negotiations on the

selected areas

What the three tracks might contain

The first track would contain the Doha down-payment package As with any WTO

package the contents would need to be negotiated and it might require complementary

policies such as technical assistance initiatives

Such a list must include items that speak to development aspects of the Doha mandate

such as

bull The Implementation of the Hong Kong decision on duty-free quota-free treatment

for less developed countries

bull A ministerial decision on the Monitoring Mechanism for Special and Differential

Treatment provisions

bull A ministerial decision on the issues raised by the Sub-Saharan African cotton ex-

porters (the group known as the C-4) and

bull The finalisation of a less-developed-country (LDC) waiver in services so that pref-

erential treatment can be provided to LDCrsquos in services without extending it to

others

Next Steps Getting Past the Doha Round Crisis

37

It should also include areas of the negotiations that engage the interest of all members

such as

bull Trade Facilitation

bull All aspects of export competition in agriculture including export subsidies

bull The Transparency Mechanism for regional trade agreements (RTAs)

bull The non-tariff barriers (NTBs) package in non-agricultural market access (NAMA)

and

bull A ministerial decision on interactions and relationships between the WTOrsquos rules

and its committees on the one hand and existing multilateral environmental agree-

ments on the other (eg the Basel Convention on the Control of Transboundary

Movements of Hazardous Wastes and the Montreal Protocol on Substances that

Deplete the Ozone Layer)

While some members would like to exclude some of these areas from a fast tracked

process in the hope of using them for trade offs in the final stage it is important that the

package is as comprehensive as possible

Track two Items for further negotiation

The second track would gather all remaining items currently under negotiations This

would include

bull All aspects of market access in industrial goods agriculture and services

bull All aspects of subsidies in agriculture

bull Various aspects of rules including fisheries subsidies

bull Environmental goods and

bull Issues related to trade-related aspects of international property rights (TRIPS) re-

garding the protection of Geographical Indicators and the protection of traditional

VOX Research-based policy analysis and commentary from leading economists

38

knowledge and folklore that were are mentioned in the Convention on Biological

Diversity1

The need for a balanced package deserves emphasis It is often assumed that there

is a straight trade-off between agricultural subsidies and market access The situation

however is more complex The interest of countries like India China and Indonesia

in agricultural reform is more systemic than export related For them other incentives

within the mandate will be required

Track three Looking ahead

The underlying theme for the work programme would be an appraisal of the entire

negotiating and decision-making process in the WTO in the context of the present

realities both within and outside the organisation The objective would be to prepare

the WTO to address new challenges to the global trading system concurrently with the

ongoing work on the remaining parts of the Doha mandate

Closing remarks

The above proposals constitute a basic template for addressing the Doha conundrum

To what extent they are actually embraced will depend on how much political capital

the major members of the WTO are prepared to invest in moving the Doha Round

forward There is much scepticism about whether such political will exists It is time

for governments to prove the sceptics wrong

1 Specifically as specified in paragraphs 18 and 19 of the Doha Declaration

Next Steps Getting Past the Doha Round Crisis

39

About the author

Ambassador Bhatia Singh joined the Indian Administrative Service in 1974 holding

several senior positions in provincial administration in Orissa State between 1976 and

1995 He served as Joint Secretary Ministry of Commerce and Industry between 1995-

2000 in which capacity he handled a number of bilateral regional and multilateral trade

negotiations From 2004 to his retirement in 2010 he served as Indiarsquos Ambassador and

Permanent Representative to the WTO in Geneva

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

VOX Research-based policy analysis and commentary from leading economists

28

recriminations about a Doha Development Agenda that has struggled through one failed

encounter after another

Negotiators should refocus their efforts on near-term wins and on building the next

Round ndash which need not be another behemoth but perhaps a ldquorolling roundrdquo of reforms

and new market access or a few highest-common-denominator plurilateral or WTO-

plus deals Ultimately these should lead to a broader-based market access and rules

agreement under the multilateral auspices of the WTO

The small package possibility

In my recent Foreign Affairs article (Schwab 2011) I suggested that negotiators should

try to salvage whatever partial agreements they can and then walk away from the rest

I mentioned a number of potential candidates such as trade facilitation and the largely

completed agricultural-export pillar (comprising proposed agreements on export credits

food aid state-trading firms and the elimination of export subsidies) Negotiators

might also try to complete two environment-related agreements one cutting subsidies

to industrial fishing fleets that are overfishing the worldrsquos oceans and the other ending

tariff and nontariff barriers to rdquogreenrdquo technologies in major producing and consuming

countries Taken together or individually each of these would benefit countries across

the spectrum of economic development

I am however sceptical that even these small agreements are achievable in the current

climate of mistrust and entrenched positions A troubling development during the course

of the Round has been how often countries seem to forget or forfeit their own economic

interests ndash let alone the greater good ndash in the face of peer pressure and group-think In

the current environment even these smaller deals might prove impossible to achieve

It is certainly worth trying to achieve a few deliverables by taking a run at a small

package but negotiators should not spend too much time on it They already know

exactly what the options are if they cannot get to ldquoyesrdquo in say two weeks they should

Next Steps Getting Past the Doha Round Crisis

29

give up and move on to the real challenge of launching a new series of multilateral

negotiations under WTO auspices

Getting past Doha

How to conclude the Doha Round One option would be for the Director-General and

a representative sample of WTO Ambassadors to come together in the interest of the

institution and to offer a declaration of Doharsquos demise along with their pledge to begin

building the future That would enable leaders at the November G20 meeting to pledge

their support for the rules-based trading system the WTO and its next steps rather than

for the ever elusive ldquobalanced and ambitiousrdquo Doha outcome

After a short period of grieving over the death of Doha and an opportunity to get

beyond the anger lead trading nations should refocus on getting the WTO back into

its mainstream business of negotiating mutually advantageous market opening and

updating the global rdquorules of the roadrdquo This approach offers the best promise of a

meaningful ldquodevelopmentrdquo outcome as well

How might this be achieved

It seems unrealistic to think WTO members would agree to launch another massive

all-or-nothing round in the near future Such broad negotiations however will be

necessary to tackle some of the worldrsquos most important market access challenges in

services manufacturing and agriculture along with such issues as farm subsidies

There are ways to build-up to the big-round model again where countries once more see

economic self-interest in the use of broad-based negotiations and trade-offs to achieve

both new market access and market reforms First however we must re-establish trust

and regain momentum

One way forward would be for ministers to agree to launch a number of confidence-

building negotiations For example ministers in December could decide to open talks

VOX Research-based policy analysis and commentary from leading economists

30

on expanding the 1997 Information Technology Agreement a number of nations

seem interested and the US Administration already has the authority to implement an

enhanced agreement If negotiators fail to work through the 850 brackets in the current

Doha trade facilitation text that could also be tackled as a stand-alone agreement since

each nation would benefit from more efficient movement of goods and services across

borders

Another confidence-building measure might be a merger of sectoral agreements geared

toward a widely-shared objective such as cheaper better healthcare A package that

included pharmaceuticals medical devices and healthcare services might attract

support from the broad array of WTO members across the development spectrum Given

the high-level of public interest in and awareness of environment issues a sectoral

negotiation on environmental goods and services might be another confidence-building

deal once it is removed from the straightjacket that Doha has become

Lessons from Doha for next steps and the next round

Confidence building agreements would offer modest economic and social contributions

and serve to prepare the atmospherics for launch the next Round This brings me to my

last topic ndash the lessons we should draw from a decade of Doha talks

One thing that is quite clear from years of struggling with the basic structure of Doha

is that the combination of formula and self-selected flexibilities has not worked It

resulted in a situation where every negotiator had to assume the worst case ndash knowing

the political costs they would pay for their own liberalisation but expecting their trading

partners to use flexibilities to negate any meaningful new market-access It is possible

to draw from the best of the Doha formulas ndash such as the higher the barrier the greater

the cut ndash while still creating real negotiations around them through requests and offers

delivered using above- and below-formula cuts

Next Steps Getting Past the Doha Round Crisis

31

Another key lesson is that lumping the worldrsquos very diverse economies into three

basic categories ndash developed developing and least developed ndash is a practice that no

longer fits 21st century economic and trade realities Nor is it a structure conducive to

negotiations and real progress based on an exchange of market access among nations

with large markets Yes the advanced economies should be expected to do more than

those at lesser stages of economic development but expectations should also reflect

the fact that many emerging economies are characterised by both poverty and sectors

where they are globally competitive trade powerhouses

The emerging economies have large markets represent over half of global GDP growth

and stand to be the biggest winners from any major trade agreement They should be

expected to contribute to the next Round accordingly Major trade agreements generally

take at least 12 years to implement from the time they are initially concluded What

should the world trading system look like in 2025 in terms of the absolute and relative

responsibilities of key trading nations

Concluding remarks

I am optimistic when it comes to the multilateral trading system and the WTOrsquos central

role in its governance The optimistic scenario is that we put the Doha Round behind

us Facing facts can invigorate and strengthen the trading system If we fail to act the

WTO risks losing its relevance

The Doha Round ndash which in my view cannot be concluded as it is conceived today ndash

should not be allowed to continue draining the WTOrsquos credibility and potential progress

on the multilateral front Now is the time to liberate the would-be trade liberalisers from

the Doha straightjacket and move on

VOX Research-based policy analysis and commentary from leading economists

32

References

Schwab Susan (2011) ldquoAfter Doha Why the negotiations are doomed and what we

should do about itrdquo Foreign Affairs MayJune

About the author

Ambassador Schwab has been a Professor at the University of Maryland School of

Public Policy since January 2009 and a strategic advisor to Mayer Brown LLP (global

law firm) since March 2010 Ambassador Schwab served as US Trade Representative

from June 2006 to January 2009 and as Deputy US Trade Representative from

October 2005 to June 2006 Prior to her service as Deputy US Trade Representative

Ambassador Schwab served as President and Chief Executive Officer of the University

System of Maryland Foundation from June 2004 to October 2005 as a consultant

for the US Department of Treasury from July 2003 to December 2003 and as Dean

of the University of Maryland School of Public Policy from July 1995 to July 2003

Ambassador Schwab serves on the boards of Boeing Company Caterpillar Inc and

FedEx Corporation

She holds a BA in Political Economy from Williams College a Masters in Development

Policy from Stanford University (Food Research Institute) and a PhD in Public

Administration and International Business from The George Washington University

33

Hopes for finishing Doha in 2011 are fading fast This essay suggests a three-track

approach for moving beyond the Doha crisis 1) Identify a package of ldquodeliverablesrsquo ndash

parts of the Round that could be agreed by December 2011 2) Assemble a package of

contentious issues for ongoing negotiation with clear terms of reference 3) Establish

a work programme to consider WTO institutional reform and forward-looking issues

For reasons that are too well known to be repeated the WTO finds itself at the crossroads

Decisions to be taken in the next few weeks will determine whether it can steer its

way to a successful conclusion of the Doha Round in the near future Failing this the

Round will continue to hang like an albatross around the WTOrsquos neck preventing it

from delivering the promised boost to least developed nations and freezing its ability

to address new challenges to the global trading system All countries would suffer from

such an outcome but especially the worldrsquos poorest and most vulnerable

The cost of a never-ending Doha Round

The adverse implications of a continuing Doha impasse on the future role of the WTO

are too compelling to be dismissed offhandedly

Several trade-linked global problems require global cooperation Food security energy

security trade-related aspects of climate change labour mobility commodity price

volatility and integration of regional liberalisation into the multilateral system are

problems that can only be solved with global cooperation

Ujal Singh BhatiaFormerly Indiarsquos Ambassador and Permanent Representative to the WTO

Next Steps Getting past the Doha Round crisis

3333

VOX Research-based policy analysis and commentary from leading economists

34

For example if food exporters continue to impose export barriers when prices rise

food importers may respond with import barriers to boost self-sufficiency This sort of

protectionist reverberation could lead the world to a situation in which all the players

are worse off but none can improve the situation unilaterally Avoiding this sort of

outcome would require global agreements There are very few global institutions that

could manage such cooperation indeed the WTO might be the only one A WTO locked

in endless Doha debates cannot be the centre of the rules based global trading system

There are many thinkers who believe that the structure of WTO rules is robust enough

to withstand a Doha failure It is true that the sky will not fall if Doha is terminated

without a conclusion Such analysts however tend to underestimate the significant

structural changes taking place in the global economy and the trading system The

WTO is working on a set of rules agreed upon in 1994 that were based on an agenda

set almost a quarter of century ago These are still useful and relevant for much of

world trade ndash but not all For instance the rules were not designed for the technology-

driven fragmentation of the manufacturing process and the distribution of the product

value chain across several geographical locations the intertwining of production with

related services the embedded intellectual property rights in components and sub-

components or the multiplicity of rules of origin All these require a different approach

to rule making

A WTO that remains preoccupied with the Doha Round cannot be expected to focus

on such issues Therefore the continuing relevance of the WTO and its primacy in

the global trading system are contingent upon a successful and early conclusion of

the Doha Round Notwithstanding this urgency it is now clear that a Doha package

cannot be wound up in 2011 along the lines agreed by G20 leaders in November 2010

To prevent this from tying the WTO in knots for years to come it is necessary to think

creatively about ways forward

Next Steps Getting Past the Doha Round Crisis

35

Ideas for moving beyond the impasse

Any effort to deal with the impasse in the negotiations needs to be based on a holistic

appreciation of the systemic implications of a continuing stalemate as much as on the

negotiating positions of various members The efforts for a solution acceptable to all

members therefore need to focus on issues in the Doha mandate as well as on issues for

a post Doha situation

Within this framework four constraints need to be borne in mind

bull A ldquoDoha Literdquo of reduced ambition will not work The outcome has to reflect a dec-

adersquos efforts of the global community Ambition however cannot be defined to suit

the convenience of a few members It must touch all aspects of the Doha mandate

bull Aspects of the Doha mandate that are more relevant to the development dimension

have to be ambitiously addressed and fast tracked

bull WTO needs to start work on a new work programme to address new challenges

bull The Doha Round cannot be completed in 2011 A down payment is necessary from

the Doha Round this year to convince the world that the WTO can deliver

A three-track approach

These constraints require the WTO to adopt a three-track approach during the next few

months leading up to the ministerial meeting in December 2011

Track 1 Identification of a list of issues that specially address the trading interests

of smaller developing countries and relatively less contentious issues for fast tracked

finalisation before the ministerial meeting

Track 2 Identification of a package of the more contentious issues for continuing

consultations with clear terms of reference

Track 3 Identification of appropriate terms of reference for a work programme on

WTO institutional reform and the forward-looking agenda

VOX Research-based policy analysis and commentary from leading economists

36

A possible timeline

These three tracks taken as a package would provide a way forward that respects all

four constraints Achieving consensus on them would be difficult ndash and require months

of preparatory work and negotiations

If the WTO membership starts immediately however there is still time to get the

package ready for finalisation by ministers at the December 2011 ministerial meeting

For this to happen it is essential that discussions on such a package begin this month

so that its contents can be finalised by the end of June 2011 This would leave about

four working months before the ministerial meeting to complete negotiations on the

selected areas

What the three tracks might contain

The first track would contain the Doha down-payment package As with any WTO

package the contents would need to be negotiated and it might require complementary

policies such as technical assistance initiatives

Such a list must include items that speak to development aspects of the Doha mandate

such as

bull The Implementation of the Hong Kong decision on duty-free quota-free treatment

for less developed countries

bull A ministerial decision on the Monitoring Mechanism for Special and Differential

Treatment provisions

bull A ministerial decision on the issues raised by the Sub-Saharan African cotton ex-

porters (the group known as the C-4) and

bull The finalisation of a less-developed-country (LDC) waiver in services so that pref-

erential treatment can be provided to LDCrsquos in services without extending it to

others

Next Steps Getting Past the Doha Round Crisis

37

It should also include areas of the negotiations that engage the interest of all members

such as

bull Trade Facilitation

bull All aspects of export competition in agriculture including export subsidies

bull The Transparency Mechanism for regional trade agreements (RTAs)

bull The non-tariff barriers (NTBs) package in non-agricultural market access (NAMA)

and

bull A ministerial decision on interactions and relationships between the WTOrsquos rules

and its committees on the one hand and existing multilateral environmental agree-

ments on the other (eg the Basel Convention on the Control of Transboundary

Movements of Hazardous Wastes and the Montreal Protocol on Substances that

Deplete the Ozone Layer)

While some members would like to exclude some of these areas from a fast tracked

process in the hope of using them for trade offs in the final stage it is important that the

package is as comprehensive as possible

Track two Items for further negotiation

The second track would gather all remaining items currently under negotiations This

would include

bull All aspects of market access in industrial goods agriculture and services

bull All aspects of subsidies in agriculture

bull Various aspects of rules including fisheries subsidies

bull Environmental goods and

bull Issues related to trade-related aspects of international property rights (TRIPS) re-

garding the protection of Geographical Indicators and the protection of traditional

VOX Research-based policy analysis and commentary from leading economists

38

knowledge and folklore that were are mentioned in the Convention on Biological

Diversity1

The need for a balanced package deserves emphasis It is often assumed that there

is a straight trade-off between agricultural subsidies and market access The situation

however is more complex The interest of countries like India China and Indonesia

in agricultural reform is more systemic than export related For them other incentives

within the mandate will be required

Track three Looking ahead

The underlying theme for the work programme would be an appraisal of the entire

negotiating and decision-making process in the WTO in the context of the present

realities both within and outside the organisation The objective would be to prepare

the WTO to address new challenges to the global trading system concurrently with the

ongoing work on the remaining parts of the Doha mandate

Closing remarks

The above proposals constitute a basic template for addressing the Doha conundrum

To what extent they are actually embraced will depend on how much political capital

the major members of the WTO are prepared to invest in moving the Doha Round

forward There is much scepticism about whether such political will exists It is time

for governments to prove the sceptics wrong

1 Specifically as specified in paragraphs 18 and 19 of the Doha Declaration

Next Steps Getting Past the Doha Round Crisis

39

About the author

Ambassador Bhatia Singh joined the Indian Administrative Service in 1974 holding

several senior positions in provincial administration in Orissa State between 1976 and

1995 He served as Joint Secretary Ministry of Commerce and Industry between 1995-

2000 in which capacity he handled a number of bilateral regional and multilateral trade

negotiations From 2004 to his retirement in 2010 he served as Indiarsquos Ambassador and

Permanent Representative to the WTO in Geneva

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

Next Steps Getting Past the Doha Round Crisis

29

give up and move on to the real challenge of launching a new series of multilateral

negotiations under WTO auspices

Getting past Doha

How to conclude the Doha Round One option would be for the Director-General and

a representative sample of WTO Ambassadors to come together in the interest of the

institution and to offer a declaration of Doharsquos demise along with their pledge to begin

building the future That would enable leaders at the November G20 meeting to pledge

their support for the rules-based trading system the WTO and its next steps rather than

for the ever elusive ldquobalanced and ambitiousrdquo Doha outcome

After a short period of grieving over the death of Doha and an opportunity to get

beyond the anger lead trading nations should refocus on getting the WTO back into

its mainstream business of negotiating mutually advantageous market opening and

updating the global rdquorules of the roadrdquo This approach offers the best promise of a

meaningful ldquodevelopmentrdquo outcome as well

How might this be achieved

It seems unrealistic to think WTO members would agree to launch another massive

all-or-nothing round in the near future Such broad negotiations however will be

necessary to tackle some of the worldrsquos most important market access challenges in

services manufacturing and agriculture along with such issues as farm subsidies

There are ways to build-up to the big-round model again where countries once more see

economic self-interest in the use of broad-based negotiations and trade-offs to achieve

both new market access and market reforms First however we must re-establish trust

and regain momentum

One way forward would be for ministers to agree to launch a number of confidence-

building negotiations For example ministers in December could decide to open talks

VOX Research-based policy analysis and commentary from leading economists

30

on expanding the 1997 Information Technology Agreement a number of nations

seem interested and the US Administration already has the authority to implement an

enhanced agreement If negotiators fail to work through the 850 brackets in the current

Doha trade facilitation text that could also be tackled as a stand-alone agreement since

each nation would benefit from more efficient movement of goods and services across

borders

Another confidence-building measure might be a merger of sectoral agreements geared

toward a widely-shared objective such as cheaper better healthcare A package that

included pharmaceuticals medical devices and healthcare services might attract

support from the broad array of WTO members across the development spectrum Given

the high-level of public interest in and awareness of environment issues a sectoral

negotiation on environmental goods and services might be another confidence-building

deal once it is removed from the straightjacket that Doha has become

Lessons from Doha for next steps and the next round

Confidence building agreements would offer modest economic and social contributions

and serve to prepare the atmospherics for launch the next Round This brings me to my

last topic ndash the lessons we should draw from a decade of Doha talks

One thing that is quite clear from years of struggling with the basic structure of Doha

is that the combination of formula and self-selected flexibilities has not worked It

resulted in a situation where every negotiator had to assume the worst case ndash knowing

the political costs they would pay for their own liberalisation but expecting their trading

partners to use flexibilities to negate any meaningful new market-access It is possible

to draw from the best of the Doha formulas ndash such as the higher the barrier the greater

the cut ndash while still creating real negotiations around them through requests and offers

delivered using above- and below-formula cuts

Next Steps Getting Past the Doha Round Crisis

31

Another key lesson is that lumping the worldrsquos very diverse economies into three

basic categories ndash developed developing and least developed ndash is a practice that no

longer fits 21st century economic and trade realities Nor is it a structure conducive to

negotiations and real progress based on an exchange of market access among nations

with large markets Yes the advanced economies should be expected to do more than

those at lesser stages of economic development but expectations should also reflect

the fact that many emerging economies are characterised by both poverty and sectors

where they are globally competitive trade powerhouses

The emerging economies have large markets represent over half of global GDP growth

and stand to be the biggest winners from any major trade agreement They should be

expected to contribute to the next Round accordingly Major trade agreements generally

take at least 12 years to implement from the time they are initially concluded What

should the world trading system look like in 2025 in terms of the absolute and relative

responsibilities of key trading nations

Concluding remarks

I am optimistic when it comes to the multilateral trading system and the WTOrsquos central

role in its governance The optimistic scenario is that we put the Doha Round behind

us Facing facts can invigorate and strengthen the trading system If we fail to act the

WTO risks losing its relevance

The Doha Round ndash which in my view cannot be concluded as it is conceived today ndash

should not be allowed to continue draining the WTOrsquos credibility and potential progress

on the multilateral front Now is the time to liberate the would-be trade liberalisers from

the Doha straightjacket and move on

VOX Research-based policy analysis and commentary from leading economists

32

References

Schwab Susan (2011) ldquoAfter Doha Why the negotiations are doomed and what we

should do about itrdquo Foreign Affairs MayJune

About the author

Ambassador Schwab has been a Professor at the University of Maryland School of

Public Policy since January 2009 and a strategic advisor to Mayer Brown LLP (global

law firm) since March 2010 Ambassador Schwab served as US Trade Representative

from June 2006 to January 2009 and as Deputy US Trade Representative from

October 2005 to June 2006 Prior to her service as Deputy US Trade Representative

Ambassador Schwab served as President and Chief Executive Officer of the University

System of Maryland Foundation from June 2004 to October 2005 as a consultant

for the US Department of Treasury from July 2003 to December 2003 and as Dean

of the University of Maryland School of Public Policy from July 1995 to July 2003

Ambassador Schwab serves on the boards of Boeing Company Caterpillar Inc and

FedEx Corporation

She holds a BA in Political Economy from Williams College a Masters in Development

Policy from Stanford University (Food Research Institute) and a PhD in Public

Administration and International Business from The George Washington University

33

Hopes for finishing Doha in 2011 are fading fast This essay suggests a three-track

approach for moving beyond the Doha crisis 1) Identify a package of ldquodeliverablesrsquo ndash

parts of the Round that could be agreed by December 2011 2) Assemble a package of

contentious issues for ongoing negotiation with clear terms of reference 3) Establish

a work programme to consider WTO institutional reform and forward-looking issues

For reasons that are too well known to be repeated the WTO finds itself at the crossroads

Decisions to be taken in the next few weeks will determine whether it can steer its

way to a successful conclusion of the Doha Round in the near future Failing this the

Round will continue to hang like an albatross around the WTOrsquos neck preventing it

from delivering the promised boost to least developed nations and freezing its ability

to address new challenges to the global trading system All countries would suffer from

such an outcome but especially the worldrsquos poorest and most vulnerable

The cost of a never-ending Doha Round

The adverse implications of a continuing Doha impasse on the future role of the WTO

are too compelling to be dismissed offhandedly

Several trade-linked global problems require global cooperation Food security energy

security trade-related aspects of climate change labour mobility commodity price

volatility and integration of regional liberalisation into the multilateral system are

problems that can only be solved with global cooperation

Ujal Singh BhatiaFormerly Indiarsquos Ambassador and Permanent Representative to the WTO

Next Steps Getting past the Doha Round crisis

3333

VOX Research-based policy analysis and commentary from leading economists

34

For example if food exporters continue to impose export barriers when prices rise

food importers may respond with import barriers to boost self-sufficiency This sort of

protectionist reverberation could lead the world to a situation in which all the players

are worse off but none can improve the situation unilaterally Avoiding this sort of

outcome would require global agreements There are very few global institutions that

could manage such cooperation indeed the WTO might be the only one A WTO locked

in endless Doha debates cannot be the centre of the rules based global trading system

There are many thinkers who believe that the structure of WTO rules is robust enough

to withstand a Doha failure It is true that the sky will not fall if Doha is terminated

without a conclusion Such analysts however tend to underestimate the significant

structural changes taking place in the global economy and the trading system The

WTO is working on a set of rules agreed upon in 1994 that were based on an agenda

set almost a quarter of century ago These are still useful and relevant for much of

world trade ndash but not all For instance the rules were not designed for the technology-

driven fragmentation of the manufacturing process and the distribution of the product

value chain across several geographical locations the intertwining of production with

related services the embedded intellectual property rights in components and sub-

components or the multiplicity of rules of origin All these require a different approach

to rule making

A WTO that remains preoccupied with the Doha Round cannot be expected to focus

on such issues Therefore the continuing relevance of the WTO and its primacy in

the global trading system are contingent upon a successful and early conclusion of

the Doha Round Notwithstanding this urgency it is now clear that a Doha package

cannot be wound up in 2011 along the lines agreed by G20 leaders in November 2010

To prevent this from tying the WTO in knots for years to come it is necessary to think

creatively about ways forward

Next Steps Getting Past the Doha Round Crisis

35

Ideas for moving beyond the impasse

Any effort to deal with the impasse in the negotiations needs to be based on a holistic

appreciation of the systemic implications of a continuing stalemate as much as on the

negotiating positions of various members The efforts for a solution acceptable to all

members therefore need to focus on issues in the Doha mandate as well as on issues for

a post Doha situation

Within this framework four constraints need to be borne in mind

bull A ldquoDoha Literdquo of reduced ambition will not work The outcome has to reflect a dec-

adersquos efforts of the global community Ambition however cannot be defined to suit

the convenience of a few members It must touch all aspects of the Doha mandate

bull Aspects of the Doha mandate that are more relevant to the development dimension

have to be ambitiously addressed and fast tracked

bull WTO needs to start work on a new work programme to address new challenges

bull The Doha Round cannot be completed in 2011 A down payment is necessary from

the Doha Round this year to convince the world that the WTO can deliver

A three-track approach

These constraints require the WTO to adopt a three-track approach during the next few

months leading up to the ministerial meeting in December 2011

Track 1 Identification of a list of issues that specially address the trading interests

of smaller developing countries and relatively less contentious issues for fast tracked

finalisation before the ministerial meeting

Track 2 Identification of a package of the more contentious issues for continuing

consultations with clear terms of reference

Track 3 Identification of appropriate terms of reference for a work programme on

WTO institutional reform and the forward-looking agenda

VOX Research-based policy analysis and commentary from leading economists

36

A possible timeline

These three tracks taken as a package would provide a way forward that respects all

four constraints Achieving consensus on them would be difficult ndash and require months

of preparatory work and negotiations

If the WTO membership starts immediately however there is still time to get the

package ready for finalisation by ministers at the December 2011 ministerial meeting

For this to happen it is essential that discussions on such a package begin this month

so that its contents can be finalised by the end of June 2011 This would leave about

four working months before the ministerial meeting to complete negotiations on the

selected areas

What the three tracks might contain

The first track would contain the Doha down-payment package As with any WTO

package the contents would need to be negotiated and it might require complementary

policies such as technical assistance initiatives

Such a list must include items that speak to development aspects of the Doha mandate

such as

bull The Implementation of the Hong Kong decision on duty-free quota-free treatment

for less developed countries

bull A ministerial decision on the Monitoring Mechanism for Special and Differential

Treatment provisions

bull A ministerial decision on the issues raised by the Sub-Saharan African cotton ex-

porters (the group known as the C-4) and

bull The finalisation of a less-developed-country (LDC) waiver in services so that pref-

erential treatment can be provided to LDCrsquos in services without extending it to

others

Next Steps Getting Past the Doha Round Crisis

37

It should also include areas of the negotiations that engage the interest of all members

such as

bull Trade Facilitation

bull All aspects of export competition in agriculture including export subsidies

bull The Transparency Mechanism for regional trade agreements (RTAs)

bull The non-tariff barriers (NTBs) package in non-agricultural market access (NAMA)

and

bull A ministerial decision on interactions and relationships between the WTOrsquos rules

and its committees on the one hand and existing multilateral environmental agree-

ments on the other (eg the Basel Convention on the Control of Transboundary

Movements of Hazardous Wastes and the Montreal Protocol on Substances that

Deplete the Ozone Layer)

While some members would like to exclude some of these areas from a fast tracked

process in the hope of using them for trade offs in the final stage it is important that the

package is as comprehensive as possible

Track two Items for further negotiation

The second track would gather all remaining items currently under negotiations This

would include

bull All aspects of market access in industrial goods agriculture and services

bull All aspects of subsidies in agriculture

bull Various aspects of rules including fisheries subsidies

bull Environmental goods and

bull Issues related to trade-related aspects of international property rights (TRIPS) re-

garding the protection of Geographical Indicators and the protection of traditional

VOX Research-based policy analysis and commentary from leading economists

38

knowledge and folklore that were are mentioned in the Convention on Biological

Diversity1

The need for a balanced package deserves emphasis It is often assumed that there

is a straight trade-off between agricultural subsidies and market access The situation

however is more complex The interest of countries like India China and Indonesia

in agricultural reform is more systemic than export related For them other incentives

within the mandate will be required

Track three Looking ahead

The underlying theme for the work programme would be an appraisal of the entire

negotiating and decision-making process in the WTO in the context of the present

realities both within and outside the organisation The objective would be to prepare

the WTO to address new challenges to the global trading system concurrently with the

ongoing work on the remaining parts of the Doha mandate

Closing remarks

The above proposals constitute a basic template for addressing the Doha conundrum

To what extent they are actually embraced will depend on how much political capital

the major members of the WTO are prepared to invest in moving the Doha Round

forward There is much scepticism about whether such political will exists It is time

for governments to prove the sceptics wrong

1 Specifically as specified in paragraphs 18 and 19 of the Doha Declaration

Next Steps Getting Past the Doha Round Crisis

39

About the author

Ambassador Bhatia Singh joined the Indian Administrative Service in 1974 holding

several senior positions in provincial administration in Orissa State between 1976 and

1995 He served as Joint Secretary Ministry of Commerce and Industry between 1995-

2000 in which capacity he handled a number of bilateral regional and multilateral trade

negotiations From 2004 to his retirement in 2010 he served as Indiarsquos Ambassador and

Permanent Representative to the WTO in Geneva

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

VOX Research-based policy analysis and commentary from leading economists

30

on expanding the 1997 Information Technology Agreement a number of nations

seem interested and the US Administration already has the authority to implement an

enhanced agreement If negotiators fail to work through the 850 brackets in the current

Doha trade facilitation text that could also be tackled as a stand-alone agreement since

each nation would benefit from more efficient movement of goods and services across

borders

Another confidence-building measure might be a merger of sectoral agreements geared

toward a widely-shared objective such as cheaper better healthcare A package that

included pharmaceuticals medical devices and healthcare services might attract

support from the broad array of WTO members across the development spectrum Given

the high-level of public interest in and awareness of environment issues a sectoral

negotiation on environmental goods and services might be another confidence-building

deal once it is removed from the straightjacket that Doha has become

Lessons from Doha for next steps and the next round

Confidence building agreements would offer modest economic and social contributions

and serve to prepare the atmospherics for launch the next Round This brings me to my

last topic ndash the lessons we should draw from a decade of Doha talks

One thing that is quite clear from years of struggling with the basic structure of Doha

is that the combination of formula and self-selected flexibilities has not worked It

resulted in a situation where every negotiator had to assume the worst case ndash knowing

the political costs they would pay for their own liberalisation but expecting their trading

partners to use flexibilities to negate any meaningful new market-access It is possible

to draw from the best of the Doha formulas ndash such as the higher the barrier the greater

the cut ndash while still creating real negotiations around them through requests and offers

delivered using above- and below-formula cuts

Next Steps Getting Past the Doha Round Crisis

31

Another key lesson is that lumping the worldrsquos very diverse economies into three

basic categories ndash developed developing and least developed ndash is a practice that no

longer fits 21st century economic and trade realities Nor is it a structure conducive to

negotiations and real progress based on an exchange of market access among nations

with large markets Yes the advanced economies should be expected to do more than

those at lesser stages of economic development but expectations should also reflect

the fact that many emerging economies are characterised by both poverty and sectors

where they are globally competitive trade powerhouses

The emerging economies have large markets represent over half of global GDP growth

and stand to be the biggest winners from any major trade agreement They should be

expected to contribute to the next Round accordingly Major trade agreements generally

take at least 12 years to implement from the time they are initially concluded What

should the world trading system look like in 2025 in terms of the absolute and relative

responsibilities of key trading nations

Concluding remarks

I am optimistic when it comes to the multilateral trading system and the WTOrsquos central

role in its governance The optimistic scenario is that we put the Doha Round behind

us Facing facts can invigorate and strengthen the trading system If we fail to act the

WTO risks losing its relevance

The Doha Round ndash which in my view cannot be concluded as it is conceived today ndash

should not be allowed to continue draining the WTOrsquos credibility and potential progress

on the multilateral front Now is the time to liberate the would-be trade liberalisers from

the Doha straightjacket and move on

VOX Research-based policy analysis and commentary from leading economists

32

References

Schwab Susan (2011) ldquoAfter Doha Why the negotiations are doomed and what we

should do about itrdquo Foreign Affairs MayJune

About the author

Ambassador Schwab has been a Professor at the University of Maryland School of

Public Policy since January 2009 and a strategic advisor to Mayer Brown LLP (global

law firm) since March 2010 Ambassador Schwab served as US Trade Representative

from June 2006 to January 2009 and as Deputy US Trade Representative from

October 2005 to June 2006 Prior to her service as Deputy US Trade Representative

Ambassador Schwab served as President and Chief Executive Officer of the University

System of Maryland Foundation from June 2004 to October 2005 as a consultant

for the US Department of Treasury from July 2003 to December 2003 and as Dean

of the University of Maryland School of Public Policy from July 1995 to July 2003

Ambassador Schwab serves on the boards of Boeing Company Caterpillar Inc and

FedEx Corporation

She holds a BA in Political Economy from Williams College a Masters in Development

Policy from Stanford University (Food Research Institute) and a PhD in Public

Administration and International Business from The George Washington University

33

Hopes for finishing Doha in 2011 are fading fast This essay suggests a three-track

approach for moving beyond the Doha crisis 1) Identify a package of ldquodeliverablesrsquo ndash

parts of the Round that could be agreed by December 2011 2) Assemble a package of

contentious issues for ongoing negotiation with clear terms of reference 3) Establish

a work programme to consider WTO institutional reform and forward-looking issues

For reasons that are too well known to be repeated the WTO finds itself at the crossroads

Decisions to be taken in the next few weeks will determine whether it can steer its

way to a successful conclusion of the Doha Round in the near future Failing this the

Round will continue to hang like an albatross around the WTOrsquos neck preventing it

from delivering the promised boost to least developed nations and freezing its ability

to address new challenges to the global trading system All countries would suffer from

such an outcome but especially the worldrsquos poorest and most vulnerable

The cost of a never-ending Doha Round

The adverse implications of a continuing Doha impasse on the future role of the WTO

are too compelling to be dismissed offhandedly

Several trade-linked global problems require global cooperation Food security energy

security trade-related aspects of climate change labour mobility commodity price

volatility and integration of regional liberalisation into the multilateral system are

problems that can only be solved with global cooperation

Ujal Singh BhatiaFormerly Indiarsquos Ambassador and Permanent Representative to the WTO

Next Steps Getting past the Doha Round crisis

3333

VOX Research-based policy analysis and commentary from leading economists

34

For example if food exporters continue to impose export barriers when prices rise

food importers may respond with import barriers to boost self-sufficiency This sort of

protectionist reverberation could lead the world to a situation in which all the players

are worse off but none can improve the situation unilaterally Avoiding this sort of

outcome would require global agreements There are very few global institutions that

could manage such cooperation indeed the WTO might be the only one A WTO locked

in endless Doha debates cannot be the centre of the rules based global trading system

There are many thinkers who believe that the structure of WTO rules is robust enough

to withstand a Doha failure It is true that the sky will not fall if Doha is terminated

without a conclusion Such analysts however tend to underestimate the significant

structural changes taking place in the global economy and the trading system The

WTO is working on a set of rules agreed upon in 1994 that were based on an agenda

set almost a quarter of century ago These are still useful and relevant for much of

world trade ndash but not all For instance the rules were not designed for the technology-

driven fragmentation of the manufacturing process and the distribution of the product

value chain across several geographical locations the intertwining of production with

related services the embedded intellectual property rights in components and sub-

components or the multiplicity of rules of origin All these require a different approach

to rule making

A WTO that remains preoccupied with the Doha Round cannot be expected to focus

on such issues Therefore the continuing relevance of the WTO and its primacy in

the global trading system are contingent upon a successful and early conclusion of

the Doha Round Notwithstanding this urgency it is now clear that a Doha package

cannot be wound up in 2011 along the lines agreed by G20 leaders in November 2010

To prevent this from tying the WTO in knots for years to come it is necessary to think

creatively about ways forward

Next Steps Getting Past the Doha Round Crisis

35

Ideas for moving beyond the impasse

Any effort to deal with the impasse in the negotiations needs to be based on a holistic

appreciation of the systemic implications of a continuing stalemate as much as on the

negotiating positions of various members The efforts for a solution acceptable to all

members therefore need to focus on issues in the Doha mandate as well as on issues for

a post Doha situation

Within this framework four constraints need to be borne in mind

bull A ldquoDoha Literdquo of reduced ambition will not work The outcome has to reflect a dec-

adersquos efforts of the global community Ambition however cannot be defined to suit

the convenience of a few members It must touch all aspects of the Doha mandate

bull Aspects of the Doha mandate that are more relevant to the development dimension

have to be ambitiously addressed and fast tracked

bull WTO needs to start work on a new work programme to address new challenges

bull The Doha Round cannot be completed in 2011 A down payment is necessary from

the Doha Round this year to convince the world that the WTO can deliver

A three-track approach

These constraints require the WTO to adopt a three-track approach during the next few

months leading up to the ministerial meeting in December 2011

Track 1 Identification of a list of issues that specially address the trading interests

of smaller developing countries and relatively less contentious issues for fast tracked

finalisation before the ministerial meeting

Track 2 Identification of a package of the more contentious issues for continuing

consultations with clear terms of reference

Track 3 Identification of appropriate terms of reference for a work programme on

WTO institutional reform and the forward-looking agenda

VOX Research-based policy analysis and commentary from leading economists

36

A possible timeline

These three tracks taken as a package would provide a way forward that respects all

four constraints Achieving consensus on them would be difficult ndash and require months

of preparatory work and negotiations

If the WTO membership starts immediately however there is still time to get the

package ready for finalisation by ministers at the December 2011 ministerial meeting

For this to happen it is essential that discussions on such a package begin this month

so that its contents can be finalised by the end of June 2011 This would leave about

four working months before the ministerial meeting to complete negotiations on the

selected areas

What the three tracks might contain

The first track would contain the Doha down-payment package As with any WTO

package the contents would need to be negotiated and it might require complementary

policies such as technical assistance initiatives

Such a list must include items that speak to development aspects of the Doha mandate

such as

bull The Implementation of the Hong Kong decision on duty-free quota-free treatment

for less developed countries

bull A ministerial decision on the Monitoring Mechanism for Special and Differential

Treatment provisions

bull A ministerial decision on the issues raised by the Sub-Saharan African cotton ex-

porters (the group known as the C-4) and

bull The finalisation of a less-developed-country (LDC) waiver in services so that pref-

erential treatment can be provided to LDCrsquos in services without extending it to

others

Next Steps Getting Past the Doha Round Crisis

37

It should also include areas of the negotiations that engage the interest of all members

such as

bull Trade Facilitation

bull All aspects of export competition in agriculture including export subsidies

bull The Transparency Mechanism for regional trade agreements (RTAs)

bull The non-tariff barriers (NTBs) package in non-agricultural market access (NAMA)

and

bull A ministerial decision on interactions and relationships between the WTOrsquos rules

and its committees on the one hand and existing multilateral environmental agree-

ments on the other (eg the Basel Convention on the Control of Transboundary

Movements of Hazardous Wastes and the Montreal Protocol on Substances that

Deplete the Ozone Layer)

While some members would like to exclude some of these areas from a fast tracked

process in the hope of using them for trade offs in the final stage it is important that the

package is as comprehensive as possible

Track two Items for further negotiation

The second track would gather all remaining items currently under negotiations This

would include

bull All aspects of market access in industrial goods agriculture and services

bull All aspects of subsidies in agriculture

bull Various aspects of rules including fisheries subsidies

bull Environmental goods and

bull Issues related to trade-related aspects of international property rights (TRIPS) re-

garding the protection of Geographical Indicators and the protection of traditional

VOX Research-based policy analysis and commentary from leading economists

38

knowledge and folklore that were are mentioned in the Convention on Biological

Diversity1

The need for a balanced package deserves emphasis It is often assumed that there

is a straight trade-off between agricultural subsidies and market access The situation

however is more complex The interest of countries like India China and Indonesia

in agricultural reform is more systemic than export related For them other incentives

within the mandate will be required

Track three Looking ahead

The underlying theme for the work programme would be an appraisal of the entire

negotiating and decision-making process in the WTO in the context of the present

realities both within and outside the organisation The objective would be to prepare

the WTO to address new challenges to the global trading system concurrently with the

ongoing work on the remaining parts of the Doha mandate

Closing remarks

The above proposals constitute a basic template for addressing the Doha conundrum

To what extent they are actually embraced will depend on how much political capital

the major members of the WTO are prepared to invest in moving the Doha Round

forward There is much scepticism about whether such political will exists It is time

for governments to prove the sceptics wrong

1 Specifically as specified in paragraphs 18 and 19 of the Doha Declaration

Next Steps Getting Past the Doha Round Crisis

39

About the author

Ambassador Bhatia Singh joined the Indian Administrative Service in 1974 holding

several senior positions in provincial administration in Orissa State between 1976 and

1995 He served as Joint Secretary Ministry of Commerce and Industry between 1995-

2000 in which capacity he handled a number of bilateral regional and multilateral trade

negotiations From 2004 to his retirement in 2010 he served as Indiarsquos Ambassador and

Permanent Representative to the WTO in Geneva

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

Next Steps Getting Past the Doha Round Crisis

31

Another key lesson is that lumping the worldrsquos very diverse economies into three

basic categories ndash developed developing and least developed ndash is a practice that no

longer fits 21st century economic and trade realities Nor is it a structure conducive to

negotiations and real progress based on an exchange of market access among nations

with large markets Yes the advanced economies should be expected to do more than

those at lesser stages of economic development but expectations should also reflect

the fact that many emerging economies are characterised by both poverty and sectors

where they are globally competitive trade powerhouses

The emerging economies have large markets represent over half of global GDP growth

and stand to be the biggest winners from any major trade agreement They should be

expected to contribute to the next Round accordingly Major trade agreements generally

take at least 12 years to implement from the time they are initially concluded What

should the world trading system look like in 2025 in terms of the absolute and relative

responsibilities of key trading nations

Concluding remarks

I am optimistic when it comes to the multilateral trading system and the WTOrsquos central

role in its governance The optimistic scenario is that we put the Doha Round behind

us Facing facts can invigorate and strengthen the trading system If we fail to act the

WTO risks losing its relevance

The Doha Round ndash which in my view cannot be concluded as it is conceived today ndash

should not be allowed to continue draining the WTOrsquos credibility and potential progress

on the multilateral front Now is the time to liberate the would-be trade liberalisers from

the Doha straightjacket and move on

VOX Research-based policy analysis and commentary from leading economists

32

References

Schwab Susan (2011) ldquoAfter Doha Why the negotiations are doomed and what we

should do about itrdquo Foreign Affairs MayJune

About the author

Ambassador Schwab has been a Professor at the University of Maryland School of

Public Policy since January 2009 and a strategic advisor to Mayer Brown LLP (global

law firm) since March 2010 Ambassador Schwab served as US Trade Representative

from June 2006 to January 2009 and as Deputy US Trade Representative from

October 2005 to June 2006 Prior to her service as Deputy US Trade Representative

Ambassador Schwab served as President and Chief Executive Officer of the University

System of Maryland Foundation from June 2004 to October 2005 as a consultant

for the US Department of Treasury from July 2003 to December 2003 and as Dean

of the University of Maryland School of Public Policy from July 1995 to July 2003

Ambassador Schwab serves on the boards of Boeing Company Caterpillar Inc and

FedEx Corporation

She holds a BA in Political Economy from Williams College a Masters in Development

Policy from Stanford University (Food Research Institute) and a PhD in Public

Administration and International Business from The George Washington University

33

Hopes for finishing Doha in 2011 are fading fast This essay suggests a three-track

approach for moving beyond the Doha crisis 1) Identify a package of ldquodeliverablesrsquo ndash

parts of the Round that could be agreed by December 2011 2) Assemble a package of

contentious issues for ongoing negotiation with clear terms of reference 3) Establish

a work programme to consider WTO institutional reform and forward-looking issues

For reasons that are too well known to be repeated the WTO finds itself at the crossroads

Decisions to be taken in the next few weeks will determine whether it can steer its

way to a successful conclusion of the Doha Round in the near future Failing this the

Round will continue to hang like an albatross around the WTOrsquos neck preventing it

from delivering the promised boost to least developed nations and freezing its ability

to address new challenges to the global trading system All countries would suffer from

such an outcome but especially the worldrsquos poorest and most vulnerable

The cost of a never-ending Doha Round

The adverse implications of a continuing Doha impasse on the future role of the WTO

are too compelling to be dismissed offhandedly

Several trade-linked global problems require global cooperation Food security energy

security trade-related aspects of climate change labour mobility commodity price

volatility and integration of regional liberalisation into the multilateral system are

problems that can only be solved with global cooperation

Ujal Singh BhatiaFormerly Indiarsquos Ambassador and Permanent Representative to the WTO

Next Steps Getting past the Doha Round crisis

3333

VOX Research-based policy analysis and commentary from leading economists

34

For example if food exporters continue to impose export barriers when prices rise

food importers may respond with import barriers to boost self-sufficiency This sort of

protectionist reverberation could lead the world to a situation in which all the players

are worse off but none can improve the situation unilaterally Avoiding this sort of

outcome would require global agreements There are very few global institutions that

could manage such cooperation indeed the WTO might be the only one A WTO locked

in endless Doha debates cannot be the centre of the rules based global trading system

There are many thinkers who believe that the structure of WTO rules is robust enough

to withstand a Doha failure It is true that the sky will not fall if Doha is terminated

without a conclusion Such analysts however tend to underestimate the significant

structural changes taking place in the global economy and the trading system The

WTO is working on a set of rules agreed upon in 1994 that were based on an agenda

set almost a quarter of century ago These are still useful and relevant for much of

world trade ndash but not all For instance the rules were not designed for the technology-

driven fragmentation of the manufacturing process and the distribution of the product

value chain across several geographical locations the intertwining of production with

related services the embedded intellectual property rights in components and sub-

components or the multiplicity of rules of origin All these require a different approach

to rule making

A WTO that remains preoccupied with the Doha Round cannot be expected to focus

on such issues Therefore the continuing relevance of the WTO and its primacy in

the global trading system are contingent upon a successful and early conclusion of

the Doha Round Notwithstanding this urgency it is now clear that a Doha package

cannot be wound up in 2011 along the lines agreed by G20 leaders in November 2010

To prevent this from tying the WTO in knots for years to come it is necessary to think

creatively about ways forward

Next Steps Getting Past the Doha Round Crisis

35

Ideas for moving beyond the impasse

Any effort to deal with the impasse in the negotiations needs to be based on a holistic

appreciation of the systemic implications of a continuing stalemate as much as on the

negotiating positions of various members The efforts for a solution acceptable to all

members therefore need to focus on issues in the Doha mandate as well as on issues for

a post Doha situation

Within this framework four constraints need to be borne in mind

bull A ldquoDoha Literdquo of reduced ambition will not work The outcome has to reflect a dec-

adersquos efforts of the global community Ambition however cannot be defined to suit

the convenience of a few members It must touch all aspects of the Doha mandate

bull Aspects of the Doha mandate that are more relevant to the development dimension

have to be ambitiously addressed and fast tracked

bull WTO needs to start work on a new work programme to address new challenges

bull The Doha Round cannot be completed in 2011 A down payment is necessary from

the Doha Round this year to convince the world that the WTO can deliver

A three-track approach

These constraints require the WTO to adopt a three-track approach during the next few

months leading up to the ministerial meeting in December 2011

Track 1 Identification of a list of issues that specially address the trading interests

of smaller developing countries and relatively less contentious issues for fast tracked

finalisation before the ministerial meeting

Track 2 Identification of a package of the more contentious issues for continuing

consultations with clear terms of reference

Track 3 Identification of appropriate terms of reference for a work programme on

WTO institutional reform and the forward-looking agenda

VOX Research-based policy analysis and commentary from leading economists

36

A possible timeline

These three tracks taken as a package would provide a way forward that respects all

four constraints Achieving consensus on them would be difficult ndash and require months

of preparatory work and negotiations

If the WTO membership starts immediately however there is still time to get the

package ready for finalisation by ministers at the December 2011 ministerial meeting

For this to happen it is essential that discussions on such a package begin this month

so that its contents can be finalised by the end of June 2011 This would leave about

four working months before the ministerial meeting to complete negotiations on the

selected areas

What the three tracks might contain

The first track would contain the Doha down-payment package As with any WTO

package the contents would need to be negotiated and it might require complementary

policies such as technical assistance initiatives

Such a list must include items that speak to development aspects of the Doha mandate

such as

bull The Implementation of the Hong Kong decision on duty-free quota-free treatment

for less developed countries

bull A ministerial decision on the Monitoring Mechanism for Special and Differential

Treatment provisions

bull A ministerial decision on the issues raised by the Sub-Saharan African cotton ex-

porters (the group known as the C-4) and

bull The finalisation of a less-developed-country (LDC) waiver in services so that pref-

erential treatment can be provided to LDCrsquos in services without extending it to

others

Next Steps Getting Past the Doha Round Crisis

37

It should also include areas of the negotiations that engage the interest of all members

such as

bull Trade Facilitation

bull All aspects of export competition in agriculture including export subsidies

bull The Transparency Mechanism for regional trade agreements (RTAs)

bull The non-tariff barriers (NTBs) package in non-agricultural market access (NAMA)

and

bull A ministerial decision on interactions and relationships between the WTOrsquos rules

and its committees on the one hand and existing multilateral environmental agree-

ments on the other (eg the Basel Convention on the Control of Transboundary

Movements of Hazardous Wastes and the Montreal Protocol on Substances that

Deplete the Ozone Layer)

While some members would like to exclude some of these areas from a fast tracked

process in the hope of using them for trade offs in the final stage it is important that the

package is as comprehensive as possible

Track two Items for further negotiation

The second track would gather all remaining items currently under negotiations This

would include

bull All aspects of market access in industrial goods agriculture and services

bull All aspects of subsidies in agriculture

bull Various aspects of rules including fisheries subsidies

bull Environmental goods and

bull Issues related to trade-related aspects of international property rights (TRIPS) re-

garding the protection of Geographical Indicators and the protection of traditional

VOX Research-based policy analysis and commentary from leading economists

38

knowledge and folklore that were are mentioned in the Convention on Biological

Diversity1

The need for a balanced package deserves emphasis It is often assumed that there

is a straight trade-off between agricultural subsidies and market access The situation

however is more complex The interest of countries like India China and Indonesia

in agricultural reform is more systemic than export related For them other incentives

within the mandate will be required

Track three Looking ahead

The underlying theme for the work programme would be an appraisal of the entire

negotiating and decision-making process in the WTO in the context of the present

realities both within and outside the organisation The objective would be to prepare

the WTO to address new challenges to the global trading system concurrently with the

ongoing work on the remaining parts of the Doha mandate

Closing remarks

The above proposals constitute a basic template for addressing the Doha conundrum

To what extent they are actually embraced will depend on how much political capital

the major members of the WTO are prepared to invest in moving the Doha Round

forward There is much scepticism about whether such political will exists It is time

for governments to prove the sceptics wrong

1 Specifically as specified in paragraphs 18 and 19 of the Doha Declaration

Next Steps Getting Past the Doha Round Crisis

39

About the author

Ambassador Bhatia Singh joined the Indian Administrative Service in 1974 holding

several senior positions in provincial administration in Orissa State between 1976 and

1995 He served as Joint Secretary Ministry of Commerce and Industry between 1995-

2000 in which capacity he handled a number of bilateral regional and multilateral trade

negotiations From 2004 to his retirement in 2010 he served as Indiarsquos Ambassador and

Permanent Representative to the WTO in Geneva

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

VOX Research-based policy analysis and commentary from leading economists

32

References

Schwab Susan (2011) ldquoAfter Doha Why the negotiations are doomed and what we

should do about itrdquo Foreign Affairs MayJune

About the author

Ambassador Schwab has been a Professor at the University of Maryland School of

Public Policy since January 2009 and a strategic advisor to Mayer Brown LLP (global

law firm) since March 2010 Ambassador Schwab served as US Trade Representative

from June 2006 to January 2009 and as Deputy US Trade Representative from

October 2005 to June 2006 Prior to her service as Deputy US Trade Representative

Ambassador Schwab served as President and Chief Executive Officer of the University

System of Maryland Foundation from June 2004 to October 2005 as a consultant

for the US Department of Treasury from July 2003 to December 2003 and as Dean

of the University of Maryland School of Public Policy from July 1995 to July 2003

Ambassador Schwab serves on the boards of Boeing Company Caterpillar Inc and

FedEx Corporation

She holds a BA in Political Economy from Williams College a Masters in Development

Policy from Stanford University (Food Research Institute) and a PhD in Public

Administration and International Business from The George Washington University

33

Hopes for finishing Doha in 2011 are fading fast This essay suggests a three-track

approach for moving beyond the Doha crisis 1) Identify a package of ldquodeliverablesrsquo ndash

parts of the Round that could be agreed by December 2011 2) Assemble a package of

contentious issues for ongoing negotiation with clear terms of reference 3) Establish

a work programme to consider WTO institutional reform and forward-looking issues

For reasons that are too well known to be repeated the WTO finds itself at the crossroads

Decisions to be taken in the next few weeks will determine whether it can steer its

way to a successful conclusion of the Doha Round in the near future Failing this the

Round will continue to hang like an albatross around the WTOrsquos neck preventing it

from delivering the promised boost to least developed nations and freezing its ability

to address new challenges to the global trading system All countries would suffer from

such an outcome but especially the worldrsquos poorest and most vulnerable

The cost of a never-ending Doha Round

The adverse implications of a continuing Doha impasse on the future role of the WTO

are too compelling to be dismissed offhandedly

Several trade-linked global problems require global cooperation Food security energy

security trade-related aspects of climate change labour mobility commodity price

volatility and integration of regional liberalisation into the multilateral system are

problems that can only be solved with global cooperation

Ujal Singh BhatiaFormerly Indiarsquos Ambassador and Permanent Representative to the WTO

Next Steps Getting past the Doha Round crisis

3333

VOX Research-based policy analysis and commentary from leading economists

34

For example if food exporters continue to impose export barriers when prices rise

food importers may respond with import barriers to boost self-sufficiency This sort of

protectionist reverberation could lead the world to a situation in which all the players

are worse off but none can improve the situation unilaterally Avoiding this sort of

outcome would require global agreements There are very few global institutions that

could manage such cooperation indeed the WTO might be the only one A WTO locked

in endless Doha debates cannot be the centre of the rules based global trading system

There are many thinkers who believe that the structure of WTO rules is robust enough

to withstand a Doha failure It is true that the sky will not fall if Doha is terminated

without a conclusion Such analysts however tend to underestimate the significant

structural changes taking place in the global economy and the trading system The

WTO is working on a set of rules agreed upon in 1994 that were based on an agenda

set almost a quarter of century ago These are still useful and relevant for much of

world trade ndash but not all For instance the rules were not designed for the technology-

driven fragmentation of the manufacturing process and the distribution of the product

value chain across several geographical locations the intertwining of production with

related services the embedded intellectual property rights in components and sub-

components or the multiplicity of rules of origin All these require a different approach

to rule making

A WTO that remains preoccupied with the Doha Round cannot be expected to focus

on such issues Therefore the continuing relevance of the WTO and its primacy in

the global trading system are contingent upon a successful and early conclusion of

the Doha Round Notwithstanding this urgency it is now clear that a Doha package

cannot be wound up in 2011 along the lines agreed by G20 leaders in November 2010

To prevent this from tying the WTO in knots for years to come it is necessary to think

creatively about ways forward

Next Steps Getting Past the Doha Round Crisis

35

Ideas for moving beyond the impasse

Any effort to deal with the impasse in the negotiations needs to be based on a holistic

appreciation of the systemic implications of a continuing stalemate as much as on the

negotiating positions of various members The efforts for a solution acceptable to all

members therefore need to focus on issues in the Doha mandate as well as on issues for

a post Doha situation

Within this framework four constraints need to be borne in mind

bull A ldquoDoha Literdquo of reduced ambition will not work The outcome has to reflect a dec-

adersquos efforts of the global community Ambition however cannot be defined to suit

the convenience of a few members It must touch all aspects of the Doha mandate

bull Aspects of the Doha mandate that are more relevant to the development dimension

have to be ambitiously addressed and fast tracked

bull WTO needs to start work on a new work programme to address new challenges

bull The Doha Round cannot be completed in 2011 A down payment is necessary from

the Doha Round this year to convince the world that the WTO can deliver

A three-track approach

These constraints require the WTO to adopt a three-track approach during the next few

months leading up to the ministerial meeting in December 2011

Track 1 Identification of a list of issues that specially address the trading interests

of smaller developing countries and relatively less contentious issues for fast tracked

finalisation before the ministerial meeting

Track 2 Identification of a package of the more contentious issues for continuing

consultations with clear terms of reference

Track 3 Identification of appropriate terms of reference for a work programme on

WTO institutional reform and the forward-looking agenda

VOX Research-based policy analysis and commentary from leading economists

36

A possible timeline

These three tracks taken as a package would provide a way forward that respects all

four constraints Achieving consensus on them would be difficult ndash and require months

of preparatory work and negotiations

If the WTO membership starts immediately however there is still time to get the

package ready for finalisation by ministers at the December 2011 ministerial meeting

For this to happen it is essential that discussions on such a package begin this month

so that its contents can be finalised by the end of June 2011 This would leave about

four working months before the ministerial meeting to complete negotiations on the

selected areas

What the three tracks might contain

The first track would contain the Doha down-payment package As with any WTO

package the contents would need to be negotiated and it might require complementary

policies such as technical assistance initiatives

Such a list must include items that speak to development aspects of the Doha mandate

such as

bull The Implementation of the Hong Kong decision on duty-free quota-free treatment

for less developed countries

bull A ministerial decision on the Monitoring Mechanism for Special and Differential

Treatment provisions

bull A ministerial decision on the issues raised by the Sub-Saharan African cotton ex-

porters (the group known as the C-4) and

bull The finalisation of a less-developed-country (LDC) waiver in services so that pref-

erential treatment can be provided to LDCrsquos in services without extending it to

others

Next Steps Getting Past the Doha Round Crisis

37

It should also include areas of the negotiations that engage the interest of all members

such as

bull Trade Facilitation

bull All aspects of export competition in agriculture including export subsidies

bull The Transparency Mechanism for regional trade agreements (RTAs)

bull The non-tariff barriers (NTBs) package in non-agricultural market access (NAMA)

and

bull A ministerial decision on interactions and relationships between the WTOrsquos rules

and its committees on the one hand and existing multilateral environmental agree-

ments on the other (eg the Basel Convention on the Control of Transboundary

Movements of Hazardous Wastes and the Montreal Protocol on Substances that

Deplete the Ozone Layer)

While some members would like to exclude some of these areas from a fast tracked

process in the hope of using them for trade offs in the final stage it is important that the

package is as comprehensive as possible

Track two Items for further negotiation

The second track would gather all remaining items currently under negotiations This

would include

bull All aspects of market access in industrial goods agriculture and services

bull All aspects of subsidies in agriculture

bull Various aspects of rules including fisheries subsidies

bull Environmental goods and

bull Issues related to trade-related aspects of international property rights (TRIPS) re-

garding the protection of Geographical Indicators and the protection of traditional

VOX Research-based policy analysis and commentary from leading economists

38

knowledge and folklore that were are mentioned in the Convention on Biological

Diversity1

The need for a balanced package deserves emphasis It is often assumed that there

is a straight trade-off between agricultural subsidies and market access The situation

however is more complex The interest of countries like India China and Indonesia

in agricultural reform is more systemic than export related For them other incentives

within the mandate will be required

Track three Looking ahead

The underlying theme for the work programme would be an appraisal of the entire

negotiating and decision-making process in the WTO in the context of the present

realities both within and outside the organisation The objective would be to prepare

the WTO to address new challenges to the global trading system concurrently with the

ongoing work on the remaining parts of the Doha mandate

Closing remarks

The above proposals constitute a basic template for addressing the Doha conundrum

To what extent they are actually embraced will depend on how much political capital

the major members of the WTO are prepared to invest in moving the Doha Round

forward There is much scepticism about whether such political will exists It is time

for governments to prove the sceptics wrong

1 Specifically as specified in paragraphs 18 and 19 of the Doha Declaration

Next Steps Getting Past the Doha Round Crisis

39

About the author

Ambassador Bhatia Singh joined the Indian Administrative Service in 1974 holding

several senior positions in provincial administration in Orissa State between 1976 and

1995 He served as Joint Secretary Ministry of Commerce and Industry between 1995-

2000 in which capacity he handled a number of bilateral regional and multilateral trade

negotiations From 2004 to his retirement in 2010 he served as Indiarsquos Ambassador and

Permanent Representative to the WTO in Geneva

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

33

Hopes for finishing Doha in 2011 are fading fast This essay suggests a three-track

approach for moving beyond the Doha crisis 1) Identify a package of ldquodeliverablesrsquo ndash

parts of the Round that could be agreed by December 2011 2) Assemble a package of

contentious issues for ongoing negotiation with clear terms of reference 3) Establish

a work programme to consider WTO institutional reform and forward-looking issues

For reasons that are too well known to be repeated the WTO finds itself at the crossroads

Decisions to be taken in the next few weeks will determine whether it can steer its

way to a successful conclusion of the Doha Round in the near future Failing this the

Round will continue to hang like an albatross around the WTOrsquos neck preventing it

from delivering the promised boost to least developed nations and freezing its ability

to address new challenges to the global trading system All countries would suffer from

such an outcome but especially the worldrsquos poorest and most vulnerable

The cost of a never-ending Doha Round

The adverse implications of a continuing Doha impasse on the future role of the WTO

are too compelling to be dismissed offhandedly

Several trade-linked global problems require global cooperation Food security energy

security trade-related aspects of climate change labour mobility commodity price

volatility and integration of regional liberalisation into the multilateral system are

problems that can only be solved with global cooperation

Ujal Singh BhatiaFormerly Indiarsquos Ambassador and Permanent Representative to the WTO

Next Steps Getting past the Doha Round crisis

3333

VOX Research-based policy analysis and commentary from leading economists

34

For example if food exporters continue to impose export barriers when prices rise

food importers may respond with import barriers to boost self-sufficiency This sort of

protectionist reverberation could lead the world to a situation in which all the players

are worse off but none can improve the situation unilaterally Avoiding this sort of

outcome would require global agreements There are very few global institutions that

could manage such cooperation indeed the WTO might be the only one A WTO locked

in endless Doha debates cannot be the centre of the rules based global trading system

There are many thinkers who believe that the structure of WTO rules is robust enough

to withstand a Doha failure It is true that the sky will not fall if Doha is terminated

without a conclusion Such analysts however tend to underestimate the significant

structural changes taking place in the global economy and the trading system The

WTO is working on a set of rules agreed upon in 1994 that were based on an agenda

set almost a quarter of century ago These are still useful and relevant for much of

world trade ndash but not all For instance the rules were not designed for the technology-

driven fragmentation of the manufacturing process and the distribution of the product

value chain across several geographical locations the intertwining of production with

related services the embedded intellectual property rights in components and sub-

components or the multiplicity of rules of origin All these require a different approach

to rule making

A WTO that remains preoccupied with the Doha Round cannot be expected to focus

on such issues Therefore the continuing relevance of the WTO and its primacy in

the global trading system are contingent upon a successful and early conclusion of

the Doha Round Notwithstanding this urgency it is now clear that a Doha package

cannot be wound up in 2011 along the lines agreed by G20 leaders in November 2010

To prevent this from tying the WTO in knots for years to come it is necessary to think

creatively about ways forward

Next Steps Getting Past the Doha Round Crisis

35

Ideas for moving beyond the impasse

Any effort to deal with the impasse in the negotiations needs to be based on a holistic

appreciation of the systemic implications of a continuing stalemate as much as on the

negotiating positions of various members The efforts for a solution acceptable to all

members therefore need to focus on issues in the Doha mandate as well as on issues for

a post Doha situation

Within this framework four constraints need to be borne in mind

bull A ldquoDoha Literdquo of reduced ambition will not work The outcome has to reflect a dec-

adersquos efforts of the global community Ambition however cannot be defined to suit

the convenience of a few members It must touch all aspects of the Doha mandate

bull Aspects of the Doha mandate that are more relevant to the development dimension

have to be ambitiously addressed and fast tracked

bull WTO needs to start work on a new work programme to address new challenges

bull The Doha Round cannot be completed in 2011 A down payment is necessary from

the Doha Round this year to convince the world that the WTO can deliver

A three-track approach

These constraints require the WTO to adopt a three-track approach during the next few

months leading up to the ministerial meeting in December 2011

Track 1 Identification of a list of issues that specially address the trading interests

of smaller developing countries and relatively less contentious issues for fast tracked

finalisation before the ministerial meeting

Track 2 Identification of a package of the more contentious issues for continuing

consultations with clear terms of reference

Track 3 Identification of appropriate terms of reference for a work programme on

WTO institutional reform and the forward-looking agenda

VOX Research-based policy analysis and commentary from leading economists

36

A possible timeline

These three tracks taken as a package would provide a way forward that respects all

four constraints Achieving consensus on them would be difficult ndash and require months

of preparatory work and negotiations

If the WTO membership starts immediately however there is still time to get the

package ready for finalisation by ministers at the December 2011 ministerial meeting

For this to happen it is essential that discussions on such a package begin this month

so that its contents can be finalised by the end of June 2011 This would leave about

four working months before the ministerial meeting to complete negotiations on the

selected areas

What the three tracks might contain

The first track would contain the Doha down-payment package As with any WTO

package the contents would need to be negotiated and it might require complementary

policies such as technical assistance initiatives

Such a list must include items that speak to development aspects of the Doha mandate

such as

bull The Implementation of the Hong Kong decision on duty-free quota-free treatment

for less developed countries

bull A ministerial decision on the Monitoring Mechanism for Special and Differential

Treatment provisions

bull A ministerial decision on the issues raised by the Sub-Saharan African cotton ex-

porters (the group known as the C-4) and

bull The finalisation of a less-developed-country (LDC) waiver in services so that pref-

erential treatment can be provided to LDCrsquos in services without extending it to

others

Next Steps Getting Past the Doha Round Crisis

37

It should also include areas of the negotiations that engage the interest of all members

such as

bull Trade Facilitation

bull All aspects of export competition in agriculture including export subsidies

bull The Transparency Mechanism for regional trade agreements (RTAs)

bull The non-tariff barriers (NTBs) package in non-agricultural market access (NAMA)

and

bull A ministerial decision on interactions and relationships between the WTOrsquos rules

and its committees on the one hand and existing multilateral environmental agree-

ments on the other (eg the Basel Convention on the Control of Transboundary

Movements of Hazardous Wastes and the Montreal Protocol on Substances that

Deplete the Ozone Layer)

While some members would like to exclude some of these areas from a fast tracked

process in the hope of using them for trade offs in the final stage it is important that the

package is as comprehensive as possible

Track two Items for further negotiation

The second track would gather all remaining items currently under negotiations This

would include

bull All aspects of market access in industrial goods agriculture and services

bull All aspects of subsidies in agriculture

bull Various aspects of rules including fisheries subsidies

bull Environmental goods and

bull Issues related to trade-related aspects of international property rights (TRIPS) re-

garding the protection of Geographical Indicators and the protection of traditional

VOX Research-based policy analysis and commentary from leading economists

38

knowledge and folklore that were are mentioned in the Convention on Biological

Diversity1

The need for a balanced package deserves emphasis It is often assumed that there

is a straight trade-off between agricultural subsidies and market access The situation

however is more complex The interest of countries like India China and Indonesia

in agricultural reform is more systemic than export related For them other incentives

within the mandate will be required

Track three Looking ahead

The underlying theme for the work programme would be an appraisal of the entire

negotiating and decision-making process in the WTO in the context of the present

realities both within and outside the organisation The objective would be to prepare

the WTO to address new challenges to the global trading system concurrently with the

ongoing work on the remaining parts of the Doha mandate

Closing remarks

The above proposals constitute a basic template for addressing the Doha conundrum

To what extent they are actually embraced will depend on how much political capital

the major members of the WTO are prepared to invest in moving the Doha Round

forward There is much scepticism about whether such political will exists It is time

for governments to prove the sceptics wrong

1 Specifically as specified in paragraphs 18 and 19 of the Doha Declaration

Next Steps Getting Past the Doha Round Crisis

39

About the author

Ambassador Bhatia Singh joined the Indian Administrative Service in 1974 holding

several senior positions in provincial administration in Orissa State between 1976 and

1995 He served as Joint Secretary Ministry of Commerce and Industry between 1995-

2000 in which capacity he handled a number of bilateral regional and multilateral trade

negotiations From 2004 to his retirement in 2010 he served as Indiarsquos Ambassador and

Permanent Representative to the WTO in Geneva

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

VOX Research-based policy analysis and commentary from leading economists

34

For example if food exporters continue to impose export barriers when prices rise

food importers may respond with import barriers to boost self-sufficiency This sort of

protectionist reverberation could lead the world to a situation in which all the players

are worse off but none can improve the situation unilaterally Avoiding this sort of

outcome would require global agreements There are very few global institutions that

could manage such cooperation indeed the WTO might be the only one A WTO locked

in endless Doha debates cannot be the centre of the rules based global trading system

There are many thinkers who believe that the structure of WTO rules is robust enough

to withstand a Doha failure It is true that the sky will not fall if Doha is terminated

without a conclusion Such analysts however tend to underestimate the significant

structural changes taking place in the global economy and the trading system The

WTO is working on a set of rules agreed upon in 1994 that were based on an agenda

set almost a quarter of century ago These are still useful and relevant for much of

world trade ndash but not all For instance the rules were not designed for the technology-

driven fragmentation of the manufacturing process and the distribution of the product

value chain across several geographical locations the intertwining of production with

related services the embedded intellectual property rights in components and sub-

components or the multiplicity of rules of origin All these require a different approach

to rule making

A WTO that remains preoccupied with the Doha Round cannot be expected to focus

on such issues Therefore the continuing relevance of the WTO and its primacy in

the global trading system are contingent upon a successful and early conclusion of

the Doha Round Notwithstanding this urgency it is now clear that a Doha package

cannot be wound up in 2011 along the lines agreed by G20 leaders in November 2010

To prevent this from tying the WTO in knots for years to come it is necessary to think

creatively about ways forward

Next Steps Getting Past the Doha Round Crisis

35

Ideas for moving beyond the impasse

Any effort to deal with the impasse in the negotiations needs to be based on a holistic

appreciation of the systemic implications of a continuing stalemate as much as on the

negotiating positions of various members The efforts for a solution acceptable to all

members therefore need to focus on issues in the Doha mandate as well as on issues for

a post Doha situation

Within this framework four constraints need to be borne in mind

bull A ldquoDoha Literdquo of reduced ambition will not work The outcome has to reflect a dec-

adersquos efforts of the global community Ambition however cannot be defined to suit

the convenience of a few members It must touch all aspects of the Doha mandate

bull Aspects of the Doha mandate that are more relevant to the development dimension

have to be ambitiously addressed and fast tracked

bull WTO needs to start work on a new work programme to address new challenges

bull The Doha Round cannot be completed in 2011 A down payment is necessary from

the Doha Round this year to convince the world that the WTO can deliver

A three-track approach

These constraints require the WTO to adopt a three-track approach during the next few

months leading up to the ministerial meeting in December 2011

Track 1 Identification of a list of issues that specially address the trading interests

of smaller developing countries and relatively less contentious issues for fast tracked

finalisation before the ministerial meeting

Track 2 Identification of a package of the more contentious issues for continuing

consultations with clear terms of reference

Track 3 Identification of appropriate terms of reference for a work programme on

WTO institutional reform and the forward-looking agenda

VOX Research-based policy analysis and commentary from leading economists

36

A possible timeline

These three tracks taken as a package would provide a way forward that respects all

four constraints Achieving consensus on them would be difficult ndash and require months

of preparatory work and negotiations

If the WTO membership starts immediately however there is still time to get the

package ready for finalisation by ministers at the December 2011 ministerial meeting

For this to happen it is essential that discussions on such a package begin this month

so that its contents can be finalised by the end of June 2011 This would leave about

four working months before the ministerial meeting to complete negotiations on the

selected areas

What the three tracks might contain

The first track would contain the Doha down-payment package As with any WTO

package the contents would need to be negotiated and it might require complementary

policies such as technical assistance initiatives

Such a list must include items that speak to development aspects of the Doha mandate

such as

bull The Implementation of the Hong Kong decision on duty-free quota-free treatment

for less developed countries

bull A ministerial decision on the Monitoring Mechanism for Special and Differential

Treatment provisions

bull A ministerial decision on the issues raised by the Sub-Saharan African cotton ex-

porters (the group known as the C-4) and

bull The finalisation of a less-developed-country (LDC) waiver in services so that pref-

erential treatment can be provided to LDCrsquos in services without extending it to

others

Next Steps Getting Past the Doha Round Crisis

37

It should also include areas of the negotiations that engage the interest of all members

such as

bull Trade Facilitation

bull All aspects of export competition in agriculture including export subsidies

bull The Transparency Mechanism for regional trade agreements (RTAs)

bull The non-tariff barriers (NTBs) package in non-agricultural market access (NAMA)

and

bull A ministerial decision on interactions and relationships between the WTOrsquos rules

and its committees on the one hand and existing multilateral environmental agree-

ments on the other (eg the Basel Convention on the Control of Transboundary

Movements of Hazardous Wastes and the Montreal Protocol on Substances that

Deplete the Ozone Layer)

While some members would like to exclude some of these areas from a fast tracked

process in the hope of using them for trade offs in the final stage it is important that the

package is as comprehensive as possible

Track two Items for further negotiation

The second track would gather all remaining items currently under negotiations This

would include

bull All aspects of market access in industrial goods agriculture and services

bull All aspects of subsidies in agriculture

bull Various aspects of rules including fisheries subsidies

bull Environmental goods and

bull Issues related to trade-related aspects of international property rights (TRIPS) re-

garding the protection of Geographical Indicators and the protection of traditional

VOX Research-based policy analysis and commentary from leading economists

38

knowledge and folklore that were are mentioned in the Convention on Biological

Diversity1

The need for a balanced package deserves emphasis It is often assumed that there

is a straight trade-off between agricultural subsidies and market access The situation

however is more complex The interest of countries like India China and Indonesia

in agricultural reform is more systemic than export related For them other incentives

within the mandate will be required

Track three Looking ahead

The underlying theme for the work programme would be an appraisal of the entire

negotiating and decision-making process in the WTO in the context of the present

realities both within and outside the organisation The objective would be to prepare

the WTO to address new challenges to the global trading system concurrently with the

ongoing work on the remaining parts of the Doha mandate

Closing remarks

The above proposals constitute a basic template for addressing the Doha conundrum

To what extent they are actually embraced will depend on how much political capital

the major members of the WTO are prepared to invest in moving the Doha Round

forward There is much scepticism about whether such political will exists It is time

for governments to prove the sceptics wrong

1 Specifically as specified in paragraphs 18 and 19 of the Doha Declaration

Next Steps Getting Past the Doha Round Crisis

39

About the author

Ambassador Bhatia Singh joined the Indian Administrative Service in 1974 holding

several senior positions in provincial administration in Orissa State between 1976 and

1995 He served as Joint Secretary Ministry of Commerce and Industry between 1995-

2000 in which capacity he handled a number of bilateral regional and multilateral trade

negotiations From 2004 to his retirement in 2010 he served as Indiarsquos Ambassador and

Permanent Representative to the WTO in Geneva

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

Next Steps Getting Past the Doha Round Crisis

35

Ideas for moving beyond the impasse

Any effort to deal with the impasse in the negotiations needs to be based on a holistic

appreciation of the systemic implications of a continuing stalemate as much as on the

negotiating positions of various members The efforts for a solution acceptable to all

members therefore need to focus on issues in the Doha mandate as well as on issues for

a post Doha situation

Within this framework four constraints need to be borne in mind

bull A ldquoDoha Literdquo of reduced ambition will not work The outcome has to reflect a dec-

adersquos efforts of the global community Ambition however cannot be defined to suit

the convenience of a few members It must touch all aspects of the Doha mandate

bull Aspects of the Doha mandate that are more relevant to the development dimension

have to be ambitiously addressed and fast tracked

bull WTO needs to start work on a new work programme to address new challenges

bull The Doha Round cannot be completed in 2011 A down payment is necessary from

the Doha Round this year to convince the world that the WTO can deliver

A three-track approach

These constraints require the WTO to adopt a three-track approach during the next few

months leading up to the ministerial meeting in December 2011

Track 1 Identification of a list of issues that specially address the trading interests

of smaller developing countries and relatively less contentious issues for fast tracked

finalisation before the ministerial meeting

Track 2 Identification of a package of the more contentious issues for continuing

consultations with clear terms of reference

Track 3 Identification of appropriate terms of reference for a work programme on

WTO institutional reform and the forward-looking agenda

VOX Research-based policy analysis and commentary from leading economists

36

A possible timeline

These three tracks taken as a package would provide a way forward that respects all

four constraints Achieving consensus on them would be difficult ndash and require months

of preparatory work and negotiations

If the WTO membership starts immediately however there is still time to get the

package ready for finalisation by ministers at the December 2011 ministerial meeting

For this to happen it is essential that discussions on such a package begin this month

so that its contents can be finalised by the end of June 2011 This would leave about

four working months before the ministerial meeting to complete negotiations on the

selected areas

What the three tracks might contain

The first track would contain the Doha down-payment package As with any WTO

package the contents would need to be negotiated and it might require complementary

policies such as technical assistance initiatives

Such a list must include items that speak to development aspects of the Doha mandate

such as

bull The Implementation of the Hong Kong decision on duty-free quota-free treatment

for less developed countries

bull A ministerial decision on the Monitoring Mechanism for Special and Differential

Treatment provisions

bull A ministerial decision on the issues raised by the Sub-Saharan African cotton ex-

porters (the group known as the C-4) and

bull The finalisation of a less-developed-country (LDC) waiver in services so that pref-

erential treatment can be provided to LDCrsquos in services without extending it to

others

Next Steps Getting Past the Doha Round Crisis

37

It should also include areas of the negotiations that engage the interest of all members

such as

bull Trade Facilitation

bull All aspects of export competition in agriculture including export subsidies

bull The Transparency Mechanism for regional trade agreements (RTAs)

bull The non-tariff barriers (NTBs) package in non-agricultural market access (NAMA)

and

bull A ministerial decision on interactions and relationships between the WTOrsquos rules

and its committees on the one hand and existing multilateral environmental agree-

ments on the other (eg the Basel Convention on the Control of Transboundary

Movements of Hazardous Wastes and the Montreal Protocol on Substances that

Deplete the Ozone Layer)

While some members would like to exclude some of these areas from a fast tracked

process in the hope of using them for trade offs in the final stage it is important that the

package is as comprehensive as possible

Track two Items for further negotiation

The second track would gather all remaining items currently under negotiations This

would include

bull All aspects of market access in industrial goods agriculture and services

bull All aspects of subsidies in agriculture

bull Various aspects of rules including fisheries subsidies

bull Environmental goods and

bull Issues related to trade-related aspects of international property rights (TRIPS) re-

garding the protection of Geographical Indicators and the protection of traditional

VOX Research-based policy analysis and commentary from leading economists

38

knowledge and folklore that were are mentioned in the Convention on Biological

Diversity1

The need for a balanced package deserves emphasis It is often assumed that there

is a straight trade-off between agricultural subsidies and market access The situation

however is more complex The interest of countries like India China and Indonesia

in agricultural reform is more systemic than export related For them other incentives

within the mandate will be required

Track three Looking ahead

The underlying theme for the work programme would be an appraisal of the entire

negotiating and decision-making process in the WTO in the context of the present

realities both within and outside the organisation The objective would be to prepare

the WTO to address new challenges to the global trading system concurrently with the

ongoing work on the remaining parts of the Doha mandate

Closing remarks

The above proposals constitute a basic template for addressing the Doha conundrum

To what extent they are actually embraced will depend on how much political capital

the major members of the WTO are prepared to invest in moving the Doha Round

forward There is much scepticism about whether such political will exists It is time

for governments to prove the sceptics wrong

1 Specifically as specified in paragraphs 18 and 19 of the Doha Declaration

Next Steps Getting Past the Doha Round Crisis

39

About the author

Ambassador Bhatia Singh joined the Indian Administrative Service in 1974 holding

several senior positions in provincial administration in Orissa State between 1976 and

1995 He served as Joint Secretary Ministry of Commerce and Industry between 1995-

2000 in which capacity he handled a number of bilateral regional and multilateral trade

negotiations From 2004 to his retirement in 2010 he served as Indiarsquos Ambassador and

Permanent Representative to the WTO in Geneva

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

VOX Research-based policy analysis and commentary from leading economists

36

A possible timeline

These three tracks taken as a package would provide a way forward that respects all

four constraints Achieving consensus on them would be difficult ndash and require months

of preparatory work and negotiations

If the WTO membership starts immediately however there is still time to get the

package ready for finalisation by ministers at the December 2011 ministerial meeting

For this to happen it is essential that discussions on such a package begin this month

so that its contents can be finalised by the end of June 2011 This would leave about

four working months before the ministerial meeting to complete negotiations on the

selected areas

What the three tracks might contain

The first track would contain the Doha down-payment package As with any WTO

package the contents would need to be negotiated and it might require complementary

policies such as technical assistance initiatives

Such a list must include items that speak to development aspects of the Doha mandate

such as

bull The Implementation of the Hong Kong decision on duty-free quota-free treatment

for less developed countries

bull A ministerial decision on the Monitoring Mechanism for Special and Differential

Treatment provisions

bull A ministerial decision on the issues raised by the Sub-Saharan African cotton ex-

porters (the group known as the C-4) and

bull The finalisation of a less-developed-country (LDC) waiver in services so that pref-

erential treatment can be provided to LDCrsquos in services without extending it to

others

Next Steps Getting Past the Doha Round Crisis

37

It should also include areas of the negotiations that engage the interest of all members

such as

bull Trade Facilitation

bull All aspects of export competition in agriculture including export subsidies

bull The Transparency Mechanism for regional trade agreements (RTAs)

bull The non-tariff barriers (NTBs) package in non-agricultural market access (NAMA)

and

bull A ministerial decision on interactions and relationships between the WTOrsquos rules

and its committees on the one hand and existing multilateral environmental agree-

ments on the other (eg the Basel Convention on the Control of Transboundary

Movements of Hazardous Wastes and the Montreal Protocol on Substances that

Deplete the Ozone Layer)

While some members would like to exclude some of these areas from a fast tracked

process in the hope of using them for trade offs in the final stage it is important that the

package is as comprehensive as possible

Track two Items for further negotiation

The second track would gather all remaining items currently under negotiations This

would include

bull All aspects of market access in industrial goods agriculture and services

bull All aspects of subsidies in agriculture

bull Various aspects of rules including fisheries subsidies

bull Environmental goods and

bull Issues related to trade-related aspects of international property rights (TRIPS) re-

garding the protection of Geographical Indicators and the protection of traditional

VOX Research-based policy analysis and commentary from leading economists

38

knowledge and folklore that were are mentioned in the Convention on Biological

Diversity1

The need for a balanced package deserves emphasis It is often assumed that there

is a straight trade-off between agricultural subsidies and market access The situation

however is more complex The interest of countries like India China and Indonesia

in agricultural reform is more systemic than export related For them other incentives

within the mandate will be required

Track three Looking ahead

The underlying theme for the work programme would be an appraisal of the entire

negotiating and decision-making process in the WTO in the context of the present

realities both within and outside the organisation The objective would be to prepare

the WTO to address new challenges to the global trading system concurrently with the

ongoing work on the remaining parts of the Doha mandate

Closing remarks

The above proposals constitute a basic template for addressing the Doha conundrum

To what extent they are actually embraced will depend on how much political capital

the major members of the WTO are prepared to invest in moving the Doha Round

forward There is much scepticism about whether such political will exists It is time

for governments to prove the sceptics wrong

1 Specifically as specified in paragraphs 18 and 19 of the Doha Declaration

Next Steps Getting Past the Doha Round Crisis

39

About the author

Ambassador Bhatia Singh joined the Indian Administrative Service in 1974 holding

several senior positions in provincial administration in Orissa State between 1976 and

1995 He served as Joint Secretary Ministry of Commerce and Industry between 1995-

2000 in which capacity he handled a number of bilateral regional and multilateral trade

negotiations From 2004 to his retirement in 2010 he served as Indiarsquos Ambassador and

Permanent Representative to the WTO in Geneva

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

Next Steps Getting Past the Doha Round Crisis

37

It should also include areas of the negotiations that engage the interest of all members

such as

bull Trade Facilitation

bull All aspects of export competition in agriculture including export subsidies

bull The Transparency Mechanism for regional trade agreements (RTAs)

bull The non-tariff barriers (NTBs) package in non-agricultural market access (NAMA)

and

bull A ministerial decision on interactions and relationships between the WTOrsquos rules

and its committees on the one hand and existing multilateral environmental agree-

ments on the other (eg the Basel Convention on the Control of Transboundary

Movements of Hazardous Wastes and the Montreal Protocol on Substances that

Deplete the Ozone Layer)

While some members would like to exclude some of these areas from a fast tracked

process in the hope of using them for trade offs in the final stage it is important that the

package is as comprehensive as possible

Track two Items for further negotiation

The second track would gather all remaining items currently under negotiations This

would include

bull All aspects of market access in industrial goods agriculture and services

bull All aspects of subsidies in agriculture

bull Various aspects of rules including fisheries subsidies

bull Environmental goods and

bull Issues related to trade-related aspects of international property rights (TRIPS) re-

garding the protection of Geographical Indicators and the protection of traditional

VOX Research-based policy analysis and commentary from leading economists

38

knowledge and folklore that were are mentioned in the Convention on Biological

Diversity1

The need for a balanced package deserves emphasis It is often assumed that there

is a straight trade-off between agricultural subsidies and market access The situation

however is more complex The interest of countries like India China and Indonesia

in agricultural reform is more systemic than export related For them other incentives

within the mandate will be required

Track three Looking ahead

The underlying theme for the work programme would be an appraisal of the entire

negotiating and decision-making process in the WTO in the context of the present

realities both within and outside the organisation The objective would be to prepare

the WTO to address new challenges to the global trading system concurrently with the

ongoing work on the remaining parts of the Doha mandate

Closing remarks

The above proposals constitute a basic template for addressing the Doha conundrum

To what extent they are actually embraced will depend on how much political capital

the major members of the WTO are prepared to invest in moving the Doha Round

forward There is much scepticism about whether such political will exists It is time

for governments to prove the sceptics wrong

1 Specifically as specified in paragraphs 18 and 19 of the Doha Declaration

Next Steps Getting Past the Doha Round Crisis

39

About the author

Ambassador Bhatia Singh joined the Indian Administrative Service in 1974 holding

several senior positions in provincial administration in Orissa State between 1976 and

1995 He served as Joint Secretary Ministry of Commerce and Industry between 1995-

2000 in which capacity he handled a number of bilateral regional and multilateral trade

negotiations From 2004 to his retirement in 2010 he served as Indiarsquos Ambassador and

Permanent Representative to the WTO in Geneva

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

VOX Research-based policy analysis and commentary from leading economists

38

knowledge and folklore that were are mentioned in the Convention on Biological

Diversity1

The need for a balanced package deserves emphasis It is often assumed that there

is a straight trade-off between agricultural subsidies and market access The situation

however is more complex The interest of countries like India China and Indonesia

in agricultural reform is more systemic than export related For them other incentives

within the mandate will be required

Track three Looking ahead

The underlying theme for the work programme would be an appraisal of the entire

negotiating and decision-making process in the WTO in the context of the present

realities both within and outside the organisation The objective would be to prepare

the WTO to address new challenges to the global trading system concurrently with the

ongoing work on the remaining parts of the Doha mandate

Closing remarks

The above proposals constitute a basic template for addressing the Doha conundrum

To what extent they are actually embraced will depend on how much political capital

the major members of the WTO are prepared to invest in moving the Doha Round

forward There is much scepticism about whether such political will exists It is time

for governments to prove the sceptics wrong

1 Specifically as specified in paragraphs 18 and 19 of the Doha Declaration

Next Steps Getting Past the Doha Round Crisis

39

About the author

Ambassador Bhatia Singh joined the Indian Administrative Service in 1974 holding

several senior positions in provincial administration in Orissa State between 1976 and

1995 He served as Joint Secretary Ministry of Commerce and Industry between 1995-

2000 in which capacity he handled a number of bilateral regional and multilateral trade

negotiations From 2004 to his retirement in 2010 he served as Indiarsquos Ambassador and

Permanent Representative to the WTO in Geneva

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

Next Steps Getting Past the Doha Round Crisis

39

About the author

Ambassador Bhatia Singh joined the Indian Administrative Service in 1974 holding

several senior positions in provincial administration in Orissa State between 1976 and

1995 He served as Joint Secretary Ministry of Commerce and Industry between 1995-

2000 in which capacity he handled a number of bilateral regional and multilateral trade

negotiations From 2004 to his retirement in 2010 he served as Indiarsquos Ambassador and

Permanent Representative to the WTO in Geneva

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

41

Doha is deadlocked This essay argues that the options are i) to declare the negotiations

dead ii) to suspend them until after the US elections or iii) to negotiate an early-

harvest agreement for the end of this year The author strongly believes that the early

harvest is worth the extra efforts ndash for both the WTO and the worldrsquos poorest

I am greatly interested in the discussions among experts and professors recently on the

future of the Doha Round While I can feel their strong sense of frustration about the

deadlock I donrsquot see any real possible solutions for the problems at hand I donrsquot have

one either The lack of a solution is probably due more to political problems than to

technical problems

Next steps

To announce that the Doha Round is dead would be easy But then what Would such

an announcement inspire people to inject more energy to the work of the organisation

Would it serve the purpose of strengthening the multilateral trading system I rather

doubt it

After dropping the Round what could be done next Just continue with business as

usual Should members only focus on trade policy reviews on regular meetings in the

bodies under the General Council and on dispute settlement cases Should they take

it for granted that the panellists and Appellate Body members will be able to fill in

the gaps of writing new rules for the world trading system This does not sound very

attractive

Zhenyu SunChina Society for World Trade Organization Studies

Next Steps Is an early harvest still possible

4141

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

VOX Research-based policy analysis and commentary from leading economists

42

The need for progress and the difficult options

If the WTO is to remain relevant its members must negotiate new rules How could

they do this Could there be a completely new round sometime later Or could there

be new rules or amendments of the old ones adopted at each and every council or

committee separately

One option would be to launch a new round To start a new round post-Doha however

could be even more difficult than the Doha Round itself People have tasted the

failure of Seattle In any new round members could not ignore the built-in agenda of

agricultural subsidies or discussing the tariff-cutting formula on agricultural and non-

agricultural products or services trade and rules It may still be difficult to cover labour

and environmental standards In any case the hard bargaining over the past 10 years

would not disappear with the start of a new round

Another option could be to rule out all rounds after Doha To not even to talk about the

ldquosingle undertakingrdquo any more ie to abandon the negotiating principle heretofore

respected where all WTO members must agree to all aspects of the final package This

option would just let the councils and committees continue with their normal functions

setting new rules and amending old ones on their own I personally believe this option

might be feasible but it is not in line with 60 years of WTO common practice Members

may not like this option because it could rule out trade-offs across interests in other

areas

Early harvest as the way forward

If dropping the Round is not an attractive option and if waiting till after the next US

election is likewise unappealing the only option left is some kind of rdquoearly harvestrdquo to

be adopted at the December 2011 ministerial meeting

I am fully aware that some members are strongly against the idea of an early harvest

Even if they could eventually negotiate a duty-free quota-free agreement for the worldrsquos

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

Next Steps Getting Past the Doha Round Crisis

43

poorest nations an agreement on cotton and an agreement on trade facilitation they

are unlikely to agree to implement them now because they will need to use these issues

to negotiate trade-offs with their other interests I would like to make an appeal to those

members

Guarding the future of the multilateral trading system

It is high time that people gave more considerations to the future of the multilateral

trading system and less to their short-term national economic interests As the APEC

leaders reiterated at a recent summit

ldquoWe uphold the primacy of the multilateral trading system and reaffirm that this

strong rules-based system is an essential source of sustainable economic growth

development and stability We take considerable satisfaction in the success of

the WTO its existing framework of rules and its consultative mechanisms in

contributing to the beginnings of global economic recovery The WTO has amply

proven its worth as a bulwark against protectionism during a highly challenging

periodrdquo

I do hope that people take this statement seriously This means giving thought to ways

to save the credibility of this organisation to deliver the promise of a development

round and to make sure that this organisation is still relevant to 21st century trade

matters Safeguarding the future of the WTO is particularly important at a time when

the world has experienced the global financial and economic crisis the upheaval in the

Middle East and when we face great uncertainties

Content of the early harvest

Certainly there could be more detailed discussions on what issues should be included in

the possible package If members are willing to move along that line there is still time

to finalise the content My friend Ujal Singh Bhatia (WTO Ambassador from India until

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

VOX Research-based policy analysis and commentary from leading economists

44

2010) has indicated some areas where members could try to build consensus and adopt

a decision at the December 2011 ministerial meeting (Bhatia 2011) I strongly believe

that it is worthwhile to make some extra efforts along the lines he has proposed

bull In any case duty-free-quota-free treatment for LDCs and the issue of cotton have to

be included in the package

These are decisions taken at the Hong Kong Ministerial Meeting its immediate

implementation would be conducive to addressing the great concerns of the poorest

countries and thus very much in line with the principle of the Doha Development Round

bull Trade facilitation could bring benefit to all members

It could help trade expansion enormously and bring even more benefit to trade than

would further reduction of tariffs It could also help President Obama achieve the goals

of doubling US exports in the next 5 years and substantially increasing employment at

home

bull The date for expiration of export subsidies at 2013 was adopted at the Hong Kong

ministerial meeting and should be included in the package

The EU may want to bring in some other issues to balance its interests Personally I

believe it is doable through adding some issues of their interest such as environment

products to the package

Concluding remarks

When they meet in Geneva this December I am sure that members would prefer to have

their trade ministers making some kind of substantive decisions An early package for

the Doha Round is probably a suitable one for the ministers to consider and to deliver

at their meeting later this year

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

Next Steps Getting Past the Doha Round Crisis

45

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

About the author

Zhenyu Sun the Chairman of China Society for World Trade Organization Studies

served as the Ambassador and Permanent Representative of China to the WTO from 2002

to 2010 He served as vice minister of Moftec (Ministry of Foreign Trade and Economic

Relations which later became Mofcom Ministry of Commerce) from November 1994

till 2002 when he went to Geneva as WTO Ambassador Born in Fengnan County

of Hebei Province in March 1946 Mr Sun Zhenyu graduated from Beijing Foreign

Languages Institute in July 1969 From 1973 to 1985 he served successively as staff

member Deputy Director and Director in the Third Department for Regional Affairs of

the Ministry of Foreign Trade During this period he worked on bilateral trade relations

between China and UK later between China and European Community From 1985 to

1990 he worked as Vice President of China National Cereals Oil and Foodstuff Import

and Export Corporation (COFCO) focusing on the companyrsquos business with Japan and

South-east Asian Countries

In 1989 he attended one year program of Management Training Course for senior

executives sponsored by UNDP in cooperation with University of British Colombia

Canada and Manchester University UK From 1990 to 1994 he served as Deputy

Director General and Director General of Department of American and Oceanic Affairs

of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) working on

bilateral trade relations with US Canada Australia New Zealand and Latin American

countries during this period He participated on separate occasions in Sino-US bilateral

negotiations on Market Access Textiles and Intellectual Property Rights

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

47

The Doha Round is stuck This essay argues that finishing Doha would be best but

if this is impossible we should admit it and move on Investing more resources and

credibility in a failure would only damage the WTO and multilateral cooperation

Leaders should turn their energies towards building an agenda for the WTOrsquos future

work that responds to 21st century interests Getting this right is critical the WTO

cannot afford another failure if Doha dies An early harvest is an excellent idea but

only if it can be done quickly

Bringing the Doha negotiations to a successful conclusion is by far the best course of

action The valuable contribution that such a development would make to strengthen the

trading system has been examined at length elsewhere No single achievement would

be more valuable than binding in the WTO rulebook the current level of trade protection

maintained by its members in all three areas of market access ndash industrial goods

agriculture and services This action would permanently capture the considerable

liberalisation that has taken place since the effective conclusion of Uruguay Round in

1993 It would also set a new start line for the launch of any subsequent negotiations

which will surely come before too long

If Doha cannot be completed hellip

Not completing the Doha Round would be a serious setback to the WTO and the

multilateral trading system However if it is clear that the Round cannot be concluded

successfully it is better to admit that and work constructively to develop an agenda for

John WeekesBennett Jones LLP

Getting past the Doha Round crisis Moving forward in the WTO

4747

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

VOX Research-based policy analysis and commentary from leading economists

48

the future work of the organisation It would be damaging to invest more resources and

credibility in something that canrsquot be done

The WTO itself remains an extremely valuable institution Its worth has been proven

by the role it played in discouraging its member governments from taking protectionist

actions during the recent global economic crisis The continued accession of new

members to the organisation is a further indication of just how valuable it is to the

international community In a world of global supply chains business needs a set of

multilateral rules within which to operate ndash now more than ever

Avoid the blame game

If the members decide that the Round cannot be brought to a successful conclusion

it will be important to avoid recrimination One thing is clear a major and sustained

effort has been made by all the members to try to deliver a successful outcome While

avoiding recrimination WTO members should spend some time reflecting on the

reasons for the current difficulties

One common mistake is to argue that the WTO as a whole is too big Many outside

observers suggest that with 153 members the WTO is too unwieldy an organisation

to address the challenges of 21st century trade particularly when decisions are taken

on the basis of consensus It is important to note therefore that blockages preventing

conclusion of the Round are not the large number of members but rather differences

among the largest and most powerful trading countries who would need to be party to

the conclusion of any major trade negotiation

One reason for Doharsquos problems is that the preparatory process for the Round was

inadequate While the built-in agenda that emerged in Marrakesh led to useful work

and provided a good basis in some areas it did not permit the sort of broad thinking

that should have gone into preparations for a major negotiating effort After the failure

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

Next Steps Getting Past the Doha Round Crisis

49

in Seattle launching the Round as a political act in the face of terrorist threats in 2001

was not an adequate foundation

Develop the WTOrsquos future work programme over the next two years

WTO member governments should now begin to plan the future work programme of the

WTO The last major work programme undertaken in the multilateral trading system

began at the fractious GATT ministerial meeting in 1982 The work then undertaken in

the GATT was supported by efforts undertaken in other international organisations and

domestically by the various lsquocontracting partiesrsquo (as members were called back then)

The product of those efforts became the basis for launching and then concluding the

Uruguay Round negotiations Obviously the world of 2011 is very different from that of

1982 Global supply chains and the seamless connections between trade in goods trade

in services and investment present a series of new challenges for the trading system

Members should start to plan the future work now But this is work that should be done

properly and not in haste One of the problems with the 1990s built-in agenda was that

it was very difficult to introduce any new items into the discussion even including

consideration of further tariff liberalisation In order to avoid such difficulties it would

be useful to develop the future agenda over a two-year period Ministers at Decemberrsquos

ministerial conference could ask the General Council and the Director-General to

consider the matter and come forward with suggestions for the future work of the

organisation at the next ministerial conference in 2013

Do we need Doha ldquodown paymentsrdquo

Many ldquoplayersrdquo and observers have raised the question of what might be salvaged or

harvested if the Doha Round cannot be finished this year This is an excellent idea

provided it can be done quickly and efficiently If however it is going to take say more

than six months the effort should be abandoned I suspect it will not be easy to agree

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

VOX Research-based policy analysis and commentary from leading economists

50

on which parts of the Doha Round should be salvaged given the different priorities of

WTO members The effort would also serve the purpose of testing whether the WTO

can negotiate agreements outside the context of a round It would be very useful to have

an answer to that question

Concluding remarks

If the Doha Round is not successful the WTO cannot afford another failure Building

a solid agenda for the future work of the WTO that responds to the real interests of its

members needs to be a central task of the organisation

About the author

John Weekes is senior international trade policy adviser at Bennett Jones LLP with

a long experience in trade diplomacy and trade policy He was Canadarsquos Ambassador

to the WTO from 1995 to 1999 and Chair of the WTO General Council in 1998 He

was instrumental in the creation of the Committee on Regional Trade Agreements and

served as its chair from its inception in 1996 until he became Chair of the General

Council Prior to that he was Canadarsquos Chief Negotiator for NAFTA (1993 to 1995)

and Canadarsquos Ambassador to the GATT during the last multilateral trade negotiations

(Uruguay Round) He was a member of Canadarsquos negotiating team to the Tokyo Round

of GATT negotiations in the 1970s He is on the Board of the Washington-based Cordell

Hull Institute and Chaired the Management Board of the Advisory Centre on WTO

Law in Geneva

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

51

Stuart HarbinsonSidley Austin LLP

The good ship Doha Salvage-and-abandon-ship or repair-and-wait

The core Doha goals ndash better market access and rules for agricultural industrial and

services trade ndash still matter but Doha is a ship run aground This essay argues that the

choices are i) to abandon ship and try with a new ship later or ii) to patch up the holes

by delivering some progress in December 2011 and then wait for a high tide to carry us

off the rocks Only the latter is likely to achieve the core goals

The good ship Doha is well and truly stuck on the rocks Letrsquos make no mistake ndash the

rocks are substantial and there is no magic solution that will instantaneously get us off

them The choice now facing us is to salvage what we can and abandon ship or to patch

up the holes wait for a high tide and sail on

While the agenda is 10 years old and showing its age in some respects few are currently

advocating its abandonment This is because the issues at the heart of the Round still

matter ndash namely market access and rules for trade in agriculture industrial products

and services The critical test for deciding on immediate next steps should be whether

they would facilitate or complicate ultimate resolution of these difficult issues

Salvage and re-launch new negotiations An option that wonrsquot work

With a ministerial conference coming up in December attention has turned to what

some call ldquosalvagerdquo A salvage operation implies that the vessel is no longer seaworthy

we should just grab what we can and leave the ship to smash itself to pieces on the

rocks We would then have to look for another ship One of the problems with this

5151

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

VOX Research-based policy analysis and commentary from leading economists

52

scenario is that it would take quite a while to design and construct a new vessel suitable

for WTO negotiations Even then the new ship will have to negotiate its way around

many of the same rocks The problems we face in agricultural and industrial market

access for example will not simply disappear

Itrsquos tempting to think that we can simply salvage a few things forget about Doha and

start all over again with a better chance of success The reality would surely prove to

be quite different

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same

way as in the past) We would thereby acknowledge as Ujal Bhatia Singh eloquently

put it recently that we are ldquolashed to the mast of Dohardquo (Bhatia 2011) This however

should not be interpreted to mean that the WTO as an institution is locked in a death

embrace with the Doha Round

ldquoDeliverablesrdquo for the ministerial conference could constitute a patch to keep the ship

afloat until the high tide comes In this analogy the ldquohigh tiderdquo would be a change in the

global economic and political seascape enabling the major trading economies to settle

their differences and bring the ship safely into harbour

Admittedly there is an element of hope in this but on balance it does not seem likely

that the present highly inimical environment (recession unemployment exchange

rate issues major domestic policy preoccupations etc) will persist indefinitely

Furthermore as a result of intensive work in recent months key members are now

much clearer about the remaining gaps and what it would take to bridge them ndash a very

useful position from which to restart at the right time

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

Next Steps Getting Past the Doha Round Crisis

53

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations

is testimony to its robustness The widely held view that it was launched off-the-cuff in

reaction to the tragic events of 911 without substantive business or political backing

is not borne out by the historical record nor does it tally with my own experience as

Chairman of the General Council at the time

In the first place it is inconceivable that such a complex undertaking could have

been agreed in the space of two months Efforts to launch a round in fact began well

before the ill-fated Seattle Ministerial Conference in 1999 These efforts received

considerable reinforcement from the failure of the Uruguay Round ldquobuilt-in agendardquo

negotiations on agriculture and services to deliver results Recall that the Agreement

on Agriculture refers to the ldquoContinuation of the Reform Processrdquo a process to which

many governments and industries were ndash and still are ndash strongly committed Many

services industries stimulated by the WTOrsquos successes in moving forward in financial

services and basic telecommunications in the late 1990s were similarly champing at the

bit While it is true that there was also some opposition the history of the preparatory

process in 2001 shows clearly that well before 911 the working hypothesis for the

Doha Ministerial Conference was the launch of a new round

As the first chairman of the Doha agriculture negotiations commencing in 2002 I can

also testify personally to the intense business and political interest at that time If such

interest has subsided this could be ascribed to the apparent lack of movement in the

negotiations and the changing political and economic dynamics since the Round was

launched

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

VOX Research-based policy analysis and commentary from leading economists

54

Deliverables would be welcome ndash as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching

the Round and resolutely pushing it forward over an extended period as well as the

high-level political commitment restated only six months ago a concerted effort to

identify a decent number of ldquodeliverablesrdquo for the eighth ministerial conference in

December would certainly be welcome

Nevertheless it might be prudent not to invest too much expectation in this process

There is a danger that such an exercise would involve multiple ldquoshopping listsrdquo which

would prove in a number of instances to be irreconcilable The last thing the WTO

needs at present is to have a lengthy and acrimonious discussion about ldquodeliverablesrdquo

culminating in a paltry agreement or worse still no agreement at all

Possible deliverables

The emphasis on ldquodeliverablesrdquo should be on the rules elements of the Round since

market access remains highly contentious and linkages make it unlikely that partial

results could be delivered Even within rules few issues come without caveats attached

Among the candidates (concentrating on Doha issues in no particular order) appear to

be the following

bull Trade facilitation is most often mentioned although substantive issues remain to be

resolved including technical assistance

It is questionable if an agreement should be rushed into if it involves too many

compromises However if it can be delivered this would be a major boost

bull An agreement on the export competition pillar in the agriculture negotiations would

also be a very substantive contribution

Whether the political will exists to settle this in advance of the remainder of the

agriculture package is a question that will need to be answered

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

Next Steps Getting Past the Doha Round Crisis

55

bull Domestic regulation in services may be considered as another significant possibil-

ity

However this item is linked with market access and the stumbling block of the ldquonecessity

testrdquo issue remains so the chances may not be great

bull Non-tariff barriers There should be a trawl through the negotiating issues in an at-

tempt to identify possible ldquodeliverablesrdquo

Realistically an agreement on transparency may be the most likely

bull The least-developed country waiver in services is more feasible though its utility is

limited without services commitments

bull Progress building on the ldquoduty-free-quota-freerdquo (DFQF) market access commit-

ments for least-developed country agreed at the Sixth Ministerial Conference would

be highly desirable

However there are political issues to be overcome Reviews of Generalised System

of Preferences (GSP) schemes in the US and EU may be a complication and duty-

free-quota-free raise the tricky issue of rules of origin there is a very real issue to be

resolved here and concerns over circumvention must be addressed

bull Cotton also falls into the highly desirable category

Political realities in the US may still prove to be an insuperable obstacle in 2011

although it may be possible to grapple with these at a later date with a new US Farm

Bill and especially if the Round as a whole is concluded

bull Agreement on a monitoring mechanism for ldquospecial and differential treatmentrdquo

would be useful

Though perhaps not in itself a major achievement this would constitute a welcome

confirmation that the development component of the Round is not sliding off the deck

bull Definitive implementation of the transparencymonitoring mechanism on regional

trade agreements

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

VOX Research-based policy analysis and commentary from leading economists

56

This would be a strong signal that the WTO is developing its surveillance functions in

this area

bull Considerable difficulties persist in the negotiations on fisheries subsidies

It seems highly unlikely that these could be resolved in time to deliver an agreement in

December One possibility may be to aim for a ldquostandstillrdquo arrangement so that existing

levels of subsidies would not be increased pending an agreement

bull On trade and the environment it should be possible to deliver on paragraphs 31(i)

and (ii) of the Doha Ministerial Declaration ndash the relationship between WTO rules

and Multilateral Environmental Agreements including information exchange be-

tween the WTO and the Multilateral Environmental Agreements such as the Mon-

treal Protocol

Desirable as it is any agreement on reducing barriers to trade in environmental goods

and services seems unlikely since this is closely linked with negotiations on market

access for industrial products

bull In trade-related aspects of intellectual property rights (TRIPS) the register of Geo-

graphical Indications for wines and spirits might be doable in isolation but linkages

to the extension of additional protection to other Geographical Indications and to

agriculture may prove to be a major complication

Overall there is a reasonable prospect of constructing a respectable package especially

if trade facilitation and export competition can be included

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

Next Steps Getting Past the Doha Round Crisis

57

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements

as ldquoearly harvestrdquo is another question In any case the idea would be to activate the

mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial

Declaration1 Even if the eventual list were modest it would be a positive contribution

and a sign that Doha has not sunk

As regards the remaining issues ndash the great bulk of the Doha negotiations ndash members

should once again recommit themselves to completion of the agenda as soon as possible

In practice that is likely to be when the global economic and political climate is more

conducive While this might provoke yawns in some quarters it is preferable to other

alternatives such as formal suspension or attempting a fundamental reconfiguration

which could result in a complete unravelling One might recall Winston Churchillrsquos

frequently uttered response to repeated adversity ndash ldquowe must just keep buggering onrdquo

(which he often shortened to the acronym ldquoKBOrdquo)

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months in my view the WTO should not stop with a repair-

and-wait strategy While the non-negotiating functions of the WTO ndash usually described

as dispute settlement and monitoringsurveillance ndash are in reasonably good shape they

are not sufficient in current circumstances especially given the state of the Round to

convince sceptical outsiders that the organisation is as functional as it should be

If in 2012 (and possibly 2013) Doha is going to assume a lower profile the opportunity

should be taken to exploit some of the other strengths of the WTO that have fallen out

1 Paragraph 47 reads ldquoWith the exception of the improvements and clarifications of the Dispute Settlement Understanding the conduct conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking However agreements reached at an early stage may be implemented on a provisional or a definitive basis Early agreements shall be taken into account in assessing the overall balance of the negotiationsrdquo

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

VOX Research-based policy analysis and commentary from leading economists

58

of the limelight in recent years Members could for example agree to reinvigorate and

give higher priority to the deliberations of the regular councils and committees These

bodies were relatively vibrant in the period 1995 to 2000 Some still are but others are

no longer being as fully exploited

This might also offer an avenue to answer to some extent critics who argue that the

WTO is locked in an outdated agenda and not addressing new areas of concern

Why should some of these ldquonewrdquo issues not be discussed in the regular (non-negotiating)

machinery This is already beginning to happen to some extent ndash for example the

recent discussion in the working group on trade debt and finance on the relationship

between trade and exchange rates and the agriculture committeersquos discussions of food

security There are numerous other candidates for similar treatment some controversial

perhaps but others less so Could relevant WTO bodies discuss some of the supply-

chain issues frequently mentioned by businessmen That might offer a welcome means

of reconnecting the WTO with the business community The Trade Policies Review

Mechanism might also be overhauled What has happened to the work programme on

e-commerce

Discussion of current issues in the regular machinery might in some cases lead

nowhere In others it could lead to some strategic thinking about the future shape of

the multilateral trading system and prepare the ground for further developments

Conclusion

To summarise it does not seem to be necessary to abandon the good ship Doha in order

to start moving forward into as yet uncharted waters

References

Singh Bhatia Ujal (2011) ldquoSalvaging Dohardquo VoxEUorg 10 May

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

Next Steps Getting Past the Doha Round Crisis

59

About the author

Stuart Harbinson is Senior Trade Policy Adviser at Sidley Austin LLPrsquos Geneva

office He joined Sidley Austin after gaining extensive trade policy experience in

several high-level positions in the United Nations World Trade Organization and Hong

Kong Government

When Permanent Representative of Hong Kong China to the WTO Mr Harbinson

chaired the General Council in 2001-2002 overseeing preparations for the Doha

Ministerial Conference He subsequently served as the first chairman of the agriculture

negotiations He was Chief of Staff to Director-General Dr Supachai Panitchpakdi

from 2002 to 2005 and Special Adviser to Director-General Pascal Lamy from 2005

to 2007

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

61

After 10 years of much progress and much frustration with the Doha Round it is time

to find a new approach to bring the negotiations to a successful conclusion This essay

argues that success would require four things implemented simultaneously i) a Doha

down-payment package agreed this year ii) an understanding of how to reorganise

continuing talks on the most contentious issues iii) commencement of a WTO work

programme on 21st-century trade issues and iv) a bold initiative by middle power WTO

members to try to unblock the talks

World leaders are in a bind over the Doha Round Carrying on with business as usual is

no longer an option ndash the impasse that has emerged cannot be solved with a few more

negotiating sessions Abandoning the Round has been ruled out by almost all WTO

members nor is there much appetite for suspending the Round This quandary has trade

ministers and diplomats casting around for creative solutions

Getting the WTO past the Doha crisis

After talking with ambassadors and senior officials from a wide range of delegations in

Geneva and a few from national capitals we pulled together the elements of a plan that

might suggest a way forward The plan has four dimensions

Richard Baldwin and Simon EvenettGraduate Institute Geneva and CEPR University of St Gallen and CEPR

Keeping the WTO on track A Doha down payment plus more

6161

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

VOX Research-based policy analysis and commentary from leading economists

62

1 What to do for the December 2011 ministerial meeting

While finishing Doha this year is impossible the WTO could have something to show

for its 10 years of work This progress could be locked in A small package or set of

stand-alone agreements could be finalised this year ndash what some call ldquoearly harvestrdquo

results and others call ldquoDoha deliverablesrdquo or the ldquoDoha down paymentrdquo

The long-scheduled meeting of trade ministers for 15-17 December 2011 provides a

natural focal point for finalising these results

Although these agreements would not constitute a major economic breakthrough it

would be a wise political response to the Doha crisis It would demonstrate that the

WTO is alive that it is forum where things can get done

The nature of the package is dictated primarily by practicality ndash we can think of

including only those items where agreement is already close There would also be great

merit both politically and economically to focusing on issues that benefit the worldrsquos

poorest countries The failure of the largest trading nations to find a compromise that

suits them shouldnrsquot be allowed to hold up sensible progress for the least developed

nations

The other essays in this eBook discuss the possible items that might be included in a

Doha down payment We have not been at the cutting face of the negotiations so we

cannot form an independent judgement of what is practical Canvassing opinions in

Geneva however the most likely items seem to be

bull An accord on duty-free quota-free treatment for least developed nations

bull A waiver that allows WTO members to provide preferential access to services trade

from least developed nations

bull An agreement to reduce distortions in cotton to the benefit of least developed na-

tions

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

Next Steps Getting Past the Doha Round Crisis

63

bull A package of measures that promote lsquotrade facilitationrsquo ie reducing barriers to

imports stemming from excessive red-tape barriers in customs inferior port infra-

structure and other non-trade-policy impedances to trade

bull Agreement on a monitoring mechanism for special and differential treatment

bull Agreement to make permanent the RTA Transparency Mechanism that has been

operating successfully for years and

bull An agreement on certain non-tariff barriers such as the Horizontal Mechanism and

textile labelling

Other issues may ultimately prove tractable or necessary to provide balance Those

most often mentioned include a standstill agreement on fisheries subsidies certain

aspects of the less controversial rules negotiations and export subsidies

2 What to do with the rest of the Doha agenda

The small package that might be ready for December 2011 would not solve the WTOrsquos

first order negotiating challenge A vast range of economic interests are still counting on

the Round to deliver major progress on market access for industrial goods agricultural

products and services If we are to maintain a semblance of cohesion among WTO

members there will have to be an agreement to continue negotiations on the core issues

But the principal negotiating processes used to date havenrsquot worked Efforts by the

Big 5 ndash as they are sometimes called ndash failed to find a compromise among themselves

There are many explanations for this failure but one thing is clear ndash not all trade-offs

were explored In particular the process has this year fixated very much on trade-offs

within industrial goods liberalisation (NAMA) Trade-offs with other areas (services

antidumping rules and others) werenrsquot considered

This suggests that the December 2011 meeting could reorganise the process in a way

that is more likely to bear fruit Here are some elements that resonated with many WTO

members with whom we spoke

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

VOX Research-based policy analysis and commentary from leading economists

64

bull Have a real negotiation under multilateral control with a ldquoconductorrdquo acting as an

impartial player with responsibility of assisting members to reach agreement

This suggests that an essential question will be the choice of the conductor (more on

this below)

bull The negotiations must be horizontal

Except for some issues in particular areas where useful work can still be done regardless

of results in other areas (fisheries subsidies for example) the negotiations should be

horizontal All areas should be on the table without a priori sequencing Thus a package

can be built with trade-offs across the board

bull Forget ldquomodalitiesrdquo

The original sequencing of the talks ndash known in WTO-ese as modalities ndash has not

worked1 Perhaps this should have been obvious from the start but now it is clear to

all No government can be expected to agree to formulae and other elements without

knowing the full impact of such an understanding

For example by common agreement nations get to choose a limited number of products

to exclude from tariff cutting As nations know better where they themselves will apply

the flexibility we have a situation where nations know what they are conceding on

tariffs but they donrsquot know what their exporters will be getting in exchange Only when

countries bring their national tariff schedules to the bargaining table will we know

what the formulae will actually mean tariff line by tariff line ndash the level that ultimately

interests business

This is one of the things the December ministerial meeting could decide It could set

a date for the submission of schedules (for industrial goods agricultural products and

services) This would unleash a process of real negotiations

1 The idea that first there would be an agreement on the levels of ambition in agriculture and NAMA with this conditioning discussions on sectorals and the remaining areas

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

Next Steps Getting Past the Doha Round Crisis

65

These changes need to be made explicit What momentum exists comes from a decade

of negotiation groups working in silos This momentum needs to be redirected by a

ministerial decision One part of this that would be critical to keeping the process in

some sort of order would be to grant a sort of ldquoconductorrsquos rolerdquo to the WTO Director-

General in his role as chair of the Trade Negotiations Committee It was a good idea to

try to let the Big 5 find their way to an accord but it did not work

3 Keeping the WTO relevant to 21st-century trade issues

Members should look beyond the 10-year-old Doha agenda and agree to a work

program to begin a discussion and analysis (not necessarily a negotiation) of other

issues relevant to todayrsquos economic relations Some of these could be

bull Investment

Trade and investment have long been linked but internationalisation of supply chains

has greatly strengthened the link For most WTO members a pro-trade policy requires

a pro-foreign-investment policy This has blurred the line between what is a trade policy

and what is a domestic or investment policy

For example during the global economics crisis many countries set up protectionist

measures on investment Indeed these went up even among members of the EU

The demand for mutually advantageous disciplines can be seen by the popularity of

investment measures that are covered in 21st-century free trade agreements Frequently

these include investment chapters guaranteeing national treatment and most-favoured-

nation treatment on a reciprocal basis

bull Competition policy

Now more than ever there is a greater appreciation of the harm that exercising monopoly

power can have on international trade and developing countries Ask any developing

country farmer who has had to bargain with large foreign supermarkets or has had to

pay extortionate prices for its produce to be transported to the local port or airport

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

VOX Research-based policy analysis and commentary from leading economists

66

Access to foreign markets is impaired as well as the gains from globalisation

compromised by anti-competitive practices The spread of competition law enforcement

around the globe has put in place one building block now the challenge is to develop

international collaboration between enforcement agencies to tackle specific cases of

anti-competitive conduct

bull Climate change

Attempts to arrive at multilateral agreements on climate-change policies failed last year

Nations are thus pursuing uncoordinated national policies aimed at climate-change

mitigation and adoption Taxes subsidies and regulations are part of these plans and

this brings them potentially into conflict with WTO rules that were designed without

climate-linked policies in mind WTO members could usefully address the question

of whether the present rules are sufficient andor appropriate to meet this 21st-century

policy challenge Is there a need to devise special disciplines and increase transparency

Is there a need to define acceptable limits or complementary policies

bull Export restrictions and duties

Whether on food raw materials or other goods the present disciplines are quite weak

as the GATTWTO rules were written in an era where imports (exports) were almost

universally viewed as a political bad (good) Rules on export restrictions simply werenrsquot

necessary The 21st century however has witnessed frequent imposition of such

measures As these can lead to a classic lsquoprisonersrsquo dilemmardquo they are naturally suited

for WTO-like disciplines that help maintain a win-win situation in the face of unilateral

incentive to undermine cooperation Just as with tariffs the point would not be to ban

such restrictions They may be necessary and indeed useful in certain circumstances

but multilateral disciplines would be useful to prevent their application from leading to

unintended consequences

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

Next Steps Getting Past the Doha Round Crisis

67

bull Revisit some of the WTO Agreements

The world of trade has changed radically since the WTO Agreements were struck

in 1994 Some such as the Agreement on Safeguards could probably due with an

updating

bull Enhanced transparency

Current transparency practices could certainly be improved to the benefit of all Now

they are based on notifications by members with the result that they are very often

incomplete and late The suggestion here is to discuss ways of improving this perhaps

leveraging new information technology

bull Government Procurement Agreement

Governments buy a very large slice of the worldrsquos goods and services Moreover there

is an increasing realisation that open procurement is beneficial to taxpayers by lowering

costs and to consumers by boosting competition and quality Indeed procurement is

frequently the subject of ambitious free trade agreements All this suggests that re-

visiting the market access provisions of the Government Procurement Agreement in

future negotiations might produce mutual gains for a wide range of WTO members

bull Institutional reform

The Marrakesh Agreement signed in 1994 was the last time the organisationrsquos structure

was examined in its entirety Since then the world of trade has shifted radically ndash most

obviously in terms of the trade weight of some developing nations but also in terms

of how the internationalisation of supply chains has blurred the distinction between

trade policies and domestic policies This suggests that a cooperative and construction

evaluation might reveal improves that could attract widespread support

4 A bold initiative from the middle powers

This is a round where the biggest players failed to provide leadership There may be

many reasons for this but the fact is not in dispute The Big 5 gave up trying to work

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

VOX Research-based policy analysis and commentary from leading economists

68

out a compromise (although at the last minute the EU made an unsuccessful attempt to

find an approach to bridge one of the gaps) This failure perhaps reinforced by a lack

of trust among the biggest players created a vacuum

One idea that could help unblock the broader talks is a bold unilateral move by the

middle trading powers These WTO members have often been a source of terrific ideas

in the past this time around they might demonstrate their additional commitment to

the multilateral trading system precisely when so many commentators and business

interests appear to have discounted the WTO Such a bold step could encourage other

WTO members to follow suit injecting a further liberalising dynamic

While middle powers cannot realistically expect much from ldquoholding outrdquo for bigger

concessions a simultaneous set of unilateral moves by this group could generate

commercial opportunities that influential business lobbies would notice Not to mention

that a welcome injection of competitive pressure would keep producers and traders in

the middle powers on their toes

The middle trading powers could for example

bull Offer to bind their tariffs at the applied level even if the application of a formula

doesnrsquot go below the bound level

bull Offer to bind 100 of tariff lines on NAMA If a tariff line is unbound bind at the

applied level

bull Table improved offers on services that reflect unilateral liberalisation undertaken

to date

bull Freeze all harmful fisheries subsidies and offer to reduce them by 10 in the first

year provided a critical mass of members do the same

bull Offer some additional restraints on the use of flexibilities presently available in the

Agriculture and NAMA draft modalities

bull Implement trade facilitation even before it becomes a legal obligation

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

Next Steps Getting Past the Doha Round Crisis

69

bull Implement improvements in transparency obligations under the Antidumping and

the Subsidies and Countervailing Measures Agreements

bull Provide duty-free quota-free treatment for 100 of products for least developed

countries with flexible rules of origin

bull Offer tariff concessions on environmental goods

Concluding remarks

After 10 years of much progress and frustration with the DDA programme it is time

for a new approach to bringing negotiations to a successful conclusion doing so in a

way that enhances the contemporary relevance of the WTO Such an approach ndash like

the others described by contributors to this eBook ndash imply that the current impasse is

not inevitable

Here we have outlined a four-part approach which WTO members could take up

over the summer of 2011 and have tangible results to show for the WTO Ministerial

Conference in December 2011 Such ldquoa Doha down paymentrdquo would demonstrate

that the WTO can deliver it would build confidence Work on many other items ndash

including the remaining elements of the DDA ndash would go beyond that time Should

further momentum develop no doubt other initiatives could be taken on board Partly

through action partly through reflection a renewed WTO would emerge as this process

unfolded over time

About the authors

Richard Baldwin is Professor of International Economics at the Graduate Institute

Geneva since 1991 Policy Director of CEPR since 2006 and Editor-in-Chief of Vox

since he founded it in June 2007 He was Co-managing Editor of the journal Economic

Policy from 2000 to 2005 and Programme Director of CEPRrsquos International Trade

programme from 1991 to 2001 Before that he was a Senior Staff Economist for the

Presidentrsquos Council of Economic Advisors in the Bush Administration (1990-1991) on

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

VOX Research-based policy analysis and commentary from leading economists

70

leave from Columbia University Business School where he was Associate Professor

He did his PhD in economics at MIT with Paul Krugman He was visiting professor at

MIT in 200203 and has taught at universities in Italy Germany and Norway He has

also worked as consultant for the numerous governments the European Commission

OECD World Bank EFTA and USAID The author of numerous books and articles his

research interests include international trade globalisation regionalism and European

integration He is a CEPR Research Fellow

Simon J Evenett is Professor of International Trade and Economic Development at

the University of St Gallen Switzerland and Co-Director of the CEPR Programme

in International Trade and Regional Economics Evenett taught previously at Oxford

and Rutgers University and served twice as a World Bank official He was a non-

resident Senior Fellow of the Brookings Institution in Washington He is Member of the

High Level Group on Globalisation established by the French Trade Minister Christine

LaGarde Member of the Warwick Commission on the Future of the Multilateral Trading

System After Doha and was Member of the the Zedillo Committee on the Global

Trade and Financial Architecture In addition to his research into the determinants

of international commercial flows he is particularly interested in the relationships

between international trade policy national competition law and policy and economic

development He obtained his PhD in Economics from Yale University

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett

Centre for Economic Policy Research

77 Bastwick Street London EC1V 3PZTel +44 (0)20 7183 8801 Fax +44 (0)20 7183 8820 Email ceprceprorg wwwceprorg

The Doha Round confronts world leaders with a dilemma Concluding the Round this year is

impossible but there is strong opposition to terminating the Round There is also strong opposition

to suspending the Round as suspension is widely seen as a roundabout means of killing it

This VoxEU eBook aims to inform options for resolving the dilemma by gathering the views of some

of the worldrsquos most experienced Doha experts Contributors include former US Trade Representative

Susan Schwab Indiarsquos former WTO Ambassador Ujal Singh Bhatia Chinarsquos former WTO Ambassador

Zenyu Sun Canadarsquos former WTO Ambassador John Weekes and Hong Kongrsquos former WTO

Ambassador Stuart Harbinson ndash all of whom spent years at the ldquocutting facerdquo of Doha negotiations

They identify the 3 ways past the crisis

bull Road 1 Declare failure and call for a period of reflection

bull Road 2 Buy time by suspending the Round or

bull Road 3 Think creatively about work-around solutions that avoid acrimony and lock in some

of the progress to date

The contributors disagree on the best way forward but all believe that Road 3 is the one worth

trying first

  • Foreword
  • The Doha dilemma An introduction to the issues and possible solutions
    • Richard Baldwin and Simon Evenett
      • There is no Plan B ndash only Plan A Towards completing Doha
        • Mari Pangestu
          • Acknowledge Doharsquos demise and move on to save the WTO
            • Susan Schwab
              • Next Steps Getting past the Doha Round crisis
                • Ujal Singh Bhatia
                  • Next Steps Is an early harvest still possible
                    • Zhenyu Sun
                      • Getting past the Doha Round crisis Moving forward in the WTO
                        • John Weekes
                          • The good ship Doha Salvage-and-abandon-ship or repair-and-wait
                            • Stuart Harbinson
                              • Keeping the WTO on track A Doha down payment plus more
                                • Richard Baldwin and Simon Evenett