let's Doha it again?

Getting back to the negotiating table at the World Trade Organization may appease the developing world – is liberalization the price we have to pay?

With the memory of the Doha Round collapse in July 2006 still fresh in the minds of foreign economic policy-makers, is it too early for the world to consider returning to the negotiating table? Members of the developing world are still waiting for their chance at equity in the often chaotic arena of the global economy, and the trade round format is all the international system has to serve these needs. Though the stalemate that ensued in 2006 led to skepticism regarding the World Trade Organization’s credibility as an international forum for economic policy, it has the potential to redeem itself, given that members of the developed world are ready to make concessions on liberalization.

Despite the features of the WTO that arguably restrain the organization’s chances at success, Doha’s predecessor, the Uruguay Round managed to formally establish the WTO in place of the General Agreement on Tariffs and Trade. The Uruguay Round also started negotiations on the General Agreement on Trade in Services (GATS) and the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). The fruit of the ambitious Uruguay Round most certainly reflected on the growing impact of the WTO on multilateral trade, but the succeeding Doha Round produced a lost opportunity for the developing world, in particular.

Doha’s focus on development highlighted negotiations to offset the negative effect of uneven development, but negotiators often seemed unclear on how development should be promoted. Would more or less trade benefit the developing world? Most members of the developing world clearly wanted more opportunities to trade.

One of the main causes for the failure of the Doha Round was the stalemate that ensued regarding agricultural and industrial exports. The strength of the G-20, a predominant bloc of developing countries led by Brazil, China, India, Indonesia, and South Africa allegedly prevented the bigger economic players, such as the U.S. and the European Union, from reaching a concession. Members of the G-20 were adamant about the agricultural protectionism that seemed characteristic of the developed world’s economic policies, which made them unable to compete in the global market.

While the developed countries pursued an agenda to open up trade from the countries of the developing world, they barely made concessions to open up their own trade for the sake of protection.

Developed countries also negotiated on Non-Agricultural Market Access (NAMA), which called for drastic cuts on the non-agricultural tariffs of developing countries. In exchange, the developed countries offered to cut their own tariffs by a small amount. This inequitable offer, was, naturally, refused by the members of the G-20.

It was no secret that the liberalization mechanisms sponsored by the WTO were bound to leave much discontent in the developing world.

Since the high-profile collapse of the Doha Round last July, there have been low-key negotiations with smaller groups of countries on a follow-up to the round. The U.S. and the EU in particular, have met with leaders from Brazil and India regarding making further concessions to possibly resuscitate earlier negotiations on tariffs and subsidies for protection. Although ongoing negotiations are reportedly making progress, there have been setbacks on formally restarting the talks at the WTO. Disagreements between the U.S. and the EU and missed deadlines have loomed over the heads of the diplomats involved, pressuring several to quicken the pace of negotiations.

And it’s about time. Merely letting the failure of the Doha Round sit on the plate of foreign policy was not going to foster a settlement between the battling divisions of the international community. The reported “quiet diplomacy” that has taken the place of formal negotiations has led to accusations of a lack of transparency.

Seeking an optimal point for the relationship between protectionism and liberalization of trade is going to be the biggest hurdle for the forthcoming negotiations. But what is prescribed by economic models is not always the final solution in the global economy, where the assumption of ceteris paribus has no place. However, the issue of developed countries’ protection emerged prior to the Doha Round. It merely reached a messy apex during the actual trade round negotiations, and it is about time to reconsider a change in policy.

Richard Fisher, president and chief executive officer of the Federal Reserve Bank of Dallas recently indicated during a statement to the Pacific Council on International Policy, “Do everything you can to resist the temptation to protect… we benefit by having an open world to sell into.” Despite the outcome of the Doha Round, the structure of the global economy remains predominantly protected by sovereign governments, all of which are at different stages of economic development.

Grasping the concept of less-than-full reciprocity will be critical for establishing a stronger foundation for the next trade round. When the developed world heads back to the negotiating table, the countries must be prepared to make significant concessions in order to strike a sound agreement. If this would mean liberalizing trade, maybe they could consider it a gesture made to revive the credibility of the WTO and restore justice in the global economy.

Not every trade round is doomed to fail, nor is any negotiation on an important issue such as development destined to be neglected by those afflicted by its negative effects. Rounds could collapse but the need for countries to secure stability in the global economy will remain.