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Doha DevelopmentRound Issues and

Benefits


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Introduction

The Doha Development Round or Doha Development Agenda (DDA) is the currenttrade-negotiation round of the World Trade Organization (WTO) which commenced inNovember 2001. Its objective is to lower trade barriers around the world, which allowscountries to increase trade globally. As of 2008, talks have stalled over a divide onmajor issues, such as agriculture, industrial tariffs and non-tariff barriers, services, andtrade remedies. The most significant differences are between developed nations led bythe European Union (EU), the United States (USA), and Japan and the major developingcountries led and represented mainly by China, Brazil, India, and South Africa. There isalso considerable contention against and between the EU and the USA over theirmaintenance ofagricultural subsidiesseen to operate effectively as trade barriers.

The most recent round of negotiations, 2329 July 2008, broke down after failing toreach a compromise on agricultural import rules. (ReferTable 1: Chronology of Events)

In the EU, 54 billion of subsidies are paid every year. An increasing share of thesubsidies is being decoupled from production and lumped into the Single FarmPayment.

The subsidies combined with tariff on imported products are the core issue behindDoha Negotiations. The aim is to reduce, or as appropriate eliminate tariffs, includingthe reduction or elimination of tariff peaks, high tariffs, and tariff escalation, as well asnon-tariff barriers, in particular on products of export interest to developing countries.

These negotiations shall take fully into account the special needs and interests ofdeveloping and least-developed countries, and recognize that these countries do notneed to match or reciprocate in full tariff-reduction commitments by other participants.

While average customs duties are now at their lowest levels after eight GATT Rounds,certain tariffs continue to restrict trade, especially on exports of developing countries for instance tariff peaks, which are relatively high tariffs, usually on sensitiveproducts, amidst generally low tariff levels. For industrialized countries, tariffs of 15%and above are generally recognized as tariff peaks.

Another example is tariff escalation, in which higher import duties are applied onsemi-processed products than on raw materials, and higher still on finished products.

This practice protects domestic processing industries and discourages the developmentof processing activity in the countries where raw materials originate.

Before Doha

Before the Doha ministerial, negotiations had already been under way on trade inagriculture and trade in services. These ongoing negotiations had been required underthe last round of multilateral trade negotiations (the Uruguay Round, 19861994).However, some countries, including the United States, wanted to expand theagriculture and services talks to allow trade-offs and thus achieve greater tradeliberalization.

The first WTO ministerial conference, which was held in Singapore in 1996, establishedpermanent working groups on four issues:
http://en.wikipedia.org/wiki/World_Trade_Organizationhttp://en.wikipedia.org/wiki/Trade_barrierhttp://en.wikipedia.org/wiki/Tradehttp://en.wikipedia.org/wiki/Agriculturehttp://en.wikipedia.org/wiki/Tariffshttp://en.wikipedia.org/wiki/Non-tariff_barriers_to_tradehttp://en.wikipedia.org/wiki/Developed_nationshttp://en.wikipedia.org/wiki/Developing_countryhttp://en.wikipedia.org/wiki/Developing_countryhttp://en.wikipedia.org/wiki/Agricultural_subsidyhttp://en.wikipedia.org/wiki/Doha_Development_Round#Geneva.2C_2008http://en.wikipedia.org/wiki/Uruguay_Roundhttp://en.wikipedia.org/wiki/WTO_Ministerial_Conference_of_1996http://en.wikipedia.org/wiki/Trade_barrierhttp://en.wikipedia.org/wiki/Tradehttp://en.wikipedia.org/wiki/Agriculturehttp://en.wikipedia.org/wiki/Tariffshttp://en.wikipedia.org/wiki/Non-tariff_barriers_to_tradehttp://en.wikipedia.org/wiki/Developed_nationshttp://en.wikipedia.org/wiki/Developing_countryhttp://en.wikipedia.org/wiki/Developing_countryhttp://en.wikipedia.org/wiki/Agricultural_subsidyhttp://en.wikipedia.org/wiki/Doha_Development_Round#Geneva.2C_2008http://en.wikipedia.org/wiki/Uruguay_Roundhttp://en.wikipedia.org/wiki/WTO_Ministerial_Conference_of_1996http://en.wikipedia.org/wiki/World_Trade_Organization


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1. Transparency in government procurement2. Trade facilitation (customs issues)3. Trade and investment4. Trade and competition.

Doha, 2001

It began in November 2001 committing all countries to negotiations openingagricultural and manufacturingmarkets, as well as trade-in-services (GATS) negotiationsand expanded intellectual property regulation (TRIPS). The intent of the round,according to its proponents, was to make trade rules fairer for developing countries.However, by 2008, critics were charging that the round would expand a system of traderules that were bad for development and interfered excessively with countries'domestic "policy space".

Issues in Doha Round

Some of the issues related to Doha round have been continued from the Uruguay roundof talks where developing nations found it difficult to implement many of the

agreements were reached. In the 80s the North(the northern continents which are

mostly developed) had an almost complete domination of the South(The southern

continents which are developing)[See Fig 2] when it came to framing treaties and

policies related to international trade. But with developing countries making their

impact in the world economy the North-South, debates regarding formulations of

treaties and policies have become a major roadblock in the progress of Doha Round.

Apart from North-South contentions, there also exist contentions within each block.

Though such internal conflicts exists within the blocks, we can concentrate on the

North-South debate or rather the debate between the developed vs. developing

countries. Some of the main issues in contention are

Agriculture: While the North (majorly US and EU) follow highly protectionistmeasures for their agricultural goods, the South wants them to scrap the protectionist

measures. US has been giving a lot of subsidies for domestic agricultural production.

Many of the developing countries have a comparative advantage in agriculture and

they are not able to access the Northern markets either due to import quotas, high

tariffs or domestic subsidies. Developing countries linked any concessions they would

provide on Industrial market access, services trade to the developed countries

concession in agriculture. The most recent of the talks, held in Geneva in July 2008,

came to an impasse majorly due to issues related to tariffs in agriculture. While US

agreed to reduce the tariffs, they demanded that countries like India should also do so.

But India insisted on allowing special product status to many of its farm goods and

also special safeguard measures to control imports in support of its large number of

subsistence farmers. Figure 1 will give a picture of how protectionist measures in

agriculture have changed in various countries over time.

Special and Differential treatment (SDT): SDT calls for special treatmentof the South. It has been a bone of contention since the Uruguay rounds. In the

Uruguay rounds, South had been asking for greater market access to the North,

technical assistance from the North and flexibility in fulfilling the obligations due to thedevelopment status of the countries in general. But they were disappointed after the

Uruguay round results. Since then they have been demanding the following four
http://en.wikipedia.org/wiki/Transparency_(social)http://en.wikipedia.org/wiki/Government_procurementhttp://en.wikipedia.org/wiki/Trade_facilitationhttp://en.wikipedia.org/w/index.php?title=Trade_and_investment&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Trade_and_competition&action=edit&redlink=1http://en.wikipedia.org/wiki/Manufacturinghttp://en.wikipedia.org/wiki/Markethttp://en.wikipedia.org/wiki/General_Agreement_on_Trade_in_Serviceshttp://en.wikipedia.org/wiki/Agreement_on_Trade-Related_Aspects_of_Intellectual_Property_Rightshttp://en.wikipedia.org/wiki/Transparency_(social)http://en.wikipedia.org/wiki/Government_procurementhttp://en.wikipedia.org/wiki/Trade_facilitationhttp://en.wikipedia.org/w/index.php?title=Trade_and_investment&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Trade_and_competition&action=edit&redlink=1http://en.wikipedia.org/wiki/Manufacturinghttp://en.wikipedia.org/wiki/Markethttp://en.wikipedia.org/wiki/General_Agreement_on_Trade_in_Serviceshttp://en.wikipedia.org/wiki/Agreement_on_Trade-Related_Aspects_of_Intellectual_Property_Rights


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changes to the SDT provisions - Greater flexibility such as exemptions from trade rules

because of the Souths development status and its difficulty in implementing

agreements; stricter rules to ensure that the North provides increased market access to

the South; technical assistance to enable the South to implement WTO agreements;

and procedures to monitor and enforce SDT. The South insists on an early decision

regarding SDT before any concessions are made while the North wants to use it as a

bargaining chip to make the South agree to some of its demands. North also hasdemanded more accurate definitions of developing countries as it doesnt want to

provide SDT status to major traders like India and Brazil. The South argues that calling

Doha a development round itself should make SDT a priority item in the agenda.

Technical assistance and capacity building: Although it was promised inthe Uruguay rounds that North would provide technical assistance to the South, the

results were disappointing. While developing countries needed a lot of technical

assistance in the implementation of Uruguay round agreements, North failed to provide

them with that and moreover any technical assistance promised were not legally

binding. There is still contentions going on between North and South regarding thelevel of technical assistance and how it is going to be utilized.

The Singapore Issues: Investment, competition policy, government procurementand trade facilitation comprise what is popularly known as the Singapore Issues. While

the developed nations wants WTO to acknowledge the growing importance of these

issues, developing nations still believe that concentrating on these issues will be

detrimental to their development. AlsoSouth argues that including Singapore Issues will

broaden the agenda of the Doha talks and they dont have enough resources for a

wider agenda. Also since North already has many of the standards in place, it will be

the South which will have the obligation to enforce them and also they fear that atighter timeline will put a lot of pressure on their resources.

Nonagricultural market access (NAMA): South has linked progress in theNAMA talks with progress in agriculture, and has demanded more special treatment in

NAMA than the U.S. and EU are inclined to offer. In the talks leading to the July 2004

framework, developing countries were unwilling to engage in serious discussion of

NAMA until the results of the talks on agriculture were clearer.

Services trade: The South favours some aspects of the services trade like themovement of labor across to the North. Services talks are more complicated than other

trade talks and so the progress in this front has been very slow. Also South wants somesafeguard measures to protect its infant industries. Still many countries have their

doubts regarding services liberalization. The Doha Round links progress in agriculture

and manufacturing to progress in services, so the failure to reach a services agreement

could threaten the entire round.

Access to patented medicines: A major topic at the Doha Ministerial regardedthe WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

The issue involves the balance of interests between the pharmaceutical companies in

developed countries that held patents on medicines and the public health needs in

developing countries. Before the Doha meeting, the United States claimed that thecurrent language in TRIPS was flexible enough to address health emergencies, but

other countries insisted on new language.


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Also with the recession affecting almost all the developed nations, protectionism has

seen a high which will affect any further talks in the Doha round. With increasing US

trade deficits it is highly unlikely that US will be removing its protectionist measures

anytime sooner. With the economic impact of countries like India , China and Brazil on

the rise, it becomes even more difficult to reach a consensus by satisfying everyone.

Benefits of Doha Round of TalksDoha round is named the Doha development round because it is started with a motiveto negotiate a better deal for developing countries. A research study was conducted bymore than 50 economists over 2 years, assessed by 8 top economists including 5 Nobellaureates to find the best solutions to ten of the worlds biggest challenges.TermedasCopenhagen Consensus 2008, the second-best investment the world can make toimprove the state of the planet is to implement the DOHA development plan (First oneis to provide micronutrients for 80% of the 140 million children who lack essentialvitamins in the form of vitamin A capsules). The Net present value of a realistic Dohaoutcome is an increase of Global income by more than $3000 billion per year, $2500

billion of which would go to the developing world.

The three major areas contributing to these benefits are Services, Trade facilitationand Agriculture.

Services Market access in service sector is more qualitative than quantitative sincethe barriers are mixed with the local regulation. For example it is hard to judge

just how open a particular nation is to foreign banks since the barriers are

thoroughly mixed in with domestic regulation, standards and business practices.

The current negotiations involve a mix of rules on FDI, movement of persons, and

cross-border commerce. Table 2: Approximate gains from the various

liberalizations, by Australian Productivity Commission report shows the gains fromthe various liberalisations

Trade facilitation Trade facilitation is the reduction in effort to reduce red-tapebarriers to trade such as delays at customs, excessive paper-work, etc. Areas

covered by current negotiations include freedom of transit, fees and formalities in

connect with importation and exportation, and publication and administration of

trade regulations.

Trade facilitation has the major potential to be the major source of gains for the world

and particularly for the developing countries. UNCTAD also estimates that simple trade

facilitation measures could reduce these costs by 2% of the value of trade. In numbers,the World Banks recent book indicates that trade facilitation would bring gains in

revenue of $110bn a year.

If other infrastructure projects which are not part of Doha negotiations are included,

then the gains shoot up to $377Bn.


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Agriculture The gains due to market access of Agricultural products are a mixedbag. Liberalization would lead to higher prices in US and EU. Some of the

developing countries are net food importers and some are net food exporters.

Liberalization would help only food exporting nations. Also some of the worlds

biggest food exporters are developed countries like Canada, New Zealand and

Australia. So any step in this direction may produce substantial gains for rich-

nation consumers and rich-nation food exporters, but very uneven gains for

developing nations.

Trade effects, Output effects, National income effectsThe benefits in the various sectors arise mainly from the 3 effects, Trade, Output and

Income. Trade effects arise from the increased trade among nations due to fewer

barriers. Trade effects are estimated to be around 11% rise in global trade. Output

effects arise from the factor that increased trade results in increased exports which

results in increase in production. So only if a large share of domestic production is

exported, increased trade can translate into increased output. National income effectsarise from changes in trade and production, shifting terms of trade, and a mix of

efficiency and scale effects. It is estimated to be additional income of .5% of global GDP

with highest gains relative to their income level to developing countries.

Alternative to Doha RoundRight now any alternative to Doha round is bleak. Instead of making legislation,

countries may file litigations with WTO and WTO may have to settle disputes instead of

making the rules. This would result in proliferation of bilateral and regional trade deals

which we have studied that is detrimental to world trade. Existing trade distortions in totrade and economic activity could become entrenched, making it increasingly difficult

for developing countries to compete fairly in world markets

Table 1: Chronology of Events

Year Discussion1986-1994 Uruguay Round of multilateral trade negotiations.1994 Uruguay Round culminated in the establishment of the World

Trade Organization (WTO). The Agreement on Agriculture wasone of 29 legal texts underwriting the WTO and itsadministration of rules governing international trade.

Nov. 9-13,2001

Current Doha Development Agenda (DDA) or Doha Round ofmultilateral negotiations was initiated in Doha, Qatar.

July 31,2004

WTO Doha Round negotiations produce an interim guidelinedocument, the Framework Agreement, to solidify existingcommitments and to guide negotiations of details for finalagricultural agreement.

Jan. 1, 2005 Current Doha Round of multilateral negotiations was scheduledto end, but several 2003 and 2004 deadlines were missed. As aresult, DDA negotiations continue with no formal schedule, butsubject to several looming deadlines.

Summer

2005

USDA initiates farm bill listening sessions around the country.

Oct. 10-14,2005

Series of position papers released by major negotiationsparticipants including the U.S., EU, G-10, and G-20.


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Oct. 27,2005

EU released updated proposal in response to concerns about theinadequacy of its first proposals market access offerings.

Dec. 13-18,2005

WTO Hong Kong Ministerial.

July 24,2006

Indefinite Suspension of Doha Development AgendaNegotiations.

July 1, 2007 U.S. trade promotion authority expires.Sept. 30,2007

2002 farm bill expires

21 July 2008 Failed due to impasse in agricultural subsidies

Table 2: Approximate gains from the various liberalizations, by Australian ProductivityCommission report

Liberalisation GainAgricultural liberalisation $50 bnManufactures liberalisation $80 bnServices liberalisation $130 bn

Figure 2: The north-south divide

References


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Fergusson ps, Ian F. (18 January 2008). "World Trade Organization Negotiations: The

Doha Development Agenda" (PDF). Congressional Research Service.

http://www.oecd.org/doha - OECDs page on Doha round

OECD policy brief (Oct 2005) The Costs and Benefits of Trade Liberalization

Paul Bluestein ( July 2008) The nine day misadventure of the most favoured nationsBrookings Global Economy and Development

Theodore H Cohn The WTO Doha round: Its problems, challenges and prospects

Department of political science, Simon Fraser University

OECD policy brief (Sep 2005) Opening up Trade in services: Crucial for economic

growth

http://www.wto.org/english/tratop_e/dda_e/dda_e.htm - World Trade Organizations site

on Doha round

Where do the benefits of Doha Development Agenda (DDA) trade liberalisationcomefrom? (3 April 2006) Copenhagen Consensus 2008 Results

Joseph Francois, Hans van Meijl and Frank van Tongeren, (April 2005) Gauging theWTO negotiations potential gains, Economic Policy

Sandra Polaski(2006) Impact of Doha Round on Developing CountriesCarneigeEndowment for international peace
http://www.oecd.org/dohahttp://www.wto.org/english/tratop_e/dda_e/dda_e.htmhttp://www.oecd.org/dohahttp://www.wto.org/english/tratop_e/dda_e/dda_e.htm

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