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International trade

Doha Round of Trade Talks: A Rollercoaster with a Likely Happy Ending

Strategic Insights

— 1 min read

The current state of the Doha round of trade talks may seem bleak, but it has a history of near breakthroughs and near breakdowns. Despite initial setbacks, the round has been revitalized, clearing the decks for eventual success. History suggests that panic is unwarranted, and there are reasons to hope that the current round can be finished in time to avoid the danger posed by the expiry of President George W. Bush's fast track trade-negotiating authority in mid-2007.

Key Takeaways:

  • The Doha round was launched in Doha, Qatar, in 2001, after the initial attempt to launch the WTO's first round of multilateral trade negotiations in Seattle collapsed amid violent demonstrations.
  • The round has made significant progress, settling some thorny and divisive questions, including the so-called "Singapore issues" and the Trips agreement on intellectual property rights.
  • The main sticking points in the current round are agriculture, services, and tariffs, but experts believe that a deal can be reached.
  • An "aid for trade" program could be devised to provide aid funds systematically to respond to the needs of the poorest countries.
  • Pascal Lamy, the WTO's director-general, has endorsed the idea of an "aid for trade" program and is expected to present a clear outline of a deal in Hong Kong.
  • The round has the support of the EU, the US, and other key players, and it is likely that a deal can be reached in time to avoid the dangers posed by the expiry of President Bush's fast track authority.

Statistics:

  • The "coupled" subsidies that distort production and trade and that alone should matter to other countries are less than $100 billion (€58 billion).
  • The export subsidies are in the range of $3 billion $5 billion annually.
  • The tariffs on manufactures in the Group of 20 countries, which includes India and Brazil, are significantly higher than the OECD average.
  • The US has comparative advantage in agriculture and cannot ignore the demands of US farmers for "sectoral reciprocity" within agriculture itself from the Cairns group countries of agricultural producers.

Sources:

  • JAGDISH BHAGWATI, "Doha Round of Trade Talks: A Rollercoaster with a Likely Happy Ending." Journal article, The Financial Times, Source November 2006

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