The WTO and the Failure of the Doha Rounds

The Doha Development Agenda

The Doha Development Agenda is the current round of trade negotiations that involve members of the World Trade Organization. The negotiations were launched in November 2001 in Doha, Qatar. The major objective of Doha is reforming international trade by establishing reduced trade barriers and enhancing trade policies. The negotiations were sanctioned by the Doha ministerial declaration. The negations were focused on, “agriculture, services, trade and development, non-agricultural market access, and intellectual property topic”

Failure of Doha negotiations

The negotiators set that January 1, 2005, would be the final date for finalizing the Doha rounds. In the course of the negotiations, the rounds’ initial goals were not aimed at the exact nature of business in an everyday life. The developed nations showed reluctance in providing political capital to meet the developing countries’ interests. Some differences also arose among the developed nations themselves. Such differences touched on the European Union and the United States retaining agricultural subsidies. The subsidies were used as a means to set trade barriers.

In September 2003, the World Trade Organization ministerial meeting in Mexico was marred by accusations and counteraccusations as the developed countries were not ready to deal with the meeting’s agenda for liberating the markets in order to achieve the Doha Development Agenda by the end of 2004. Instead, the developed countries wanted to maintain their protection policies. The negotiations, thus, stalled until July 2004.

This was after the countries managed to lay a basic foundation for introducing a framework for future discussions. The framework, however, did not encourage the world trade states to reduce their differences in their stands, such as eliminating farm subsidies while establishing the framework for Hong Kong discussions in late 2005. The objective was to ensure that the rounds came to the compromise by December 2006. However, due to the unripe political climate, the July 2004 package was not approved

In the Hong Kong deliberations, the Doha rounds revived some momentum with setting targets, such as elimination of, “agricultural export subsidies by 2013 and cotton subsidies by 2006”. In addition, there were efforts to promote the development of poor countries by allowing them to make exports free of duty and quota by the end of 2008. The Hong Kong pact, however, did not address the anticipated framework for, “agricultural and non-agricultural market access (NAMA) sector.”

The negotiations were put on hold in July 2006 because of misunderstandings concerning farm subsidies and tariffs and industrial tariffs. The rounds were also seen as promoting a system of trade policies that were not favorable for development, and greatly compromising the internal regulations of member states. However, in regards to the issues that were to come in action in 2008, the Doha talks stalled due to differences in the issues of discussion between the developed and developing nations.

Role of the World Trade Organization in the future of the world trade

The World Trade Organization is a very significant body in the world of trade. The WTO has rules and policies that have great impacts on the development plans of developing member states. However, the failure of Doha negotiations reflects the failure in the negotiating arm of the World Trade Organization in both, market access and decision making. It portrays the World Trade Organization as the body that lacks the ability to be flexible. Instead, the failure to agree shows WTO as adapting to rising world trade issues which cannot be solved through bilateral compromises. To strengthen its position in world trade, the World Trade Organization must deal with key issues and challenges that are central to its framework.

To start with, the World Trade Organization must deal with issues that are raised by developing countries. This transcends the decisions made previously and those made during the 2003 ministerial conference. The major decision was to ensure that the member states are putting appropriate measures to correct the issues of imbalances in the rules and systems. This is in addition to formulating new policies which do not disturb the trading system imbalances further.

Regardless of the fact that the World Trade Organization had previously enhanced the global trade system by establishing a basis for member countries to do trade among themselves, there were problems with the framework in the recent past. This is mainly due to the unavailability of beneficial prospects to the developing world, challenges in the enforcement of their own mandates, and lack of openness and minimal participation in formulating policies

Another challenge the World Trade Organization must tackle is working towards realizing the expected benefits in agriculture and textile sectors. These sectors have been strongly protected by developed countries due to the continued increase in domestic subsidies. The World Trade Organization must also ensure that the developed countries deliver on their liberalization commitments. The developed countries increasingly call for developing countries to open their markets rapidly.

Conversely, the developed countries are always in need of more time to adjust. Thus, the role of the World Trade Organization is to ensure that future obligations are implemented by all parties. As a result of difficulties in implementing their own obligations, developing countries have challenges in pursuing development goals such as industrialization, addressing health needs and promoting agriculture. These problems emanate from “structural imbalances and weaknesses of several of World Trade Organization agreements”.

The World Trade Organization must, therefore, develop strategies to deal with the ironical liberalization and globalization of some of the countries in the Organization for Economic Co-operation and Development, OECD, while addressing the reduced popularity of liberalization in some quarters in these countries. The loss of popularity is mainly the result of job losses and income inequality.

The world trade body must also be responsive to the multidimensional nature of the world trade mechanisms, as opposed to past perceptions of the WTO as an exclusive body for developed countries. As member countries seek to play a greater role in advancing their commercial policies, the World Trade Organization has to deal with the challenges of defining agendas and negotiations. The World Trade Organization must, therefore, involve all the member states in all the body’s activities. The challenge for the World Trade Organization leadership is to empower the emerging economies to take leadership responsibilities, and at the same time, encourage the initial players to continue participating.

To be able to continue with an active role in world trade, the World Trade Organization needs to refine its framework for negotiations and modalities of agreements. The formulation of policies must also consider the competing goals of the World Trade Organization so as to unify them. For instance, the World Trade Organization has to reconcile member states over the introduction of new agendas. This is despite the fact that there are previous member countries that have stagnated. The World Trade Organization also plays a great role in ensuring that more world trade mechanisms are in place.

This can be achieved by promoting equity in terms of efficiency, transparency, and legitimacy in the trading system in order to reflect inclusiveness for all members. It is the responsibility of the WTO to introduce, “a balance of rights and regulations among its members that will be perceived as legitimate, sufficiently flexible, and also capable of addressing the trade-related development needs and priorities of individual members”.

Many states across the globe have turned to different trade systems based on bilateral and regional agreements that encourage preferential modes of trade among the members. These preferential trade agreements are against the World Trade Organization’s world trade since they are discriminative. The preferential trade agreements are catalyzed by the World Trade Organization’s perceived bureaucracy in decision making.

The World Trade Organization, therefore, has the role of introducing trade reforms in order to promote world trade and discourage discriminatory trade systems. It is no wonder that the World Trade Organization finds itself in a multilateral trade environment whereby states rapidly adopt liberalization, “unilaterally and/or preferentially through bilateral and regional trade agreements” (Capling & Higgott 2009, 319). As a result, the World Trade Organizations must take extra roles that cannot be achieved by the preferential trade systems; for instance, policy formulation and non-litigious discussions that may be essential in advancing knowledge and encouraging more comprehension, besides expanding avenues for collective action.

Challenges of the Preferential Trade Agreements

Preferential Trade Agreements (PTAs) are trade pacts among states. PTAs minimize trade tariffs for the member states. Preferential Trade Agreements, also called Free Trade Agreements, are preferential trade pacts not limited to the geographical location of the member countries. There has been a drastic rise in Preferential Trade Agreements over time. These estimated that each member of the World Trade Organization was to sign about thirteen preferential trade agreements.

Each agreement was developed to minimize trade restrictions and increase subsidies among the member states. Most of the Preferential Trade Agreements came into being as a result of stagnation of Doha negotiation. Hence, PTAs were formed as building blocks for opening multilateral markets. They were also formed to promote production networks through the facilitation of free trade agreements, driven trade and investment liberalization. Another motive for the proliferation of preferential trade agreements was to expand market niches and utilization of economies of scale. Other free trade agreements were formed in “response to European and North American regionalism to improve competitiveness and raise voice on global trade issues”.

Despite the role of preferential trade agreements in advancing technology, skill transfer, domestic reforms, and enhanced development prospect, they pose a formidable challenge to the basic nondiscrimination policy of the World Trade Organization. The wide proliferation of preferential trade organizations has eroded the nondiscrimination principle by “reducing the most-favored-nation clause to the exception rather than the rule”.

The preferential trade agreements also tend to emphasize the origin of the product, in spite of the liberal world trade where there are no limitations to trade. Only products from member states are eligible for duty-free trade. Hence, there are challenges pertaining to the methodology of distinguishing goods from member states and those from non-members. Governance procedures such as the issuance of certificates of compliance are huge challenges to these organizations, particularly in countries with scarce resources.

Since many countries are members of various preferential trade agreements, the rules of origin compound the challenges greatly. In complying with different rules and procedures of the various pacts, organizations incur extra costs in developing certificates of origin. This, in the end, increases the operational cost. These challenges make the World Trade Organization be preferred because of the uniform standards across all member countries.

Preferential trade agreements also face the challenge of opening the markets. This is despite opening markets being the major reason for the establishment of PTAs. It has been suggested that products that are hard to liberalize in the World Trade Organization also prove to be difficult for the preferential trade agreements. Most preferential trade agreements are established on regulatory mechanisms and not on the tariff basis. This is mainly the result of changes in the manner in which production is done globally because of the increased global production networks. These networks demand favorable settings that can offer better investor protection and infrastructural support. This is a challenge that some preferential trade agreements find difficult to address due to scarce resources.

Bibliography

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Cho, Sungjoon, “The Demise of Development in the Doha Round Negotiations,” Texas International Law Journal 45 (2010): 574. Web.

Heribert, Dieter, “The Multilateral Trading System and Preferential Trade Agreements: Can The Negative Effects be Minimized?” Global Governance 15 (2009): 393-408. Web.

Looney, Robert, “The Cancun Conundrum: What Future for the World Trade Organization (WTO)?” Journal of Third World Studies. 2 (2004): 2. Web.

Low, Patrick, “Potential Future Functions of the World Trade Organization.” Global Governance 15 (2009): 327-334. Web.

Mikic, Mia and Melanie Ramjoue, “Preferential Trade Agreements: An Insurance against Protectionism?” ASCAP 2 (2009): 314. Web.

WTO. 2012. “Understanding the WTO: The Doha Agenda. WTO and the Failure of the Doha rounds”. Web.