Posted by: bklunk | December 4, 2006

Doha Possibilities

Possible Outcomes of the DOHA Round

Instead of analyzing the previous two articles separtely, I have incorporated aspects of each into the following post I am using for my class assigned wiki project related to International Trade:

It seems that whether the DOHA round of trade negotiations fails or succeeds, there will very likely be an outcome that fundamentally changes the WTO.  Due to the lack of the G6’s willingness to change negotiating posistions and the current state of suspension of the DOHA round trade talks, at least two members of the European Parliament, Javier Moreno Sanchez (PES, ES) and Jean-Pierre Audy (EPP-ED, FR), have called for the creation of a parlimentary dimension within the WTO.  The intention is to allow the WTO to, “take greater account of development and to negotiate separately on each sector” ( http://www.europarl.europa.eu/news/expert/infopress_page/026-11682-290-10-42-903-20061016IPR11679-17-10-2006-2006-false/default_en.htm# ).  Already the Inter-Parliamentary Union and the European Parliament (they make up the Parliamentary Conference on the WTO) meet to, “enhance external transparency of the WTO and make this inter-governmental organization accountable to legislators as elected representatives of the people” (http://www.ipu.org/Splz-e/trade06.htm).  The creation of a parliment within the WTO seems the next logical step towards the goal of fairness to all countries and forced compliance to those who put their interests before all others.

If the DOHA round does manage to close successfully, a strong possible outcome would be the large growth of GDP within developing countries around the world.  Kwame Bawuah-Edusei, an Ambassador of Ghana to Switzerland and Permanent Representative of Ghana to the UN offices and international organizations in Geneva, including the WTO, has published a commentary about the DOHA round from an African perspective.  He states that, “The World Bank and IMF estimate that liberalization of agriculture trade would increase developing country exports by at least US $30 billion a year and possibly by as much as US $100 billion.  n Africa this could mean an increase of a nearly 1% growth in GDP annually across the continent”.  This revenue would be joind by an additional $300 million from the African cotton industry if the US agrees to end it’s $3.9 billion subsidies to US cotton farmers (p. 5) as part of a successful close to the DOHA round.  Similiar revenue gains would be seen by many developing countries whose economies rely heavily on agricultural exports.  The other side of this coin would of course be the economic loss taken by agricultural producers within Australia, Brazil, the United States, India, Japan the EU (the G6) and other developed countries.

However, if the DOHA round ends in failure, a possible outcome may be the end of the WTO’s current negotiating mandate and the beginning of a new one.  Pascal Lamy, the Chief of the WTO, has stated in an article published on the European Parliment’s website that, “any questioning of the present negotiating mandate [may] force the parties to halt the current negotiations and sit all WTO member states round the table to devise a new mandate” (1st link to www.europarl.europa.eu).  This is comprable to rewriting a country’s constitution, and while long term gains may be realized, the short term losses felt by developing countries would range from the loss of billions of dollars of potential revenue, to the loss of millions of lives due to failed medicinal TRIPS policies ( http://www.ipsnews.net/news.asp?idnews=32433 ).  As stated in a preliminary draft outcome by the Rapporteur of the Steering Committee of the Parlimentary Conference on the WTO:
 “A prolonged suspension of the Doha talks would have a lasting negative effect on the entire multilateral trading system and may result in a proliferation of bilateral and regional trade agreements which often put poorer countries in a disadvantaged position.  If efforts to revive the negotiations are not successful, the losses incurred would be immense, both economically and politically.  Among the first to be adversely affected would be the least developed countries (LDCs), including cotton-exporting countries in Africa” ( http://www.ipu.org/splz-e/trade06/draft311006.doc ).
It seems then that the opportunity cost created by a failed DOHA round would be high enough to force the G6 to settle their differences and find a way to successfully complete this round of international trade negotiations.  It remains to be seen, however, whether or not the leaders of the G6 define their total benefit relative to their own states, or to the international community as a whole.  In other words, will the leaders of the Global North be responsible for the biggest unflattening incedent since 9/11, or will they create the 11th flattening event?

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Responses

  1. From an economic standpoint, a successful Doha round would be great. There would be much growth to be had and a significant increase in trade, however, as with everything (since there’s no such thing as a free lunch), those things will come as benefits to some (developing countries) and costs to others (developed countries, specifically the U.S.). It’s just a matter of what is greater-the cost or the benefit. I think regardless of the outcome of the Doha round, it must be recognized that the global economy is changing and it’s likely that the U.S. is going to lose out on much of the benefits to be had in trading agreements if it doesn’t “loosen up” a bit. There are currently more than 200 country to country and regional trade agreements; the U.S. has a mere 13. It’s clear that there are many options out there for countries looking to make agreements and that many of these countries are not going to continue waiting for the U.S.


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