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Il braccio di ferro senza fine del Doha Round
The World Trade Organisation’s Doha Round appears to be stuck in a strategic deadlock, with no end in sight, and little hope for completion in the forseeable future. The latest bout of negotiations, a “stocktaking exercise” held in Geneva in the last week of March ended with no direction and without plans for a further meeting of senior officials from capitals, or for Trade Ministers. The target of finishing the Round by the end of this year was not even mentioned.
The Doha Round started in November 2001 at the WTO’s Ministerial meeting. At that time the developing countries were strongly against a new Round of world trade negotiations, arguing that they had not even begun to digest the Uruguay Round (1986-1993) and its many problems.
So the new negotiations were informally called the Doha Development Agenda to make it more palatable to developing countries. In the nine years since, the development content of the talks has almost entirely disappeared, and the developed countries’ real intentions to open up the markets of developing countries while protecting their own turf especially in agriculture, labour services and intellectual property have come to the fore.
The latest draft texts on how agricultural and industrial imports are to be liberalized are imbalanced. They call on developing countries -except the Least Developed Countries (LDCs)- to undertake more real commitments than developed countries.
In particular, the developed countries can still make use of their huge agricultural subsidies which enable the United States’ and Europe’s otherwise inefficient farms and companies to capture markets, including displacing the small farms of developing countries.
But developing countries are asked to cut tariffs of their manufactured goods drastically (for some countries by up to 60% on average) so that most of their new import duties will be below 15% . Many economists worry that this will damage the countries’ industrial development prospects as the local firms cannot withstand the competition.
Despite the advantage given by the drafts, the United States is still asking for more. They want some developing countries (China, India and Brazil in particular) to also agree to cut their tariffs on some industries (chemicals, industrial machinery and electronics) to zero. A senior Chinese official said that China had already made major concessions in the draft texts, and these extra US demands are simply unacceptable, as they would damage or wipe out the most important industries in the countries concerned.
US-based analysts meanwhile note that the Washington administration faces a Congress and a public that is hostile to the US agreeing to sticking to its own minimal commitments on reducing its maximum level of agricultural subsidies and industrial tariffs. Thus the US is going beyond the draft texts and making even more demands to selected developing countries to open their markets.
The developing countries are calling “Foul” as this goes far beyond the agreed mandate. The US stubbornly sticks to its unreasonable demands, pointing to what its Congress wants. The developing countries counter-argue that they too have their own public to think about, and they won’t accept the destruction of their farms and industries.
As has often been the case in the checkered history of the Doha talks, the rest of the world is still “waiting for the United States.” Previously the wait was for the US to agree to make some commitments to liberalise its agriculture. Now the wait is for the US to give up its unreasonable demands on others. With the US mired in its own domestic problems, it will be a long wait.
Developing countries are facing three major imbalances: the imbalance within agriculture, the imbalance within Non Agricultural market access (NAMA) and the imbalance between agriculture and NAMA.
The development component has vanished in agriculture and NAMA and ironically the special treatment is mainly enjoyed by developed countries instead. Also, the developed countries were supposed to make major concessions in agriculture, in exchange for some concessions from developing countries in NAMA. However in agriculture there are few commitments from developed countries, while the developing countries have to make drastic tariff cuts in NAMA.
This is why the equations in the Doha talks have been often dubbed an “unequal exchange” weighted against developing countries.
Yet the developed countries, in particular the US is not able to adopt the December 2008 drafts. High-ranking trade officials from developing countries are aghast that the US does not seem to confirm that it stands by the cap on agricultural non-trade distorting domestic subsidies that in December 2008 it had agreed to (US$14.5 billion for overall trade-distorting domestic support).
And the US in bilateral talks and in recent mini-Ministerials seemed to be demanding more from major developing countries (especially in sectoral elimination of NAMA tariffs) as well as remaining against an effective Special Safeguard Mechanism (SSM).
Reports from Washington carry the message that the US is demanding to see big gains in increased exports to developing countries, even more than what it would already get from the imbalanced proposals in the December 2008 drafts.
This is at the heart of the Doha impasse. And the deadlock may continue until one side or the other gives way.