Katelyn Lacy

The Authors Jagdish Bhagwati - Jagdish Bhagwati, is University Professor at Columbia University and Senior Fellow in International Economics at the Council on Foreign Relations. He has been Economic Policy Adviser to Arthur Dunkel, Director General of GATT ( ), Special Adviser to the UN on Globalization, and External Adviser to the WTO.

The Authors Peter Sutherland- Mr. Peter D. Sutherland, S.C., K.C.M.G. serves as the Chairman and Managing Director of Goldman Sachs International. Mr. Sutherland serves as an Advisory Director of The Goldman Sachs Group, Inc. He served as the Director General of GATT and Group Secretary and General Counsel of World Trade Organization from 1993 to Mr. Sutherland served as an Attorney General of Ireland.

What is the Doha Round? The Doha Round (aka the Doha Development Agenda) is the latest round of trade negotiations among the WTO membership. Its aim is to achieve major reform of the international trading system through the introduction of lower trade barriers and revised trade rules. The work program covers about 20 areas of trade. The Round was officially launched at the WTO’s Fourth Ministerial Conference in Doha, Qatar, in November 2001.

Defining Institutions WTO/GATT- On January 1, 1995, the WTO replaced GATT (which had been in existence since 1947) as the organization overseeing the multilateral trading system. WTO Functions: Administering WTO trade agreements Forum for trade negotiations Handling trade disputes Monitoring national trade policies Technical assistance and training for developing countries Cooperation with other international organizations

Why Has Doha Stalled? The global economy has become more and more integrated. For the last two decades, economic integration has not fallen below 40% and had risen as high as 55% before the downturn. The GATT/WTO has successfully accompanied this process by establishing a rule-based trade system based on norms that are almost universally accepted. So why has a multilateral negotiation dedicated to further liberalizing the global economy stalled?

Why Has Doha Stalled? Policies that work well unilaterally or bilaterally become increasingly complicated when they must be accomplished despite close scrutiny of the media and defensive domestic constituencies. The rapid growth of emerging economies has changed the composition of developing and developed nations in the WTO. The expansion of negotiations into highly sensitive areas –such as agriculture- has complicated the picture. For developed countries, the outcome of Doha is likely to be asymmetrical.

Doha: The Case For Completion An insurance policy against future protectionism. Doha would act as a consolidation agreement for the large amount of unilateral liberalization that has occurred since the end of the Uruguay Round. Reform of Farm Trade. Doha would have a constraining effect on the subsidization of farming in the developed world.

Doha: The Case For Completion New market access. Tariff reductions and the contraction of the market share of those countries whose agriculture subsidies are cut will provide new market access. The reinforcing of the WTO system. The WTO and the global trading system itself could be damaged by the failure of the round. Failure could provoke a series of preferential trading agreements that could fragment the global economy.

The Case For A Deadline The authors point out that political leaders are unwilling and unlikely to invest in finishing the Doha because they are not forced to bear the immediate costs of failure. There is no momentum to push for a final deal, but at the same time no single player will walk away from the table for fear of being accused of causing Doha’s demise. The authors recommend setting a firm deadline within 2011 by which the Round must be completed or declared a failure.

The Structure of a Final Package Creation of new trade opportunities would take place in the Doha Round as a result of the negotiations in three main chapters: Agriculture Industrial goods Services

The Structure of a Final Package- Agriculture Negotiations in this area focus mainly on reducing tariffs and subsidies. Increased market access from these reductions will benefit both developed and developing countries. The current tariff formula would cut the highest and most distorting tariffs proportionally more. Under current drafts, the EU would reduce its MFN duties by 60%. Other markets would also undergo radical market opening. Two main groups will benefit: agricultural exporters in developing countries and those in developed countries.

The Structure of a Final Package- Agriculture Negotiation has also focused on trade distorting domestic support to agriculture. Up to 80% of support in the EU and 70% in the US will be reduced. Current drafts also see the elimination of all export subsidies by 2013 by developed countries and by 2016 by developing countries.

The Structure of a Final Package- Industrial Goods Among developed countries, tariffs would be virtually eliminated, with no tariff remaining above 6%. In the EU, duties levied on imports would decrease by 44%. In the US, by 50%. China would also reduce duties levied by 22%. Other emerging economies would undertake much less new market opening. Sectoral Agreements

The Structure of a Final Package- Services The negotiations on services offer some of the largest potential gains for both developed and developing countries. Doha would consolidate a new level of openness, but would not create many new opportunities for trade. Countries are open to cooperation in this area, and the authors believe this area should be the chief focus of future negotiators.

Other Areas A package for Least Developed Countries- (49) Tariff reductions will be staggered over extended periods. Granting of DFQF access for all exports from all LDCs. Trade Facilitation negotiation. WTO members have tabled more than 70 new proposals for improving the transit of goods between markets.

Conclusion “Both in preparing the ground for this Doha agreement and in defending open trade more widely, politicians must be willing to explain the value of liberalization, not just in terms of new market access for exports but in terms of the value of imports to widen choice and competition and drive productivity and growth. This means breaking the habit that describes every new import as a concession, simply because it often comes with a price in adaptation. Without this willingness, the politics of open trade will always be hobbled and incompletely honest. Only this explicit political leadership will create the context in which negotiators feel able to move from defensive positions to deal-making.”