WTO and the Doha Round

Last Updated: Tuesday, September 15, 2009 - 16:34

On September 14, key ministers of member countries of the World Trade Organization will meet in Geneva to decide to take the negotiations further ahead from Geneva July 2008 meet. The basis of the negotiations will be the text issued by WTO director general Pascal Lamy in December 2008.

The big breakthrough came in early in September 2009, breaking a year long impasse on the Doha development talks raising hopes for a better world trade at a time when the world is recuperating after a bruising recession.

The present round of the World Trade Organization (WTO) negotiations began in 2001 in Doha, Qatar, with the aim of boosting global commerce and help developing countries. Better known as `Doha Development Agenda`, it aimed at committing all countries to opening agricultural and manufacturing markets, as well as beginning trade-in-services (GATS) negotiations and expanding intellectual property regulation (TRIPS).

The intention was to make trade rules fairer for developing countries.

Major ministerial talks since then, held at Cancún, Mexico (2003), and Hong Kong (2005) were unable to break the impasse. Related negotiations were also held in Geneva, Switzerland (2004, 2006, 2008); Paris, France (2005); and Potsdam, Germany (2007).

However since July 2008, talks have stalled over differences between developed countries led by US and EU and developing countries led by the BRIC (Brazil, Russia, China and India) countries on major issues, such as agriculture, industrial tariffs and non-tariff barriers, services, and trade remedies.

Though the issues are many, the main stumbling block is the subsidies given by United States to its cotton farmers as well as a disagreement between India and US over the trigger mechanism to counter import surge of farm goods in developing countries, known as Special Safeguard Mechanism (SSM).

Why Doha talks

After World War II a need was felt to regulate and expand world trade so as to help countries recover from the ravages of war. Negotiations to this effect resulted in the General Agreement on Tariffs and Trade (GATT) which came into effect 1947 and remained in force till 1994.

In the 1982 Ministerial Declaration, many structural deficiencies of GATT were identified.

To address these issues, the eighth GATT round (known as the Uruguay Round) was launched in September 1986, in Punta del Este, Uruguay.

It resulted in a revised body which replaced the earlier structure, and came to be known as the World Trade Organization. The world trade organization formally came into being on 1 January 1995.

While GATT had mainly dealt with goods trade, the WTO and its agreements cover trade in services, inventions, creations and designs (intellectual property).

Pursuant to the same line, and to further liberalize world trade, in the Ministerial Conference in Doha, Qatar in November 2001, WTO member countries agreed to launch new negotiations.

The Doha talks originally included 21 issues and had a deadline of 1st January 2005. Subsequent extensions have seen the deadline recede to 2010.

The reason for the collapse of Doha talks earlier

Though the Doha round of trade negotiations were called the ‘Development round’ to emphasise its declared objective of opening up opportunities for developing countries, it came to impasse developing countries, notably the US, and the developing countries, led by the BRIC nations could not agree to the direction and content of the proposed changes.

The US wanted developing countries to open up their markets to farm products from the developed countries, in return of a similar gesture from the developed countries. The idea was simple; and apparently fair: you open up your markets and we’ll open up ours.

But India and other developing countries argued that this apparently fair trade cannot be fair until US stopped giving subsidies to its farm sector which allowed them to sell their products at extremely low prices.

India’s then Commerce Minister Kamal Nath noted that, “This Round is not for perpetuating the flaws in global trade especially in agriculture, it’s not to open markets in developing countries in order for developed countries to have access for their subsidized products to developing countries.”

That is the crux of the entire problem, which the ministers of the WTO member countries would now try to solve.

Compiled by Anil Satapathy



First Published: Tuesday, September 15, 2009 - 16:34

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