Doha Round at Risk of Collapse, Report Warns
Associate Editor, CNBC
The Doha round of negotiations on world trade faces collapse unless world leaders can reach a final agreement to lift trade tarrifs before the end of the year, a new report by the governments of the UK, Germany, Turkey and Indonesia warned on Wednesday.
The report by the Trade Experts Group, which reports on protectionism and promotes global trade, warned the Doha round would die unless political leaders were able to demonstrate their commitment to a final agreement in coming months.
The report argued the failure of the Doha round would not only impact on trade, but also economic confidence, and more widely, stability and global governance.
Peter Sutherland and Professor Jagdish Bhagwati who co-chaired the Experts Group, called specifically on the US and China to help progress the deadlocked negotiations and argued the concessions that need to be made were “relatively small in size and involve limited political pain”.
“The message of this report is that the Doha Round of talks is facing imminent failure. Ten years of negotiations has brought a wide ranging package of trade agreements within reach, but without urgent action the prize a conclusion would bring will be lost for all nations,” Sutherland added.
The report came as former US Trade representative Susan Schwab said the Doha round was doomed to failure and urged world leaders to come up with a more realistic new round of negotiations.
In a speech in the US to the Peterson Institute for international Economics Swab said: “There is not going to be a big happy conclusion and therefore we need to move on. You can’t unbreak the egg.”
The warnings also followed a meeting of trade minsters from the 21 members of the Asia Pacific Economic Cooperation (APEC) forum last week in the US.
After the meeting, ministers refused to pronounce the Doha round dead but noted there were “unbridgeable” gaps in several key areas.
APEC also said a deal before the end of the year was unlikely unless there was a major breakthrough calling on WTO members to develop a “clear and realistic path” to bring the negotiation to a successful conclusion.
The Doha round aims to eradicate protectionism in a number of key areas particularly agricultural trade tarrifs and subsidies, industrial tarrifs and intellectual property regulation.
The last round of negotiations collapsed in 2008 over agricultural import rules with developed nations including those in the European Union, the US and Japan falling out with emerging economies over farming subsidies and agricultural commodity import taffifs.
Pascal Lamy, director general of the World Trade Organisation told CNBC on Thursady the Doha Round of negotiations was not dead but that the current way in which agreement had to be reached on each point in the negotiations meant that failure to agree on everything blocked progress.
“The reality is that we’ve done a lot of work for the last ten years but for the moment the negotiations are stuck on one of the 20 issues which we have been dealing with, which is the reduction of industrial tarrifs which is a stalemate with the US on one side and emerging countries like China on the other side. As long as we remain with this system where nothing is agreed until everything is agreed, stalemate on one of the topics for the moment blocks the progress of the negotiations,” he said.
He also raised concerns about the increase in protectionist measures being implemented by different national economies.
“The regulations we are presently implementing date from 1995. In the meantime the world has changed, the economy has changed, technology has changed and trade patterns have changed," he said.
"And there is a necessity for the WTO to adjust so it can cope with a commission, which is opening trade for the benefit of all and this coincidence of a stalemate in the Doha negotiations, which is about updating these rules on the one side and protectionism on the other side is a risk, which we have to add to the downside part of the world economy in the months and years to come.
"I think there is some urgency for G20 leaders to renew this firm commitment that they will not recourse to protectionism in order to exit the crisis,” he added.