Doha Dead . . . or Is It?

WASHINGTON, AUGUST 12, 2008--Trade specialists agreed at AEI on August 6 that although the Doha round of global trade talks appears dead, the situation is not hopeless. Although the World Trade Organization (WTO) ministerial talks had broken down in Geneva the week before, some observers thought an accord appeared to be within reach. Warren Maruyama, general counsel for the U.S. Trade Representative, said that despite widespread pessimism about the future of the WTO, the collapse of the Doha round cannot be seen as heralding the demise of the multilateral system, particularly when there are no plausible alternatives in the horizon. He described the multilateral system as a "roadmap to ensuring developing countries' prosperity" and lauded its track record in stimulating growth.

The unresolved issues that led to the collapse of the trade talks included a special safeguard mechanism (SSM) for agricultural imports in developing countries and nonagricultural market access (NAMA). The panelists were divided on whether these issues were technicalities that could be overcome or whether they represented deeper divisions.

In response to a question posed by AEI resident scholar Philip I. Levy about whether the problem was a structural one or a result of complications arising from the shifting numbers and needs of stakeholders within the WTO, most of the panelists seemed to agree it was more of the former, except for Arvind Panagariya of Columbia University, who insisted that the complications were arising exclusively as a result of having a large number of stakeholders discussing such a complex agenda.

Gary Horlick, a partner at WilmerHale, claimed the opposite and pointed to the WTO's heavy reliance on ministerial meetings over meetings of senior trade negotiators with more technical expertise--a point Franklin J. Vargo of the National Association of Manufactuers agreed with, noting that the latter method was more productive.

As to how best to move forward, speakers agreed that domestic political pressures were important causes of the talks' collapse. Several noted the dramatic recent rise in energy and food prices, as well as the shifting dynamics and new coalitions within the WTO. Given the uncertain political climate, Vargo warned against heavy reliance on purely technical means to seal deals as complex as these, while the Brookings Institution's Paul Blustein suggested that if the system is to move forward at all, future proposals should present countries with "a broad mix of issues that enable them to trade off gains in one area against concessions in another."

Panelists also grappled with the implications of the Geneva failure for preferential trade agreements (PTAs). Blustein maintained that the risk PTAs pose to the future of the multilateral trading system is real, particularly at a time when the WTO's ability to set the rules of global trade is under threat. He claimed that mushrooming PTA deals across the globe must be corralled if the multilateral system is to be saved at all.

Other panelists disagreed, stressing PTAs' ability to bring about mutually beneficial business and political outcomes to the parties involved. Vargo argued that a PTA that immediately eliminates a huge percentage of duties would be more attractive than a deal that promises small reductions in tariffs over a long period of time.

Panagariya expressed doubts that the success or failure of multilateral trade deals would have any significant impact on countries' inclination to pursue PTAs with each other.

AEI resident scholar Claude Barfield also pointed out the diplomatic and security gains that bilateral deals could deliver, thus explaining why they were attractive options for participating countries.

--DHARANA RIJAL

AEI-sponsored research and conferences on international trade can be found at www.aei.org/trade/. Recent highlights include:

• A conference on the nexus between U.S. agricultural policy, the Doha round, and the future of free trade. U.S. Deputy Secretary of Agriculture Charles Conner delivered the keynote speech.
• An essay by Philip I. Levy on trade in the waning days of the Bush administration.
• A new book by Jagdish Bhagwati on the weaknesses of bilateral trade agreements versus multilateral processes like Doha.

For video, audio, and more information about this conference, visit www.aei.org/event1767/. For media inquiries, contact Véronique Rodman at vrodman@aei.org or 202.862.4870.

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