The Doha Round: Can we see the glass half full?

WHEN the Doha Development Agenda or Doha Round, was launched in Doha, Qatar, in November 2001, it was billed as the inclusive initiative to ensure that developing countries are better integrated into the multilateral trading system. It was premised on the notion that a transparent and predictable global trading environment is good for business.

One decade and several missed deadlines later, can we continue to look at the glass half-full?

Granted in a multilateral setting, negotiations are tough. The issues are wide ranging, covering agriculture, industrial goods, services, environment goods and services, trade facilitation and trade-related intellectual property. Given that the players represent a diverse group with varying degrees of interests the negotiations have been highly contentious. Because decisions are based on consensus, the negotiations have been protracted.

Let's step back to November 2001. The World Trade Organisation (WTO) comprised 142 members. China was not a member of the WTO. India was growing at 3.9%, and its total global trade amounted to US$93.8bil; the Asean Free Trade Area (AFTA) had yet to reach full implementation and the regional grouping had yet to articulate its plans towards an integrated economic community; to a large extent the US, EU and Japan were calling the shots; the global financial crisis was not on the cards; member states were beginning their engagement in bilateral free trade agreements (FTAs).

Fast forward to 2011. The WTO comprises 153 members. China has been a WTO member for over five years. China is now the second largest economy; India's growth has been averaging at 8.5% the last five years and has entered into several bilateral FTAs.

AFTA is in full implementation and Asean is on track towards becoming an economic community by 2015; the global financial crisis has changed the economic game; 371 bilateral FTAs have been notified to the WTO, of which 193 are in force, and a host of others are being negotiated. And the WTO has missed almost every deadline it set under the Doha Round; with three collapsed ministerial meetings in 2003, 2006 and 2008.

Clearly in the past decade global dynamics have change. The rapid growth of emerging economies like India, China and Brazil has altered the negotiating landscape. These countries, having benefited from a liberalised trading environment, are now expected to contribute more. Developed countries, such as the US, argue that the current negotiating mandate is unbalanced, and that major economies like China must do more to open their markets for industrial goods and services.

The emerging economies, on the other hand, want the developed countries to substantially reduce agriculture subsidies that have long distorted the markets, and negatively impacted the livelihood of their poor farmers.

With all its missed deadlines, is the WTO still relevant?

The global financial crisis of 2008-2009 proved that a rules-based multilateral trading system serves a purpose. During the crisis period the monitoring undertaken by the WTO served in large measure to keep protectionist pressures in check. Governments exercised restraint over the imposition of new trade restrictions.

In general there is agreement that WTO has still a role in ensuring economic growth through a liberalised, transparent and predictable global trading environment. The November 2010 G20 Leaders Summit in Seoul, and the APEC Leaders and Ministers' meeting in Yokohama also in November 2010, sent strong signals of political resolve to conclude the Doha Round in 2011. This new impetus was reemphasised recently when 24 trade ministers met in Davos, Switzerland, on Jan 29, 2011. The ministers engaged in a candid exchange of views on the challenges and difficulties they face in the negotiations and the flexibilities they would require to conclude the Doha Round. There was a clear signal emanating from Davos that 2011 was probably the last window of opportunity to conclude it.

In his intervention at the Davos Ministerial Meeting, International Trade and Industry Minister Datuk Seri Mustapa Mohamed stressed the important role of the major economies and the need for them to demonstrate leadership and responsibility in bridging their differences in the key areas of agriculture, industrial goods and services.

Wither the future of the Doha Round?

The conclusion of the Doha Round is important. Of this there seems to be little disagreement. Yes, there is much to be gained from it:

1) It locks in unilateral liberalisation that has occurred since the Uruguay Round in 1994. By binding the concessions made since then, it provides the assurance against possible protectionist measures that countries may take;

2) It provides a global economic stimulus of hundreds of billions of dollars in new trade annually. Estimates point to US$360bil worth of new trade as a result of the current Doha Round modalities, and this would be substantially increased by enhanced market access in services and trade facilitation;

3) It will reduce and eliminate trade distorting support and subsidies in agriculture that the developed countries have in place; and

4) It will reinforce the WTO's institutional and legislative capacity in resolving disputes and the WTO's role as the supreme body in addressing trade concerns and issues among its 153 members.

As a trading nation, Malaysia is a strong supporter of the WTO and has benefited from its integration into the global economy.

Malaysia stands to gain from the conclusion of the Doha Round, which would provide additional market access to traditional trading partners and new opportunities in emerging markets.

A great deal has already been achieved, but we have yet to achieve closure. There must be the will at all levels to complete the Doha Round. Ever the optimist I want to continue seeing the glass half full. That's the challenge.

The writer is International Trade and Industry Ministry secretary-general.

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