The Hindu Business Line : Doha resurrection

The Doha Round (and generally the WTO), like the proverbial phoenix, has risen from the ashes of past failures, and it appears that there would be more such resurrections before the Round is sealed; the latest being the call for another round of mini-ministerial in early December at the recently concluded G-20 summit (dubbed as Bretton Woods II by many) at Washington.

With several OECD countries already in recession and the rest on the brink, the G-20 communiqué rightly highlighted that free trade should be encouraged and members should not erect new barriers to international trade in goods, services and investment, to prevent a re-run of the Great Depression policies.

It was also stated that Members should aim for a speedy conclusion of the Doha Round of trade liberalisation. But how quick is ‘speedy’, and what is the realistic expectation of trade openness from the Doha Round?

Lesson from Bretton Woods

It needs to be recalled that while the actual Bretton Woods (BW) Conference in July 1944 lasted for 22 days, the vision was first articulated in the Atlantic Charter of August 1941. From February 1942 until the spring of 1944, numerous bilateral and multilateral meetings of allied financial experts were held to agree upon a common approach.

Thus, it may be safe to assume that any workable solution to the present financial and economic crises should not be reached in a hurry; the world has become infinitely more complex in the past 80 years. The proposed mini-ministerial at December, therefore, can be taken as another concerted effort to bridge gaps in the still open issues under negotiation, rather than push for concluding the Doha Round.

The key tenet of the Bretton Woods discussions was based on the Wilsonian belief that free trade not only promoted international prosperity, but also international peace. The policies adopted by governments to combat the Great Depression of 1930s — high tariff barriers, competitive currency devaluations, discriminatory trading Blocs — created an unstable international environment without improving the economic situation. It would appear that the world today has come to a similar impasse, albeit with minor modifications.

Proliferating Blocs

Discriminatory regional and bilateral trading blocs are proliferating, more so since the launch of the Doha Round.

Some 380 Regional Trade Agreements (RTAs) were notified to the GATT/WTO, of which 205 were in force in July 2007. If we take into account RTAs that are in force but have not been notified; those signed but not yet in force; those currently being negotiated, and those in the proposal stage, about 400 are scheduled to be implemented by 2010.

Global economies have also erected (often insurmountable) non-tariff barriers to imports. Sixty years of GATT/WTO have brought down the tariff barriers significantly, but these have been replaced by aggressive standards and regulatory requirements that restrict market access. In such a situation, the current Doha Round of trade liberalisation that is mostly focused on tariff-negotiations is unlikely to boost trade between countries significantly. The G-20 needs to be realistic in its expectations from the Doha or change the rules of trade negotiation appropriately to reflect the changed circumstances.

(The author is Senior Fellow with ICRIER. Her views are personal. blfeedback@thehindu.co.in)

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