by Jeffrey J. Schott, Peterson Institute for International Economics
Paper published in Economic Perspectives
volume 7, no. 1
© Institute for International Economics
After three years of preparations and five grueling November days in Doha, Qatar, trade ministers from the 142 member countries of the World Trade Organization (WTO) finished their marathon by agreeing to cross the starting line for new multilateral trade negotiations. The Doha meeting produced three major documents:
In addition, the Doha Ministerial approved the protocols of accession for both China and Taiwan, who became WTO members in mid-December 2001.
This article assesses why the Doha meeting fared better than its predecessor in Seattle and then offers general observations on the Doha mandate and what it presages for the new negotiations.
Why Doha Wasn't Seattle
There are several reasons why the Doha meeting did not share the same fate as the previous ministerial in Seattle.
First, the world's largest traders—the United States and the European Union (EU)—cooperated more extensively with each other and were willing to make concessions on key issues of priority concern to the developing countries. US Trade Representative Robert Zoellick and European Commissioner Pascal Lamy understood that neither side could achieve its objectives if they worked at cross-purposes.
US-EU cooperation started early in 2001 with the settlement of the long-running bilateral dispute on bananas and the tacit agreement to avoid new retaliation on issues such as US Foreign Sales Corporation export subsidies. These actions demonstrated that transatlantic trade problems could be solved in a pragmatic manner without the acrimony and "winner-take-all" results of trade litigation. They also established a strong precedent for working together on the Doha agenda. Each side recognized that, despite their substantive differences on key issues such as agriculture and the environment, neither could achieve its overall objectives in new WTO talks without concessions from the other.
In Doha, the European Union acceded to demands by the United States and others for a strong mandate to reduce and eventually eliminate agricultural export subsidies. In return, US negotiators encouraged other countries to support European proposals for new negotiations on environment immediately and on investment and competition policy (deferred until the next ministerial in 2003). Without these trade-offs, neither trading superpower could have accepted the Doha Declaration.
Second, the Doha Ministerial was better prepared and better organized than Seattle. Extensive consultations throughout the year engaged all WTO members. Developing countries participated actively through their own south-south caucuses, north-south caucuses (such as the Cairns Group of agricultural exporters), informal ministerials in the months preceding the Doha meeting, and frequent bilateral consultations with the United States and the European Union. This network of consultations benefited from the efforts and guidance of WTO Director-General Mike Moore and WTO Council Chairman Stuart Harbinson, who directed WTO preparations for Doha.
In 1999, WTO talks failed to bridge differences between delegations and produced a worthless and unworkable document for ministerial action. In 2001, the WTO preparatory process yielded more constructive results. Moore and Harbinson prepared draft declarations that were considered balanced and objective and that resolved most subsidiary disputes over agenda items. Where agreement by Geneva diplomats was not possible, they framed options for a limited number of politically sensitive issues so that ministers could put together a set of compromises that allowed each one to take home "trophies" for his or her political constituencies. In that regard, US concessions made early in the Doha meeting on sensitive issues like antidumping and the declaration on TRIPS and Public Health, as well as the EU concession on agriculture, proved invaluable in ensuring a result that balanced the interests of developed and developing countries.
Third, the costs of failure in Doha were greater than in Seattle. Amid deepening economic slumps in the United States, Europe, and Japan, a failure to launch new trade talks would have sent a signal that countries were less likely to resist protectionist demands from their domestic lobbies, triggering a bearish reaction in financial markets. Furthermore, after the Seattle experience, another debacle would have raised doubts about the efficacy of the new trade institution and the willingness of major trading nations to use the WTO, rather than new bilateral and regional initiatives, to advance their trade objectives. Trade is not like baseball; usually, it's two strikes and you're out.
Finally, and perhaps most importantly, failure in Doha would have reflected badly on the international alliance of Western and Islamic nations working together to confront the scourge of global terrorist networks. The tragic events of September 11, 2001, brought together many countries that had previously differed on important trade and foreign policy matters. Indeed, the countries that had been the most reluctant to engage in new WTO talks had become key allies in the war on terrorism and had received substantial economic assistance from the industrialized countries in recognition of their contributions. Failure in Doha would have raised doubts about the staying power of this new alliance.
The Doha Mandate: General Observations
First, the Doha ministerial Declaration is an agreement to negotiate. With the exception of a few implementation decisions, it only sets negotiating objectives; it does not require that those objectives be met, in whole or part, in the eventual agreements. Each participating country will determine the maximum level of obligation that it will undertake in each area and the minimum level of obligation by other countries that it deems sufficient to produce a reciprocal package of agreements.
Second, the declaration establishes a broad-based agenda that encompasses ongoing negotiations on agriculture and services, both traditional General Agreement on Tariffs and Trade (GATT)/WTO subjects, new issues like investment, competition policy, and environment, and a limited array of institutional issues (primarily dispute-settlement reform). The declaration establishes a two-stage process in which new negotiations on the so-called Singapore issues such as investment and competition policy will not begin until after the next WTO ministerial, probably in fall 2003, based on modalities to be agreed at that time. Developing countries, which originally were reluctant to expand the WTO agenda to these new issues, wanted to ensure that the focus of the initial talks was on the traditional market access issues and that failure to make progress in those areas would imperil talks on the new issues.
The negotiating agenda is not cast in stone. In the past, other subjects have been added to the talks that were not mentioned in the ministerial declaration that launched the round (for example, commercial counterfeiting in the Tokyo Round and the WTO itself in the Uruguay Round). In the new negotiations, it would not be surprising if the Agreement on Safeguards is revisited in light of the discussions that evolve on GATT Article VI (antidumping) and the balance-of-payments provisions of GATT Article XVIII. However, subjects that are excluded from the original agenda are very difficult to retrieve. In the Doha Declaration, "trade and labor" was the only subject explicitly excluded from the negotiations.
Third, countries agreed that the Doha negotiations would be a single undertaking. It is difficult to overstate the importance of this commitment. Given the WTO's consensus rule, the all-or-nothing requirement means that sufficient progress has to be made on all of the key issues or nothing gets done—and all the new issues are included in the single undertaking. The single undertaking thus provides an insurance policy for the European Union that India and other countries will not block the start of negotiations on investment and competition policy by refusing to agree on modalities for those talks. If India or any country attempted to block those talks, it would elicit reciprocal actions to stall ongoing talks on other issues of priority for the blocking country. The entire WTO negotiation would quickly founder, and India would be implicated in the crime just as it would have been if it unilaterally blocked the launch of the talks at Doha.
Finally, the Doha Declaration recognizes the basic fact that trade accords create opportunities but do not guarantee sales. If developing countries are to be able to take advantage of the prospective new accords, they will need help in strengthening their macroeconomic management, economic infrastructure, and administrative capabilities. Much of the required effort lies outside the competence of the WTO. But trade ministers committed at Doha to provide the necessary technical assistance and capacity building to developing countries so that they can fully participate and benefit from the Doha round. Such support can make the new WTO negotiations a "win-win" proposition for developed and developing countries alike.