Doha Round Prospects Alan Beattie

Doha Round Prospects

Alan Beattie explains the key tradeoff in a Doha Round trade agreement:

"At the heart of any final deal is likely to be a bargain between the rich trading blocs, the European Union, US and Japan, and big emerging market countries such as India, Brazil and South Africa.

The deal would see the rich nations cut subsidies and tariff protection on agriculture in return for better access for their goods and services exports to those emerging markets."

("Doha round faces long and winding road", Financial Times)

Beattie points out that there are several external events this year that may create challenges for the negotiators. One is the possibility that the current race for WTO Director-General may get out of hand:

"The first is the competition to replace Supachai Panitchpakdi as director-general of the WTO when he steps down in August...

Member countries say they are desperate to avoid a repeat of the bitter stalemate that characterised the previous competition...

However, with some poor countries affronted that the EU has put forward Pascal Lamy for a post they think should be reserved for a candidate from the developing world, there is potential for a prolonged and debilitating fight that will halt progress on the Doha talks."

Then, there are the increase in Chinese competition in textiles and clothing and the falling U.S. dollar:

"China is another worry...

The end of the global textile quotas at the beginning of this year provides a test case for how quickly China can seize market share in an industry in which it indisputably has a strong competitive advantage.

Textile producers in developing countries that benefited from the quota system, including Mauritius and Bangladesh, as well as the familiar textile lobby in the US and the EU, will be trying to use every conceivable form of safeguard and anti-dumping mechanism to protect themselves from the onslaught of cheap Chinese imports. This does not bode well for enthusiasm for liberalisation...

The final wild card is the dollar, which has fallen to levels that are causing European exporters to squeal with pain...

The sight of the dollar bloc gaining competitive advantage while the Bush administration stands by will do little for the rest of the world's affection for free trade and open markets..."