What happens if the Doha Round fails? It could happen. David Eldon, the Chairman of the Pacific Basin Economic Council, took a look into one possible future in a Financial Times column this week: Perils of a trade round’s collapse.
Sure, we'll lose the benefits we might have had from trade reform this time. But the impacts of the failure will also ramify through time:
... what if the WTO degraded into a bureaucracy without the momentum of its negotiating rounds? Because, if the Doha round fizzles, it will be next to impossible to launch new negotiations. If the WTO lacks the ability to address new issues as trade evolves, even more governments will pursue bilateral deals, which may be good for local producers but are notoriously bad for international business. The proliferation of bilateral deals has created a spaghetti bowl of rules and regulations that are a headache. What is worse, the principle at the heart of WTO will suffer – to mediate the interests of the many, not just a few.
What's the problem:
...The Doha development round, launched in 2001, was framed around three broad issues: market access, competition and services. Instead of dealing with these, negotiations are bogged down on the issue of agricultural subsidies of developed nations.
...the US administration will lose its fast-track negotiating authority in 2007, which will mean that the WTO’s most forceful advocate historically will be tied up in domestic issues when new developments occur on the negotiating front. So the Doha round must meet its schedule of finishing by 2006.
...In July, trade officials missed a self-imposed deadline to agree concessions from developed countries on agricultural subsidies balanced by concessions from developing countries on market access. The deadline had been set in July 2004 when officials did make some progress. A year later, negotiations on agricultural subsidies have advanced only marginally while equally important talks, including market access and services, have languished. The way the negotiations have been designed means the Doha deal has to be comprehensive or not at all. The rules do not permit, for example, a deal on agricultural subsidies without companion agreements on market access and export competition.
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