After Doha, What’s Next?

the Center for Global Development

This is an interview with Randall Soderquist of the Center for Global Development. It explores where global trade talks can go fom here. - Kale

The collapse of the Doha Round of multilateral trade negotiations last week was a major setback for developing countries and rich countries alike. Policymakers are now trying to make sense of what went wrong and salvage what goodwill remains. Randall Soderquist, CGD’s new senior program associate for trade, says that developing countries stand to lose the most from last week’s events, as the fragmented regional and bilateral trade agreements that will likely succeed Doha will undermine their bargaining power. In a new Q&A, he explains Doha’s impact on poor countries, discusses shifting political attitudes toward trade, and offers recommendations on steps toward a new trade agenda.

Randall previously served as director for the Economic Policy Program and the Trade and Poverty Forum at the German Marshall Fund of the United States. His work there and his eight years working on trade issues on Capitol Hill bring a wealth of policy experience to CGD’s ongoing investigation of how rich-country trade policies can be improved to make it less difficult for poor people in the developing world to escape from poverty. Welcome Randall!

Q: Is the Doha Round really “dead”? Has a global agreement just been put on hold?

A: Some argue that it’s still possible to salvage the Doha Round, noting that the Uruguay Round that preceded it was put on hold for two years before it was completed and eventually signed in Marrakesh in 1994. But lots has changed since then. Before, developing countries sat on the margins, accepting the agenda offered by the so-called Quad (EU, U.S., Japan and Canada). Emerging economies like Brazil, China, and India had none of the influence they wield today. This shift in the WTO power structure and the emergence of what is in effect a multi-polar trading system make it really hard to reach a consensus. Then, too, the issues are more expansive and complex, but the WTO continued to approach this as a single undertaking—where nothing is agreed until everything is agreed. Finally, there is the changing political context in the rich countries: with growing anti-trade sentiment few politicians are willing to make trade a priority. With the upcoming elections in the United States and India and the appointment of a new Commission in the EU, there is simply not a whole lot of room to maneuver.

Q: So what happens next?

A: I suspect we will see some posturing by the key players about the need to lock in portions of the Doha Round agreement so that the talks can be revived later. Personally I think that’s unlikely. Instead I expect that the Doha Round will simply fade away as countries pursue specific sectoral and regional trade agreements that serve their individual economic interests.

Q: So, is the idea of trade for development also off the table?

A: Certainly not. There seems to be an understanding in the international trade community—public, private, and non-profit sectors alike—that poverty alleviation and economic opportunity need immediate attention. U.S. Trade Representative Susan Schwab, for example, stated that some components of the package might be moved forward on a multilateral basis. She cited duty-free quota-free access on most products for the poorest countries, trade facilitation, and environmental goods and services. So development is clearly on her radar screen. The idea has been floated among her counterparts, and from what I can tell there have been discussion on the side about how to “harvest” what is ripe right now. But India has objected to this approach. Since it would require consensus among all WTO members, it is hard to imagine this happening in the context of the Doha Round. It is unfortunate that India—which has gained so much from market access for its exports through existing multilateral agreements—now appears to be standing in the way of developing countries who want to make similar progress. It is a very odd and disconcerting turn of events.

Q: What will be the impact of Doha’s collapse on poor people in developing countries?

A: The real impact of the collapse is unclear as there was so much that remained to be negotiated. But if the question is whether what was on the table would have provided significant economic benefits to those living in poverty, the short answer is no. Granted the U.S. offer would have forced some real constraints on subsidies available under the current farm legislation. Similarly, reforms that are being undertaken in the EU’s Common Agriculture Policy would have been locked in. And some benefits would have been derived from cuts to bound tariff rates. But most of the important issues for developing countries remained undecided. Subsidies on cotton; tariffs on bananas, textiles, and clothing (so-called “sensitive” products excluded from tariff reductions); preference erosion on key exports; and, of course, safeguards all remained unresolved, so it is difficult to calculate whether there would have been a net gain or a loss as a result of the agreement. Indeed, one of the most sensitive issues—anti-dumping—was not even mentioned. Nonetheless, developing countries had far better leverage to negotiate with rich countries as a group in a multilateral forum like that in Geneva than they do individually. The asymmetries they will face in a post-Doha world -- asymmetries in power and in negotiating capacity -- will not necessarily be conducive to economic development or poverty alleviation.

Q: What should rich countries be doing with respect to trade policy to help developing countries in lieu of a multilateral deal?

A: The next step requires innovative approaches that will allow developing countries to better integrate themselves into the global supply chain and, in this manner, obtain the investment they need to exploit trade opportunities and promote economic growth. This means taking a critical look at existing trade agreements and preference programs and examining what works and what doesn’t. In particular we should be looking for opportunities for poor countries to leapfrog past old industries and into new technologies of the future. Rich countries should work to coordinate the preferences they offer to developing countries to try to ensure that benefits obtained from one country are not squelched by another. Rich countries should also integrate their trade agreements, preference programs, and development assistance programs so that they reinforce each other. In short, there is quite a lot we can and should do, even without a Doha Round.