Developing Countries and the Doha Development Agenda of the WTO

Pitou van Dijck, Gerrit Faber

• Publisher: Routledge
• Year: 2006
• ISBN:
  9781134165728
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

The Doha Development Agenda held the promise of substantial gains for developing countries. However, the realization of these gains is far from obvious: the interests of various groups of countries differ greatly and technical complexities have hampered further progress since the very start of the negotiations.

Against the background of the agenda of the present trade negotiations of the World Trade Organization and its slow progress, this enlightening book outlines the positions of the main players. Its central focus is to analyze the main effects of these positions and to find a way to complete the Doha Round so a meaningful contribution to its main objective i.e. development, is made. Key issues discussed include:

• the rise of the G20 group of developing countries led by Brazil, China and India
• the reasons for the failure of the WTO Ministerial Conference at Cancún in 2003
• the prospects for the poorer developing countries - with emphasis on Africa in particular.

This timely and topical book enables the reader to monitor and evaluate the ongoing negotiations in the DDA, and is a natural follow-up to the bestselling 2001 Routledge title World Trade Organization Millennium Round edited by Deutsch and Speyer.

1
The Doha Development Agenda

Ambitions and achievements

Pitou van Dijck and Gerrit Faber

Introduction

Early August 2004, almost one year after the Fifth Ministerial Meeting of the World Trade Organization (WTO) in Cancun ended without substantive agreement, the Doha Work Programme (DWP), which provides the framework modalities for future negotiations, was agreed. The DWP is a crucial step to move the negotiations towards their completion. It is true that the Fourth Ministerial Meeting of Doha in 2001 had launched the ambitious Doha Development Agenda (DDA), but many decisions on the substance of the negotiations were postponed to the Cancun meeting. This included the decision to start negotiations in the areas of investment, competition policy, government procurement, and trade facilitation, the so-called Singapore Issues; in the areas of small economies; on trade, debt, and finance; on trade and transfer of technology; and on the modalities for the negotiations on agriculture.

The Doha Declarations (WTO 2001a) leave no doubt about the ambitions of the members: ‘We are determined…to maintain the process of reform and liberalization of trade policies…and pledge to reject the use of protectionism.’ These firm words were to end a period in which the gap between the positions of developed and developing countries had widened. Indeed, two years earlier, the debacle of the Third Ministerial Meeting in Seattle had shown that the world trading order was not only threatened by genuine differences of opinion over issues of trade liberalization. The failure of Seattle was in large part due to the rhetoric over labour standards and sanctions without due regard for developing countries’ concerns.

Notwithstanding the verbal resolve to make the WTO contribute to development and poverty alleviation, progress so far has been slow. In fact, right before the Ministerial in Cancun, there were no draft agreements among the members on the most salient issues. The joint proposal by the EU and USA on agriculture a few weeks before Cancun was not able to get the negotiations moving again, but triggered a fierce critique of what was to become the G-20, thus clearly demonstrating the gap in ambitions and perspectives between the two major players among the developed countries and a large and diverse group of developing countries in Latin America, Asia, and Africa. It was only in the summer of 2004 that the DWP was finalized and negotiations on the substance, that is, on the extent of the reduction of trade barriers, finally could start. The question is: what package will get the support of all members, in order to complete the DDA?

Rather than providing a blueprint of the ‘single undertaking’, this volume will delineate the main elements of a development-orientated, trade-related package deal, and formulate the conditions that such a package has to meet in order to be acceptable. By way of introduction to the overall study, this chapter provides an overview of the issues under negotiation and the positions of the main players. The next section shows in what respects this round differs from previous multilateral trade rounds and in what respects the DDA is particularly relevant to developing countries. Subsequently we show in a stylized fashion the significant changes in the world trading system and in particular the rapidly changing position of developing countries. The final section focuses on the main issues on the agenda of the DDA that need to be solved to make the Doha Round a true development round.

The Agenda

Preponderance of development

In the rounds of trade negotiations that took place before the Uruguay Round (1986–94), the roles of developing countries and the attention for their problems were limited. Non-reciprocity, preferential treatment for their exports, and more space for their trade policies were the major elements of the Special and Differential Treatment (SDT) offered to them. At the same time, developing countries did not actively participate in the negotiations on trade liberalization, the core of the General Agreement on Tariffs and Trade (GATT) rounds. This changed somewhat during the Uruguay Round (1986–94), which addressed the issue of market access for export products from developing countries and for exports of services from developed countries to the markets of the South. However, for many developing countries the outcomes of the Uruguay Round had been far less beneficial than expected. The implementation of the agreement on Trade-Related Intellectual Property Rights (TRIPS) appeared very costly, leading to transfers to developed countries’ firms (Primo Braga et al. 2002). The ‘dirty tariffication’ of agricultural trade barriers and the backloading of the abolition of quantitative restrictions (QRs) on developing countries’ exports of clothing and textiles constituted a further dilution of the benefits of the Uruguay Round for developing countries (Srinivasan 2002).

In Doha, much time and words were devoted to the interests of developing countries.¹ The title of the new round is a tribute to the objective of creating a multilateral trading order in which ‘…trade can play a major role in the promotion of economic development and the alleviation of poverty’ (WTO 2001: Para. 2). Two more declarations complemented the Ministerial Declaration: one on ‘the TRIPS Agreement and public health’ and one on ‘implementation-related issues’. The former was to deal with a conflict that had arisen between developing countries and developed countries over the price of medicines to treat HIV/AIDS and some other tropical diseases. As the declaration puts it: ‘…the TRIPS Agreement does not and should not prevent members from taking measures to protect public health’ (WTO 2001b). The TRIPS Agreement should be interpreted ‘in a manner supportive of public health, by promoting both access to existing medicines and research and development into new medicines’. The latter declaration reaffirms earlier agreements and urges members to apply measures in favour of developing countries such as early liberalization of clothing and textiles imports, and support for the implementation of standards.

The DDA has development as its main objective. Given the relatively high rates of growth in large parts of the developing world during recent years, and the increased orientation of the major trading nations towards international markets including markets of developing countries, the latter group of countries has become more active and demanding in international negotiations. This makes the nature of the DDA different as compared to previous rounds of negotiations in several respects.

Up to the Uruguay Round, developed countries exchanged concessions on manufactured products and non-agricultural commodities primarily among themselves. Consequently, barriers to trade in these products have been reduced to very low levels. However, for labour-intensive and temperate zone agricultural products tariffs remained high. Most tariff peaks in developed countries are concentrated in these product groups. Such products constitute a significant share of developing countries’ exports.

To be successful, the DDA must contribute to the liberalization of trade in these product groups. However, negotiations on North–South trade will be more difficult than negotiations on trade among developed countries were, as they concern largely inter-industry rather than intra-industry trade. Trade among developed economies is for a large part concentrated in sectors that are characterized by scale economies and product differentiation, and trade liberalization tends to stimulate intra-sectoral specialization. However, trade liberalization between developing and developed countries tends to stimulate specialization between sectors characterized by a widely different use of factors of production, thus changing the structure of production and the distribution of income over factors of production in the liberalizing economies. Although substantial welfare gains can be reaped at the level of the economy at large, factors of production in declining industries will receive lower rewards or will get out of business. These effects are shown by Anderson et al. in Chapter 2 of this volume, Table 2.3, in a scenario of full liberalization of global trade. Those that expect to be negatively affected may attempt to organize coalitions opposing the proposed liberalization measures. The Uruguay Round (1986–94) made a beginning in addressing the difficult task of liberalizing trade between developed and developing countries by integrating rules for the liberalization of trade in textiles and clothing, and by the Agreement on Agriculture (AoA).²

The agenda of multilateral trade negotiations has been expanding continuously since the Kennedy Round (1962–67). After tariffs had been lowered substantially and QRs had been largely removed, differences in regulations were becoming major trade barriers. Early examples of agreements on harmonization of regulatory barriers are the codes on standards, subsidies, government procurement, and on civil aircraft, concluded during the Tokyo Round (1973–79). The Uruguay Round concluded with a large number of agreements on harmonization of regulations that deepened previous and introduced new agreements: on Technical Barriers to Trade (TBT), and on the Application of Sanitary and Phytosanitary Standards (SPS). Agreements on services, investment, intellectual property rights, subsidies, and agriculture expanded the area of harmonization of regulation further. For an overview see Faber (2002). The Doha Declarations opened the possibility to take the process a few steps further by addressing the Singapore Issues, further liberalization of services, and by bringing down the trade-distorting effects of agricultural support. However, the limits of regulatory harmonization are becoming apparent. This applies particularly for negotiations between partners that are likely to have widely differing regulatory preferences, as is the case with developing and developed countries. Different levels of welfare are likely to give rise to diverging preferences for policy interventions in areas such as protection of workers, consumers of goods and services, owners of intellectual property rights, and the environment. Forcing developing countries to accept the regulations of the developed world may distort the national development priorities and be counterproductive (Finger and Schuler 2000). For these reasons, progress in regulatory harmonization will be very difficult to achieve. Only where there are sufficient benefits for all WTO members, this seems likely to happen.

Transparency and single undertaking

The deliberations on the DDA show that the negotiations for further trade liberalization are complex and strongly interrelated. The complexit...

Table of contents

• Routledge studies in the modern world economy
• Contents
• Illustrations
• Contributors
• Preface
• Abbreviations
• 1 The Doha Development Agenda
• 2 Global trade reform and the Doha Development Agenda
• 3 Modelling global trade reform
• 4 Market access and the modelling of global trade reform
• 5 Services and the Doha Development Agenda
• 6 Improving Special and Differential Treatment
• 7 The role of the G-20
• 8 Minimum conditions for a package deal
• 9 Towards a development round
• Index