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DOHA doomed?

May 20, 2011 Editorial

For a small nation like Guyana in the international arena of sharks, there’s safety in numbers. The players are so massive that if we try to deal one-on-one with them, we’re certainly going to be chewed up and spat out like the minnow we are. Even when we swam with our fellow minnows in CARICOM, to negotiate an Economic Partnership Agreement (EPA) with the EU, we were so overwhelmed that we only signed on under severe duress.
It is for this reason that this newspaper has been arguing for the last few years that we cannot afford for the WTO’s Doha Round to fail. The WTO, after all, is the only international institution where Guyana has a vote just like any other member country, and its vote is necessary for the WTO’s decision to be binding. And for an export-oriented nation like ours, it is crucial that the rules of the international trading regime, governed and enforced by the WTO, are not stacked against us as they are at the moment.
But that is not all, because as in all organisations, the old dominant forces would still tend to manoeuvre things so that they could have their own way – the rising power of the new emerging forces such as BRICS offer small countries a countervailing force. It is fortuitous that at this juncture, the interests of BRICS and other emerging countries do coincide with ours on a host of issues – but especially on development. Doha was supposed to be the “development” round.
But after a decade (the Doha Round was launched in 2001) it appears that we may not have an agreement by this year end. When the WTO ambassadors met at the end of last month the best they could conclude was they should keep on talking.
This lassitude is dangerous for several reasons, not just for small nations but even the largest – including the US, which is presenting the most objections at this time. The specific problem is that the US in particular is demanding that Brazil, China and India cut their tariffs to zero (or near zero) for three sectors (with the stress on chemicals, electronics and industrial machinery). The super-liberalisation in these “sectorals” is supposed to be voluntary, but the US wants it to be mandatory for the big developing countries.
The two major protagonists representing the contending sides are the US and China. It is ironic that the US and the EU were the major proponents behind the launch of the Doha Round, but they (especially the US) are now dragging their feet the most.
This about-turn represents, more than anything else, the changing fortunes in the world economic order. The rise of China and BRICS has witnessed a corresponding decline in the position of the US, and this dynamic will reverberate in their domestic politics next year, making it much more difficult to subsequently get the round back on track.
In the US, 2012 is a Presidential election year, and the increasingly hostile partisan politics will certainly cement extreme positions on necessary compromises for the Round to be completed.
US Presidents are not noted for compromising on multilateral trade matters early in their term. We can expect a hardening of the US demands for substantial trade liberalisation in industrial goods. Over in China, the new leadership, also poised to take office in 2012, cannot start off by making what can be viewed as major unilateral concessions to the US. Based on what transpired in Geneva last month, it is unlikely that either side is willing to blink.
But if agreement is not reached, most analysts believe that it might take another decade to get to another agreement, since the world would have changed so much by then, that it will certainly be necessary to place new items on the agenda and new rules to deal with them. At this time, with 80% agreement overall, the area of major interest to us – US reduction of subsidies in agriculture – is on the cards. Maybe they can sign what is agreed and table the remainder?

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