Doha Trade Round

"What are the main obstacles to a successful completion of the current round of negotiations on international trade (the Doha Development Round) and how could they best be resolved from the perspective of developing countries?"

The current W.T.O trade round was launched, November 2001 in Doha Qatar. Amid much hype and fanfare, it was hailed as a "development round" of negotiations. Launched less than two months after the September 11th attacks the talks began with high hopes all round. The mere fact the talk took place at all was an achievement in itself, considering the debacle that was the 1999 talks in Seattle which collapsed amid anti-globalisation protests and rioters being tear gassed on the cities street's.

Doha's agenda has been ambitious; aiming to not only cut certain barriers in agriculture as well as the highly protected services sector. It also set out to write new globalisation policies in areas such as investment and competition. Its main (and most significant) focus though was to help the poor. The rich promised to open their markets in area like farming and textiles to poor countries so heavily dependent on these sectors. They also promised to help not just with cash and debt cancellation but also with technical assistance.

An analysis by the World Bank, published in its Global Economic Prospects on September 3rd 2003, predicted that the ambitious aims of the Doha round to reduce trade tariffs and barriers could boost global income by between $290 billion and $520 billion a year. Well over 50% of these gains would go to some of the world's poorest countries. By 2015, the World Bank predicts that a successful Doha round could lift 144 million people out of poverty.

Unfortunately, despite these potential gains, governments in both rich and poor countries have gone back on promises and commitments made to the Doha agenda. The E.U in particular, well known for its heavy subsidisation of farming has gone back on numerous commitments it made towards freer farm trade. America also, with George Bush's raising of cotton and other farm subsidies have acted in a manner contradictory to the radical proposals they put forward at the outset of the Doha round.

What is the problem?

From the start many poor countries have been defensive. Instead of negotiating they are still prickly about what they regard as their unfair treatment at the Uruguay round of talks concluded in 1994. They focused on the American proposed idea of "Special and differential treatment for poorer nations" and seem to interpret it as; the rich should make more of an effort to help us than we should try to resolve the issues ourselves.

This resulted in something of a stalemate, which caused the talks to stall. In farm trade, the area so crucial to the developing world, countries such as Australia and Argentina who want to tear down barriers (something that would suit developing nations) and the great farm subsidisers such as Japan and the E.U who want to minimise change reached something of an impasse. To the point where negotiators could not even reach a consensus on how to conduct their talks process.

This resulted in a paralysis over the entire spread of the talks, as many of the poorer nations were reluctant to make concessions in other areas until the agricultural issues were resolved. Agreeing measures to cut industrial tariffs also stalled and were put off until the subsequent round of talks in Cancun, Mexico.

Agriculture is at the crux of the issue with regard to the development of poorer nations. Reason being farm protectionism in both the developed and under developed worlds is a scandal. Over three quarters of the world's poor live in rural areas naturally dependent on agriculture. Yet the rich world spends over $300 billion per annum supporting its farmers. This constitutes an amount six times what they spend on foreign aid. Average agricultural tariffs in rich countries are many times higher than those on manufactured goods and services. On individual commodities, barriers or tariffs are often much higher. Japan for instance, puts tariffs of up to 1000% on rice.

This amount of support and protection for domestic agriculture distorts prices and blocks market access for poor countries so dependent on agricultural exports. Cotton is a classic example of this imbalance. The U.S is the world's biggest exporter of cotton even though its production costs are higher than those of West African producers such as Burkina Faso. America has around 25,000 cotton producers who receive about $4 billion of government subsidies; in return they produce about $3 billion worth of cotton. This subsidisation pushes down world cotton prices, hugely affecting West Africa's 11 million or so cotton farmers.

However on the other side of the coin (and often overlooked) is the fact that poor countries themselves engage in protectionism. These countries are too poor to afford subsidies so instead enforce tariff rates on imports that are often higher than similar tariffs in the developed world. While the reduction in wealthy countries subsidies would help create a fairer commodity price on world markets The World Bank reckons that 80% of the benefits reaped by developing nations from agricultural reforms would come from reductions in the huge tariffs and an increase in trade between these poorer nations.

Another problem for the developing world is reducing tariffs imposed by industrialised countries on industrial goods. In this area too the focus of Doha has been on the rich to cut its barriers to the exports of poorer countries. While overall the developed world's barriers on manufactured goods are generally low, they are high in certain areas. On average the tariffs applied by rich countries on the types of goods produced by poorer countries (textiles and clothing) are four or five times higher than the tariffs imposed on goods imported from other rich countries. A recent study conducted by Oxfam points out that the tax rate the U.S applies to imports from Bangladesh is 14% while a comparative rate for France is 1%. Oxfam and others have rightly pointed out that if Doha is to succeed this issue must be addressed.

However once again the biggest potential gains for the developing world would be to cut tariffs between developing nations. Over the last ten years, trade flows between poor countries have risen twice as fast as overall global trade, reason being many poor countries have been cutting tariffs. Trade between developing nations now makes up 11% of all global trade and is rising still.

Nonetheless,