Category Archives: WTO Negotiations

This week’s WTO ministerial

The WTO’s Seventh Ministerial Conference starts on Monday. Demonstrations, arson, and arrests started Saturday.

In his report to the General Council on 17 November 2009, Pascal Lamy said that while the upcoming WTO Ministerial Conference would not be a negotiating session, it would be “a platform for ministers to review the functioning of this house”, including the Doha Round, and an occasion “to send a number of strong signals to the world with respect to the entire WTO waterfront of issues — from monitoring and surveillance to disputes, accessions, Aid for Trade, technical assistance and international governance”. [WTO]

Police fired tear gas and rubber bullets Saturday to separate violent demonstrators from a protest of a meeting of top world trade officials, but the hooded “black bloc” activists were able to cause damage before 14 were arrested, spokesmen said. The protesters set fire to at least four cars, broke shop windows and committed other acts of violence Saturday, police spokesman Patrick Puhl said. [AP]

Whither single undertaking trade negotiations?

UCL’s WTO Scholars Forum raises an interesting question: Is the single undertaking model dead?

GATT and WTO negotiations for trade liberalisation have always aimed at comprehensive packages containing something for everyone. But in 1994 the Uruguay Round had to leave several topics over to be settled later. It took 9/11 and the financial slump to launch the already watered-down Doha Round which was further starved of substance and ambition in 2004 (and later). Despite this lack of ambition, the current Doha Agenda negotiations have still fractured, and bilateral and regional trade deals are proliferating.  Does this mean that all-encompassing global trade negotiations have become impossible? And what could emerge in their place?

The event is the evening of December 8 if you’re in London.

Russia ends unilateral WTO bid

Russia keeps its never-ending WTO accession bid interesting:

A week after Russian Prime Minister Vladimir Putin announced Russia, Kazakhstan and Belarus would pursue their World Trade Organization memberships jointly as a customs union and not singly, WTO members remain uncertain how the plan would work and what its motives are.

Negotiators from the three ex-Soviet republics briefed WTO members on the plan this week — and also asked them frankly how it could be made to work.

“Nobody knows — and they don’t know,” said one Latin American diplomat. “We were confused by the replies as well.”

Russia, the biggest country outside the body that umpires world trade, has been pursuing membership for 16 years.

Moscow is clearly frustrated at the lack of progress on the talks, which often turn cool when western powers are unhappy with Russia, as after last August’s war with Georgia. In fact, as an existing member, Georgia has an effective veto over Russia in the WTO, which operates by consensus.

Tidbits

  • Language as a trade barrier – “[I]f knowledge of English in all European countries increased by ten percentage points, European trade would rise by up to 15% on average. Bringing all European countries up to the level of English proficiency enjoyed by the Dutch could increase European trade by up to 70%.”
  • The third edition of Doug Irwin‘s Free Trade Under Fire will be out in a few months.
  • Foreign athletes can now play in the US for more than ten years.
  • Robert Baldwin criticizes the botched special safeguard mechanism that caused so much trouble for the Doha negotiations back in July.
  • The benefits of highly skilled immigration: “If immigrants were merely displacing natives, increases in the H-1B quota should not have led to increases in innovation. But Messrs Kerr and Lincoln found that when the federal government increased the number of people allowed in under the programme by 10%, total patenting increased by around 2% in the short run. This was driven mainly by more patenting by immigrant scientists. But even patenting by native scientists increased slightly, rather than decreasing as proponents of crowding out would have predicted.”

A symbolic Doha?

Joseph Francois, who was previously skeptical of others’ emphasis on completing the Doha to address the crisis, say it’s “still true that the substance of the Doha Round will not impact the current crisis.” But now he supports completing the round, because doing so would be “a potent symbol of commitment.”

I’m skeptical of that line of reasoning. First, if world leaders are smart, they’ll invest their limited energies in supporting measures that have both substantive and symbolic impact. Second, I don’t know what the value of a symbolic commitment would be (I know that past efforts have proven hollow). Finally, I just don’t expect countries to restrain themselves – as Francois himself notes, the EU is introducing new export subsidies and the US Congress is gunning for China. Francois’ plea that “We are in this together. Just say no…” is likely as futile as Nancy Reagan’s.

Along related lines, Will Wilkinson complains about economists recommending policies that target psychological confidence rather than substance, when they don’t seem to have done much reliable work on that subject.

Mattoo and Subramanian: Beyond Doha

Aaditya Mattoo and Arvind Subramanian’s push for vastly expanded global trade negotiations, seen two weeks ago in the FT, appears in a much longer form in this month’s Foreign Affairs.

Claude Barfield objects:

[T]he two economists recommend a vastly expanded negotiating remit (in some instances in conjunction with other international institutions), including food security, energy and climate change, competition policy, new currency and financial regulations, and supervision of sovereign wealth funds.

There are two huge problems with proceeding in this manner. First, WTO members are fiercely protective of their rights, and many would rebel against a wholesale revision of the 2001 Doha ministerial decisions regarding the substantive agenda. Second, the issues championed by Mattoo and Subramanian are exceedingly complex could take years to sort out. Further, a move to short-circuit the negotiating process would be taken as a direct, coercive attack on the policy space of the developing world – this is particularly true of the larger countries such as China, India, Brazil, and South Africa. Attempting to move directly to a “more ambitious agenda” thus would likely backfire and deepen the already deep divisions in Geneva.

Mattoo and Subramanian laid out their ideas in full in a 30-page PIIE working paper last October, though I haven’t had a chance to read it yet.

Is Doha critical to surviving the crisis?

Joseph Francois says that the emphasis on the Doha Round is misplaced:

Approximately 30% of world trade is locked in at zero tariffs through various European agreements (the European Union treaties and the EEA), another 8% of trade is under zero tariffs locked in through NAFTA, and another 40% involves OECD importers where tariffs are at or very close to bound rates — i.e. there is no “binding overhang” (except for the OECD share involving food trade outside free trade blocks, which is roughly 2.5% of world trade).

On top of this, the commitments undertaken by China and Taiwan when they joined the WTO also limit their room for protectionist manoeuvres. If we also include Hong Kong and Singapore as “safe” importers (they are traditionally staunch free traders), this leaves around 20% of trade “at risk.” This involves Asian importers, Africa, Latin America, OPEC Members, and components of the former Soviet Union… What all this means is that the recent IFPRI study (which has been widely quoted) may greatly overstate the risk of Doha failing. Because of regional and multilateral bindings that really do bind, we will not get a massive unwinding of trade through widespread hikes in applied tariff schedules – unless the EU, NAFTA, and WTO themselves all unwind as well…

We need to devote energy to non-Doha issues in Geneva. These include the risk of rising and excessive use of antidumping, countervailing duty, and safeguard protection; misguided public subsidies (though some of the current ones may be justified on retro-Keynesian grounds); rising protection in the poorest countries; and temptation in the US Congress to violate existing treaty commitments. The WTO members should spend energy on these issues, but the Doha Round is not a critical part of the equation.