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Sat, July 29, 2006 : Last updated 19:50 pm (Thai local time)



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Home > Opinion > Revive the Doha Round





EDITORIAL
Revive the Doha Round

A fairer global trading system that would help the world's poorest calls for concessions from the big traders

The Doha Round of World Trade Organisation (WTO) negotiations collapsed on Monday, after six leading trading powers failed to reach a compromise on achieving a fairer international regime that would enable poor countries to benefit more from globalisation. WTO director-general Pascal Lamy indefinitely suspended the talks, launched in 2001 and already two years behind schedule, after the United States, the European Union, Brazil, Japan, India and Australia failed to agree on lowering protectionist tariffs and subsidies on politically sensitive farm sectors.

It is sad to see the hopes of the world's poorest countries, which depend so heavily on the export of a handful of competitive agricultural products and textiles, scuttled by nations that have enjoyed the lion's share of global trade. The big traders had a good chance to help the poor where it matters most, and they blew it.

Thus, poor countries will be hit disproportionately harder than most others, while countries that are better adjusted to international trade or economically stronger can live with the lack of progress in international trade talks. With the Doha Round stalled and protectionism continuing multilaterally, some countries may gravitate towards bilateral deals that are better suited to their needs.

In the absence of progress in the talks, Commerce Ministry permanent secretary Karun Kittisataporn predicted that countries, including Thailand, would become more active in pursuing bilateral free-trade agreements (FTAs), because they could not afford to wait for multilateral talks to move forward. Many will take whatever advantage they can amid increasingly integrated world trade.

The US has already been actively pursuing bilateral FTAs with many countries, including Thailand, South Korea and Malaysia. But it failed to show leadership by making substantial cuts in its farm subsidies.

The EU and Japan are also busying themselves with talk of a bilateral FTA with Asean. In the Doha Round, both the EU and Japan refused to bring down protection on their farm sectors any further. India and Brazil, both of them big fast-growing developing countries that are hugely successful exporters, did not do as much as they should have to help their smaller, weaker trading partners gain greater access to their respective markets. China, the world's growth engine despite being new to the WTO, could have done something meaningful to support fairer global trade but chose instead to sit on its hands.

Sceptics fear that these major economies are sending a signal that their national interests would be better served by bilateral FTAs than by a fairer and better-regulated global trading system.

If that is the case, then developing nations will fall victim to distortions in world trade that are biased in favour of countries that are wealthy or better integrated into the global system.

Indeed, a proliferation of bilateral FTAs could undermine the WTO. Many of them lack crucial elements that are required by the WTO, such as the need for further cuts in farm protection. Most of the so-called FTAs involve only tariff cuts and service liberalisation. For instance, the prospective Thai-Japanese FTA does not require Tokyo to open its market to Thai rice.

Also, countries that lack the wherewithal to negotiate trade may find themselves at a disadvantage when they have to do so one-on-one with much more powerful countries, whereas they could band together with other countries that have similar interests and collectively bargain for what they want in the WTO forum.

With the collapse of the Doha Round, the WTO is likely to be faced with an enormous number of trade disputes between member countries, because there is not much space left for negotiation.

But all is not lost. WTO members should try to revive the Doha Round, even though time is running out. Wealthy countries and other major traders have a moral obligation to make concessions to restore the world's faith in the WTO's global trading, which would benefit everyone. There would be no better or nobler way to help the world's poor than to empower them to pull themselves up from poverty and destitution through their own efforts - that is, through fair trade.







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