Oped on the Doha Round

Pascal Lamy, the WTO’s Director General declared at the APEC Summit in Sydney that the Doha Round of trade negotiations can be completed this year.  The APEC Leaders supported Lamy with a call to complete the Doha Round.  This call will be as ineffective as the nearly identical calls made at four previous summits. 

It is time Australia stopped playing along in these international public policy charades and urged the Doha Round be shelved until others, particularly the EU, are ready to deliver.  This the only way a substantive result can be achieved.  This continuing mockery of a negotiation is now putting the WTO’s reputation at risk.

Some say conclude the Round now and lock in what small commitments are on the table to open markets.  That would deliver  little to Australian farmers and leaders of commodity farm groups know this. 

There is something fundamentally wrong in the Doha Round.  The major economies, particularly the EU cannot show leadership and the majority of WTO members do not want liberalization.  Those who do, which includes the more dynamic economies in Asia and Latin America (as evidenced by their interest in negotiating bilateral agreements) cannot make headway in the WTO because there are too many hands on the wheel who do not.

How it is shelved or frozen will matter.  Anti-globalization NGOs like Greenpeace, WWF and Oxfam will make propaganda that this is a major failure in the WTO and claim it supports their long standing demands to “reform” the WTO. By reform they mean to weaken its free market principles.    

Attention needs to be focused on the reality that the most important business of the WTO is to ensure its 180 odd members adhere to the international web of legally-binding commitments they have made to keep markets open and not play politics with trade. 

To appreciate the importance of this, consider the case of China. WTO rules oblige Chinese officials to ensure Chinese businesses stick the WTO’s rules. They ensure the market, not the Government, shapes trade. Imagine the chaos in world markets if Beijing set its own terms of access to its burgeoning markets.

Shelving the Doha Round would in no way diminish the capacity of the WTO to keep its members up to their legal commitments.

Australian farmers rightly gripe that WTO rules still do not set free market rules for trade in agriculture.  But it is not in their interests to see the WTO discredited.

Australia needs a new global farm trade strategy.  The centerpiece until now has been to pressure the EU through the WTO, working through the Cairns Group.  Efforts should be switched to a global communications campaign outside the WTO, concentrating on the EU.  Only Oxfam is mounting such an effort and they are using it to run anti-WTO and anti-free trade messages.

Inside the WTO, it is time for Australia to step “outside the tent” and challenge the system to wake up to reality – the Round is going nowhere.  While staying inside the tent as part of Lamy’s WTO leadership Group, Australia perpetuates a failing situation.  The longer it lingers, the greater the risk of damage to the WTO’s authority.

Australia should press to freeze the Doha Round until around 2012 (the EU is slated to review its agricultural policies in 2013) and then review how to proceed.  This will give time to assess if the EU will reduce protection of its farmers.  It will also provide time to consider a much more serious issue.  Can the WTO achieve global liberalization of trade in the way in which it has in the past, now that it has over 150 members, most of which are small economies which are uninterested in trade liberalization?  (When the Uruguay Round concluded in 1994, the WTO had 90 members)

While negotiations in the Doha Round are in limbo, Australia can seek improved access for Australian agricultural exports through bilateral FTAs.  Australia won much better long term access for beef exports through the US FTA than it could have through the Doha Round. FTA negotiations are in process with China and ASEAN, have begun with Japan and one is planned with Korea.  These present opportunities to increases access in most of Australia’s major agricultural markets.

Some argue it damages the WTO to pursue trade liberalization in bilateral and regional trade agreements.  Most agreements complement, not undermine, the WTO. The real damage being done is maintenance of the pretense that current efforts in the Doha Round are effective.

Alan Oxley is Principal of ITS Global, consultants on global issues.  He was Australia’s Ambassador to the GATT, predecessor to the WTO, during the beginning of the Uruguay Round of global trade negotiation.