The internal and external reasons for the failure of the Doha-Round and the role of the industrial and developing countries

Table of contents

Index of abbreviations

1. Introduction

2. The WTO rounds and agreements
2.1. The Ministerial Conference of Doha 2001
2.2. The Ministerial Conference in Cancún 2003
2.3. The WTO agreement in Geneva 2004
2.4. The Ministerial Conference in Hong Kong 2005
2.5. The Ministerial Conference in Geneva 2008
2.6. The future of the WTO

3. Multilateralism vs. Regionalism
3.1. The position of the EU
3.2. The position of the developing countries
3.3. The position of the WTO

4. Conclusion

Bibliography

Online Publications

Index of abbreviations

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1. Introduction

During the fourth Ministerial Conference of the World Trade Organization in Doha, Qatar, from November 9th to 14th 2001, the new round of multilateral trade talks became known as the Doha Round.

Against the background of the terrorist attacks in the USA that had happened two months before in September, a strong message of stability and prosperity to the economical development and the wish for a greater political cohesion were communicated and were seen to become resolved in multilateral trade negotiations.^[1]

The principle aim of this ministerial-level meeting was to lower trade barriers globally, which allows countries to increase trade worldwide by a more efficient exchange of goods among countries^[2] and to establish a more stable and certain foundation for today’s dynamic global marketplace in order to avoid a repetition of terrorist attacks.

However, the Doha Round failed and even following ministerial conferences and meetings that took place in Cancún, Mexico (2003), Hong Kong (2005), and Geneva, Switzerland (2004, 2006, 2008) did not lead to a satisfying result.

In the following chapters, the internal, thus the relationship between developing and industrialized countries with focus on the EU and the leading developing countries Brazil, India and China - which are developing to the leading economic powers in the world at the moment - and external, thus especially the upcoming trend towards bilateralism and regionalism, reasons for the collapse of the multilateral trade round will be discussed.

The question is whether the Doha Round, thus multilateral trade talks, still has a chance – coupled with the WTO – in a growing regionalized world and what can be done to find a consensus in the world trade system.

The focus of the paper lies on the conditions, the framework and the results of the rounds and the development in perspective, but does not cover the content of the agreements.

2. The WTO rounds and agreements

The preamble of the WTO says that the member states have the desire to enter into “reciprocal and mutually advantageous arrangements with the aim of substantially reducing tariffs and other trade barriers” and the “elimination of discriminatory treatment in international trade relations“^[3].

The contracting parties declare in Article 131 that “their aim is to contribute to the harmonious development of world trade, the progressive abolition of restrictions on international trade and the lowering of customs barriers.“^[4]

2.1. The Ministerial Conference of Doha 2001

The Ministerial Conferences of the WTO that take place at least every two years are the principal and political organ of the WTO^[5].

The fourth Ministerial Conference in Doha (after Singapore, Geneva, Seattle) was initiated in order to introduce a new global – this time successful – global trade round which would lead to greater trade liberalization.

“This time successful“, because the negotiated issues of the first WTO Ministerial Conference in Singapore in 1996 – government procurement, trade facilitation, investment, and competition policy^[6] – which were highly pushed by the European Union, Japan and Korea and opposed strongly by most developing countries did not lead to an agreement.^[7]

Doha, however, was more difficult than its three multilateral predecessors. The WTO of today has not only gained more members (153 in July 2008^[8] ) and is constantly expanding, but also the role of the developing countries – which represent the majority of the WTO – has changed over time from a passive to a more active one.

Under the GATT, the main actors were exclusively industrial countries, but the developing countries have become more powerful in imposing their interests.

The reason is that some developing countries have expanded their share of world trade, have shifted to become producers and traders of manufactures^[9], have extended their infrastructure and external affairs and have therefore reached the status of emerging or even new industrialized countries – the best examples are Brazil, China and India.

A bipolar WTO including the USA and the EU had given way to a multipolar alternative.^[10]

Due to this increased influence of developing countries, the Doha Round became known as the “Doha Development Round“^[11].

The issues which were most relevant to developing countries were concessions on agriculture, reduction of trade-distorting tariffs on agriculture, compulsory licensing of medicines and patent protection and the implementation of current trade obligations within the framework of “special and differential treatment” which was imposed by the industrial countries towards developing countries.^[12]

The aim was to establish transparency and efficiency throughout all official negotiations during the round and to prevent inofficial arrangements that could impede the proceeding.

After long lasting controversial negotiations the members agreed on a so called “Doha Declaration“ that include the Singapore Issues, environment, agriculture, trade and social development, implementation of existing contracts and TRIPS and health.^[13]

The most important and controversial subjects were the Singapore Issues and agriculture, whereby to the first the EU and its industrialized partner countries paid special attention.

However, some developing countries worried about the participation in new obligations and were sceptical about the importance of investment and competition issues which belonged to the Singapore Issues. Therefore, a compromise was established which said that the negotiation of the Singapore Issues was delayed two years later in order to cope at first with topics that are more important for developing countries – such as agriculture referring to the status of the meeting as “Development Round”.^[14]

In regard to agriculture the aims were substantial reductions in trade-distorting domestic support and substantial improvements in market access^[15]. A crucial trade-off for the negotiations was the extent to which developed countries reduce their trade-distorting domestic support in return for additional market access from large developing countries.^[16]

Due to diverging interests on both sides the progress of negotiations took place at a slow pace and was characterized by continuing disagreements on nearly every issue.

[...]

^[1] Ian F. Fergusson, “World Trade Organization Negotiations: The Doha Development Agenda“, Library of Congress Washington DC Research Service, CRS Report for Congress, 2008, URL: http://www.nationalaglawcenter.org/assets/crs/RL32060.pdf [15 March 2009], p.5 / CRS-2.

^[2] Fergusson, “World Trade Organization Negotiations: The DDA“, p.11 / CRS-8.

^[3] Marise Cremona, “Neutrality or Discrimination? The WTO, the EU and External Trade”, in: de Búrca Gráinne/Joanne Scott (Hg.), The EU and the WTO: Legal and Constitutional Issues (Oxford, Portland, Oregon: Hart Publishing, 2001), p.131.

^[4] Cremona, “Neutrality or Discrimination?“, p.131.

^[5] Benjamin Reichenbach, „Die DOHA-Runde der Welthandelsorganisation (WTO)“,

Politlounge.de, URL: http://www.politlounge.de/essays/wto_doha.pdf [26 February 2009].

^[6] Ian F. Fergusson, “The Doha Development Agenda: The WTO Framework Agreement“,

Library of Congress Washington DC Research Service, CRS Report for Congress, 2008, URL: http://www.nationalaglawcenter.org/assets/crs/RL32645.pdf [15 March 2009]. p.5 / CRS-2.

^[7] Fergusson, “World Trade Organization Negotiations: The DDA“, p.22 / CRS-19.

^[8] “Understanding the WTO: The organization, Members and Observers”,

URL: http://www.wto.org/english/thewto_e/whatis_e/tif_e/org6_e.htm. [2 April 2009].

^[9] Bernard Hoekman, “The Trading System in Perspective”, in: The Political Economy of the World Trading System: The WTO and Beyond (Oxford University Press, 2001), p.10.

^[10] Simon J. Evenett, “Trade policy: time for a rethink?”, in: Fragmented Power: Europe and the Global Economy, (Brussels: Bruegel, 2007),p.79.

^[11] Reichenbach, „Die Doha-Runde der WTO“, p.4.

^[12] Fergusson, “World Trade Organization Negotiations: The DDA“, p.2.

^[13] Reichenbach, „Die Doha-Runde der WTO“, p.4.

^[14] Reichenbach, „Die Doha-Runde der WTO“, p.4.

^[15] Fergusson, “The DDA: The WTO Framework Agreement“, p.7 / CRS-4.

^[16] Fergusson, “The DDA: The WTO Framework Agreement“, p.2.