Update on WTO Doha Round

bali_logoChapter four of One Billion Hungry describes the Uruguay and, later, Doha rounds of international trade negotiations. At the time of publishing little headway had been made in reducing tariffs, trade barriers and protectionist measures in the agricultural sector (tariffs for agricultural products are an average 62% compared to 4% for industrial goods) and since the Doha round began in 2001, there has been a stubborn stalemate between developed and developing countries. Reducing the number of proposals to agree in 2011, including measures on intellectual property and trade in services, (and spurring the moniker “Doha Lite”), the World Trade Organisation were seeking agreement between the 159 member countries at a recent meeting in Bali, the success of which looked likely to determine the continuance of Doha altogether, and the value of the WTO itself as this would be the first ever deal agreed under the WTO since its inception 1995.

On the 3rd to the 7th December ministers of trade met in Bali and despite several disagreements and standoffs, which threatened to derail the process, an agreement was met. So what was agreed exactly?

Central to the agreement is “trade facilitation”, which commits members to implement binding rules that reduce the amount of customs paperwork needed and set maximum time limits for goods crossing borders, a proposal that is estimated to add over $1 trillion to the global economy. For regions where goods crossing borders are subject to lengthy delays and difficulties, resulting in high transaction costs, an agreement such as this could lower the cost of imports. Reducing these transaction costs associated with trade by just 1% could boost the global economy by $40 billion, according to a report by the Organisation for Economic Co-operation and Development. And the bulk of this increase in economic wealth is expected to benefit developing countries such as Uzbekistan, Tajikistan, Kazakhstan and the Central African Republic, which, according to the World Bank’s Doing Business Index, have the worst scores for the ease with which goods can be traded across their borders.

A further agreement was around increases in farm subsidies, which are currently limited under the WTO Agreement on Agriculture. India insisted it should be allowed to subsidise grain as part of its effort to tackle food insecurity, paying farmers higher than market prices for grains for its government domestic stores. As an interim measure, WTO members agreed not to bring disputes against countries breaching the farm subsidies limits as part of food security measures while a longer term solution is found but there remains concern that this gives India the power to distort global trade and undercut producers in other countries. Despite the negative impacts of subsidies, an alternative is yet to be found, and without this compromise India would have backed out of the agreement altogether, although they did agree not to ”distort trade or adversely affect the food security of other [WTO] members”. Development agencies are concerned that the agreement only last four years and only relates to currently held public food stock holding programmes. [Read more…]