The Doha Round

Introduction

The Doha Round, notwithstanding some recent injection of impetus, has a desultory now it's-on-now-it's-off quality to it. To most this lack lusterness is a frustration. If only it could be brought to conclusion, the world would be so much better off, especially if one is to believe the estimates of the gains from trade liberalization that the Round would deliver (an increase in global welfare of about $500 billion according to Bill Cline of the Institute for International Economics).

There is little doubt that there are substantial liberalization opportunities in both industrial and developing countries that are ripe for reaping. It is also true that the GATT /WTO system and the rounds of trade negotiations provide an institutional framework for making the desirable politically feasible. This framework relies on reciprocal market opening so that the domestic political pain of liberalizing imports is countervailed by the domestic political benefits of providing greater market opportunities for exporting interests. At this juncture, this reciprocity framework is in trouble.

The market opening bargains between industrial and developing countries are increasingly difficult to strike. For two reasons. First, exporting interests in industrial countries have less and less enthusiasm for the multilateral trade system as a means of achieving their access objectives. Second, there seems little prospect that industrial countries will be able to overcome their own defensive interests to deliver greater access to developing countries where they most seek it. This disengagement comes ironically when at least the larger developing countries appear, for the first time, to be prepared to negotiate seriously.

The Corporate sector in the North has been the main driver of multilateral negotiations historically, the process of multilateral trade liberalization in the WTO has been driven by corporate interests, notably in the US and Europe, in search of access to foreign markets. The early rounds of trade liberalization in the GATT were driven by US private sector interests threatened by the trade diversion consequences of the formation of the EU and its subsequent enlargement. The impetus for the Uruguay Round came in large part from the services, and especially intellectual property interests, in the US and Europe, which were looking to boost their sales and profitability during the macro economically difficult times of the 1980s.

The Doha Round has always been plagued by a private sector interest deficit. The corporate demandeurs-the traditional protagonists-of the North are conspicuous by their absence. All the focus on developing country discontent with globalization and the WTO, and attempts to address it by making the Doha round a "development" round have obscured this fundamental problem afflicting the Round. This absence results from an interesting combination of success and defensiveness.

In manufacturing, unilateral and regional liberalization have diminished the stake in multilateralism

The private sector in industrial countries should be interested in seeking market opening in the manufacturing sector in developing countries, particularly the larger ones, where barriers remain high. And the WTO would seem the best vehicle for advancing these interests. Yet there has been little enthusiasm here which ...