The Doha round of talks began once again on the 21st July; the Doha Development Round is the trade negotiations of the World Trade Organisation. The round originally commenced at Doha, Qatar in November 2001 and negotiations continue today. Its objective is to lower trade barriers around the world, permitting free trade between countries of varying prosperity. As 152 countries converged on Geneva, talks continue to stall over a divide between the developed nations led by the European Union, the United States and Japan and the major developing countries led and represented mainly by India, Brazil, China and South Africa.
Very little progress has been made after seven years of seemingly fruitless haggling; ministers are still trying to agree trade-boosting measures. Discussions have so far foundered over the extent of cuts to farm subsidies and how far trade in services such as banking should be liberalised. In the current round of talks, negotiators from more than 30 countries are meeting in Geneva to try and inject fresh impetus into the process.
Trade: Past and present
The origins of the current negotiations go back to the international situation after WW2. The General Agreement on Tariffs and Trade (GATT ), was established after World War II in the wake of other new multilateral institutions dedicated to international economic cooperation – notably the Bretton Woods institutions now known as the World Bank and the International Monetary Fund. With the US dominating the post war situation it invited its war-time allies to enter into negotiations to conclude a multilateral agreement for the reciprocal reduction of tariffs on trade in goods.
The General Agreement on Tariffs and Trade was the outcome of the failure of negotiating governments to create the International Trade Organization (ITO). The Bretton Woods Conference had introduced the idea for an organization to regulate trade as part of a larger plan for economic recovery after World War II. As governments negotiated the ITO, 15 negotiating states began parallel negotiations for the GATT as a way to attain early tariff reductions. Once the ITO failed in 1950, only the GATT agreement was left. The GATT’s main objective was the reduction of barriers to international trade. This was achieved through the reduction of tariff barriers, quantitative restrictions and subsidies on trade through a series of agreements. The GATT was a treaty, not an organization. The functions of the GATT were taken over by the World Trade Organization which was established during the final round of negotiations in early 1990s.
The Doha development talks were launched in 2001 as a rehashed version of the talks that had been taking place for half a century which achieved very little. The Doha round of talks are now in their seventh year, with a deal still very unlikely.
What is being negotiated?
After WW2 the US proposed amongst a number of proposals that opening the economies of the world was the best way to deal with post-war reconstruction, the closed economy scenario prior to the war isolated nations from each other and as most nations do not have all the resources they need the removal of restrictions to trade would benefit all. The WTO was created during the Globalisation era and this became the number one argument for removing barriers to trade as the world economy was becoming more integrated only the removal of barriers to trade was the way for underdeveloped nations to develop.
The biggest sticking points currently are how far the richest countries will go to remove their barriers to agricultural exports from the poorer ones. The US also disputes the extent to which developing nations open up their markets for manufactured goods and services from the rest of the world.
US brings talks to a standstill
The US was blamed for causing the collapse of the negotiations in the past and this is because it felt that developing countries would not open markets in the same way that it was being asked to open its and so it saw no point in continuing the talks. It wanted what would seem like a fair deal: rich countries open their market, and poor countries do the same in return. Without understanding context or history, this sounds just and equal, however global trade has always been unequal, dominated and influenced by the rich countries.
Geopolitics
Global trade has always been unequal throughout the history of Western development, Western nations have competed for foreign markets even going to war with each other. What must be understood is the opening of economies and the removal of barriers to trade is a formula being presented for third world nations to follow. However a cursory glance at the development of the US and Britain clearly shows that they developed behind much protection and completely opposite to what they are proscribing for the world. It wasn’t until after WW2 that the US began to liberalise trade and the reasons for this was outlined by Dr Joon Change expert in economic history at Cambridge ‘it was only after WW2 that the USA – with its industrial supremacy unchallenged – finally liberalized its trade and started championing the cause of free trade.’
Once Western countries establish industrial dominance behind protectionist walls, they tend to advocate free trade in order to kick away the ladder from the followers and consolidate their dominance this was certainly the case for Britain in the mid 19th century which led the liberalisation drive in Europe. The United States today is following a similar path.
Conclusions
The US utilised its dominant position after WW2 by establishing global institutions in order to shape the world according to its interests. It developed the Marshal Plan for European reconstruction to ensure Europe didn’t drift towards communism. The reality of such institutions in their historical form and in their current forms as the IMF, World Bank and the WTO have been complete failures for most of the world, their aims were outlined very clearly in a Brookings Institute report: “The United States has viewed all multilateral organisations including the World Bank, as instruments of foreign policy to be used in support of specific US aims and objectives…US views regarding how the world economy should be organised, how resources should be allocated and how investment decisions should be reached were enshrined in the Charter and the operational policies of the bank.”
Adnan Khan – Economics Correspondent