Doha Round of Trade Talks
The Real Reason Why It Failed
The Doha round of trade talks for the period of 2001-2006 was an attempt at a multilateral trade agreement. It would have been between every member of the World Trade Organization (WTO). It was launched at the Doha, Qatar WTO meeting in November 2001, with a goal to be finished by January 2005, but the deadline was pushed back to 2006. The talks were finally suspended in June 2006, because the United States and the European Union refused to reduce agricultural subsidies.
The Doha talks were ambitious. First, all WTO members (almost every country in the world) participated. Second, decisions had to be settled by consensus at the trade talks—every country needed to sign off. Third, there were no piecemeal sub-agreements. There was either an entire agreement or none at all. In other words, unless every country agreed with the whole deal, there would be no deal.
The Purpose For the Doha Talks
The agreement's purpose was to boost the economic growth of developing countries. It centered on reducing subsidies for the developed nation's agricultural industries, allowing them to export food to developing countries. In return, the developing countries would open up their market to services from developed countries, particularly banking. This would have provided new markets for the developed countries’ service industries and modernized existing emerging markets.
Although the agreement negotiated 21 main points, they can be reduced to the following 10 categories:
- A proposed reduction in subsidies to 2.5% of the value of production for developed countries (would only be 6.7% for developing countries)
- A proposed reduction in tariffs on food imports
- A proposed end to subsidies for exports
Non-agricultural market access
- A proposed reduction in tariffs for non-food imports
- Clarified rules and regulations on foreign-provided services
- Developed countries wanted to export financial services, telecoms, energy services, express delivery, and distribution services
- Developing countries wanted to export tourism, healthcare, and professional service
- Countries wanted to decide which services they could allow
- Countries wanted to decide whether to allow foreign ownership
- Tightened the rules on antidumping, which is a rule prohibiting a country from lowering prices on exports to undermine the businesses in countries they are exporting to
- Strengthened prohibitions against launching subsidies to retaliate against another country's subsidies
- Focused on commercial vessels, regional aircraft, large civil aircraft, and cotton
- Reduced fishery subsidies to cut down on overfishing
- Created a register to control country-of-origin for wine and liquor
- Protected product names, such as Champagne, Tequila, or Roquefort, that are only authentic if they come from that region
- Wanted inventors to reveal the country of origin for any genetic material used in products
Trade and environment
- Attempted to coordinate trade rules with other agreements to protect natural resources in developing countries
- Clarified and improved custom fees, documentation, and regulations
- Tightened procedures for customs to attempt to reduce bureaucracy and corruption
Special and differential treatment
- Gave special treatment to help developing countries
- Included longer periods for implementing agreements
- Required that all WTO countries safeguard the trade interests of developing countries
- Provided financial support to developing countries to help build the infrastructure needed to handle disputes and implement technical standards
- Installed recommendations for better settlement of trade disputes
- Opposed customs duties or taxes on internet products or services
Why the Doha Talks Were Important
If it had been successful, Doha would have improved the economic vitality of developing countries. It would have reduced government spending on subsidies in developed countries, but boosted financial companies.
Unfortunately, agribusiness lobbies in the United States and the European Union put political pressure on their legislatures, which ended the Doha round of negotiations. As a result, bilateral trade agreements increased, due to their ease of negotiation.
What Failure Meant
The failure of Doha means that future multilateral trade agreements will need to be more attractive to those countries with competitive advantages. Other sticking points must be resolved as well if the talks are to resume. The United States, Japan, and China must realize their "currency wars"—where countries try to have the lowest valued currency—are exporting inflation to other countries, such as Brazil and India.
The WTO must dangle the carrot of more liberal service export regulations. That would entice the United States and other developed countries to accept services from developing areas. Otherwise, developing countries will move ahead on their own with Trade in Services Agreement negotiations.