The Hindu : Opinion / News Analysis : The Doha talks must fail for the world's poor

Online edition of India's National Newspaper
Tuesday, Jul 04, 2006

Opinion

Opinion - News Analysis

The Doha talks must fail for the world's poor

Robert Wade

AMONG THOSE who care about multilateral trade negotiations the air is thick with talk of crisis in the Doha trade round. Should we be crossing our fingers that agreement is reached around the sort of deal that the parties are negotiating? World Trade Organisation director-general Pascal Lamy says the price of "failure" would be high. The question is: high to whom? The price of failure to agree a deal within the current parameters would certainly be high for the developed countries; but it is not clear it would be high for most developing countries.

Developed countries have low tariffs on industrial and service imports and high tariffs (or other forms of protection) on agricultural imports. Developing countries have substantial tariffs on industrial and service imports and on some agricultural imports. In the Doha round, developed countries are saying to developing ones: "You must make cuts in industrial, service and agricultural tariffs, and then we will make cuts in our agricultural tariffs and other agricultural supports. This will give you better market access for your agricultural exports, in line with your comparative advantage; and we will get better market access for our industrial, service and agricultural exports."

The developed countries are insistent that developing countries make big cuts in protection on non-agricultural imports, so much so as to yield the acronym NAMA (non-agricultural market access). The developed countries are making a big push to get developing countries to accept NAMA proposals.

Serious dangers

Most developing countries face serious dangers of de-industrialisation if they accept the basic terms of this negotiation. They risk becoming more specialised than at present in the production of primary commodities and simple, labour-intensive products, and even less diversified in the production of more complex, rich country goods.

I take it as given that the world interest (at least of the human species) favours a more equal distribution of income and wealth. My argument is that faster, catch-up economic growth and industrialisation in developing countries is unlikely in conditions of free trade, for at least three reasons.

First, virtually no country has managed to industrialise and become "advanced" without going through a stage of protecting new basic industries. As the domestic industrial sector became deeper the now-advanced countries liberalised their trade selectively and gradually. The colonies of these countries were forced to liberalise quickly and unselectively, and experienced rapid de-industrialisation.

Secondly, industrialisation in today's developing countries is unlikely in conditions of free trade because they will then tend to specialise in exports from their existing efficient industries and agricultures. Their further development depends on diversifying into higher value-added activities in which they are not presently efficient.

Thirdly, the developed countries have tightened their protection of new technologies through the WTO's Trade-Related Intellectual Property Rights (TRIPS) agreement, making it more difficult for developing countries to obtain advanced technologies than in the more permissive regime when today's advanced countries were developing.

The developing countries should resist the NAMA agenda. They should push for rules that allow developing countries more latitude to set tariff levels in line with the maturity of their industries, and with variation rather than uniformity in tariffs across industries in line with differences in the time needed for upgrading. And they should push for relaxation of TRIPS. —

(Robert Wade is professor of political economy at the London School of Economics. He is the author of Governing the Market.)

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