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Last chance for the Doha round

Trade ministers of the 21-member Asia Pacific Economic Cooperation (APEC) meeting in Vietnam might have done a signal service to the cause of multilateral trade. Their appeal to the WTO members to break the deadlock in the Doha development round might be the best hope yet for salvaging the most ambitious multilateral trade negotiations ever attempted. The Doha round that began in 2001 hit a roadblock over seemingly intractable issues connected primarily with agriculture. In July this year the talks reached an impasse. India, Brazil and other large developing countries resisted demands by the United States and the European Union that they lower their tariffs without the developed nations agreeing to a substantial reduction in their domestic subsidies and agricultural tariffs. WTO Secretary General Pascal Lamy had identified a triangle of issues on which the future of the Doha round depended: the U.S. will have to agree to a deeper cut in its domestic farm support; the EU to an increased market access (by lowering tariffs) and the developing countries to a lowering of industrial tariff. With each wanting the others to move first, the negotiations floundered amidst fears of dire consequences not just to the future of the Doha round but to the WTO itself.

The prognosis was grim also because the latent protectionist sentiment in the U.S. was expected to assert itself after the November midterm elections. However, even though the Democrats have won control of both the houses of the U.S. Congress, there are clear signs that the mood might actually tilt towards multilateral trade. That by itself could give negotiators everywhere a fighting chance to reach an amicable resolution of the Doha round issues. Whether that is possible before the U.S. President's "fast-track" authority ends in July next year is unclear, but the post-election messages from the U.S. have certainly shortened the odds. For various other reasons too the timing of the APEC declaration is propitious. The APEC on its own has substantial clout, accounting for nearly 50 per cent of world trade and 60 per cent of the GDP. One of its key members, Vietnam, has just joined the WTO and another, Russia, seems all set to follow suit. The declaration calls upon every member to move beyond its current position over key issues of the Doha round. Such "give and take" was what has been missing so far but all countries, including India, have consistently favoured multilateral trade over bilateral trade treaties and free trade zones. The challenge now is to not lose sight of the development issues in the Doha round even while moving towards tariff cuts to boost world trade.

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