Is Doha Still the Best Way to Go?

In the absence of agreement on the Doha round of trade talks, Asia has embarked on a host of bilateral and region-to-region trading arrangements which have increased trade complexity. Pushan Dutt, Associate Professor of Economics at INSEAD this week argued that policymakers should continue to strive for a multilateral deal.

The Trans-Pacific Partnership, an 11-country free trade area including the US, is just one of 60 such deals currently being hammered out across Asia. Upon completion, it will add to the 166 trading arrangements the region already has in force. The EU has also been strengthening ties with ASEAN countries, with the eventual goal of a region-to-region free trade agreement (FTA). There were just six trading arrangements in Asia in 1991.

This rush to form regional and bilateral trade deals comes as the relevance of the WTO is being called into question and as a new director general is scheduled to take the helm. The WTO has struggled to rebuild interest in a global deal on trade liberalisation since the collapse of the Doha Round in 2008. But are these bilateral deals, even between trading blocs of countries, the way to go?

Dutt argues that while bilateral arrangements are better at reducing barriers quickly and are easier to reverse, multilateral trading arrangements are a stronger commitment to trade liberalisation. He says that Doha remains the best way forward because it would create certainty about the policy environment as well as limiting the trade wars and protectionist policies that were a reaction to economic crises in the past.

Many of the bilateral trade agreements currently under negotiation are between asymmetric partners such as the U.S. and Columbia. Obviously the U.S. has all of the negotiating advantage. In the multilateral Doha round, smaller countries have a much more powerful voice. Dutt believes that this makes the Doha round the most viable option to move trade liberalisation forward despite the challenges that remain to clinching a final deal. The three issues stalling talks are: broad agreements on agriculture, textiles and services; countries wanting access to other markets but being guarded of their own; and the consensus that “nothing gets agreed at the WTO until everything gets agreed.”

While a multilateral deal still remains the ideal, it would be tragic and unnecessary if hope of creating trading opportunities for the poorest countries were to be abandoned because of the continual failure to bring the entire Doha Round to a conclusion.

It is imperative that the most developed countries continue to take steps to boost development of the poorest countries through trade – steps which do not require unanimous agreement from WTO members; nor do they require reciprocity from the poorest countries. Any country could open up their markets unilaterally and shame others into action. Many of the development aims of Doha can still be achieved without a multilateral agreement being signed.

Read Professor Dutt’s thoughts in full here

 

summary

In the absence of agreement on the Doha round of trade talks, Asia has embarked on a host of bilateral and region-to-region trading arrangements which have increased trade complexity. Pushan Dutt, Associate Professor of Economics at INSEAD, this week argued that policymakers should continue to strive for a multilateral deal. While a multilateral deal still remains the ideal, it would be tragic and unnecessary if hope of creating trading opportunities for the poorest countries were to be abandoned because of the continual failure to bring the entire Doha Round to a conclusion. Many of the development aims of Doha can still be achieved without a multilateral agreement being signed.

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By | 2016-03-25T15:31:18+00:00 April 12th, 2013|Uncategorized|0 Comments

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