M. Chatib Basri University of Indonesia and CReco Research Institute

Transcription

1 M. Chatib Basri University of Indonesia and CReco Research Institute

2 About the report Background of the High Level Trade Experts Group This report was published as an urgent warning. This report traces the imminent failure of the Doha Round back to a deficit of political leadership. It is a failure at the level of national governments, it is a failure above all of national leaders This argument about political leadership runs through this overview of the global trading system and its future. This is a report for the political leaders who must own and nurture the global trading system.

3 Background The fundamental role of the WTO, and of the GATT before it, has been to provide a legal and diplomatic framework in which the principles of open trade could be established and liberalization can be agreed, managed and enforced. Yet, the WTO remains vulnerable. Successive G20 Summits have repeated conventional mantras about the value of the open trading system and the need to bring the Doha negotiation to a successful conclusion.

4 Why open trade is important? The political case for open trade is not just economic but moral : look at the case of rice in Indonesia, engine of prosperity Keeping protectionism at bay : WTO disciplines Trade is changing; so are trade barriers: intermediate goods, production net-work Trade in services is crucial for growth Behind the border barriers Capacity to trade as a barrier to trade

5 Some issues in world trading system Resisting protectionism Risk of currency wars How to progress service in trade liberalization How to tackle regulatory barriers to trade

6 Aid for Trade Aid for trade programs where these countries are offered funds and technical assistance for developing the missing or inadequate institutional and physical infrastructure necessary to undertake increased trade are best seen as a way of giving these countries that traction. There is growing realization of this supply side constraint on effective trade performance rather than the demand side constraint resulting from lack of market access.

7 Why Doha? Doha captures many of the basic political problems the wider multilateral trading system faces: a changing political economy among the largest and most influential members, driven above all by the rise of the growing economies of Asia and Latin America; a political tension between the multilateral agenda and regional and bilateral trade agreements; and above all, a deficit in political leadership at the level of the states that actually make up the WTO and who must ultimately be the engine of its forward movement

8 Why failure must not be an option for the Doha Round Ten years of negotiation has produced the most farranging and substantial package of trade liberalization ever put within reach. It would lock in and render irreversible the unilateral liberalization of the last decade, fundamentally reform global farm trade, and provide new market access in almost all the world s largest markets. Nothing like these gains could ever be achieved bilaterally in any other format.

9 Unfairly or not, Doha s failure would stand as the basic benchmark for the WTO s success or failure fifteen years after its creation. The collapse of the Doha round would inevitably accelerate the drive to bilateral preferential trade agreements that has done much to distract WTO members from the wider goal of a multilateral pact. FTA/PTA is WTO plus. Without Doha, no benchmark for FTA High food prices

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11 Why Doha Stalled the reasons for Doha s slow progress are also tied to the changing nature of the WTO and the states it represents as much as to any specific detail of the negotiation Rapid growth of emerging economies changed relationship between poor and small. This systemic free riding which was critical to building consensus in earlier Rounds was justified under the legal principle of special and differential treatment and economically under the now discredited theory that high tariffs fostered industrialization. 21st century economic realities, however, changed this. Expansion of negotiations into agriculture

12 The outcome will be asymmetrical. This makes the Doha Round a difficult proposition for some domestic constituencies, even if it does not in itself imply a reduction in the economic value of the package for developed economies, due to the beneficial impact of new access for imports. For EU: complete renovation of its system of agricultural supports and tariffs with no expectation of proportionate action from developing countries. Similar the US, Japan and Switzerland, and that its competitiveness in So the Doha Round s development mandate will be delivered in two key ways: 1) complete exclusion of all Least Developed Countries from any obligations except binding their tariff schedules at the current level 2) the concept of agreed modalities for tariff cuts (and in the case of agriculture, subsidy reductions) in principle agreed by all members, but in practice tempered by various forms of flexibility for developed and developing countries.

13 Doha the case for completion An insurance policy against future protectionism. Doha would act as a consolidation agreement for the large amount of unilateral liberalization that has occurred since the end of the Uruguay Round in In this sense by binding this openness into an international agreement it acts as an insurance policy against possible reduction of market access. Reform of farm trade. A Doha Agreement would have the same constraining effect on the subsidization of farming in the developed world. A Doha agreement would also eliminate all export subsidies for agricultural goods. New market access. The reinforcing the WTO system

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15 Conclusion The WTO will never fulfill its potential without genuine political ownership by the member states it represents. All members, including the large developing countries that are now required to make a new level of concessions to match the benefits they have extracted from liberalization by other members, need to play a more statesman-like role in strengthening the WTO. The economic weight of these rising powers is such that they have the clear capacity to make or break the WTO, much as the EU and the US have had for the last two decades.