Remember the development round? Belated reflections on the WTO Doha collapse

December 22, 2008

     By Duncan Green     

I was on holiday when the Doha round ran into the sand at the end of July (for more see here), but reading the reports brought back memories of previous collapses (a WTO speciality) in Seattle and Cancun. If you can get past the thickets of tradespeak, the subtexts to the latest collapse carry some fascinating stories about how the world has changed since the round was launched in 2001.

The meeting finally fell apart on the apparently technical issue of how far poor countries are allowed to go in protecting small farmers from surges of imports, the so-called ‘special safeguard mechanism’ (see what I mean about tradespeak?). That saw the US line up against India and China, backed by about 100 developing countries, who were arguing for greater flexibility.

At first sight this is paradoxical. In a period of record high prices, the last thing developing countries want to do is jack up tariffs (and prices) still further. But the shock of food prices seems to have reminded governments of the wider importance of food security, and made them want to set rules that provide flexibility when (if?) prices fall back and their farmers once again come under threat.

Back in 2001, I was part of a group of NGOs, academics and developing country delegations that promoted the idea of a ‘development box’ of pro-poor measures in the WTO Agreement on Agriculture. These included the special safeguard mechanism and giving developing countries particular flexibility to protect ‘food security crops’ vital to the livelihoods of poor farmers. The idea of using trade rules to defend particular vulnerable sections of the population was one of the more innovative discussions in a round that exposed real differences in understandings of the links between trade and development.

Such differences also emerged over industrial tariffs – should developing countries be obliged to cut tariffs, or should the rules recognize their particular need to protect infant industries at early stages of development (for more see here). The talks in Geneva never even got to another crucial battleground – the need to curb US and European subsidies on cotton, which drive down prices for millions of cotton farmers in West Africa and elsewhere. The Cancun ministerial collapsed largely over the EU’s efforts to force onto the agenda a series of deeply unpopular ‘new issues’ on investment and competition policy largely designed to pry open developing country markets for European companies.

These divisions exposed the shallowness of the claims that the Doha talks constituted a ‘development round’. In fact the round was almost accidental – launched just six weeks after the 9/11 attacks as a gesture of global solidarity, but with little of the demand from business evident in the previous ‘Uruguay Round’ that led to the establishment of the WTO. The round proved something of a political and intellectual dinosaur: combining the geopolitics of the late 1990s with the ‘liberalization is good’ agenda of the late 1980s, it struggled to adjust to the rise of powerhouse economies in China, India and Brazil, the constraints placed by climate change, or the growing doubts about the Washington Consensus. It was this inability to adapt that underlay the collapse last month.

What happens next? If the WTO were a football team, its record of lost 3 (Seattle, Cancun, Geneva), drawn 1 (Hong Kong) and won 1 (Doha) would lead to calls for a change of manager. In this case, the manager is effectively the entire world, however, and the world needs a multilateral trading system in which rules place at least some curbs on abuses by the powerful players. Perhaps the best thing would be for the WTO’s members to, in the words of the Financial Times, ‘let it go’, declare the round closed, and get back to the WTO’s core business of monitoring and regulating world trade on the basis of its existing agreements, however flawed (much of the developing country agenda in Doha was a doomed attempt to correct such flaws). Freed from the intellectual and political straitjacket of the Doha round, it might then be possible to think more creatively about how to ensure trade works for development in a carbon-constrained world.


December 22, 2008
Duncan Green