How to Close WTO Doha (Nearly a Decade On)

♠ Posted by Emmanuel in ,, at 9/27/2010 12:03:00 AM
Here's something that I just missed from the ever-interesting Foreign Affairs which always has something good to read (even if I disagree with the contributors once in a while). In case you're still counting--and even I tend to lose count for obvious reasons--we are nearing the tenth year of Doha Development Agenda negotiations with nary a sign of it nearing completion. Began in 2001 partly in sympathy for America after the 9/11 attacks, let's say the rest of the world hasn't given the red, white, and blue a free pass in the trade realm since then. Sometime ago, Aditya Mattoo and Arvind Subramanian offered their take on how the DDA should be, ah, structurally adjusted to bring about a greater chance of completion. Now, Gray Hufbauer and Robert Lawrence offer their thoughts on the same.

What is interesting is how these two authors focus on the two big players who now arguably hold the cards in world trade. In particular, what should be done to make this a genuine development round? On one hand we have the world's biggest largest exporter of goods and services as well as its largest importer of the same (America). On the other we have the world's largest merchandise exporter, having recently surpassed Germany. Insofar as Germany is pretty content to let others with longstanding interests to protect (French and US agriculture) and images to burnish (China as a fast-developing economy) duke it out in trade negotiations, let's read the authors' prescriptions for Chimerica:
If China acts as a leader in the trading system, it should be recognized as one. In its WTO accession agreement, China reluctantly agreed to be treated as a nonmarket economy in antidumping cases until 2015, which meant that its exports could be subject to safeguards with a lower trade impact threshold ("market disruption") than normal safeguards applied to other WTO members ("serious injury"). This provision was invoked by Obama last year, when the United States slapped high duties on inexpensive car tires made in China and imported by Wal-Mart and other budget retailers. China also agreed in advance of its WTO accession to submit to annual compliance reviews, which Beijing considers humiliating. In return for concessions on government procurement and services, the United States and other developed countries should grant China recognition as a market economy -- with normal remedies in antidumping and safeguard cases -- and also put an end to annual compliance reviews.

Meanwhile, the United States should phase out cotton subsidies -- which were ruled illegal by the WTO two years ago -- and put a cap of about $9 billion annually on all its agricultural subsidies. Washington should also agree to extend duty-free, quota-free treatment to virtually all the exports of the least developed countries and allow duty-free imports on all manner of environmental goods, including ethanol. Such a gesture would give substance to the development promise of the Doha Round and, in a modest way, put the United States on the right side of the climate agenda.

If China and the United States are on board, other major players will feel enormous pressure to contribute. India, with its demonstrated interest in maintaining open markets in information services, would likely join the services talks and sign on to the GPA. Brazil and other successful developing countries would do the same and contribute concessions on industrial products.

These proposals could make the Doha Round a political winner: major concessions by China and a few other emerging countries would be seen in the United States as evidence of greater access in markets that count. And China would not advance its status as a full participant in the world trading system, while also positioning itself as the leader that delivered the benefits of the Doha agenda to all developing countries. The world would recover that much faster from the hangover of the Great Recession.