Explain the purpose behind the WTO's Doha round of trade negotiations. Why has this round proved so difficult to conclude? What are the likely consequences for the world economy if the Doha round fails?

The second main negotiations was on Trade and Environment, this topic is on how the members of the WTO should comply with the environmental regulations which have been set by other bodies, it is also about the ways products are made to make the processes more “eco-friendly”. The ministers at the Doha round of trade negotiations “agreed to launch negotiations on the relationship between existing WTO rules and specific trade obligations set out in multilateral environmental agreements.” The members discussed the ways in which out of 200 environmental agreements only 20 have trade provisions and how these maybe increased, the reason for this that the WTO is a body which helps to cover all aspects of trade, and as environmental issues are at the forefront of topical debate around the world, the WTO are encouraging their members to improve their production and distribution methods as much as possible while still being price competitive. An example of these discussions and implementations would be “the Montreal Protocol for the protection of the ozone layer applies restrictions on the production, consumption and the export of aerosols containing chlorofluorocarbons (CFC’s).”

Also, the members discussed in the Doha round the environmental labelling requirements and whether the rules which were set by the WTO are in violation of eco-labelling policies, this matter is going to be discussed in the near future between the WTO and the “Barriers of trade committee” (TBT), to see ways in which this matter can be solved.

The discussions which were made on trade and environment are important for both the company’s and countries involved, but also to society itself, the reason for this is that the regulations which have made in these negotiations should help reduce pollution examples of this were (as stated above) CFC’s which creates holes in the ozone layer which will affect everyone, and so it could be seen that these discussions would benefit the whole of society.

The relationship between trade and investment was also discussed in the Doha round of discussions, though these will start after the 5th session of ministerial conference, the reason for this is that the WTO want to wait for the session on modalities of negotiations as this will tell how the negotiations ought to be conducted.

 “In the period up to the 2003 Ministerial Conference, the declaration instructs the working group to focus on clarifying the scope and definition of the issues, transparency, non-discrimination, ways of preparing negotiated commitments, development provisions, exceptions and balance-of-payments, consultation and dispute settlement. The negotiated commitments are being made – “positive lists” – rather than making broad commitments and listing exceptions.”

The declaration also explains the standards which the countries involved should keep to. The reason for this is that there is a need to “balance the interests of countries where foreign investment originates and where it is invested, the countries right to regulate investment, development, public interest and individual countries specific circumstances. It also emphasizes support and technical co-ordination with other international organisations e.g. UN Conference on Trade and Development (UNCTAD).”

This negotiation by the World trade organisation is quite important, has it helps keep the balance on how trade can be conducted and also give the countries powers if they disagree with the way they are being treated by others countries. This declaration will benefit all countries, but especially developing countries as before this was enforced, major powers such America would gain the most out of trading products like raw materials, and would pay a considerable amount less than if they were buying from a more developed country. It gives these countries more say in the practices which go on, and can regulate them on how trading will be at the peak benefit to them without being too controlled by the other country/countries.

The fourth main topic which arose within the Doha round was market access to non-agricultural products, this was where “Ministers agreed to launch tariff-cutting negotiations on all non-agricultural products so to “reduce, or as appropriate eliminate tariffs, including the reduction/ elimination of tariff peaks, and tariff escalation, as well as non-tariff barriers, in particular on products of export interest to developing countries.”

What this means is that as countries have a much harder task of having tariffs on imports the less developed countries will be able to receive more revenue as they receive more capital than if tariffs were used. This idea would also cause better competition within the market, making them price competitive which would benefit the consumer. Also, as non-tariff barriers are to be reduced/ eliminated this will mean that these less developed countries, as they will be able to receive better technology and equipment which would increase productivity and efficiency, helping the country become more developed.

This negotiation is of great importance, especially to less developed countries as it will mean more revenue for the country and also the companies operating within the market, it will also benefit the consumers of which countries are members as products will be reduced in price and also the range of products will increase.

The final main topic which was discussed was regional trade agreements, according to the WTO all countries have to meet certain conditions, yet it is still unclear whether these conform to the provisions set by the Regional trade committee. In the Doha round they agreed to come to a solution as these agreements will be able to help less developed countries gain substantial growth in time, this is stated in the declaration where it says “the negotiations are aimed to clarify and improve disciplines and procedures under the existing WTO provisions which apply to regional trade agreements.”

The objectives of this agreement are to provide a duty free market for developing countries and to improve market exports to these countries; overall these regional trade negotiations could benefit all involved as it will improve regional trade agreements creating more choice for the consumer and also more stability and control for the less developed countries which can help create the foundations for the country to improve on, therefore this should in-turn benefit all involved.

After seven years of negotiations, participants at the World Trade Organization (WTO) mini-ministerial meeting in Geneva on July 2008 could not reach a final agreement on the Doha Round liberalization modalities. Conflicts still exist on several issues regarding the commitments that both developed and developing countries should make. For instance, the United States (US) is still reluctant to tackle the issue of domestic support to the cotton sector, and India and other developing countries wish to avoid restrictions, such as the anti-concentration clause, on their ability to use flexibility in Non Agricultural Market Access (NAMA) negotiations.  

Beyond these very specific elements of disagreement, it seems that the incentives to conclude the Doha Round are weak. Because large market access gains have already been achieved in the manufacturing sectors of developed country markets (Martin and Messerlin, 2007), the impetus that existed in previous multilateral negotiations has vanished. In addition, the remaining issues are not only more difficult to negotiate, but the political costs are high and the gains are more difficult to assess. For developed countries, liberalizing agricultural markets remains a very complex issue. At the same time, developing countries want to maintain protection in manufacturing and avoid making new commitments regarding services based on nascent industry considerations. Lastly, regional and bilateral liberalizations have reduced the market access gains expected by key players and have fostered resistance to multilateral liberalization that will erode existing preferences. Therefore, the longer the negotiations last, the weaker are the incentives to conclude a successful round.

The financial crisis has greatly magnified the import of that failure. As the turmoil starts to weaken the “real” economies of many countries, the WTO’s July meeting can be seen, in retrospect, as a potentially calamitous stumble for economic globalization.

The spectre of widespread protectionism, which seemed almost laughably remote in recent years, suddenly looms as a much more serious threat. Up to now, it has been easy to dismiss worries that the world might descend into trade wars like those of the 1930s, when America’s Smoot-Hawley tariff triggered a disastrous cycle of retaliation and counter-retaliation. Those fears look a lot less far-fetched now that recessionary forces are spreading to every major region of the world. The resultant rise in unemployment and bankruptcy is bound to generate intense pressure on politicians to raise trade barriers. In the United States, such pressures will be all the greater because the plunge in many foreign currencies—from the Korean won to the Brazilian real to the South African rand—will make imported products much cheaper.

After India refused on to accept the special safeguard mechanism (SSM), a measure designed to protect poor farmers by allowing countries to impose a special tariff on certain agricultural goods in the event of an import surge or price fall deal, the U.S. and China began blaming the collapse on India. In addition, any smaller countries are anxious that they will now come under renewed pressure to sign generous bilateral trade agreements with rich countries, giving them less bargaining power than they can wield collectively within the WTO. Amy Barry, a trade analyst at Oxfam, said: "The concern is that in bilateral and regional deals they have much less clout and that if the WTO is discredited then countries like the US and EU will pay even less attention to its rules than they already do.""No deal is better than a bad deal," said Aftab Alam Khan, head of trade policy at ActionAid, arguing that the US and EU had made too many demands.

The failure of a WTO agreement would be a clear sign of international non-cooperation; it would launch trade conflicts and litigations (especially between High Income and Developing Countries), and would be the first unsuccessful Round despite the fact that it is the first Round to focus on development and the first Round launched by the WTO. In a period of economic stagnation, the risk is high that this failure would give WTO members the incentive to pursue non-cooperative strategies via the adoption of protectionist policies. In that case, the loss would be large. Therefore, stakes in Geneva are very high and the July 2008 package appears to be the closest and most promising step toward a global development agenda for a world in disorder.  

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