February 22, 2011
World Trade Organization which has been in existence since its formation several decades ago symbolizes intergration of the world trade systems. The organization has been attempting to harmonize the world trade in its effort to improve the standards of living of all people especially in the least developed countries through economic growth and development agenda. However, just like any other regional or international organization that is attempting to intergrate several member states either politically, economically or socially, WTO has faced many challenges since its formation. These challenges include political, environmental, cultural and economical which has affected its intergration efforts over the years. This has led to organization of many global trade forums in attempt to solve the challenges that are facing this organization. The most recent global forum is the Doha round that is just about to be concluded. This paper attempts to look the challenges facing the WTO in relation to Doha round negotiations.
CHALLENGES FACING DOHA ROUND
Doha round negotiations were started about 11 years ago in Doha Qatar under WTO. The negotiations have many agendas but the main agenda is to remove trade barriers among the member states globally. This will get the third world countries into the global trade system. However, the negotiations have faced missed ministerial meetings as well as failure to meet deadline as noted by Ismail (2009). As Bercelo (2007) notes, Doha round can be said to be in trouble as for now, there is no progress that is being realized as for now. Many political issues that are based on national interests are the major obstacle to the completion of Doha round negotiations. Many countries including US and European Union are considering the effects of these negotiations on their global trade. The major issues in these negotiations that have formed the bases for division include agriculture, trade remedies, services and industrial tariffs. There are three main blocks in the negotiations where in one side, there are developed countries led by European countries, US and Japan. The second block includes key developing countries led by South Africa, Brazil, South Korea, china and finally there are least developing countries.
Internal policies from the developed countries are always conflicting with the terms of Doha negotiations thus making it difficult for the WTO to remove the barriers. For instance, in US there is 2002 farm bill which has provisions that are conflicting with the terms of Doha negotiations. This bill was passed in 2002 and was meant to increase domestic subsidies in agriculture which is an action against free trade. This subsidies increase the US domestic agricultural production which limit the market available for third world countries. These subsidies are not friendly to trade and they turn to be costly for the third world countries. The breakthrough that is needed in these negotiations will come when the agricultural trade will be freed. All the negotiating partners believe that in order for this breakthrough to be attained, US has to make the first move and agree to reduce its domestic agricultural tariffs more that it has already done. This will allow more market to be freed in US, thus creating space for developing countries to export their agricultural products to the US market. In addition, European countries also need to reduce their agricultural tariffs in an effort to create more space for agricultural products from the developing countries and US. Finally, middle income countries like Brazil, china and India also need to reduce their tariffs on other type of products such as non agricultural products. The agreement need to benefit all the groups since demand for trade liberation from developing countries will not be accepted by the developed countries.
According Barcelo (2007), another challenge that is facing WTO is that of discrimination from the systems of world trade. Many discriminatory trade organizations have been formed around the globe and different countries have joined one or more trade organization. These organizations are discriminatory and go against the principles of WTO such as fairness and openness in trade. This forms a major obstacle in realization of Doha round negotiations. Thus as Stoler (2010) argues world trade organization need to align the discipline of subsidies in order to achieve the waited breakthrough in the Doha round. If US can agree to apply the 97 percent rule as it is negotiated, export from the least developed countries will increase by about 10 percent. However, to convince US to agree with this rule is the hardest obstacle facing the negotiations.
Though many people are optimistic that the Doha round negotiations will be completed, there are still some major obstacles that need to be solved in order to achieve the much awaited break through. These include national interests and discriminatory systems of the world trade. Thus for WTO to realize success in intergrating world trade, it has to address these obstacles standing on its path of success. However all players in the world trade also have a role to play in order to realize this goal.
Barcelo, J.J. (2007), Challenges facing WTO: Doha Round and beyond. Retrieved on February 22, 2011.
Ismail, F. (2008), An assessment of the WTO Doha Round July-December 2008 collapse
World Trade Review. 8(4): (579- 606)
Melo, C. (2010), The Doha Round and Market Access for LDCs: Scenarios for the EU and US Markets. Journal of World Trade, 44(1): (251-291)
Stoler, A. (2010),The Evolution of Subsidies Disciplines in GATT and the WTO
Journal of World Trade. 44(4) 🙁 797- 809)