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What is the Doha Round?

What is the Doha Round? article image

It's supposed to be the mother of all trade negotiations, but what else does the Doha Round represent and how will it affect Australian exporters? Doha, capital city of emerging emirate Qatar in the Middle East, was the site of the 2001 World Trade Organisation (WTO) Ministerial Conference, a meeting held biennially by the topmost body of the organisation. The theme of the meeting focused on ensuring developing countries benefited from the multilateral trading system that the WTO provided, hence its alternative name 'the Development Round'. From the conference came the Ministerial Declaration that to tackle the global economic slowdown of the late 1990s/early 2000s, the WTO and its members would need to "maintain the process of reform and liberalisation of trade policies, thus ensuring that the system plays its full part in promoting recovery, growth and development" and to "reject the use of protectionism".

The Doha Round in brief

In particular the Doha Development Round, or Doha Round as it is more popularly known, recognised the role that trade plays in the economic development of emerging countries and the alleviation of poverty. In essence, the Doha Round is therefore a negotiating platform for a free trade agreement encompassing all the members of the WTO, but one especially mindful of the disadvantages in the trading system experienced by less developed countries that may not have the power, influence or leverage of their more affluent counterparts. As a result, the work program developed at Doha reflected the special needs of struggling, underdeveloped economies participating in liberal trade. The declaration set this out in no uncertain terms-"we recognise the need for all our peoples to benefit from the increased opportunities and welfare gains that the multilateral trading system generates"-and the ministers pledged to "continue to make positive efforts designed to ensure that developing countries, and especially the least developed among them, secure a share in the growth of world trade commensurate with the needs of their economic development". To meet these goals, they noted that "enhanced market access, balanced rules, and well targeted, sustainably financed technical assistance and capacity-building programs have important roles to play". The Doha Round also ties in with the United Nations Millennium Development Goals to: end poverty and hunger, provide universal education, achieve gender equality, improve maternal and infant health, combat HIV/AIDS, achieve environmental sustainability and strengthen global partnerships. In light of this, WTO director-general Pascal Lamy noted that "the strengthening of the multilateral trading system through the conclusion of the Doha Round and Aid for Trade are the contributions that the WTO has to make" to meet the goals.

Advance Australia

According to a conservative estimate by the WTO, a Doha Round deal would lift the global economy by $130 billion a year, a gain based on cutting proposed tariffs. However, a study by the Peterson Institute for International Economics in the USA shows that a trade deal could boost the world economy by between $300-700 billion a year, spread equitably across developed and developing countries. This figure includes the broader impact of a trade deal such as efficiency gains made by helping developing countries improve trade infrastructure and ease bureaucracy. Australia has much to gain from a worldwide trade deal of this nature, as it would level the playing field in favour of more open trading terms. "This is the pinnacle in terms of trade policy negotiation, in terms of making a fairer environment for global trade," says Cameron MacMillan, former trade commissioner and current executive director of International Business at global business advisory BDO in Queensland." For Australia, being a very open trading environment, this would just be marvellous to lock in."

And for the individual exporter there seems to be only positives in store if the deal goes through. "I see very little drawback because we have already taken the big steps," MacMillan says. "We have put in place microeconomic reform and macroeconomic reform that has streamlined and opened our economy. We have all to gain from open trade." However, one problem is that Australia, while enthusiastic, is not highly influential at the negotiating table. "With the greatest respect to the efforts of our government, we are extremely efficient, we are major contributors to research and to the debate, but in terms of influence we're up against the EU and the USA and some of the other countries that are sticking their heels in with regard to the Doha Round," he says. "We have our place."

State of play

Earlier this year, Lamy said he believed the Doha Round was about 80 percent there and "technically doable". He indicated the final 20 percent would be about ironing out differences in agriculture and making trade between rich and poor nations fair and equitable. "That probably has to do with what remains to be done with tariff reductions on industrial goods, and in some cases on agricultural goods, notably with the safeguard with developing countries," he said at the time. Negotiations have stalled due to a number of factors, most prominently disputes about the role of agriculture in both developed and developing countries. "It comes from two angles. From a developing country perspective they want restrictions on agricultural trade into their country and for a developed country perspective, they don't want to correct subsidies for farming," explains MacMillan. "It is purely political." The Doha Round's initial purpose is to stave off protectionism in order for the work program to take place. At the time of its inception, many developed countries had undergone a mild recession, and some economies were still suffering the aftershock of 1997 Asian financial crisis. Fast forward to 2010, and the world once again finds itself emerging from a period of economic turmoil. The Doha Round thus remains an important reminder of the reasons to resist protectionism. Unfortunately, the GFC affected some countries' trade behaviour. "The contagion that was around the GFC situation made people look inwardly. Global trade took a bit of a back seat," says MacMillan. "People were very worried that the GFC would mean there would be new trade restrictions introduced or 'buy local' campaigns, which is all well intended but does slow down global trade. Politicians do recognise that global trade is a great way to assist recovery and need to remind themselves and others of that." As for Lamy's comment that the Doha Round is "80 percent there", MacMillan agrees that "the low lying fruit have been picked" but believes that the hard issues-which will take the most time and effort to traverse-have yet to be successfully negotiated: "There's no doubt that a multilateral agreement is so much more complicated, difficult, technical. It really pushes on people's national pride and their attitude towards domestic industry." He points to successful agreements such as the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA) as evidence that multilateral trade agreements are possible despite differences between signatory parties, and affirms his belief that the Doha Round will eventuate in a global agreement. "FTAs provide a platform for dialogue. The benefits will come, but there aren't any instant wins," he warns. "But the end game is well worth it."

Getting to know Doha

Department of Foreign Affairs & Trade: www.dfat.gov.au/trade/negotiations WTO's Doha Agenda: www.wto.org/english/tratop_e/dda_e/dda_e.htm DFAT encourages contact at trade.consult@dfat.gov.au or Trade Policy Section Office of Trade Negotiations Department of Foreign Affairs and Trade BARTON ACT 0221

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