Trade Policy Analysis No. 23

Whither the WTO? A Progress Report on the Doha Round

Where does the World Trade Organization stand, one year into the Doha Round of multilateral trade negotiations? The new round, launched in Qatar in November 2001, will include negotiations on reducing barriers to trade in industrial goods, farm products, and services and taking the WTO into new territory to cover investment-, competition-, and environment-related trade policies. The new round presents great opportunities, but it also creates new risks for world trade.

Little progress has been made since negotiations in the new round started in January 2002. Doomsayers prophesy a replay of the Seattle disaster-perhaps at the next ministerial conference in Cancun in September 2003-and a marginalized, increasingly irrelevant WTO further down the line.

Clouding the negotiations at the WTO are three alarming trends: creeping standards harmonization, through which more-developed members seek to impose higher regulatory standards in such areas as intellectual property on less-developed members; excessive legalism, through which WTO panel rulings fill in the gaps of WTO agreements; and a more politicized WTO, where interest-group politics threatens to paralyze the organization.

Looking ahead, the round could follow three divergent scenarios: a focus on market access and trade-barrier reduction (the traditional and preferred focus of multilateral negotiations); an effort, principally by the European Union, to turn the WTO into a lumbering regulatory agency in its own image; and a UN-style future for the WTO, with deep divisions and blanket exemptions for developing countries.

For the new round to succeed, the major players, the United States and the EU, must contain domestic political difficulties, defuse bilateral conflicts, and co-operate intensively. A Bush administration leading from the front, notwithstanding protectionist blemishes at home, must forge issue-based and across-the-board alliances with market-access-oriented WTO members, especially within the developing world. Only then will the WTO head in the right direction.

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Razeen Sally is an associate professor in international political economy at the London School of Economics and Political Science, director of trade policy for the Commonwealth Business Council, and a memeber of the Board of Advisers of the Cato Institute’s Center for Trade Policy Studies.