World trade law after Doha: multilateral, regional, and national approaches.

Author:Gantz, David A.
 
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  1. INTRODUCTION

    After ten years, the Doha Development Round is effectively dead, at least in its present form, even if no one seems willing to affirm its passing in so many words for fear of being blamed for its demise. (1) At best, "the Doha Rounds seems likely to lapse into an indefinite period of hibernation--with little idea of when or how the talks could be wakened." (2) Doha will not likely again be a comprehensive single undertaking, and it is unlikely that a broadly comprehensive round of trade negotiations reminiscent of Doha or the Uruguay Round will be attempted in the foreseeable future. Although some have suggested a "time out," with resumption only after political leadership changes in the United States and China, in 2013, (3) there is little reason at this writing, with the inability of the Ministers at the WTO's 8th Ministerial Meeting in December 2011 to resurrect the Doha Round, (4) to believe that a few years' delay would make a major breakthrough in the negotiations possible. While some have suggested that Doha's demise threatens the continued existence of the GATT/WTO system, (5) many more see continued strength in the system as developed over the past nearly sixty-five years, with its extensive body of rules and a mandatory dispute settlement system that, despite its flaws, works reasonably well, and consider it unlikely that the binding rules that have been negotiated in prior GATT rounds will atrophy. (6) Even with some risks of backsliding and increasing protectionism many nations, the United States, the European Union (EU), Japan, Brazil, China, and India, among others, have far too much to lose to make abandoning the WTO rules or even departing substantially from them a rational option. Thus, the WTO system, with its inefficiencies and deficiencies (of which there are many (7)), is here to stay.

    Over the past twenty-five years, international trade expanded in a robust manner, outpacing world population by about 5 percent, compared to 1 percent from 1870 to 1950. (8) Between 1994 and 2006, world merchandise trade increased each year except for 2001, in amounts ranging from approximately 10 percent in 1997, 2000, and 2004, to only 3.5 percent in 2002. (9) While world trade rules undoubtedly facilitated this growth, other factors, including trade in components as a result of just-in-time manufacturing processes and the revolution in shipping brought about by the containerization phenomenon, as well as some of the more successful regional trade agreements (RTOs) such as the EU and NAFTA, also contributed. (10) Perhaps Doha has been a victim of the success of prior GATT negotiating rounds, because of the extent of liberalization except with regard to agricultural subsidies, sensitive agricultural goods, and certain manufactured products. (11)

    The last several decades have also been a time of fundamental change to the global trading system. The "Quad" countries (the United States, EU, Japan, and Canada) no longer dominate the negotiations. China (since November 2001), Brazil, India, Indonesia, and South Africa in particular are major players without whose concurrence little can be accomplished in Geneva. (12) This trend will likely continue, as it is estimated that in twenty years or so, ten of the largest economies will be what we currently regard as developing countries, and China will likely be almost every WTO Member's largest trading partner. (13) Peter Sutherland, the last secretary general of GATT, states bluntly that because China is the "world's most successful trading nation and will remain so for a long while ... China [is] the key player in the World Trade Organization." (14) Less significant change is likely for most other developing countries, which despite increasing their share of world trade are likely to remain poor. (15)

    The Doha process has also been plagued by a confluence of negative political factors in the United States, the EU, India, and elsewhere. The expiry of Trade Promotion Authority (TPA) in the United States in mid-2007 and divided government since 2010 have made continued negotiations more difficult, given that most nations are reluctant to conclude trade agreements with the United States unless they are assured (as TPA provides) that Congress cannot unilaterally change the agreement. (16) Elections in India in 2009 likely contributed to the failure of progress in the negotiations in 2008, as did Brazil's more recent defensive approach toward rapidly increasing imports from China and currency appreciation at home. (17) A similar problem has been the inward focus of those and other developing nations, for which reducing poverty remains a major focus of government policy and actions. (18) If one adds Japan's on-going political paralysis, the EU's focus on internal debate about the Eurozone and a stagnant regional economy and implementation of the Lisbon Treaty, and China's reluctance to accept the full responsibilities of WTO membership and world economic power status (likely in part as a result of a coming leadership transition), (19) there has arguably been a perfect storm of extreme political caution among the major players in the negotiations.

    If there is reason for cautious optimism post-Doha it is because there are alternatives to a broad package of new or amended WTO agreements. These alternatives while less than ideal may nevertheless provide an impetus for continuing trade liberalization both among specific countries and in some instances worldwide. Such possibilities include existing and future "plurilateral" trade agreements (specialized agreements among willing Members but not the entire membership, such as the WTO's Government Procurement Agreement and the Information Technology Agreement), hundreds of regional trade agreements (RTAs), and various national laws and regulations in the soon to be 156 member nations of the WTO. (20)

    I begin in Part II by reviewing briefly the evolution of the world trading system since 1947, along with the major reasons for Doha's failure and for the widespread belief that a broad agenda of "single undertaking" negotiations cannot be recreated in the foreseeable future. Part III discusses the specific areas in which relatively widespread international agreement may be reached, including information technology, trade facilitation, government procurement, services, fisheries subsidies, and treatment of state owned enterprises (SOEs). Part IV discusses the historical development, current state and likely future expansion of RTAs, while Part V addresses the importance of national, largely unilateral trade liberalization through tariff and non-tariff barrier reduction such as that which has recently taken place in Chile and Mexico, and may well be more common, even in the United States and the EU and even in the agricultural sector. (21)

    When trying to assess the future, I have focused on the relatively near term, primarily the coming five to ten years. Predictions beyond that period are fraught with peril in the international trade area as in most others. I doubt that anyone, and certainly not I, has a crystal ball that would give an accurate reading forty or even twenty years hence. Among other constraints are the impossibility of assessing the impact of unexpected events ranging from a nuclear bomb or other catastrophic attack in a developed country by a terrorist group to economic and social dislocation resulting from much more rapid climate change than experts currently anticipate, to a decline in Chinese economic growth on the one hand or a reversal of the economic decline of Europe and the United States on the other. (22)

    As others have pointed out, "the WTO is an integral part of the world trading system, but it is only one part...." (23) There is insufficient political will to conclude the Doha Round. It remains to be seen whether, among the willing trading nations, there exists the necessary political foresight to assure that the process of expanding world trade through the reduction of trade and non-trade barriers will continue well into the 21st Century. If such will exists there are tools other than a major WTO negotiating round to achieve such goals.

  2. WORLD TRADE AS OF THE END OF 2011

    The GATT 1947, as modified and expanded in eight major multilateral rounds culminating with the Uruguay Round's Marrakesh Agreement in April 1994, (24) resulted by 2000 (when the Uruguay Round tariff concessions were fully implemented) in an aggregate reduction of tariffs imposed by developed countries of approximately 40 percent and for developing countries of 20 percent compared to pre-Uruguay Round levels. (25) Beginning with the completion of the Tokyo Round in 1978, rules relating to a number of non-tariff areas, such as dumping, subsidies, government procurement, and customs valuation were added as "codes," albeit on a plurilateral basis. (26)

    The watershed event for the world trading system was the completion of seven and a half years of negotiations that resulted in the Uruguay Round agreements, which became effective for most then-existing GATT Contracting Parties in 1995. (27) The Uruguay Round constituted a massive expansion of the international system, by adding to the GATT trade in goods disciplines; trade in services; trade-related intellectual property; limited coverage of trade-related investment; coverage of agriculture, textiles, sanitary and phytosanitary measures and standards; and a mandatory dispute settlement system. (28) Moreover, disciplines which under the Tokyo Round were optional, such as those relating to dumping, subsidies, and customs valuation, were no longer so after the Uruguay Round. Also, discretionary plurilateral agreements applicable to government procurement, civil aviation, dairy products, and bovine meat were included in the Uruguay Round package. (29)

    While this expansion has proven relatively easy to understand and implement for developed countries, the additional...

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