The Doha Development Round

The Doha Development Round A glimpse at the setting, major challenges, and major players in reaching consensus on new trade regulation in 2011

January 2011 ~ International Commercial Law ~ IUG

Abigail Hunter

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INTRODUCTION

In 2001 the World Trade Organization (WTO) launched the Fourth Ministerial

Conference for the negotiation of new international trade regulations in Doha, Qatar. The

Conference has convened in parts and as a whole various times in the past nine years but has yet

to adopt and implement a formal decision on modalities for agricultural trade regulation. In

January 2011, negotiators will meet once again in an attempt to reach consensus. By

investigating and analyzing the historical failures and achievements of the round, the challenging

issues of agriculture and cotton it takes on, and the current diplomatic, economic, and political

situation in the world, a better understanding of the difficulties faced in negotiations of 2011 can

be reached. However, even with close examination of those three aspects of the Doha Round,

along with a glimpse at the positions and intensions of major actors, no definitive conclusion can

be reached regarding what the outcome of the 2011 talks will be.

INITIAL SETTING

The Doha Round was approached much differently in November 2001 than the Uruguay

Round that preceded it. The Uruguay Round had left developing nations disgruntled from the

large amount of concessions they had made in order to fulfill the requirements for debt relief and

repayment (Panagariya, p. 5). This dissatisfaction of developing nations, the economic and

political setting in developed nations, along with the accession of China to the WTO, are all

important factors that lead to the opening of the Doha Round of negotiations.

Developing nations, known as the South in international theory, received less than

desired from the Uruguay Round and was hesitant to enter into new multilateral negotiations

with the developed countries of the North. Therefore, before agreeing to begin the round, the

South demanded that the North fulfill their promises from Uruguay. They also required that the

new round of negotiations address the South’s development needs such as “technical assistance

and capacity building” and “more flexibility in fulfilling its WTO commitments” (Cohn, p. 3).

The North agreed to add development to the Work Program of the Doha Round and renamed the

round the Doha Development Round (DDR) upon the commencement of negotiations.

For developed nations of the North, the economic and political setting of 2001 was

extremely influential to opening the DDR talks. Economically, the steadily growing foreign

trade deficits in the US and the emergence of the EU as a highly powerful trade conglomerate

motivated the North to engage in a new round (Cohn, p. 7). The political situation of the US

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drove the country to initiate the DDR negotiations because of the desire to show unyielding

commitment to liberalism after 9/11 and the switch from Democratic to Republican leadership,

removing labor issues off the negotiating table (Panagariya, p. 4). Meanwhile, the signing of

agreements such as the North American Free Trade Agreement in the US and creation of the

European Union in Europe had brought about a recent “domestication” of trade issues within

each of the main Northern powers, engaging their respective constituencies in trade related

matters (Cohn, p. 7).

The addition of China to the WTO within the first days of the Ministerial meeting, added

another important dimension to the opening setting of the DDR. China’s accession was quite

controversial because many members of the WTO were uncomfortable giving China developing

country status, as is usually provided to all Recently-Acceded Members (RAMs). While China

was lagging in some sectors, it was highly advanced in others, and this created concern within

WTO members about providing special and differential treatment to China as a RAM (Prime,

p.2).

The initial work program, released in 2004, has a two-track approach to address trade and

development (WT/MIN(01)/DEC/1, p. 1). It covers the areas of agriculture, cotton, non-

agricultural market access, services, negotiating bodies, trade facilitation, and development

issues including special and differential treatment, technical assistance, implementation, least

developed countries (LDCs) and other development issues. The addition of the second track to

the agenda was due to the “particular concerns of developing countries, including relating to

food security, rural development, livelihood, preferences, commodities and net food imports, as

well as prior unilateral liberalization, that should be taken into consideration, as appropriate, in

the course of…negotiations” (WT/L/579, p. 4).

The dissatisfaction of the developing nations of the South, the economic and political

situations in the developed North, and the accession of China to the WTO all played strong roles

in inspiring the beginning of the Doha Development Round and it’s work program. All three

aspects have impacted negotiations throughout the previous decade and have been aspects of

some of the greatest challenges to the Round.

NEGOTIATIONS

Including November 2001, there have been three ministerial meetings, six major

negotiations, and various small meetings between members thus far related to the Doha

Development Round. Each meeting has made certain advances but due to some highly

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controversial issues within agriculture, a conclusion to the DDR has yet to be reached. Initially

in 2001, the General Council set a timeline giving negotiations until 2005 to be completed,

however, because of the sensitivity of the issues, negotiations still continue.

After the 2001 meeting in Doha, Qatar, the General Council met again in 2004 in

Cancun, Mexico. There, the members released the Doha Ministerial Declaration and made

several important advancements. The first was the agreement on TRIPS and Public Health

where members agreed to provide the LDCs with an extension of TRIPS for pharmaceutical

products until 2016 and recognized the right of a country to decide for itself cases of national

emergency or extreme urgency (Panagariya, p. 7). The members also reached a decision on

Implementation-Related Issues and Concerns that “urges” countries to “exercise restraint in

challenging measures… [of agricultural protection]… in developing countries in order to allow

them to promote rural development and adequately address food security concerns” (Panagariya,

p. 9). Within agricultural negotiations in Cancun, contradictory positions began to staunchly

present themselves. The US and EU issued a paper to call for the partial elimination of export

subsidies in agriculture and a market access formula that would blend the US and EU approaches

(Cohen, p. 4). This proposal faced opposition by the G10 net food importers made up of

Bulgaria, Israel, Japan, Republic of Korea, Liechtenstein, Mauritius, Norway, Switzerland, and

Taiwan because the legislation was not flexible enough in it’s ability to maintain protective

tariffs. While the newly formed G20 developing nations led by Brazil, China, and India

considered the legislation not a strong enough tool for subsidy removal. The Cancun meeting is

important in the DDR because it marked the first accomplishments with TRIPS and because it

created two pronounced groups of actors within agricultural negotiations that continue to play

significant roles throughout the DDR.

Also in 2004, the July Package was signed in Geneva and set a new negotiation strategy

for the DDR in agriculture. The most profound aspect of the Package was that it divided cotton

negotiations apart from agriculture. Pressure from the Cotton-4∇ was instrumental in dividing

cotton from the agricultural negotiations so as to take it on from both a trade and development

aspects. “Never previously in the multilateral trading system had WTO members decided to

distinguish between the trade and the development policy aspects of a commodity, and then link

them both to a specific coherence mandate with the framework of negotiations” (ITC, p. 2). The

US, EU, India, and Australia all agreed upon the division as well and came to an accord on

                                                                                                               ∇  Benin,  Burkina  Faso,  Chad,  and  Mali  

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elements of the agriculture framework. The members generally agreed that in order to move

forward in the Round, agricultural export subsidies and export credits along with domestic

subsidies would all have to be reduced in developed nations in order for developing nations to

lower tariffs on manufactured goods.

At the third ministerial meeting in Hong Kong in 2005, a consensus was reached on

cotton. Resting on the conditional conclusion of the DDR, member states agreed to:

1) The elimination of all forms of export subsidies for cotton in developed countries by

2006.

2) The duty-free and quota-free access for cotton exports from LDCs entering developed

countries.

3) Reduce trade-distorting domestic support for cotton “more ambitiously than for

whatever agree general formula to be implemented” over a shorter period of time

(ITC, p. 3).

The General Council was also able to agree to eliminate all agriculture export subsidies by 2013

and set a new deadline of 2006 for the completion of the DDR.

However, by July 2006 WTO Director General Pascal Lamy had to completely suspend

DDR talks because the unwillingness of the US and EU to further cede anymore of their

agricultural subsidies. (Reuters) Both the US and EU were facing strong domestic pressure at

the time to not further reduce any farm subsidies. Another domestic issue that added to the US’

position at the time was the expiration of “Fast Track” legislation.✧ The halting of negotiations

in 2006 was primarily due to domestic political responses to the decisions of Hong Kong and the

unwillingness of countries to cede any concessions in agriculture.

Negotiators from the US, EU, Brazil, and India attempted again in 2007 in Potsdam,

Germany to approach agricultural legislation in the DDR and failed. “The developed countries

accused the developing countries of bringing nothing new to the table. The developing countries

countered that the US and EU’s farm subsidy cuts are too minimal to make any difference”

(Mayes, p. 13). Also, cotton arose on the agenda once again because timeline of the agreement

had already been missed and negotiators failed to rehash the consensus. The tension filled

meeting raised the level of animosity between the two sides and only entrenched the opponents

in their positions.

                                                                                                               ✧  “Fast  Track”  legislation  allowed  the  President  of  the  US  to  send  trade  legislation  through  Congress  as  an  entire  package  that  could  not  be  altered  just  voted  for  or  against.  

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In July 2008, negotiators met again in Geneva, directly proceeding an APEC and G20

Economic group summit. Together the groups called for an end to the DDR by 2008 because of

the looming issues in the global economy (Reuters). The members came together in Geneva to

specifically discuss agricultural modalities but talks collapsed over the issue of Special

Safeguard Mechanisms (SSM), specifically whether “tariffs could be permitted to exceed the

limits set by the pre-Doha meetings” if the prices of commodities were to plummet (Mayes, p.

11). China, who had previously been taking a supporting role to Brazil and India, finally came to

the front within the negotiations and “accused the US of hypocrisy for heavily subsidizing its

own cotton farmers…while asking other countries to expose theirs to harsh competition” (Lim &

Wang, p. 3). While there had been high hopes, DG Lamy did not call a ministerial meeting in

the wake of the negotiations because of “lack of political will among major powers to bridge

gaps on key issues (Reuters).

The variety of ministerial meetings, negotiations, and talks between member states since

2001 have led to agreements on TRIPS, aspects of cotton and agriculture, along with elements of

development. Agriculture modalities and SSMs have emerged as particularly sensitive issues

within the negotiations and have led to the collapse of talks on several occasions. While all

members have repeatedly pledged their commitment to arriving at consensus on new trade

legislation, “they have yet to move or note any movement towards real convergence”

(TN/AG/W/4/Rev.4, p. 2).

CHALLENGES

The two greatest challenges of the Doha Development Round revolve around the issues

of agriculture and cotton. Agriculture has been and will continue to be majorly controversial

negotiating point due to amount of invested actors within agriculture across the world.

Meanwhile cotton is a challenge because of the development aspect of it’s production and the

nature of the DDR as a “development round”; it is almost serving as a litmus test from the view

of the South, as to whether the DDR is truly representing the interests of the developing world.

Agriculture modalities negotiations revolve around working to define green box, blue

box, and amber box spending and creating solutions for eliminating amber box spending and

reducing blue box spending. ✼ Redefining and reducing agriculture subsidies has mobilized a

                                                                                                               ✼  Amber  box  spending  refers  to  the  most  trade-­‐distorting  payments  and  subsidies  like  price  supports  or  production  payments  while  the  blue  box  spending  is  less  trade-­‐distorting  because  it  limits  production  of  the  

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variety of actors on both international and domestic levels. Within the DDR, there have three

main relationships that have come into focus within negotiations: North/North Relations,

North/South Relations, and Ambassador/Constituency Relations. These three relationships play

an intrinsic role in the agricultural modalities talks of the DDR.

The Northern, developed economies, do not stand entirely united on the agriculture issues

at hand. On one side, the US and the Cairns group✢ , are willing to abolish the majority of their

agricultural export subsidies, decrease their domestic subsidies and allow greater market access

to foreign commodities. However, the EU, Japan, Norway, Republic of Korea, and Switzerland,

still heavily favor supporting their rural communities with payments, promoting sustainable

agriculture, and not drastically liberalizing their agricultural trade. (Cohn, p. 10-11) The greatest

area of division between the two is undoubtedly I regards to the US’ “zeroing” of dumping

margins.❃ Even though the WTO has ruled it in violation of numerous trade regulations and the

EU is vehemently opposed to it’s use, the US continues to practice “zeroing” and is attempting to

add it to the DDR agriculture agreement. While they have aligned because their interests are

most closely related, there are still great differences in the positions held by the US-led North

and the EU-led North. The distinctions between the two have not yet played a drastic role, but

the closer the DDR comes to completion, the more the details of the North versus North

positions will come into play.

North versus South relations began to surface from the very beginning of DDR

negotiations and remain the greatest hurtle to completion of the Round. Essentially, the North is

bargaining for more market access in the South in exchange for a reduction of their own

domestic subsidization of agriculture (Mayes, p. 1). In this bargaining process, the new G20

developing economies alliance grew, led by the growing powers of Brazil, India, and China in

harsh opposition to the powers of the US and EU. Because of the countries of the South felt

cheated by a variety of provisions of the Uruguay Round, they mobilized strongly behind the

G20 leaders and are pushing for real tangible changes in market access, domestic support, and

export subsidies in developed nations. The issue of particular controversy is the Special

Safeguard Mechanisms (SSM) that the South advocates for addition to the DDR work program.

                                                                                                               commodity.    For  spending  to  be  in  the  green  box,  it  must  minimally  affect  trade  because  it  goes  towards  general  support  elements  such  as  research  and  development  (Elliott,  p.  2).  ✢  Australia,  Canada,  Colombia,  Costa  Rica,  Malaysia,  New  Zealand,  Peru,  and  South  Africa  ❃  “Zeroing”  refers  to  the  act  of  normalizing  all  negative  computed  dumping  margins  and  making  them  zero  thus  inflating  the  dumping  margin  and  dumping  margin  duty.    It  is  used  by  the  US  Department  of  Commerce  to  commute  dumping  margin  duties.  (Lincicome)  

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The SSM would be a safeguard for developing nations against quickly depressed import prices of

steep increase in the volume of imports so as to protect domestic industries. The Uruguay Round

provided a Special Safeguard for developed nations, so the South is essentially demanding

reciprocity (Khor).

The leaders of the South, Brazil, India, and China, all have integrated interests within the

G20 platform of lowering developed nations trade-distorting practices. Brazil has been taking

strong stances on all three areas of change because it is looking to use its comparative advantage

to export to huge new markets in the North (Nogueira, p. 2). India is focused on making certain

that SSM trigger levels are low enough to ensure sufficient protection from import flooding and

dramatic price falls (Kumar & Nair, p. 4). Meanwhile, China stepped up into a leadership role in

2008 because it is especially concerned with RAM status and ensuring that differentiated

treatment for RAMs is maintained in the DDR (Lim & Wang, p. 4).

The G20, led by Brazil, India, and China has become formidable challenger to the US,

EU, and Cairns group. Each side is deeply entrenched on opposing sides of the issues relating to

the developed world’s subsidization of agriculture because of the immense trade inequalities that

the payments create. This North versus South conflict over modalities within agriculture stands

as the greatest conflict in the DDR.

Both the North and South are stuck on their sides in part because of the relationship

between Ambassadors and Constituency. The domestic situation in several countries has already

come into play in negotiations regarding agriculture, especially due to the “domestication” of

trade issues. For instance, the EU has a difficult time on subsidies due to the interests of its

domestic farming communities. Meanwhile, in the US, WTO trade regulations do not apply

unless they can be passed through Congress and since the end of “Fast Track” in 2007, it makes

passing trade legislation very difficult (Mayes, p. 6). Ambassadors, in the end, are accountable

to the interests of their constituencies and therefore limited to certain negotiating positions in the

DDR.

Cotton was such a challenging commodity that it had to be specifically separated from

the agriculture negotiations. The challenge behind cotton stems from the heavily subsidized

cotton production in the US and the fact the DDR has a development track. The DDR has been

running parallel to Brazil’s case against the US in the Dispute Settlement Body (DSB) regarding

the legitimacy of US cotton subsidies. In 2009, the DSB ruled that the US had, in fact, failed to

fulfill its commitments under the Uruguay Round Agreement on Agriculture and the Agreement

on Subsidies and Countervailing Measures (ICTSD, p. 2) Thus, the US lost it’s negotiating

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power within cotton negotiations and is going to be forced to make even greater concessions. In

the meantime, the Cotton-4 (C4) has taken on cotton negotiations as a portion of the

development track proposing that domestic spending on cotton be cut more deeply and at a faster

rate than spending on other goods in order to promote growth and development in LDCs (ITC, p.

2). They have received support from the African Group, EU, and Brazil and their proposal is in

the current draft of the cotton consensus (TN/AG/W/4/Rev.4).

Agriculture and cotton are two of the greatest challenges within the DDR. While cotton

has had some breakthroughs in negotiations, agriculture is currently at a standstill. Because of

the dynamics in North/North, North/South, and Ambassador/Constituency relationships,

agriculture continues to be an uphill battle in the DDR.

PRESENT GLOBAL CONDITIONS

A great deal of the tension in the recent summits in Seoul and Toronto stem from the

economic situation in the aftermath of the Global Crisis in 2009 where world trade dropped some

20% (WTO Trade Report, p. 2). Even though on the edge of recession in 2008 the G-20 pledged

to avoid protectionism, the World Bank shows that at least 17 of the G-20 countries have passed

some 78 trade measure with 66 involving trade restrictions and 47 of them being directly

implemented (Gamberoni & Newfarmer, p. 1). In agriculture, programs in the US, EU, Japan,

Republic of Korea, and others have built in price supports that shield local producers from

commodity price falls. These “trade distorting subsidies push the global burden of adjustment

onto commodity producers in Africa, Asia, and Latin America where governments do not have

resources to match subsidies of wealthier countries” (Gamberoni & Newfarmer, p. 3). The

recessionary period has driven persistent food volatility higher and has placed even greater stress

on developing nations to secure food sources for their people (Roache, p. 22)

Because China runs an export-led model for economic growth, the 17.5% drop in exports

from the Crisis created a new incentive for China to become more active in keeping trade open

and growing (Lim & Wang, p. 6). Indian exports and imports dropped dramatically in top

sectors such as gems and jewelry, garments and textiles, leather, and handicrafts resulting in the

government attempting to make changes in it’s foreign trade policy. The policy highlights the

“new underlying theme of diversification of markets and products…and have identified 26 new

export markets in Latin America and Asia” (Kumar & Nair, p. 9-10). Brazil’s export markets

faced the smallest losses and thus Brazil’s economic policies are mostly concerned with the

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national sector’s ability to handle the new tariffs that have been going up across the world

(Nogueira, p. 7).

The political situation of the world has evolved greatly since the beginning of talks for

the DDR and is quite different in the start of 2011 than at the last 2008 DDR draft. In the US,

the Executive administration is now Democratic with a split Democrat and Republican Congress.

This domestic situation will make the passing of legislation extremely difficult. Also, at the end

of 2010, the Congress excluded the Generalized System of Preferences (GSP) from the new trade

legislation package. That means that the GSP program, which has been trade policy since 1974

and affects 954 different imported agricultural products, will not continue into 2011 (Kirk).

India is the leading supplier of imports under the GSP program and the loss of the

program will affect 22% of India’s total exports (USTR). Paired with India’s “inherent fear

towards trade liberalization because of historical and political reasons as well as a lack of

awareness about the implications of trade agreements”, the loss of the GSP program could be

politically and economically detrimental (Kumar & Nair, p. 12). China has adopted a huge new

domestic spending bill, supposedly around $586 billion, to help create a greater domestic market

for their own products and reduce dependency on foreign markets (Economist, Nov. 10, 2008).

Meanwhile in Brazil, the presidency was turned over from Luis Inácio Lula da Silva to another

member of the Worker’s Party, Dilma Rousseff. Much of Lula’s foreign policy emphasis was on

trade policy and agreements, and Rousseff will most likely continue along the same lines,

however, discourse within her administration is leading towards realignment of priorities within

foreign policy (Noegueira, p. 9).

The transformations in diplomatic relationships, the economic crisis, as well as changes

in government administrations and regulations will all factor into the upcoming round of DDR

negotiations. The conditions of the global environment have altered substantially since 2001,

however, it is still unknown whether the positions of all major power have sifted enough to

create a consensus. What is known is that the current world situation has not limited the

intentions and desires for a DDR completion.

FUTURE

WTO Director General Pascal Lamy is attempting to prepare for a Doha Development

Round endgame in the upcoming negotiations on 10th of January, 2011. In a statement in

December 2010, DG Lamy outlined several of his aspirations for the upcoming negotiations in

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hopes to garner consensus on the DDR by the end of the first quarter of 2011. Firstly, DG Lamy

plans to have members work on updating the 2008 drafts to serve as a base for a final accord. As

part of establishing this framework, he has also called upon all members to submit compromise

proposals in order to reduce the number of disagreements over the final texts. Secondly, DG

Lamy has created a schedule of ministerial negotiations in a ‘cocktail approach’ format that

combines small group meetings, bilateral contacts, negotiating sessions, and consultations led by

DG Lamy, himself. In the first week of negotiations, groups on rules, trade facilitation, trade and

environment, intellectual property rights, and development will meet. Then in the second week,

agriculture, non-agricultural market access (NAMA), services and dispute settlement

negotiations will convene for discussion. Finally, DG Lamy is committed to the fact that all

texts adopted in DDR legislation should come from a chair-driven bottom-up process. (Lamy,

WTO News 14 December). With the framework, schedule, and process laid out, DG Lamy is

setting the stage for productive, forward moving talks for the DDR.

The current economic and political atmosphere across the world could act as either a

catalyst or a barricade to the upcoming series of talks in the DDR. While the economic crisis has

made many countries turn to semi-protectionist measures, it has also re-enforced the drive of top

trading partners to locate and expand to new markets. This desire to expand to new markets

could definitely work in favor of reaching consensus for new and expansive multilateral trade

regulations. Politically, the recent failure of the US to continue the General System of

Preferences, may work positively in negotiations because nations will need the DDR to be

successful to secure market access in the US. However, political pressures within the US and

EU to favor domestic producers will make it extremely difficult for their Ambassadors to

maneuver within negotiations. There is an overwhelming sentiment at this time that the DDR

negotiations have reached the extent of their lifespan. The EU, specifically, has announced that

they plan on concluding the DDR within the year or petitioning to cancel the round (De Gucht,

15 Nov. 2010). On a whole, the US, EU, Brazil, India, and China all have great vested interest in

a successful completion of the DDR and after almost ten years of talks, they have finally reached

the point where they must either come to an accord or cancel the DDR altogether.

CONCLUSION

The Doha Development Round of World Trade Organization negotiations to create a

new, updated set of trade regulations for the world has been underway since November 2001.

Historically, the DDR has become the longest running set of negotiations since the formation of

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the WTO, and has still not reached international consensus. The next talks, scheduled for

January 2011, are highly pressurized due to the long historical failures of the round, the majorly

polarizing challenges that it faces in regards to agriculture and cotton, and the current diplomatic,

economic, and political situation of the world. In reviewing all three aspects of stress for the

DDR 2011 along with the positions and intentions of the major actors, the outcome for the

negotiations is still quite unpredictable.

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