Trade diplomats are trying for what may be one last time to conclude the long-deadlocked Doha Development Round of global trade negotiations among the 153 countries in the World Trade Organization. Why continue to dither over whither Doha?
Politicians everywhere promise to conclude Doha soon, but a pervasive lack of any real understanding of the potential benefits of a successful deal translates into a lack of political urgency in the United States and elsewhere. What would be the benefits of a successful Doha agreement, and what are the costs of not getting one?
Foremost among the benefits would be the additional global growth that would result from lowering more of the many remaining tariff and non-tariff barriers to international trade in manufacturing, agriculture and services. By one estimate, a successful Doha deal could yield potential annual gains of $280 billion in worldwide GDP. Other estimates of the potential gains are much higher.
Of that $280 billion, approximately $36 billion would come to the U.S. — adding 0.4 percent to U.S. GDP — every year. Gains for developing countries would be even larger in GDP terms. Studies by the Peterson Institute and the World Bank conclude a highly successful deal could lift as many as 440 million people worldwide out of absolute poverty.
A successful Doha Round also would provide a much-needed and debt-free stimulus for the whole global economy. As the International Chamber of Commerce recently explained, “Over the past 60 years, the multilateral trading system has contributed to improving the standard of living of billions of people across the world by creating new economic opportunities and providing greater choice and lower prices to consumers. Concluding the Doha Round in 2011 would inject much-needed growth in the global economy, and, in turn, boost business confidence and fuel increased private investment.”
A Doha deal would create new jobs in the United States and worldwide. Widespread fears of job losses from international trade are misplaced. Some jobs will always be lost from the increased competition that comes with increased trade. But if the right domestic policies are in place — if the right attention is paid domestically, for example, to improving labor skills through education and training, and to connecting local businesses and workers to global supply chains — many more jobs will be gained from increased trade than will be lost.
Experience shows, too, that jobs in businesses engaged in international trade often are better jobs with better pay.
In a joint report prepared for the most recent G-20 summit, in Seoul, the World Trade Organization, the World Bank, the International Labor Organization and the Organization for Economic Cooperation and Development said, “In the long run, employment of both skilled and lower-skilled workers would increase in every country” from the further trade liberalization under a Doha deal. They predicted wages would rise as well.
A successful Doha deal also could be an added brake against protectionism while the world recovers from the global financial crisis. The worst fears of a global retreat from free trade have not been realized. The existence of binding WTO rules — backed by enforceable dispute settlement — has done much to constrain recourse to protectionist trade barriers in violation of WTO rules. Even so, “legal protectionism” has proliferated in government purchasing, investment and other areas not yet fully covered by WTO rules. New trade agreements in the Doha Round could add an insurance policy that would enhance the continued flow of growth-generating global trade of all kinds.
One more benefit of success with Doha would be that the focus of trade negotiators could then move beyond Doha to confront the new trade challenges of the 21st century that largely were not included on the Doha agenda a decade ago. Climate change, green technology, intellectual property, investment, energy, technical standards, product safety, electronic commerce, financial regulation, currency practices — all these and more await the outcome of Doha, and are much more likely to be addressed in the WTO if there is success with Doha.
And the costs of not concluding Doha successfully could be considerable. Bilateral and regional trade agreements would continue to proliferate, perhaps in ways that would facilitate mercantilism and frustrate global hopes for the overall gains in jobs and growth that would come from freer trade worldwide. The WTO dispute settlement system would become increasingly immersed in judging potentially politically explosive international disputes that ought to be resolved by negotiations.
It is long past time to get serious about Doha. The issues that have long stalled the negotiations are real, but those issues can be resolved if those who are negotiating keep in mind the benefits of success and the costs of failure. All that is missing now is political will.
James Bacchus is a former chief judge for the World Trade Organization, a former member of Congress, and a former trade negotiator for the United States. He chairs the global practice of the Greenberg Traurig law firm.