chapter  2
The Doha Development Agenda 10 Years On: What Next?
ByBERNARD HOEKMAN
Pages 18

The Doha Development Agenda (DDA) negotiations have now been underway for more than 10 years. The outline of what has emerged as a result of a decade of deliberations is the subject of widespread criticism. The Doha round is in a state of paralysis as a result of major disagreements between the major players on the extent and depth of new market access liberalization commitments, especially for non-agricultural products. Assessments of the market access dimension of what has been negotiated suggest that the DDA could generate a global welfare (real income) boost of some US$160 billion.1 Whatever one’s normative view of what the DDA should deliver, from a positive perspective this is not insignificant and compares well with what was achieved in previous rounds.2 Moreover, such quantitative assessments of the economic impact of a DDA deal neglect important dimensions of what is (and what could be) on the table.3 They also ignore the potential downsides of a “no Doha” scenario for the trading system: the negative knock-on effects of a collapse of the talks on the prospects for multilateral cooperation in new trade-related areas and continued implementation of World Trade Organization (WTO) rules and commitments by members. The inability to conclude Doha is costly for the trading system because it implies that the WTO is not delivering on its “legislative” function-the development of new global rules of the game for trade-related policies that give rise to negative pecuniary spillovers. In what follows I argue that there are three preconditions for con-

cluding the talks. The first of these is an acceptance and recognition that Doha (and the WTO more generally) should not be assessed primarily on the basis of the extent to which it results in agreements to reduce applied levels of protection. The WTO is not just a marketplace in which countries exchange liberalization commitments: it is also a vehicle through which governments agree on rules of the game for policies, and the institution through which implementation is monitored

and negotiated rules and commitments are enforced. These rule-setting and enforcement dimensions of the WTO are very important for firms engaged in trade because they reduce uncertainty regarding the “conditions of competition” they will confront in export markets. Uncertainty can be an important source of market entry and operating costs. An agreement to lower the applied tariff from 10 to 8 percent for a

product will be beneficial to an exporter. Getting the importing country to lower the tariff further to 7 percent will raise the payoff to that exporter, but this marginal improvement in effective market access is likely to be less beneficial than knowing with certainty that the tariff in that market can never exceed 8 percent. Any assessment of the outcome of WTO market access talks therefore needs to include consideration of the value to firms (and consumers) of the reduction in uncertainty that is associated with such “ceiling” tariff bindings. If, in the example just given, the current ceiling binding is 25 percent, an outcome that brings the ceiling binding down to 8 percent therefore has a value that is greater than the 2 percentage point decline in the applied tariff (from 10 to 8 percent). The associated reduction in uncertainty as to what the applied tariff might be in the future is an important dimension of what the WTO process is designed to deliver. The same argument applies to access to services or government pro-

curement markets: even if governments today have a liberal stance and do not impose discriminatory treatment on foreign suppliers, if this has not been bound in the WTO, there is no constraint on the imposition of discriminatory measures in the future. Thus, commitments to lock-in prevailing policies have value even if there is no liberalization involved at all. The market access dimension of the DDA extends beyond import

tariffs and policies affecting the ability of firms to enter and contest services markets. Some of the areas of negotiation aim to lower the costs associated with satisfying tax and regulatory compliance procedures at borders. A prominent example is the negotiation on trade facilitation, which aims at agreement among countries to apply certain procedures and good practices to transit trade and border clearance processes. Such an agreement will not only lower costs directly but also reduce uncertainty for firms regarding the associated procedures and thus the timeliness of consignments. The “uncertainty reduction” dimension of market access negotiations in the WTO tends to be ignored in the rhetoric and media communication strategies employed by governments and the business community.4