Why the world needs a new round of trade talks

The prospect of a new round of multilateral trade talks being launched in November is brightening, though challenges remain.

The world, and in particular its poorest nations, needs a new round of multilateral trade negotiations. The World Trade Organization and the multilateral trading system will survive if we do not launch a round of talks at our Fourth Ministerial Conference in Doha, Qatar in November. But the new round is not for the WTO or for the sake of any institution. Rather, relaunching the talks will mean being able to avoid further delay in tackling the pressing problems that confront the global economy, and particularly the economies of the smallest and most vulnerable nations.

In the past year and a half, we have spent our time rebuilding confidence in a global trading system that has brought immense benefits to mankind. The confidence has grown. WTO member governments understand each other better and, just as importantly, they understand that no nation will achieve its goals inside the system unless all nations see benefits flowing to them from a new round of negotiations. Member governments understand too that progress is impossible unless all governments feel they have been part of the process.

But the age-old question about launching a round is: Do you do so in healthy or less-than-healthy economic conditions? Do you fix the roof when it is raining or when the sun is shining? Right now, the forecast is for drizzle and high winds. The economic slowdown that has gripped the United States and Japan threatens to spread to other countries that depend on those export markets for economic growth and development. The trouble is, as history tells us, economic deceleration has a nasty tendency to feed protectionist sentiment.

At such a time, it is important to send a signal that governments around the world are committed to trade liberalisation, particularly when it comes to products from the developing countries. A round would help the poor and weak countries more than anyone else. The big guys can fend for themselves. But without multilateral rules, the poor are subject to the law of the jungle. There are few economists today who would disagree with the notion that improved market access for poor country products is fundamental to efforts aimed at alleviating poverty. In rich country markets, developing country exports face much higher trade barriers than products from developed countries. If trade in manufactured products were further liberalised, three-quarters of the benefits would flow to developing countries. Indeed, the economic benefits to the developing countries of eliminating agricultural subsidies in the rich countries would, according to the World Bank, be more than 3.5 times greater than all Official Development Assistance (ODA in 1999 came to US$56.4 billion).

But such benefits would flow not just to the poor. A study by the University of Michigan found that cutting barriers to trade in agriculture, services and manufactured goods would boost the world economy by $613 billion. That is the size of the Canadian economy. Removal of such barriers would boost growth by nearly $1.9 trillion – that’s two Chinas. The European Union (EU) and European Free Trade Association (EFTA) countries would see economic growth boosted by $169 billion, Mexico would see gains of $6.5 billion, the United States $177 billion and so on.

Can the 140 member governments of the WTO launch a round in Doha? The answer is, we don’t know yet. But the odds are certainly better than they were at this time last year. We have made good progress in targeting areas of disagreement and governments have shown flexibility on their positions. In meetings we have had in the past several months, very few delegations have said they oppose a round. But, there remains wide disagreement over what the agenda of such a round should be. Differences remain over investment, competition, trade facilitation, the environment and cutting industrial tariffs. But the differences over these issues are narrowing, largely because delegations have been working together constructively and listening to the concerns of others.

There is really only one issue on which there is truly sharp disagreement – labour standards. Developing countries are more resistant than ever to including this on the WTO agenda. For them, this is not a line in the sand, it is a canyon.

While delegations debate these issues, we already have negotiations underway in agriculture, services and on the implementation of existing agreements, an issue a great many of our governments believe is of fundamental importance. We have held productive stocktaking meetings in agriculture and services, which have laid out the negotiating agenda for the next year. On implementation issues, we have made but modest progress and many developing countries would like to see us achieve more in this area. But it is quite clear to me that on all three of these issues – agriculture, services and implementation – substantial progress will be very difficult, if not impossible, outside a round.

So where does all of this leave us? It is widely accepted by governments that we must have the basic framework of an agreement in place by the end of July if we are to launch a round in Doha. The agenda has to be broad enough to have something for everyone. It must exclude issues on which we have no hope of achieving agreement. It should be detailed enough to be meaningful but not so detailed as to be a pre-negotiation. It must be 95% understood in July, and not leave 95% to do in November. Doha must not be another Seattle. Ministers from our governments will not tolerate it.

Can we do it? I think so, if governments show the necessary flexibility and willingness to compromise. We are clearly seeing evidence of that today, from many of the major players. It will not be easy, but achieving something of historical importance rarely is.

©OECD Observer 226/227, Summer 2001




Economic data

E-Newsletter

Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Suscribe now

<b>Subscribe now!</b>

To receive your exclusive paper editions delivered to you directly


Online edition
Previous editions

Don't miss

  • Africa's cities at the forefront of progress: Africa is urbanising at a historically rapid pace coupled with an unprecedented demographic boom. By 2050, about 56% of Africans are expected to live in cities. This poses major policy challenges, but make no mistake: Africa’s cities and towns are engines of progress that, if harnessed correctly, can fuel the entire continent’s sustainable development.
  • “Nizip” refugee camp visit
    July 2016: OECD Secretary-General Angel Gurría visits the “Nizip” refugee camp, situated between Gaziantep and the Turkish-Syrian border, accompanied by Turkey’s Deputy Prime Minister Mehmet Şimşek. The camp accommodates a small number of the 2.75 million Syrians currently registered in Turkey, mostly outside the camps. In his tour of the camp, Mr Gurría visits a school, speaks with refugees and gives a short interview.
  • OECD Observer i-Sheet Series: OECD Observer i-Sheets are smart contents pages on major issues and events. Use them to find current or recent articles, video, books and working papers. To browse on paper and read on line, or simply download.
  • Queen Maxima of the Netherlands gives a speech next to Mexico's President Enrique Pena Nieto (not pictured) during the International Forum of Financial Inclusion at the National Palace in Mexico City, Mexico June 21, 2016.
  • How sustainable is the ocean as a source of economic development? The Ocean Economy in 2030 examines the risks and uncertainties surrounding the future development of ocean industries, the innovations required in science and technology to support their progress, their potential contribution to green growth and some of the implications for ocean management.
  • OECD Environment Director Simon Upton presented a talk at Imperial College London on 21 April 2016. With the world awash in surplus oil and prices languishing around US$40 per barrel, how can governments step up efforts to transform the world’s energy systems in line with the Paris Agreement?
  • Happy 10th birthday to Twitter. This 2008 OECD Observer interview with Henry Copeland said you’d do well.
  • The OECD Gender Initiative examines existing barriers to gender equality in education, employment, and entrepreneurship. The gender portal monitors the progress made by governments to promote gender equality in both OECD and non-OECD countries and provides good practices based on analytical tools and reliable data.
  • Once migrants reach Europe, countries face integration challenge: OECD's Thomas Liebig speaks to NPR's Audie Cornish.

  • Message from the International Space Station to COP21

  • The carbon clock is ticking: OECD’s Gurría on CNBC

  • If we want to reach zero net emissions by the end of the century, we must align our policies for a low-carbon economy, put a price on carbon everywhere, spend less subsidising fossil fuels and invest more in clean energy. OECD at #COP21 – OECD statement for #COP21
  • They are green and local --It’s a new generation of entrepreneurs in Kenya with big dreams of sustainable energy and the drive to see their innovative technologies throughout Africa. blogs.worldbank.org
  • Pole to Paris Project
  • In order to face global warming, Asia needs at least $40 billion per year, derived from both the public and private sector. Read how to bridge the climate financing gap on the Asian Bank of Development's website.
  • How can cities fight climate change?
    Discover projects in Denmark, Canada, Australia, Japan and Mexico.
  • Climate: What's changed, what hasn't, what we can do about it.
    Lecture by OECD Secretary-General Angel Gurría, hosted by the London School of Economics and Aviva Investors in association with ClimateWise, London, UK, 3 July 2015.
  • Is technological progress slowing down? Is it speeding up? At the OECD, we believe the research from our Future of ‪Productivity‬ project helps to resolve this paradox.
  • Is inequality bad for growth? That redistribution boosts economies is not established by the evidence says FT economics editor Chris Giles. Read more on www.ft.com.
  • Interested in a career in Paris at the OECD? The OECD is a major international organisation, with a mission to build better policies for better lives. With our hub based in one of the world's global cities and offices across continents, find out more at www.oecd.org/careers .

Most Popular Articles

Poll

What issue are you most concerned about in 2016?

Unemployment
Euro crisis
International conflict
Global warming
Other

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2016