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Assess which issues in your view are preventing the final agreement of the Doha round and thus causing friction among members of the world trade organisation and evaluate how they are likely to be resolved.
The world trade organisation was established in 1995 from the General Agreement on Tariffs and Trade (GATT) which was 11 from 1948 to 1994. The creation of an organisation to control the trade and promote it began during the final stages of the Second World War, mainly from the realisation that distorted trading practices and economic policies was a contributing factor to that great conflict. In order to foster greater co-operation between nations several global institutions were formed under the guise of Bretton Woods agreement from where the World Bank, the United Nations, the International monetary fund etc were developed. But the agreement between nations about liberalising trade policies to much more negotiations than the other organisations. The Gen agreement on tariffs and trade was signed between 23 nations in 1947 and laid the framework for an international trading organisation. It is an irony that the most important force of trade liberalisation, the United States, did not ratify the International trading organisation (ITO) charter and the development of a world body to oversee the trade between nations took several decades to complete. The creation of World Trade Organisation can be attributed to the several rounds of negotiations between various nations where the initial subjects covered were mainly reduction of tariffs of imports and exports under the guise of GATT (Deb, and Amin, 2011). In the 1980s it became clear that a much more robust organisation is required as 123 members had joined GATT and several other trade related discussions such as non-tariff measures, intellectual property rights, dispute settlement and the most important contentious issue of trade in agriculture came to the fore. With the Uruguay round of trade talks during the period of 1986 to 1994 developed the framework for the World Trade Organisation which came into being in 1995 (WTO, 2011). The World Trade Organisation deals with the rules of trade between nations at a global or near global level. While the GATT and only dealt with the trade in goods, the World Trade Organisation agreements and discussions about trade in agriculture, services, inventions, creations and designs (intellectual property).
In simple words WTO is the organisation where countries negotiate to liberalise the trade by reducing the barriers. One of the essential characteristics of World Trade Organisation according to the charter is to create equality among nations and promote economic well-being. On this basis the World Trade Organisation with its member states has a responsibility to achieve equity in growth of the least developed nations, developing nations and the developed nations (WTO, 2011). It is pertinent here to say that the major driving forces of the World Trade Organisation and trade liberalisation during the early parts of 1980s where the developed countries who wanted to reduce the trade barriers in all nations, but recently the leadership responsibility has been taken over by grouping of nations such as G-7, G4, G20 and G33. It also needs to be said that the creation of World Trade Organisation was also to rectify the distortions caused by the General agreement on trade and tariffs especially in agriculture where several nations and mainly the present developed nations used the loopholes in order to provide export subsidies and other trade distorting practice. But along with such distortions the international trade flourished during the period when several countries joined and ratified GATT and this can be seen from the example of the current growth levels of India which has liberalised the economic after the 1990s (even though due to extreme external pressure from the International monetary fund). It is not only India but also several other nations such as China, Brazil, South Africa, nations in Southeast Asia and other like Latin American nations which benefited from the liberalisation of trade and the reduction of tariffs.
Along with the trade liberalisation which increased the national gross domestic product in many countries there is also an increasing divide between the rich and the poor or the internal distortion of growth of the population. Specifically in the case of India which was an agricultural-based economic for several decades after independence has now transformed with services sector contributing more than 50% and the agriculture contributing to less than 15% whereas the labour force by the occupation is 34% in the service sector and 55% in agriculture. With respect to United States that sectorial contribution towards GDP is 1.2% from agriculture and 77% from services with the rest contributed by industries and a similar disposition of labour force by occupation (Deb, and Amin, 2011). It is clear that in many developing nations the development has been occurring due to the high levels of trade of industrial goods and services which has contributed to the increase in GDP of those countries but without a corresponding distribution of labour force.
Coming to the specific subject of the Doha round of trade talks the main emphasis was on reforming agricultural subsidies, improving access to global markets for non-agricultural products, services and trade related aspects of intellectual property rights. The Doha round which is also called as the Doha development agenda began with the ministerial level meeting in 2001 subsequently followed by other meetings in Cancum, Mexico in 2003, Geneva 2004, Hong Kong in 2005, Paris 2005, Geneva 2006, Potsdam 2007, Geneva 2008. From the start of the negotiations between contentious points was on the reforming of agricultural sector or in simple terms to reduce the trade barriers in agriculture which was wound of subsidies for farmers in developed nations and removal of import various in developing nations (Pfumorodze, 2011). Both the blocks of countries have been unable to reach a common ground on the aspect of production of barriers. The developed countries consist of the United States and the European Union as a single block, but they themselves have had their disagreements in reducing import barriers in agriculture and related products in the past. The differences between developing and developed nations over the disagreements for reducing trade barriers in agriculture has been seen by many as technical in nature, internal political pressure, lack of willpower, etc (González-Garibay, 2011). During the several round of talks the various countries have formed groups in order to project their positions and the major force was in the form of BRIC nations (Brazil, Russia and India China South Africa). It has been alleged that the recent collapse of negotiations was over the issues of special safeguards mechanism (SSM), percentage of products to be declared a sensitive products, tariff capping and overall trade distorting support (Gounder and Prasad, 2011).
On a deeper analysis of the issues which are relevant from the perspective of different nation group groupings the developed countries want to negotiate an overall framework which includes the reduction of barriers in agriculture along with the other industry segments. The developing countries and the least developed nations want the agreements to be initially confined to trade tariffs relating to agriculture alone (Deb, and Amin, 2011). As mentioned before due to the loopholes in the general agreement on tariffs and trade many nations especially those which are developed was able to sustain that farmers by providing huge subsidies which is distorting the trade either directly or by placing import barriers. The rationale for the developed countries such as that of the United States and the European Union is that these measures are required to sustain the social framework. From the perspective of the developing nations due to the distortions of agricultural prices by the subsidies provided from the developed nations the worldwide agricultural prices are increasing at a faster pace (González-Garibay, 2011). Moreover the developing nations are the net producers of agricultural products and have an advantage in exports. When the developed countries are asking the developing nations to liberalise their economic for trade in services and other manufactured goods, the developing nations are asking the developed countries to reduce the subsidies and trade barriers for agricultural goods. The position of the developed countries is to simultaneously negotiate on all the areas with a give and take policy with related to agriculture and other trade. But the developing nations and the least developed countries want to finalise the barriers of agriculture so that their farmers and local markets are protected against dumping, inflation, overpricing etc.
When analysing the background of the trade talks the main position of the developing nations is that agriculture is closely related to the income distribution and poverty levels in their countries. When the developed nations are talking about social well-being in their own nations where most of the farmers have got rich alone from the subsidies and would want to develop their agricultural by having access to markets in the developing countries. In simple terms the agricultural products which are heavily subsidised in the developed nations can be exported to developing nations and sold in those markets at a lesser price. These levels of export from the developed nations will reduce the subsistence of local farmers in developing countries. But the essential factor to be borne in mind is that such levels of export of agricultural products from developing countries could only be sustained on the back of continuous subsidies. When the levels of subsidies are brought down or completely abolished the developed nations will be at a disadvantage of having their own agricultural products either heavily priced or even completely stopped. From the perspective of the developed nations this will contribute to an increase of imports of agricultural products from other nations which are developing and will contribute to unemployment in the agricultural sector and social unrest. This is the reason why the developed nations are unable to agree on direction of subsidies and other trade barriers on agricultural products. The main negotiating stance of the developed nations is revolving around reaching an agreement on all the areas and not only on agriculture. This will provide them with access to the world markets for their industrial products and services, but are unable to produce the subsidies for agriculture in the domestic market. Several countries and economics to criticise this was position of the developed markets and consider that the World Trade Organisation is in fact only acting on behalf of the developed nations. But due to their veto power of a single member in the World Trade Organisation no agreement could be reached.
One of the essential characteristics as mentioned before which is the equity of growth of all the nations through trade liberalisation is also a major bone of contention. According to the World Trade Organisation Charter, one of the several founding policies of the organisation is to reduce the inequalities among the nations and upliftment of the world population from poverty. But the trade liberalisation has in fact contributed to an increase in the differences between rich and poor in many developing nations. Several developing and least developed nations consider the positions of the United States and of Europe which have developed based on accessing of resources from these countries during the decades prior to 1950s as unacceptable. Some of the other contentious issues are grouped under the “outstanding implementation issues” which are the agreements under the previous general agreement on tariffs and trade (Vishwanath, 2011). These are of the agreements which have not yet been implemented by the developing nations due to several reasons. Hence the previous agreements made during the several previous negotiations have also come up for discussion with the developing nations asking for relaxation in time period as well as revisions. The issue of climate change which has come to the fore in the last decade is also a major factor for the breakdown of negotiations. Even though these issues are being discussed at a different stage and level the intransigencies of the negotiating positions of the developed and developing nations is a continuous source of friction for the Doha development round.
Coming to the specific aspects of the negotiations relating to agriculture the latest round of talks collapsed over the technical details about the agreements on safeguards mechanisms for the developing nations. It was agreed during the discussions that the developing nations will be able to protect their farmers and local markets while resorting to temporary increase in tariffs and trade barriers even after an agreement on reducing the overall agricultural trade barriers (Beattie, 2011). But the technicalities surrounding the enforcement of this mechanism about the level of increase of barriers by developing nations and the trigger for such increases was not agreed upon. Both the developed and developing nations adopted a strict stance on these positions (The Hindu, 2011).
When evaluating the different perspectives of the developed and developing nations many of the recent authors on the subject predict that the Doha round of trade negotiations is ultimately bound to collapse. According to many researchers the positions of the developed and developing nations cannot be resolved. From the initial discussion it was found that in the developing nations agriculture is still the occupation of the majority of the people and any trade policies which will cause cheaper imports of agricultural products from developed nations on the back of subsidies will give rise to large levels of social unrest and even riots. Some of the characteristics of the nation’s and initial positions have been undermined in the last decade due to rapid changes which has happened in the world economy. One of the aspects is the heightened levels of concern among the nations about climate change where similar unacceptable positions are being taken by the different nations groups (Pfumorodze, 2011). The philosophy of the nation al blocks in adhering to their stance is clear and no middle way could be approached with ease. When the Doha round of trade negotiations was created the United States had a unilateral position, view and power over the world economy which has also been undermined with the wars in the Gulf and the recession. The grouping of developing nations under the leadership of Brazil, India, China, South Africa and Russia which has promoted to increased levels of negotiations is also a major factor due to which agreement is not yet reached. When considering the previous general agreement on trade and tariffs agreements reached by the different nations in can be seen that the major power politics adopted by the United States was a contributor in those agreements. Even previous to the Doha round of negotiations some of the other trade related agreements on the intellectual property rights and the trade in services were also agreed and accepted by many nations due to the pressure from the developed nations mainly the United States (Ezeani, 2011). The position of the United States which was dominant during the initial periods of 2000 has been undermined because of the strength of the opposition. Even the threatening stance of the United States has also been neglected by many developing nations.
From a different perspective the increased levels of trade liberalisation will create and global economic where all the countries are interlinked. The recent economic recession which was mainly due to the housing market collapse in the United States spread throughout the world due to the interdependence from globalisation. Many of the countries in the African Nations are said to be insulated from the recession because of the lower levels of liberalisation achieved in their economies (WTO, 2011). Hence a lesser globalised economy can insulate some of the negative effects of capitalism and any recessionary trends in any particular country being affected throughout the world. When specifically seeing about the agricultural markets if interlinked with worldwide trade, and when some countries are depending on others for its staple foods, a decrease in production of such products in one geographic area will contribute to massive levels of undersupply in all over the world. This is similar to the recessionary forces where the collapse of the capital markets in the United States and the consequent undersupply of credit limited the growth opportunities throughout the world due to the interlinking of economies. Such levels of interlinking in agriculture and the consequent effect of one region spreading to others may not be acceptable. The consequences of changes in agricultural output are directly affecting the common people and especially the population which is below poverty level even at a single country basis. This is seen from the effects of the increase in food prices in the present year where commodity prices has increased at an acceptable level in many developing nations especially in the case of African nations where there are high levels of drought and famine. Hence from the perspective of globalisation the agricultural globalisation may not have a positive effect on the economy of the developed and the developing nations. As the Doha round of negotiations could not reach a common ground due to the different positions adopted by the nations as well as the inherent fundamental inequalities, it is best to resolve the issues by concluding with a failure of the negotiations. Moreover the nations should adopt a policy of self-sufficiency in agriculture at least in the case of staple foods. It is not only the growth of trade and liberalisation which is important but also the equality of the world population and lifting them out of poverty.