Doha Deal Crucial to World Economies

21 July 2006

The Age

John Denton
Partner & Chief Executive Officer
Corrs Chambers Westgarth

Breaking the Doha Round impasse is the key to reducing poverty and improving the financial health of the world, writes John Denton.

The opportunity to secure a new round of global growth and better living standards for most of the world's population hangs in the balance.

So too, potentially, does the future of the world's multilateral trade system and the World Trade Organisation.

The Doha Round of world trade negotiations has been stumbling towards its latest and most critical impasse for some time.

Success in bolstering multilateral trade arrangements will underpin further liberalisation of world trade, making economies more productive and spreading benefits and opportunities to consumers the world over.

The World Bank estimates that the full liberalisation of world trade could result in additional economic production worth more than $400 billion a year. Importantly, a substantial proportion of the economic gains would flow to developing nations.

A boost to world production of this magnitude would make a substantial contribution to improving the material living standards of hundreds of millions of people and significantly reduce poverty. The benefits would last for many decades.

For Australia, a successful Doha outcome means potential access to new and lucrative markets for our agricultural and manufacturing products and our services.

Failure, on the other hand, may cause untold damage to this important institution.

While everyone is in furious agreement with what is at stake at a high level, as is always the case in global trade talks a lack of consensus around key areas such as agriculture has turned the molehills of discussions into seemingly impassable mountains.

Now, after months of fruitless talks, lead WTO nations have bitten the bullet to break the impasse and appointed the WTO's director-general, Pascal Lamy, to urgently broker an agreement on agriculture and industrial goods - the two biggest stumbling blocks in securing a lasting Doha agreement.

This desperate initiative signals quite clearly that we are at the point where the key elements of a final deal need to be offered up, nailed down and agreed without delay.

The political landscape that has underpinned much of the transnational goodwill in recent times around moving Doha forward is about to change.

As we get closer to 2007, attention in Europe will turn to elections in France.

In the US, the President's individual authority to sanction trade deals is due to expire in 12 months and there is uncertainty over whether Congress will renew it.

These looming events, combined with the refusal of key nations to make decent offers, have prompted the declaration of a state of "crisis", providing Mr Lamy with a very important mandate.

The Business Council of Australia has written directly to Mr Lamy urging him to use his mandate to conclude an agreement as a matter of urgency. At the same time, our letter has emphasised that the short time frame available should not be a pretext for watering down the key objectives laid down for the Doha Round in 2001.

A final agreement will not be acceptable to Australian business unless it achieves substantial progress in freeing up markets in all of the key areas: industrial goods, services and agriculture.

If his mandate is to make a real difference, Mr Lamy will need to enlist political leadership at the highest levels.

The intervention of US President George Bush and other heads of government is imperative to take negotiations towards a meaningful conclusion.

Beyond the immediate and direct potential gains from this round, we need to make sure the outcome from Doha strengthens and preserves global free trade, not diminishes it.

More than 50 years of the multilateral liberalisation of trade has delivered lasting benefits for many of the world's nations and their people.

Failure to reach a meaningful Doha agreement could lead to an even greater focus on bilateral and regional trade negotiations than there is now.

Developing countries are unlikely to be major participants in such a process, leaving them on the wrong side of the high walls of preference agreements.

Furthermore, if WTO nations find themselves in a situation where the multilateral system is not delivering results for a period of years, expanding bilateralism might lead some to view a future resumption of multilateral liberalisation as a threat.

By the time another opportunity to conclude a multilateral round comes, it might be too late to salvage the utility and integrity of the multilateral system.

For all these reasons, the world needs a substantial and comprehensive Doha agreement signed, sealed and delivered well before the end of this year.



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