Doha Round Needs Strong Leadership

The Australian Financial Review

By John W. H. Denton
Partner and Chief Executive Officer, Corrs Chambers Westgarth
Chairman, BCA Trade and International Relations Task Force

Over the coming months, international trade reform needs to be given a much higher priority, or a vital opportunity to lift economic growth may be lost.

Governments in the US and Europe have a particular responsibility to revive and bring progress to stalled negotiations. This is the clear message from business across the world.

The Business Council of Australia believes that, if trade policy is not assigned a higher priority, the vast majority of nations will lose the chance to secure increases in job numbers and incomes in the years and decades ahead. The World Bank has estimated that a substantial agreement under the Doha round trade negotiations would add as much as $US375 billion ($479 billion) to the world economy.

Key governments, especially the US and the EU, have fallen into a pattern of making public statements on the importance of trade liberalisation, with little or no concrete actions to follow on from the rhetoric. Strong, consistent political leadership is needed to break out of this pattern. There are five concrete actions that leading governments need to take as a matter of urgency.

First: Doha round negotiations should be officially restarted. A major problem with the suspension was that negotiators stopped working. Valuable time and momentum has been lost.

Second: rhetoric on the importance of the Doha round must be matched by a willingness from the largest trading nations to offer concessions in all areas: agriculture, industrials and services.

Third: those same nations must put pressure on other key players, particularly leading developing nations, to go further.

Fourth: comprehensive agreement must be concluded by no later than May 2007, in order to bolster the case for the US Congress to extend its Trade Promotion Authority legislation beyond its expiry date in mid-2007.

Fifth: united support for the extension will be required.

While a Doha round agreement would go a long way to providing the impetus for Congress, it will still have to be persuaded to grant an extension.

There has been great speculation that the new Democrat majority in the US will be more protectionist on trade. I do not agree with this view. A Democrat government took the lead in concluding the Uruguay round in 1994. The Democrat administration of the late 1940s was responsible for establishing the multilateral system after World War II.

With a strong record on trade reform, I see the Democrats as open to supporting trade liberalisation, provided the Doha round is concluded and the merits of a new agreement are demonstrated.

If the worst happens and Doha fails, a key consideration will be the need to preserve and minimise damage to the multilateral system. It would be much better to take the hard decisions now and prevent such a setback to the world economy.