WTO AND BALI AGREEMENT: FROM THE URUGUAY ROUND TO THE DOHA ROUND (ENCYCLOPEDIA)

Abstract

The Doha Round was officially launched at the WTO’s Fourth Ministerial Conference in Doha (Qatar), in November 2001. It is the latest round of trade negotiations, after the end of the Uruguay Round among the World Trade Organization (WTO) membership. These negotiations were concluded when the Ministers of Trade of 160 WTO member countries had signed, in Bali (Indonesia), an historic agreement for the liberalization of international trade in December 2013. This agreement ended a series of ten-year long negotiations, in which the topics discussed (Doha Development Agenda) were: agriculture, services, WTO rules, dispute settlement procedures (see Dispute Settlement Body-DSB), e-commerce, Trips (Trade Related Aspects of Intellectual Property Rights), "Singapore Issues" (Foreign Direct Investment-FDI, competition policy, transparency in government procurement and trade facilitation). The rules, resulting from the trade negotiations, should have been merged within 2005, into a single undertaking agreement (a procedure which forces member States to fully accept the agreements package or to reject it en bloc). On the contrary, in the Cancun Conference in 2003, the negotiations reached a stalemate because of division between the advanced countries (the EU, the United States) and the emerging countries (such as, Brazil, China, India, South Korea, South Africa). After the stalemate, a final agreement (also known as the "Doha light") was reached in Bali, bringing about the conclusion of the Doha Round.

Structure of the WTO Agreements

GATT (General Agreement on Trade and Tariffs) and, later on, the WTO, are organizations which pursue goals, such as free trade, the elimination of customs barriers as well as tariffs, the removal of Technical Barriers to Trade (TBT) and everything that can hinder free competition in the global market. The WTO agreements cover goods, services and intellectual property; they spell out the principles of liberalization and the permitted exceptions. They also include individual countries’ commitments to lower customs tariffs and other trade barriers and to open and keep open services markets. They set procedures for settling disputes and prescribe special treatment for developing countries. The WTO agreements require Governments to make their trade policies transparent by notifying the WTO about laws in force and measures adopted and through regular reports by the secretariat on countries’ trade policies.

These agreements are often called the WTO’s trade rules and the WTO is often described as “rules-based”, a system based on rules. However, it’s important to remember that the rules are actually agreements negotiated by Governments. The principal mechanisms used by the WTO to pursue these objectives are the multilateral negotiations, the so-called "Rounds".  The Rounds are ordinary commercial negotiations at the end of which, international agreements independent from the GATT are stipulated: they are destined to bind only the States which formally accept them. The agreements, which constitute the rules of WTO, are usually adopted by consensus among all members. 

Tab. 1: The basic structure of the WTO agreements

Source: World Trade Organization

The WTO was born out of negotiations and every action that the WTO takes, is the result of these negotiations. The bulk of the WTO's current work comes from the 1986-94 negotiations called the Uruguay Round and from earlier negotiations under the GATT.

The use of multilateral trading system (Round) guarantees greater consensus and benefit for all nations that take part in it. Through these negotiations rules of international trade are established with the aim of guaranteeing stability for national markets, encouraging growth and free trade (as shown in Table 2). At the same time, the use of a negotiation system based on consensus, causes long-lasting decision-making processes.  

Tab. 2: Growth in volume of world merchandise trade and GDP 2005-12 (annual percentage change):

Source: WTO World Trade Report 2013

Start of the Doha Round

The latest round of WTO negotiations was held in Doha (Qatar) in November 9th, 2001. The result of these negotiations  was the Doha Development Agenda, a document that establishes the beginning of the Doha Rounds. The Development Agenda drew the world attention because of its development issues (see Millennium Development Goals adopted in the Millennium Declaration of the United Nations in 2000). The topics discussed during the four days of the conference were:

- Agriculture;

- Non-agricultural Goods Market Access (NAMA);

- The relationship between investment and trade;

- Interaction between trade and competition policy;

- "Singapore Issues" (transparency in government procurement, trade facilitation and customs issues);

- Trade Related Aspects of Intellectual Property Rights (TRIPs);

- Trade and environment;

-  WTO Rules;

-  Resolution of disputes;

- Small economies;

- Trade, debt and finance;

- Trade and technology transfer;

- Technical cooperation and capacity building;

- Least Developed Countries;

- Special and differential treatment;

In addition, the Doha Ministerial Conference established the beginning of the next Conference (Cancun, 2003), the so-called "Singapore Issues". Finally, it was decided to set a deadline for concluding the negotiations within January 2005.

Failure of the Cancun Ministerial Conference

The Ministerial Conference in Cancun (Mexico ) in 2003, was an important step for the Doha Round. Topics included the relationship between international trade, foreign investment and competition, transparency and facilitation of international trade. The conference provided political and economic contrasts between members: the developing countries did not accept the “Singapore issues”; the U.S. did not want to eliminate subsidies to its cotton producers; the U.S. and the European Union clashed with G-20 countries group on agricultural issues and on market access for non-agricultural products. There were still objections raised by many developing countries against the tariff reductions.

The Cancun Conference provoked, as main effect, the crisis of Doha Development Agenda and the multilateral approach of world trade by WTO.

Main Reasons for the Round Impasse

After the failure of Cancun Conference, the negotiations of Doha Round reached a long stalemate. The Conference results showed the decline of the western economy (U.S. and EU) and the rise in international trade of some BRICS countries, such as China and Brazil (see swap trade agreement between China and Brazil) and of other G-20  countries. According to the Bretton Woods institutions (International Monetary Fund - IMF, World Bank and the WTO) any failure of Doha Rounds might have been caused by high costs compared to the potential gains in terms of commercial wealth. During the ten-year of negotiation, the structure of international trade and consequently the balance of negotiation power underwent changes because of the success of new emerging economies. The international trade regulation became particularly fractionated by the exemptions, preferential agreements, bilateral and multilateral agreements between nations. Therefore, with the passing of time, the negotiations' principles and the multilateral mechanisms of the WTO became obsolete also because of the rapid changes for globalization of economy.

Conclusion of the Doha Round: Bali Agreement

In December 2005, the WTO organized the Sixth Ministerial Conference in Hong Kong which officially re-opened negotiations on the issues discussed in Cancun and revitalized the Doha Round. The Hong Kong meeting had a positive effect on the negotiations, as well as on the WTO workings. After the Hong Kong conference, Rounds continued in Geneva, Potsdam until Bali agreement in December 2013.

According to the report published by the “Peterson Institute for International Economics”, the "Bali package" should create one trillion dollars of economic wealth. The measures package developed in Bali, also known as the "Doha light", however, represents less than 10 % of the comprehensive reform program originally established in Doha. In fact, it does not refer to tariffs or quantitative restrictions, but it focuses on the elimination of administrative and bureaucratic obstacles to trade. WTO achieved only three of the originally nineteen chapters: the first chapter was the bureaucratic simplification of customs procedures through a better use of network technologies. The second one concerned the Indian exemption to allow the State to buy, at subsidized prices, from their peasant food to reduce the risk of hunger and poverty. Finally, the third one referred to developing countries, focusing on the abolition of duties on the export.

References

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GUERRIERI P.- SALVATICI L. (2008), Il Doha Round e il Wto. Una valutazione quantitativa degli scenari di liberalizzazione, Bologna, Il Mulino

HOHMANN H. (2008), Agreeing and Implementing the Doha Round of the WTO, Cambridge, University Press

RAVI DEVARAKONDA K. (2013), “Asymmetries mark WTO's Bali Accord”, Asia Times Online, 17 December

(http://www.atimes.com/atimes/Global_Economy/GECON-02-171213.html)

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(http://online.wsj.com/news/articles/SB100014240527023047443045792 47772406524520)

SPAGNUOLO F.(2009), Globalizzazione e diritti umani. Il commercio dei servizi nella WTO, Pisa, Plus

SYDNEY J. KEY (2003), The Doha Round and financial services negotiations, Washington D.C., Aei Press

WORLD TRADE ORGANIZATION (2013) "Days 3, 4 and 5: Round-the-clock consultations produce 'Bali Package'”, WTO, 7 December  (http://www.wto.org/english/news_e/news13_e/mc9sum_07dec13_e.htm)

WORLD TRADE ORGANIZATION (2013) “Revised drafts of ‘Bali Package’ sent to ministers after intensive consultations”, WTO, 6 December 2013 (http://www.wto.org/english/news_e/news13_e/mc9_06dec13_e.htm)

 

 

Editor: Giovanni AVERSA