Trade Policy Note Final-rev08 - Development

Box 3: Doha Round Suspension
On 27 July 2006, the WTO General Council took note of the statements that had been made
by delegations and the Director General to suspend the Doha Round multilateral trade
negotiations. The talks broke down due to the inability to reach trade offs between the
liberalization of industrial tariffs and the reduction of domestic subsidies and tariffs on
agriculture. 10 In particular, the United States did not consider that it was in a position to
accept a commitment to reduce its total trade distorting domestic support below $23 billion.
Such breakdowns in multilateral negotiations are not new, (e.g. Brussels 1990) 11 , and in
January 2007 the WTO Director General announced the full resumption of the negotiations.
Policy space objectives:
Some action will require multilateral agreement, and thus must be pursued in concert
with other interested countries, such as flexibilities to protect poor farmers ( SP and
SSM), maintenance or exclusion of plant varieties from patenting, more effective
rules to prevent bio-piracy, more flexibility to raise bound tariff rates, resistance to
excessive liberalization through formulas in tariffs and services. Other will involve
defense of policy measures in direct negotiations with trade partners in response to
requests for liberalization commitments on tariffs and services.
Box 4: Trade Policy Space Rationale
The question arises: why protect “space” for trade policy?
It can be argued that before 1995, developing countries largely “enjoyed” a free hand in the
area of trade policy, and for the most part, with the exceptions that will be noted in the text,
did not take advantage of this policy space to develop their economies.
The contraction of policy space which resulted through trade negotiations in GATT, but most
dramatically after the entry into force of the WTO on an almost universal basis, was aimed to
provide greater security of access for traders and investors, while the more stringent rule of
law in the trade field was seen to be beneficial to developing countries as weaker partners in
the international trading system.
Acceptance of the more intrusive and extensive trade disciplines described above is also seen
as providing governments with an effective defense against protectionist pressures at home.
For developing countries, such disciplines were viewed as needed to “lock in” the trade
regimes imposed under temporary structural adjustment programmes imposed by the Bretton
Woods institutions, which were considered as inherently beneficial for developing countries.
These binding disciplines would provide the base for further trade liberalization and the
further extension of the “frontiers” of the trading system to submit an ever widening range of
policy measures to enforcement through the threat of trade sanctions. This was assumed to
lead to ever increasing trade and accelerated economic growth.
However, this logic overlooked three important factors.
First, the process of development followed by successful countries, both those now
considered highly developed, and those which have more recently industrialized (e.g. Asian
10 See analysis by B.L. Das in SUNS, 2 August 2006 www.sunsonline.org.
11 See comparison to breakdown of 1990 Brussels GATT Ministerial Meeting by Chakravarthi
Raghavan in SUNS, 28 July 2006 www.sunsonline.org.
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