speri.comment: the political economy blog

The Doha stalemate

The real worry is not the decline of trade multilateralism per se but rather the breakdown of a shared social purpose underpinning global trade governance

Matthew L. Bishop, Honorary Research Fellow, SPERI, and Senior Lecturer in International Relations, University of the West Indies, Trinidad & Tobago, and Valbona Muzaka, Honorary Research Fellow, SPERI, and Senior Lecturer in International Political Economy, King's College, London

Matthew Bishop and Valbona MuzakaIn December 2013, almost twenty years since the conclusion of the Uruguay Round of trade negotiations that brought the World Trade Organization (WTO) into being, and over a decade since the start of the ill-fated Doha Round, the membership finally agreed the so-called Bali Package.  Despite their continuing inability to transcend the most contentious issues facing them, they were able to do a deal by picking the most easily available ‘low-hanging fruit’.  As a consequence, incoming Director-General, Roberto Azevêdo, was moved to claim: ‘For the first time in our history, the WTO has truly delivered … this package is a not an end – it is a beginning’.

Yet the well-documented reality is that the Doha Round was on life support for much of its history.  Indeed, its very establishment was largely a misconceived sop to the developing world after the ‘Battle in Seattle’ and 9/11.  Ever since the collapse of various ministerial meetings throughout the 2000s, there has been widespread opposition from larger developing countries to an agreement they suspect will never offer the kind of ‘development’ that was supposed to be its hallmark.

The most visible straw that keeps breaking the camel’s back is Indian resistance over the issues of agricultural subsidies and food stockpiling, which it sees as vital to protect its enormous and vulnerable rural population.  In July this year, India once again refused to ratify Bali, imperilling the process at the half-way point between its signing and Azevêdo’s plans for further progress.  In truth, Indian opposition is a sideshow and Bali may well eventually be institutionalised.  The deeper point is that Doha has faced huge and longstanding challenges which have caused many to proclaim the end of multilateral approaches to managing global trade.

This is quite a claim, and it’s something we explore in a recent journal article entitled Doha Stalemate: The End of Trade Multilateralism?

The key analytical move we make is to disentangle questions of multilateralism from those facing the WTO itself.  The current form of multilateralism, built around a specific global body, is not the only possible form.  In fact, the multilateralism of the past was highly ambiguous and, by examining how it was framed, we subject recent trends, and associated claims about the end of multilateralism, to critical scrutiny.

The conventional account of multilateral decline has three main dimensions:

  • the Doha stalemate itself, which is fundamentally a product of shifting relations of power and the increased resistance of major developing countries who believe that any agreement will be heavily skewed in favour of their richer counterparts.
  • the rise in number of bilateral and plurilateral free-trade agreements, of which many hundreds have been signed in recent years, including ‘mega’ deals, such as the Transatlantic Trade and Investment Partnership (TTIP), currently being negotiated outside the WTO, in secret, and amidst much controversy.
  • problems within the WTO itself: for example, its raison d’être – the ongoing liberalisation of substantially all trade – is increasingly difficult to realise as ever-more countries negotiate ever-more sensitive issues within a member-driven architecture that precludes the secretariat staking out new (potentially heterodox) intellectual ground.

Our account does not neglect these developments, but pays particular attention to the way in which narratives of a crisis of trade multilateralism have been used as political tools to compel members to consent to a negotiation outcome they have been resisting in order to solve the present crisis – lest the entire edifice of trade multilateralism crumbles….  This is done, in part, by idealising the trade multilateralism of the past as orderly, effective and balanced – a baffling claim to anyone with even limited historical knowledge.  Indeed, in so far as multilateralism is seen as a changeable but durable institutional form underpinned by certain generalised principles of conduct – which, in the case of trade, would be non-discrimination, ‘indivisibility’ (applying to all) and ‘diffuse reciprocity’ (members expect roughly equivalent benefits in aggregate and over time) – it would be difficult to argue that the trade arrangements of the post-war period were multilateral at all!

In reality, even in the trade system that preceded the current Doha Round, there existed significant departures in letter and spirit from the principle of non-discrimination and the same rules definitively did not apply to all members.  Moreover, if ‘indivisibility’ implies, minimally, that members were ‘in it together’, this does not square with the hierarchical, exclusionary, club nature of the post-1945 trade system.  Nor did it generate true ‘diffuse reciprocity’, because most benefits visibly accrued to key developed countries!  In short, pre-Doha trade multilateralism scored poorly on the key principles.

The ‘success’ achieved in this period came about largely because core members shared, to some degree, a commitment to couple the liberalisation of trade rules with the quest for domestic stability (what John Ruggie famously called ‘embedded liberalism’).  Crucially, this latter commitment gave a measure of social purpose to the existence and continuous functioning of trade ‘multilateralism’, such as it was.

Even then, it remained the case that the majority of the collectivity – the developing countries – either did not share in this social purpose, or bore the cost associated with securing domestic stability within the core, or were disadvantaged on both fronts.  This was the result of a contradictory multilateral arrangement that was normatively built on the recognition of ‘equal’ state sovereignty, but in practice assigned leading roles to a core of powerful states.

Such contradictions have been – and remain – the source of many political conflicts within global trade politics.  They have visibly manifested themselves in previous trade rounds and, without question, in the current Doha Round, within which even this emaciated version of a ‘shared social purpose’ is at risk of disappearing altogether.

Our central finding, then, is that the WTO is not under immediate threat, although it may well come to be.  Legal systems do not collapse, as Dani Rodrik has suggested, because we don’t make more laws, and so further rounds might have little bearing on the WTO’s ability to exercise its judicial function.  Equally, global trade is also holding up well, partly thanks to the enduring ‘Smoot-Hawley myth’ (as Gabriel Siles-Brügge put it recently on this blog) about the causes of the Great Depression.  The most important task, therefore, is not saving the WTO or even Doha, but actually agreeing a common social purpose for trade multilateralism and then changing the rules and procedures to serve it.

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Categories: Development, Economics, Global crisis, India, Politics and policy, SPERI Comment, trade, USA | Tags: , , , , | Leave a comment

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