Monday, September 14, 2009

Africa Holds the Key to Unlocking Doha Round

Since its formation in 1995, the World Trade Organization (WTO) has conducted five ministerial conferences that commenced rounds of trade negotiations. The most recent one, held in Doha, Qatar in 2001, was declared the development round because of its focus on ensuring that the multilateral trade system should benefit developing countries, which constitute more than three quarters of WTO members. Since the surprising strength of the street protests against globalization at the Seattle ministerial in 1999, the 38-member Africa bloc has been more aware of its power to halt the preferred consensus decision-making of the WTO.

The two main areas of focus in the Doha Round have been agriculture and trade in services. The failure to acknowledge that the members of the WTO have vastly different economic systems has prevented consensus on action to conclude the Doha Round. For example, a 2005 Carnegie Endowment for International Peace report showed that agricultural liberalization alone would favor developed countries rather than developing countries that would benefit most from liberalization of manufactured goods. The non-competitive agricultural sectors in many developing countries are based on low-productivity, small-scale farming. Such countries would see lower food costs by importing from more efficient foreign producers, but would also see big losses in their own agricultural sectors.

Because the economies of the United States and Malawi, for example, are structured and operate so vastly differently, it would be difficult to come up with a plan that benefits both without special measure for the weaker economies. And there lies the rub. Special Safeguard Mechanisms (SSMs) have been suggested to benefit developing countries by guaranteeing the right of these more vulnerable economies to exempt staples such as maize, rice and wheat from WTO-mandated tariff cuts and permit them to raise tariffs in the case of large or sudden increases in imports that threaten domestic producers. One of the shutdowns of the Doha Round occurred in 2008 when the United States refused to accept the SSMs.

But now the Government of South Africa is participating in the next Doha Round negotiations next year as the champion of the developing bloc of countries. South Africa has pledged to work with other emerging and developing nations to ensure a balance between agriculture negotiations and demands for industrial tariff reductions. South Africa has formed an alliance with the governments of Australia, Indonesia and the Republic of Korea to seek a conclusion to trade negotiations in this WTO round in 2010. South African President Jacob Zuma pledged just that in his State of the Nation address.

African representatives have used their status as the largest regional WTO bloc to stymie action, but with South African leadership, perhaps now those votes can be used to achieve African and other developing economy goals and fulfill the promise of the development round of trade negotiations.

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