Samuel C Park Jr. Professor of Economics Yale University Presentation at the ITC-ICRIER conference “Fostering Trade T

1. Saving Doha or Saving The WTO? T.N. Srinivasan Samuel C Park Jr. Professor of Economics Yale University Presentation at the ITC-ICRIER conference “Fostering Trade Through Private-Public Dialogue” Shangrila Hotel, New Delhi March 28, 2007

2. Introduction • Developing Countries in GATT/WTO and DOHA agenda • Non-Discriminatory Multilateral Versus Discriminatory Preferential and Regional Approach To Trade Liberalization • India in the GATT/WTO • Conclusions

3. 1. Introduction • Lamy’S address at the New Delhi Seminar on “ Saving Doha and delivering on development” and at the Bangalore seminar “ multilateral trade: Which way to go?” • Zedillo’s introduction to a volume of essays on poverty and trade • Apparent divergence between the two • Constraints on development mostly domestic • Success in completing the DOHA agenda will help but not solve the complex and multidimensional problem of development

4. 2. Developing Countries in GATT/WTO and the Doha Agenda • Of the original twenty three contracting parties of GATT eleven were developing countries (DgCs) including India Pakistan and Sri Lanka • Some DgCs chose to stay out of GATT Negotiations • Those who became contracting parties did not participate effectively in bargaining over the reduction in trade barriers took place until the Tokyo Round. • Results of ineffective participation: • High tariffs against exports of DgCs in rich countries • MFA an egregious violation of GATT • agriculture out of GATT disciplines to be continued ….

5. Tokyo round and its enabling clause which in fact hurt DgCs – Baldwin describes DgCs as “don’t obey/don’t object” members because of the clause • Uruguay round TRIPS, TRIMS,GATS • Implementation Issues- Singapore Issues • Failure of Seatle ministerial to launch another round • Success at Doha – Reasons for success Zoellick’s remarks • Doha development agenda and a set of deadlines • Failure to meet the Doha deadlines and Cancun ministerial in 2003 followed by the adoption of July 2004 package with a new set of deadlines to be continued ….

6. Failure again to meet the new deadlines – Hong Kong ministerial of 2005 and yet another set of deadlines • Lamy on the Doha Journey • Are we back in full negotiation? • US farm bill 2007 and EU reaction to it • Lamy on development dimension of Doha to be continued ….

7. Neither Lamy nor Zedillo embrace the extereme views of Stiglitz • Trade and development • Development constraints largely domestic as Lamy himself recognised • Lamy’s list of domestic requirements – Washington consensus • Aid for trade – is it realistic? Does it have a rationale? • Coherence among global institutions

8. 3. Non-Discriminatory Multilateral Versus Discriminatory Preferential and Regional Approach to trade Liberalization • CUs and FTAs as an exception to MFN provisions of Article I of GATT • Requirements for CUs and FTAs to be consistent with GATT defined in Article XXIV • Failure of the working party mechanism of GATT and the CRTA mechanism of WTO to check consistency. • Transparency Mechanism of 2006 • Lamy on reasons for the proliferation of RTAs not convincing to be continued ….

9. The criteria of EU for choice of FTA partners • US with its WTO-plus approach • Lamy correctly rejects PTA’s FTAs, and RTAS as substitutes for multilateral agreements • Can a Pareto optimal customs union be designed? • Yes, according to Kemp and Wan • Can a country considering to enter an FTA with another achieve will achieve some of its objectives without an FTA? • Yes, according to Evenett (2006) to be continued ….

10. Can the spaghetti bowl of rules of origin, and procedures of cumulation be turned into becoming building blocks rather than being stumbling blocks as they are currently, towards global free trade • Yes, according to Baldwin (2006) • Potential Role of the WTO in defanging RTAs and turning them into building blocks • In case of RTAs cannot be defanged, the best alteration is to repeal article XXIV of GATT/WTO and replace it with the requirement that all discriminatory and preferential features of PTA be exit ended on an MFN basis to all of the members of the WTO after five years of the PTA coming into force

11. 4. India In the WTO/GATT • Of the 23 original contracting parties of GATT were DgCs including India, Pakistan and Sri Lanka. • India resisted Multilateral and reciprocal trade liberalization furthermore wanted DgCs to have complete freedom for choosing their trade polices • India’s position dates back to the discussion of ITO charter at the Havana Conference • India and Brazil as leaders of the group of twenty at Punta del Este ministerial meeting, resisted the launch of the to be continued ….

12. Uruguay round with new items on the agenda until the last minute • Both emerged once again, this time with China also as a member, of the G-20 group of DgCs at Cancun, to coordinate their negotiating positions on DOHA • China has remained largely silent, while Brazil and India have been vocal • In the increasingly unlikely event that EU, Japan and US reconcile their differences and offer a deal, whether Brazil and India will shift their positions sufficiently to reach an agreement remains to be seem Mr. Mukherjee’s and Mr. Kamal Nath’s disappointing remarks at the New Delhi seminar are not encouraging to be continued ….

13. India like other member of the WTO is pursuing the FTA route • SAPTA, SAFTA ineffectual • Interests of India and DGCs better served by the multilateral process

14. 5. Conclusions • Doha at a critical stage • The possibility of narrowing the widely divergent positions of WTO members particularly on agriculture, so as to reach an agreement by June 2007 is remote • An agreement with completion of “Development Agenda” also very unlikely, But a ‘DOHA Light’ is possible and it would not be a disaster. It will save the WTO and give a chance to its members to cobble together a better future agreement • Liberal global trading system is in the best interest of DgCs but it is not a solution for all development problems to be continued ….

15. Problems of development lie in the domestic arena • Trends towards PTAs will continue – Efforts have to be made to “defang” them .

16. Thank You