Trade and Development: The Risks after Hong Kong

Abstract

The Doha Round has laboured from the beginning. Trade agreements have commercial objectives but the Doha Round was launched as an international political response to 9/11; the technical groundwork had not been laid and the movement on the built-in agenda had been negligible. Coming out of Hong Kong, we have the usual "glass half full, glass half empty" commentary on prospects for the Round. Some see failure papered over but others see the outline of a "Grand Bargain" taking shape and are encouraged by steady technical progress that is sidelining the smaller issues. If there is something of an emerging consensus concerning the future of the Round, it is that it will be concluded, but it will be late, back-end loaded, driven by the agendas of the major players and delivering overall modest efficiency gains. Not a bad outcome and the system lives to fight another day. This paper assesses several risks to that view and to development outcomes linked to trade: (a) that countries will conflate the Round with the WTO and fail to put the resources into the negotiations commensurate with the importance of the latter; (b) that system friction from deepening global integration will generate too much heat for the WTO system to handle; (c) the “Grand Bargain” will deliver some trade but not much development, disappointing what is now the majority constituency in the WTO; and (d) the tensions related to macroeconomic imbalances will spillover onto the trading system.

Keywords: Doha Round, WTO, trade and development

JEL Classification: F13