Globalisation and the Wealth of Nations by Brian Easton

Author:Brian Easton [Easton, Brian]
Language: eng
Format: epub
Tags: Political Science, Globalization
ISBN: 9781775580805
Google: Sb0YAgAAQBAJ
Publisher: Auckland University Press
Published: 2013-10-01T09:38:50+00:00

Lessons from the Doha (Development) Round

In 2001, at the Arabian/Persian Gulf city of Doha, the WTO launched a ‘development round’, aiming to enable the poor countries of the world to experience ‘growth, development and prosperity’ through a reduction of trade barriers and distortions. The unanimity of the agreement disguised the fact that there were at least two different theories as to how this might happen.

The rich economies saw the high levels of protection and other government interventions in the poor economies as holding back their development. They thought the poor economies would develop if these interventions were reduced, a process the Doha Round could assist. On the other hand, the poor economies felt frustrated by such rich economy practices as restricting the access of their products (especially the more processed ones) to domestic markets and dumping subsidised agricultural surpluses on third-country markets.

These two distinct paradigms gave little room for compromise. The exact reasons for the July 2006 deadlock are too complex to summarise here. But one might see it as arising from the US belief that any deal would be unacceptable to its farm lobby, which wanted better access to other markets; the EU’s expectation that the French would veto the deal in order to protect their farmers from increased outside competition; and an Indian judgement that the Rich Club’s demands would compromise the living standards of their poor farmers (which number as many as 650 million – almost the population of the EU and the USA combined).

There were those who welcomed the deadlock on the basis that the demise of the Doha Round would see the end of ‘globalisation’. That involves a very narrow meaning of the term. There will still be international trade and investment long after any collapse of these negotiations. Their growth rate may slow, but as long as the costs of distance continue to fall, globalisation will continue (as it did for 150 years when there was no GATT/WTO).

At issue, then, is not whether there will be a continuation of globalisation, but what sort of globalisation will continue. The alternative might be bilateral deals between countries. However, this option increases the power of the bigger economies. The US, for instance, has signalled its wish for concessions outside the normal WTO framework. The line between commercial and political policy can be an ambiguous one. The US required Saudi Arabia to abandon its boycott of Israel (a member since 1995) as a condition for its approval of Saudi accession to the WTO. Was that because it was considered wrong that US businesses trading with Israel should be discriminated against? Or was it a part of the US’s political support for Israel? Of course there is bullying in the WTO’s multilateral negotiations too, but here small economies can support one another to reduce its effectiveness.

A fatal flaw in bilateralism today reflects the changing nature of international trade. Now that many finished products contain components sourced from numerous economies, there is a need for a ‘country-of-origin rule’ to determine which are eligible for any concessions.

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