Unlocking business support for a global trade deal
By Jake Colvin, vice president for Global Trade Issues at the National Foreign Trade Council, and Scott Miller, director of Global Trade Policy for Procter & Gamble who chairs the Council’s project on the WTO. The opinions expressed are their own.
Next week, the Director General of the World Trade Organization Pascal Lamy is coming to Washington to discuss the status of global trade talks. Trade officials are gearing up now for a serious push to conclude the Doha Development Agenda in 2011, which began nearly 10 years ago. If they are interested in securing high-level corporate support for a deal, they must deliver an ambitious outcome that works for businesses as well.
Several current and former negotiators have lamented a lack of enthusiasm by the American business community for global trade negotiations. Given the lack of progress or urgency in concluding the talks, it’s a wonder that groups like the National Foreign Trade Council and the U.S. Chamber of Commerce have continued to bring member companies to Geneva over the past decade to express interest in a deal. It is unrealistic to expect senior corporate leaders to engage in a process where benefits to their bottom lines appear either unclear or inconsequential.
The American business community is ready to lend strong support to conclude and implement the Doha Round, so long as the agreement leads to new trade flows around the world. Improved access to major emerging economies in Europe, America, Asia and Africa is particularly important to grab the attention of CEOs and senior executives.
While the gains made thus far in the negotiations are important, they are uninspiring for business leaders whose backing will be critical to the success of a deal in the United States and elsewhere.
Lowering trade barriers to manufactured goods and services is vital to secure corporate interest and political support in key countries. In particular, improving the rules governing key services around the world such as logistics, information technologies and global mobility could help gain significant support from business. Reducing or eliminating tariffs on baskets of goods from specific manufacturing sectors such as chemicals and electronics would also help spark interest in a deal.
A balanced and ambitious agriculture package is also critical for unlocking a global deal. High commodity prices and a new focus on disciplining subsidies should encourage flexibility among agriculture negotiators. At the same time, any movement in subsidies must be driven by new agricultural market access in major economies.
An ambitious global trade deal is not just good for business. A breakthrough in trade talks would help spur the global economy. Global GDP gains from an enhanced Doha Round package are estimated at $282.7 billion, according to the Peterson Institute for International Economics, far exceeding gains that are currently on the table. A successful conclusion would help avert creeping protectionism that has resulted from the global economic downturn and reaffirm the centrality of global rules to the trading system.
Greater ambition could also help address pressing global challenges. Reducing trade barriers to clean technologies would benefit countries around the world seeking to mitigate or adapt to the effects of global climate change. Eliminating high trade barriers to medical and pharmaceutical products would encourage access to affordable, high-quality health care solutions.
Finally, a successful conclusion would help clear the decks for trade negotiators to focus on a range of new issues that have emerged since the Doha Round began in 2001. For instance, today, global companies face challenges from optimizing increasingly complex international supply chains to coordinating cross-border research and development to navigating a maze of national regimes for the treatment of electronic data that were scarcely envisioned when the Doha Round began. While current negotiations address some of these concerns in part, there is a growing backlog of issues left unaddressed by the WTO.
It is encouraging to see recent progress among negotiators in Geneva, spurred by more frank discussions of the needs and sensitivities of major countries. But it will be up to major economies – including the United States, European Union, Brazil, China, India, and South Africa – to exercise leadership and take politically-difficult decisions to steer the Doha Round to a successful conclusion.
The Doha Round is facing a make-or-break moment. It is time for negotiators and heads of state to seize it.
Photoss; Top: World Trade Organisation Director-General Pascal Lamy speaks during a business meeting organised by the Confederation of Indian Industry (CII) in New Delhi September 4, 2009. Key trade ministers met on Thursday to work out how to turn political leaders’ pledges to complete the Doha round trade talks by 2010 into reality. REUTERS/B Mathur; Bottom: Ministers pose for an official photo at the G-20 nations ministerial meeting at the Copacabana Palace hotel in Rio de Janeiro September 9, 2006. REUTERS/Sergio Moraes