The latest Doha Round of the global trade talks held in Geneva from 30th November to 2nd December, 2009, seem to have almost gone unnoticed in Pakistan. The reason for this could be much more importance given to the news related to the fresh US strategy on Afghanistan, the NRO and the army offensive in South Waziristan during these days, which were of immediate interest to the public at large.
However, since the outcome of the trade talks could be very significant for the economy of Pakistan, their progress needs to be closely monitored and thoroughly analysed by the policymakers of the country. According to the latest reports, the trade ministers wrapped up three days of the WTO talks with little headway seen on ending an eight-year stalemate on framing a trade liberalisation accord, ahead of a 2010 deadline. This was due to the unwillingness of the concerned parties to budge on the level of cuts to agricultural subsidies and industrial product tariffs, causing an impasse between the developed and the emerging nations in the Doha Round of global talks.
No landmark proposals were even made this time to bring the process forward, despite the fact that the US Trade Representative Ron Kirk and Indian Commerce Minister Anand Sharma met at least twice at the sidelines of the Geneva meetings, with the US envoy calling on the trade-driven developing nations to open up their markets as vital for the conclusion of the Doha Round. India, Brazil and others in the Group of 20 developing countries, which act as a big negotiating block primarily on agriculture, on the other hand, emphasised the need to call the spring ministerial meeting next year to give a final push to negotiations. The US did not reject such an idea flatly, but was not sure of any worthwhile achievement if more attention was not focused on sustained bilateral negotiations that could yield meaningful results.
Naturally, most of the participants were disappointed. As a reminder of the target date set by the leaders of the Group of 20 emerging and developed economies, Gareth Thomas, British Trade Minister said that "if we don't make progress soon, we will miss our 2010 target and that would be a great loss for the global economy and the world's poorest". World Trade Organisation Chief, Pascal Lamy warned the ministers that time was not on their side even though about 80 percent of the Doha deal had been clinched. Calling the nations to be straightforward, EU Agriculture Commissioner lamented that "the days of only nice statements should be over."
There is no doubt that the inconclusive talks on the Doha Round would be a great setback to the world economy. According to some conservative estimates, its successful outcome could boost the global economy by around $170 billion annually and was also seen to be critical in helping it recover from the current recession. The continued stalemate, on the other hand, is encouraging various countries to enter into bilateral deals and giving added impetus to the efforts of various groups to increase the level of resistance. It was very strange to see that on the sidelines of the WTO meeting, meant to facilitate/increase trade on a global basis by dismantling various kinds of barriers, 22 developing and poor countries, including India and Brazil, agreed on a deal of cutting tariffs by at least 20 percent, on 70 products, on a bilateral basis.
These countries thought that they had made a statement that the problem of a lack of progress in the Doha talks was not from their side, though such an attitude was against the spirit of the basic exercise. Activists representing farmers, fishermen and labour groups are also mobilising increasing support to voice their opposition against the finalisation of the Doha Round, arguing that an agreement could lead to cheap imports, dwindling incomes and increased poverty in the developing countries. Although this argument may not be theoretically convincing, yet it is making the task of negotiations more complicated.
It is obvious that the Doha Round that began in 2001, with a focus on dismantling barriers to trade by striking an accord to cut agricultural subsidies and tariffs on industrial goods, is currently dogged by disagreements over various issues, including how much the US and European Union should reduce aid to their farmers and the extent to which developing countries such as India, China and South Africa should lower tariffs. Barring a miracle, the deadline for 2010 is going to be missed though a large part of the deal has already been clinched. This will be highly unfortunate, because increasing protectionism in various countries due to domestic difficulties could derail the whole process at some point of time.
A very depressing part of the exercise is that even the 2008 text of the Doha deal is now not acceptable to the US because of waning domestic political support. Uncertainty on the liberalisation of world trade could promote further bilateralism or the emergence of regional blocks. Although the whole world may suffer the consequences of restrictive trade practices, the poor developing countries would be more vulnerable to the severe shocks arising out from the continued impasse or debacle in the Doha Round. For Pakistan, the impact could be highly destabilising due to the vast exposure of its economy to foreign trade. Its greater integration with the world economy could be gauged from its trade openness indicator ie the trade to the GDP ratio, which has increased from 25.8 percent in 1999-2000 to around 35 percent at present. If services trade is included, the ratio would be higher than 40 percent.
However, despite so much openness, Pakistan could play only a minor role in world trade negotiations due to the small size of its economy and an insignificant share in the global trade. In a situation like this, we can only play a minor role in the Doha Round and hope for its success. In the meantime, the authorities of the country could explore opportunities for a higher level of bilateral trade with a view to reaping the maximum benefits of comparative advantage in the production of various goods and services.