Globalisation has lead to an increase in trade among countries; however there has been some measures put forward by different countries to curb flow of goods and services. Such barriers to trade are tariffs, quotas and subsidies. World trade organisation is an internationally recognised body, which oversees and makes policies aimed at facilitating international trade.
It makes agreements with member countries (149 members) and oversees their implementation. In its efforts to facilitate international trade, the organisation in November 2001 in Doha, Qatar, started negotiations aimed at removing/reducing trade barriers.
It target agricultural and industrial manufactured goods and services. The negotiations did not take place in Doha only but, there were other negotiations in different parts of the world as follows, in 2003 Cancun, Mexico, in 2005 Hong Kong and Paris, in 2007 in Potsdam, Germany 2007, there were also other related negotiations in Geneva, in 2004, 2006, and 2008 .
The negotiations are referred to as Doha negotiations. However the trade negotiations did not last for long it failed on July 24, 2006. Despite the failure of the negotiations globalisation is still ongoing although it was greatly affected by the failure; world economies lack economic prosperity as the rounds of negotiations aimed at attaining (Ismail 2-34). This paper looks pinto the reasons which lead to the failure of Doha round on negotiations and how the failure has affected globalization.
The general goal of Doha round of negotiations was to reduce/remove trade barriers among counties so as to facilitate international trade. It aimed at having global market without discriminatory rules/policies. The net effect was expected to be benefits from free trade as countries trade among each other.
The following were the specific objectives;
Increase market accessibility of goods and services all over the world (Opening agricultural and manufacturing industry good access to world economies)
Look into developmental issues in developing countries and look for remedies of their low participation in international trade
Device ways that facilitate adherence to international trade rules most notably world trade organisations rules and agreements
Facilitation of trade and other trade related issues like dispute resolutions
It aimed at expanding intellectual property regulation (TRIPS)
It aimed to facilitate the adoption of appropriate technology for sustainable development (environment agenda).
Other than lowering tariff on goods, the negotiation also targeted services industry like in Telecommunication, banking, health care, and transport which are seen as strong points in development (Melaku 1-5).
By 2006, the agenda that the rounds of negotiation had embarked failed; there was an increased poverty in developing countries, inequality in developed counties, environmental deterioration and increased social unveiling among others. Different countries, though signatories of the negotiations had failed to honour the policies set and lead to the failure of negotiations.
The round of negotiations had been termed as developmental strategies negotiations but they failed the test of time when World Bank evaluated the benefits of the negotiations downwards. It was of the view that the negotiations lead the poor nations to be the net losers in the policies agreements (Elliott 43). The following are some of the factors that lead to the collapse of negotiations;
During the period of negotiations, poverty levels in developing countries had increased instead of improved as the negotiations aimed at. In Sub-Saharan Africa and the Middle East for instance the number of people living under $1 a day had increased and those living under $2 a day in Latin America and the Caribbean had increased.
This was seen as net effect of the round of negotiations. According to UN Food and Agriculture Organization, there has been a reduced rate of development and hunger reduction successes in Asian countries in the last fifteen years; this was the time that the rounds and specific agendas to reduce poverty in developing countries.
Farmers who were to benefits from the negotiations however they were reduced to producer of good that were utilised by large multinational food industries for their profit gain as small scale farmers suffered and their poverty increased. In India, the government released statistics which showed that 100,000 farmer committed suicide due to increasing poverty during the era of WTO.
Models implemented by International Monetary Fund and World Bank to facilitate the negotiations resulted to a decreased growth rate and poverty reduction in some countries and boosted growth in others (those who registered growth were the ones who pushed the IMF and World Banks policies). This lacked equality. Such policies included structural adjustment policies (SAPs) and trade deficit financing policies ( Laborde & Bouet 12).
This failure is seen as the first failure of the Doha negotiations. The main reason that resulted to the failure is strong stands that were taken by different countries. These differences were not resolvable; major agricultural producing countries were needed to change their policies on agriculture completely and not to have some small adjustments here and there but eventfully retain their national protection policies.
They were needed to have a fresh look into policies that they are adopting and be willing to accommodate competition in their countries. United States came up with a new form of farm bill that WTO nations needed to adopt in summer of 2002. This was not the case as other members like European Union found the farm bill as so stringent and were not willing to adopt it. At the same time there was a committee that had been made to make progress on the modalities that needed to be implemented in agriculture trade negotiations.
This was referred to as Geneva negotiations, they had not attained their mandate as they faced repellence from different countries. This created urgency and a mini meeting was conducted in Montreal in July 2003 and with ten days to the deadline European Union and the United States of America did not soften their stands on their policies.
In the mini negotiations there came irresolvable Singapore issues. This created differences and taking sides in the negotiations with some nations joining efforts to bring down the other.
In August 2003, there was a US-EU sharing proposal which was made, however, US officials and those members who supported them refused to take adopt the proposal. This lead to an increased mistrust among countries
The mistrust lead to development of G20 which looked for support from developing countries which had little to control the agreement than their votes, these countries included Brazil, China, India, and South Africa. G20 mandate then and today is to push the United States, Europe, and Japan to liberalize their agriculture trade for the benefit of all countries. This move is seen as a division in negotiations which were meant to move as a bloc (Hanrahan 13).
The second factor that seemed lead to the collapse of the negotiation is suspicion of some countries especially the European Union. Countries seemed to wonder what EU wanted in the negotiations, it seemed to be more concerned about Singapore issues other than the general good of the world. It was supported by Japan which through its action was seen to have similar interests but it did not come out clear.
The demand by European Union, Japan and Korea to resolve Singapore issues was not shared by other members and thus this made the goals and objectives of the negotiation take different stands. In the same spirit, developing countries felt that they are used as a pathway for developing other countries and there were not clear policies on how they are going to benefit from the negotiations.
They started to take neutral stands and opted to delay their contributions to future times where they would understand how they are to benefit from such negotiations. The developed countries and developing countries seemed to have a difference in all agendas of negotiations; they took different stands.
The formation of G20 and proposal on US-EU agreements were clear policies that developing countries saw as a move by developed countries to hijack the process for their own gain. Inequality and special treatment were seen as the order of the day and developing countries were not willing to be a part of a negotiation that was aimed at assisting them but it was actually discriminating them (Anderson 7).
The aftermath of Cancun ministerial round of negotiation lead to suspension of negotiation for the remaining part of 2003, but the talks regained in 2004. United States pushed restructured their stand and accepted removal of subsidies on agricultural goods which lead to a conference of negotiation from March 2004. The move also considered the case of Singapore and it suggested that the country should not be given full attention but there should be measures developed to facilitate trade in the country.
The negotiations got track and there was an agreement to remove Singapore issues from debates of Doha which was accepted by EU. EU also accepted to eliminate agricultural exports subsidies. Developing countries played a more active role with India and Brazil as the main players where they repressed a self proclaimed “non-party of five”. There was agreement for once and this lead to structuring of July Package which offered guidelines to removal of subsidies and facilitate trade.
However this agreement which had a deadline on December 2005 failed because of non compliance, these were from France which refused to cut down its subsidies as the agreement required. The countries farmers continued to enjoy subsides against the expected trend. Other countries like United States, Brazil and India feared that if they remove subsidies on all their agricultural economies they are likely to suffer and thus they retained subsidies in areas like beef and rice (Urmetzer 12).
With the unattained goals and agreements, there was a meeting converged in Hong Kong in December 2005 which was aimed at taking stock of what success the negotiations had attained. In the meeting there was an increased blame game where developing countries accused developed countries of retaining trade barriers yet they showed their interests in removing their barriers when in negotiating table.
Developed countries were not willing to loosen their stand. However there was an agreement that trade barriers especially on agricultural goods should be removed by the end of 2006. This was never affected and the negotiations were seen to not be bearing fruits, on July 24, 2006 the negotiations were abandoned.
After the abandonment, there have been some conferences aimed at forging a way forward the negotiations but it has not bore fruits. The situation after the collapse was made even worse by global financial crisis. When the crisis hit the world, one of immediate mechanism that nations took was to protect their economies.
They feared that they can import the crisis and thus opted to protect their economies. On the other hand the origin of the crisis which was thought to be United States made the country be seen as a country to watch when trading with it. This collapsed trade with the country despite being the world largest economy (Collin 2-23).
Despite the collapse of the negotiations, globalisation has not stopped to occur however it is taking different routes than it was expected to take by the negotiations. More countries are continuously trading among each other in the “uncontrolled trade”. However, failure of negotiations has drawn an increasing questioning of the validity of WTO policies and strategies which are seen to be driven by a small number of experts with the aim of controlling the world trade.
On the other hand commitment on international negotiations has been questioned. The failure has offered the need to rethink of international trade negotiations and how the global world should be managed. Over the media and the most told reason for the failure of the negotiation is non compliance of countries to honour WTO policies but the untold stories is that these are moves that show repellence to WTO policies and corporate-led globalization model which are seen by some countries like China to lack objectivity.
Since the start of the negotiation, all deadlines sets had been surpassed and needed to be extended however even after an extension its fulfilment was still not fully. This is in both agricultural, good and service sectors of the economy. There has been moves by some WTO members to let down policies and debates brought about by large multinational corporations in developed countries since the world organisation has for a long period been used as a tool to make policies that benefited these corporations at the expense of other countries.
The failure of corporate negotiations and agreements has resulted to an increasing number of people from all spheres of an economy to think of the way forward on globalisations. These policies are increasing being challenged by economists, politicians, farmers and civil society analysts.
They are of the opinion that these are negotiations/agreements which have resulted to worse functioning of world economy. It is noted that in Africa there was a 40 percent growth in economies from 1960 to 1980 when there was no trade monitoring and control by international bodies but the same have contracted by 10% during the period of 1990-2000.
This is the period that WTO had its policies stamped strongly on the ground. Consequently, China has drastically changed and improved over time, this is an improvement that is remarkable despite the fact that it only joined WTO in 2001; this is leading to an increasing doubt on the effectiveness of WTO and other Trade organisations.
Despite a number of policies developed by WTO to reduce poverty, the world is still facing 24,000 deaths daily out of hunger either directly or indirectly (Ana 48-59)..
Countries with similar trade agendas are joining their efforts to be able to jointly negotiate for better terms in trade. They are using the strength of a group to negotiate with other countries for better prices. However the same blocks are increasingly being used as trade barriers when members of a block maintain preferential trading terms amongst themselves.
This was the intention that the collapsed negotiations had. For example, European Union has made some trade barriers against other countries but has removed them when trading with other countries. When they are negotiating for trading terms with other countries they do it as a block (Doha round must be a success 2)
In Africa, the trend is the same with the recent negotiation being the formation of East African community. The community has referential trade among themselves and free movement of factors of productions. When they are negotiating for international trade terms or terms with other countries, they are doing it as a block to have a higher negotiating power.
The result of this trend is a world economy that is maintaining different relationships among countries. There are some countries which are left to fight for their position alone and this has increased poverty further, sometimes these blocks go against the expectations of international bodies as each is willing to undertake measures that benefit it not considering whether other countries will suffer of not (Yager 8).
Different countries are establishing trading partners which can benefit them and engaging in trade with such countries. This is at the expense of the general world trading. This trend is seen mostly in developing countries when they seek strategic partnership with developed countries which are likely to benefit them.
Such partnership may be specific on specific items and others are general. For example Algeria has shifted its trade from western countries to China. The countries are having special trade negotiation which is aimed to have mutual benefits.
For example in road construction, tenders are given to Chinese under the condition that China accepts coffee supply from Algerians without any duty barriers. The emergence of china as a fast growing economy is also leading to a shift of trade to the country. The country is able to produce goods cheaply and thus developing countries are seeing it as a better trading partner.
There has also been the emergence of economic masters. These are countries which could control a large portion of world economies. At the same time there are countries which are fully dependent on others. Economic giants include United States of America, European Union and China.
The effect of such countries was felt in 2007 when failure in United States trade led the entire world to an economic crisis. There are countries like Swaziland and Zimbabwe who have been turned to almost beggars. They can hardly feed their economies and thus depend on international community for help. Such countries are in such states not because they cannot produce but if they do their production cost is too high to compete with the rate of international market. They are growing poorer (Stokes 55).
The collapse of the negotiations has lead to protectionism of certain industries by different countries. Many countries are protecting those industries which they have a comparative advantage. For example in United States, there are still tariff barriers on imported beef products as the country aim at protecting its home industry. In Kenya, the country has limited the exportation of hides and skins, and old lead batteries. This is in the efforts of protecting the home industries.
The country is using tariff and quota barriers. Ethiopia is selling its tea to specific European countries and imposes tariffs on others. From another angle the collapse of negotiations have resulted to industrial development more so in developing countries where they are kept under the pressure that they must improve their processes if they have to compete with developed countries. Trading giants are having a competition to win developing countries and they have traded rivalry among themselves.
The trend of trade is following a move towards colonial masters. This is more in developing countries. In Africa, countries are seeking for trade negotiations and collaborations with their colonial masters. Despite the fact that colonial masters at one time were oppressing the countries they had colonised, the move had changed to have the same countries as their preferred trading partners. There is close trade between Britain colonised countries than those colonised France.
A country like America which is the world largest economy has diverted from competing for European and Chinese market but is focusing on developing countries; this move is sometimes questionable whether the country has an agenda to assist developing countries or it has diverted the trade to that direction for its own benefit (MARJIT 320-332).
Doha round of negotiations had an agenda for environmental conservation. This was a move that aimed at ensuring countries efficiently produce goods and services and adopt technology that will ensure sustainable development. To attain this agenda, different countries needed to relook their production mechanisms and come with better environmental procedures. It did emphases on implementation of Kyoto protocol.
However after the collapse of Doha negotiations, each country felt that it needs to utilise the available revenues to develop to remain competitive in world trade. This lead to an increased deterioration of environment; a similar disagreement that shown greed and lack of commitment was experienced in 2010 in Copenhagen when world nations had met to discuss the way forward in environmental conservation. The same way that nations were not willing to give in Doha round of negotiations was experienced (Stokes 3).
The collapse of Doha negotiations left the world in a worse state than it had found it or than it had aimed to make it. It resulted to more protection among countries. The fail was as a result of countries taking strong stands which were favouring them at the expense of other countries. Some countries like United States reinforced their economy protections by choosing their trading partners. The move has also resulted to a shift of trade to China which was seen to have taken a more neutral role in the negotiations.
Economic and trading blocs have emerged as other forms of protectionism nations are feeling that they need to trade with a certain country if they have a mutual benefit they can attain from such a trade at the expense of trading internationally. Developing partners are increasingly giving favours to one side of economy and protect their economies against others.
There are moves which the world is trying to undertake to ensure that future such negotiations will not fail but the way situation seem to be there is no much change; most recently there was there was the collapse of environmental talks in Copenhagen. There are other international organisations which seem to be learning from the collapse of the talks which include Organization for Economic Cooperation and Development (OECD).
They have taken the task of facilitating agreement to facilitate corporation among countries. It’s too early to gauge their effectiveness but since they are learning from mistakes done by previous bodies the world is optimistic that they are going to create a better trading ground than their predecessors. The un-asked question that is in the mind of economist, politicians and policy makers is whether WTO will be trusted to spearhead the direction of world economies.
There is also a move that seems to be neo-colonialism taking the form of trade. The move to preferred trading partner has brought a control of some countries by others. Some countries are totally depending on others to feed their economies. Competition to who is the best producer has resulted to a deterioration of environment as nations produce without the care of the environment. The net effect of the failure is decreased living conditions in developing countries and emergence of giant world economies.
Countries need each other as trading partners, they also have learnt from previous experiences and they understand on how not to approach issues. This is working positive for international trade. There is increased corporation and trade if facilitated by mutual agreement; arbitration by individual’s countries is bearing fruits with the recent one being United States arbitration on Pakistan and Afghanistan trade agreement.
Nations are utilizing their comparative and absolute advantages to facilitate international trade. Another positive move taken by countries is phasing out trade barriers with time; this has increasingly increased international trade. The wave of international trade and globalisation cannot be stopped but its adopting better was to promise a better life to the world.
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