Can Doha lite succeed?

As trade ministers gather in Bali the question is can a 'Doha lite' agreement be concluded to rescue something from the Doha Round of trade negotiations? Or will agreement once again be foiled by arguments over agriculture?

The developing world will still want the US and the EU to stop export subsidies for their farmers, although those paid out by the EU have shrunk away to a fraction of what they were: Export subsidies . Cotton farmers in Africa will still demand better access to the American market and a reduction in domestic subsidies. Sugar cane growers in Australia and Brazil also want better access for their products.

However, the real sticking point could be Indian insistence on rewriting the rules of the WTO on food security programmes. A 'peace clause' was agreed, intended to give another four years to negotiators to come up with new WTO rules for farm subsidies and the prices paid for staples bought as part of government programmes to supply food to the poor. 70 per cent of the Indian population is covered by such programmes which have recently been extended by legislation and there is a general election due next year. It now appears that India wants the clause to be permanent or at least apply until a final deal is concluded.

Doha lite?

The recent G-20 summit was understandably dominated by the eurozone crisis so little attention was paid to the fact that leaders decided to effectively abandon all hopes of achieving a full blown Doha Round settlement and instead see if they could achieve a 'Doha lite'.

Many analysts think that they will achieve nothing. Either way this effectively means the end of 'Rounds' as a way of progressing international trade negotiations. Given the economic backdrop, it also means the end of further breakthroughs towards liberalisation, although the dispute settlement process could still spring some surprises, particularly in relation to agriculture.

The trend towards bilateral deals will be reinforced. Compared with a multilateral framework, such deals tend to be more asymmetrical, so this is not really a gain for the Global South, not that least developed countries got that much outof multilateral negotiations. It was agricultural exporters like Brazil that stood to benefit.

The global financial crisis has obviously shifted priorities over this issue. However, at the very least a ‘Doha-lite’ deal for developing nations will be discussed at a World Trade Organisation meeting in December this year, with an aim of reaching a consensus in time for the 2012 G20 summit in Mexico.

Will progress be possible in agriculture? The EU may stick to its promise to phase out export subsidies, although possibly later than planned given that CAP reform is likely to be delayed. However, EU is unlikely to give much more ground on market access and the US will defend politically sensitive subsidies for crops such as cotton.

It may be that a shortage of government money will now drive reform, but budgetary changes are open to fudging and they never provided as sure a pressure for reform as international trade negotiations. At the end of the day, manufacturing and service industry interests did not want to see potentially lucrative deals derailed by agriculture. These trade offs were one of the benefits of a multilateral negotiating framework.