Failure to complete Doha round would not, in fact, amount to a catastrophe

By Robert Hunter Wade
FT.com
Published: November 4 2005 02:00
(Letter to Financial Times) From Prof Robert Hunter Wade.

Sir,
Would it be a catastrophe if the Doha round were not completed in 2006, as Martin Wolf claims? ("The world has everything to lose if trade liberalization fails", November 2). I doubt it, for several reasons.

The present world trade and investment regime is already more liberal than at any time in the past 75 years. It is not clear that making it still more liberal would bring large economic gains.

Mr Wolf cites World Bank projections to 2015; but they inflate the likely gains and omit important losses, and even then the net gains are fairly small.

Then there is the matter of who would receive the gains of further liberalization.

Sixty per cent of the increase in world consumption over the 1990s accrued to people living in the upper half of the developed countries' income distribution, less than 10 per cent of the world's population; and most of the rest to the burgeoning middle class of China.

"Globalization" has been good for these people, but not for the large majority of the world's population.

Completing the Doha round on its current terms may make world income distribution even less equitable.

Developing countries should insist on changing the terms away from "you open your markets to our manufactures and services and we promise to open ours
to your agricultural exports".

They should insist that the principle of "reciprocity" be given up, and that the General Agreement on Tariffs and Trade principle of "special and differential treatment" for developing counties be restored.

They should insist on more scope for deploying the same development policy instruments that the developed countries used in their development phase, including such measures as domestic content requirements.

They should be prepared to see the Doha round fail, and then put their weight behind another round on terms fairer to them.

Robert Hunter Wade,
Professor of Political Economy,
Development Studies Institute,
London School of Economics,
London WC2A 2AE