Speech of H.E. Dr. Iftekhar Ahmed Chowdhury, the Hon'ble Adviser for the Ministry of Foreign Affairs, Expatriate's Welfare and Overseas Employment

Putting Development Back into the Doha Round

Elizabeth Rose Hall, United Nations University, Tokyo, Japan
25 February 2008 at 15:00 hrs

Distinguished Guests, Ladies and Gentlemen:

This is an honor for me to be here this afternoon and share my thoughts on the Doha Development Round. I thank the United Nations University and the WTO Research Center of Aoyama Gakuin University for this talk. My comments will briefly address three broad questions: a. Why the Doha Round continues to stumble? b. What can we do to resuscitate the talks and c. How can Doha redeem itself as a true 'Development Round"?

Doha continues to elude us - all 151 members of the WTO. After the Hong Kong Ministerial meeting in December 2005, many trade ministers claimed a win-win outcome. But by July 2006, most of the enthusiasm had disappeared. The talks unfortunately came to a complete halt. The EU and the US trade negotiators failed to reach an agreement on farm subsidies. A consensus on NAMA also remained elusive. In the clash of the Titans, interests of the developing countries - especially that of the LDCs - have suffered a major setback. The epitaph "development" in the Doha Round is about to become a collateral damage.

Early this month, the Chairs of Agriculture and NAMA - Ambassador Crawford and Ambassador Stephenson - circulated two revised negotiating texts. These new texts surely mark progress. But it will require further work and more importantly, flexibility and compromise among the G-4 members. The disagreement still lingers on market access and market distortion aspects. It appears that some countries would still insist on a quid pro quo - removal of distortions in exchange for greater market access for agricultural products. Such a mercantilist approach will surely defeat the development imperative of the Doha Round.

The Doha Development Round - as you know - began with huge expectations. Developing countries heartily welcomed the new round of trade talks through some had already warned about the raising expectations. It was generally believed Doha would reverse the inequities in the outcome of previous rounds. Six years later, Doha enlists more skeptics than optimists. A very few think that the talks will conclude in the next few months. An even smaller minority expects that the Round will, at the end, fulfill its promise of a true development round.

Ladies and Gentlemen,

If we want to understand the real reasons for the stalemate, we must revisit both the agenda and the process of the Doha Round. To say the least, the Doha agenda has been too ambitious. The Doha Work Programme initially included 21 areas, including the controversial Singapore issues such as investment, competition policy, government procurement and trade facilitation. By August 2004, the negotiators agreed to drop the first three Singapore Issues. The agenda nevertheless remained burdensome for many developing countries, especially for the LDCs. It contributed to perpetuating the asymmetry between the developed and developing countries. Many developing countries simply lacked the capacity to effectively participate in simultaneous negotiations. The ambitious agenda, paradoxically, made a favorable outcome somewhat impossible.

Closely correlated with the problem of an ambitious Doha Development Agenda has been the problem of process. As we know, a bad process can lead to a bad outcome. The flawed negotiating process largely stems from the WTO Principle of Single Undertaking. "Single Undertaking" requires WTO members to accept or reject an agreement in its entirety. It, of course, has its merits. The principle helped solve the so-called "free-rider" problem. The Single Undertaking approach also allows tradeoffs across issues. For example in the Uruguay Round, developed countries made concessions on textiles and apparel while developing countries made concessions on trade-related aspect of intellectual property rights (TRIPS).

Ladies and Gentlemen,

The Single Undertaking Principle, however, imposes an inordinate cost on the developing countries, especially on those with small negotiating teams. Countries like Bangladesh - with limited resources and expertise - are constrained to focus on issues of immediate concerns. This often requires us to compromise our long-term interests in other areas. The Single Undertaking Principle forces us to accept unfair deals - for example in NAMA - when our negotiating resources are trapped in the discussions on special and differential treatment. Only the larger economies can maximize their interests in multi-sectoral, simultaneous negotiations. Only their large teams of trade lawyers, economists and diplomats can take full advantage of the Single Undertaking.

Another recent innovation in the negotiating process - the formation of Groups like G-4, G-6 and G-20 - undermines the interests of the developing countries. This is particularly true for those excluded from these groups. These groups were formed to facilitate an agreement. The members, however, often fail to represent the interests of those excluded from the group. This induces - what is known as - the "Principle-Agent" problem. For example, an African LDC included in G-20, was keen on addressing the cotton subsidy issue, which is of vital importance to the African countries. In the absence of due representation from the Asian LDCs in the group, some of their key concerns failed to receive equal importance in the G-20 common position. The Asian LDCs would have benefited from greater G-20 focus on market access for their RMG exports. The Doha Round should not seek an agreement just for the sake of one, especially if it does not protect and promote the interests of all member states. The quest for negotiating efficiency should not sacrifice the interests of the countries - especially that of LDCs - excluded from these groups.

Ladies and Gentlemen,

The Doha Round has faltered also because of unrealistic deadlines. Trade negotiations should not face the pressure of deadlines. We all know that the fast track authority granted to US President George W. Bush, under the Trade Promotion Act of 2002, expired on 30 June 2007. This would undoubtedly put a significant hurdle to securing the approval of the US Congress for the Doha Agreement. But that should not compel the member states, particularly the LDCs, to accept an agreement that is not in their best interest. There is a growing acknowledgement that no agreement is better than a bad agreement. The Doha Round will be deemed a development round only if it can attach due priority to the development concerns of the LDCs. Our development priority should not be subjected to arbitrary deadlines.

We were heartened to know that Ambassador Crawford Falconer, chairperson of the agriculture negotiations, circulated four further working documents on 21 December 2007. These papers reflect the latest progress in the talks on Overall Trade-Distorting Domestic Support. We are seeing some light at the end of the tunnel.

We should, however, remain cautious against a hurried settlement if it ignores our vital interests. In particular, the Doha Round should recalibrate its focus on the issue of special and differential market access for LDC exports. The proposed duty-free and quota-free market-access for 97% of LDC exports make S&D treatment a mockery. As we have estimated, more than 60% of Bangladesh's export - in terms of value - can be included in the 3% sensitive list. They will be ineligible for duty-free treatment. We need to ensure that all exports from all LDC are granted duty-free and quota free access to the developed markets. Anything short of this will renege the promises of a development round. This should be done pending agreements on agricultural subsidies or NAMA. LDCs should get full duty-free and quota-free market access, without conditions and reciprocity. This is an absolute imperative for the Doha Round to fulfill its developmental pledge.

Ladies and Gentlemen,

There is a growing consensus that migration can be an effective tool for development. International migration presents an enormous potential for the development of a country like Bangladesh. Migration, through remittances, can contribute to reducing poverty and vulnerability in the developing countries. According to the UN Population Division, in 2005, 191 million people - representing 3 per cent of the world's population - were living outside their countries of origin. This is a significant increase, compared to 75 million in 1960. Temporary labor migration and remittances have become an important source of finance in many developing countries. Official remittance to Bangladesh exceeded 6.5 billion last year. It is nearly four times larger than the official development assistance we received last year. As many as 4.55 million Bangladeshi migrant workers are working abroad, in the Middle East, South East Asia, Europe and North America.

While remittances are an important source of income, opportunities for legal migration are often limited because of various restrictive policies and practices. The Doha Round must redirect its focus on temporary labor migration i.e. the liberalization of Mode IV services. Numerous studies have shown that the welfare gains, from Mode IV liberalization, will far exceed the gains from liberalized trade in goods. A World Bank report in 2006 showed that a 3 per cent increase of in the number of migrant workers in high-income countries by the year 2025 would augment global income by as much as US$356 billion. Bangladesh, in particular, will benefit significantly if the movement of low-skilled labor is liberalized. The issue should receive its due priority. The Doha Development Round will redeem itself as the true development round if it can make tangible progress in Mode IV liberalization. It will be a missed opportunity and a disservice to development if the Round concludes without a breakthrough in Mode IV services.

Ladies and Gentlemen,

The linkages between trade, environment and sustainable development are increasingly clear. The Doha Development Round cannot ignore these relationships. It must however strike a good balance between the quest for a carbon neutral development and the immediate need of the developing countries. Enhanced market access and trade can help the least developed countries to generate the resources needed for their adaptation to climate change. The Doha Round must take this into account. If it fails, it will not only delay development but also will adversely impact adaptation to climate change in the least developed economies. New rules on technology transfers and IPR protections can help the developing countries pursue carbon-neutral economic development. The Doha Round can initiate this process and triumph as a development round.

Thank you.