Will the Doha Round of International Trade Negotiations bring Growth and Development to Africa?

By Dr. Stephen Karingi

The Doha Round of the World Trade Organization (WTO) negotiations began in November 2001 and is now in its eighth year.  According to the original timetable, the negotiations were supposed to be over by 1 January 2005 with an agreement that would increase international trade and spur economic development in poor countries.  Despite political pressure from the highest levels and intense engagement of negotiators and ministers, several deadlines have come to pass.

The premature collapse of the Cancun WTO Ministerial meeting in September 2003; a new negotiations framework in July 2004; failure to reach agreement at the Hong Kong Ministerial meeting in December 2005; suspension of the negotiations altogether in July 2006; their resumption in February 2007; and yet another collapse in July 2008; has made it a bruising experience for negotiators.

This prompted the Indian Minister of Commerce and Industry, Kamal Nath to remark that the Doha Round “is definitely between intensive care and the crematorium”.

In spite of these difficulties, another draft negotiations text is now making its torturous route through the numerous negotiations committees at the WTO in Geneva.  But is the text truly developmental?  Does it live up to the original and ambitious Doha Declaration?

This is the key questions that African trade negotiators and international experts will be addressing at an Expert Group Meeting organized by the United Nations Economic Commission for Africa in Nairobi on 7 – 8 September.

The Meeting is an opportunity to conduct an early audit of the possible results of the Doha Round based on an analysis of the current negotiations text in order to understand their potential economic implications for African countries.

The meeting is essential because most economic simulations currently show that Africa will receive the least benefits if the Doha Round is concluded based on the current text.  Other negotiators at the WTO also recognize this.  That is the basis of the various flexibilities provided in the text aimed at exempting some countries from full implementation of tariff cuts; and the priority given to implementation of the aid for trade as the negotiations continues. 

Regarding the Kenyan economy, a forthcoming study by Carnegie Endowment Foundation, KIPRA and UNECA, Doha-induced liberation has the effect of increasing Kenya’s trade. Averaged across years, annual exports are 4 percent higher and imports are 3 percent higher in the Doha scenario compared with the baseline scenario.

Because lowering import tariffs decreases the price of Kenyan imports while reducing subsidies to agriculture increases the price of Kenyan exports, Kenya is able to buy more imports with the same volume of exports. Doha thus brings an improvement in the terms at which Kenya trades.

However, gains are notably small. General equilibrium estimates of the impact of trade reforms usually render small changes, positive or negative, in welfare. However, the improvements that Doha brings to Kenya’s economy are particularly small.

In fact, if Doha’s adjustment costs are factored in, the gains may even be smaller.

And complicating the picture further for countries like Kenya that might with to invest their negotiations capital towards securing more positive concessions, the United States has proposed that the Doha Round negotiations should now proceed along two tracks.  The first track will continue on technical issues of tariff reductions as has been the case.  The second track will now look at the flexibilities that are built into the current texts to see whether they may enable countries to avoid making substantial reductions in their tariffs.

This poses a dilemma for the African Group of negotiators at the WTO.  As key beneficiaries of flexibilities under the principle of special and differential treatment, the African Group fears that this scheduling process might lead to a reopening of already agreed-upon positions.  This could undermine some gains already made.  Having the negotiations proceed on two tracks is also very time consuming and the African Group is already stretched with a few negotiators covering multiple sessions.  Western countries have much larger teams of negotiators and often have up to one dozen people on a single issue, so can afford to pursue a two-track approach.

There is therefore growing pessimism that when concluded, the Doha Round will not measure up to the early ambitions.  For Africa, such an outcome would be devastating given the initial high hopes.  African countries are still negotiating hard to ensure the Round overcomes the current impasse and concludes as truly developmental.  The meeting in Nairobi this week will contribute to this goal.

End.