Doha Round of multilateral trade negotiations launched in 2001 :

-Price of oil - $25 a barrel, Price of rice - $170 a ton

- China’s current account surplus – two percent of their GDP

In 2008 ( with changes unfolding ) :

-Price of oil - $65 a barrel, Price of rice - $515 a ton
- U.S. financial system teetering between socialization and
oblivion
-With all these changes, governments, Nero-like, dwell on minor
issues ignoring
burning questions.

New economic system :

-Doha round collapse after negotiations failed at Geneva
-British Prime Minister, Gordon Brown proposed Bretton Woods II
-Doha agenda does not respond to challenges imposed by
increasing global
integration
-These challenges have significant global implications that
World trade :
- Since mid-1990s, world trade grown rapidly (6 percent a
year)
- WTO has not adjusted max level of tariffs & other
barriers
- Overall trade flourished, multilateral process that
governs trade
languished

Why has world trade grown :

- Many believe openness promotes long-term
development
- Many unilaterally liberalized their regulations on goods &
services

Multilateral process:
- These unilateral & regional efforts at liberalization ended
up robbing
Doha talks resumed in Geneva:
- Richer developing countries proposed reforms that left
average tariff rates
for agricultural goods unchanged, slight reduction for
manufacturing goods.( 6.4% to 5.6%)
- Supporters of Doha concede goals to lowering trade
barriers modest, argue that real purpose is to provide
security for trading partners.( to ensure trade policies will
not be reversed )
- However Doha talks did not even consider guarantees
against states suddenly resorting to punitively high import
tariffs.

Doha’s limited relevance:

- Groups traditionally at forefront – private corps in
intellectual-property, manufacturing, service sectors are
now notable by their absence from this process
- Too modest
 Between 2002 and 2007 – World economy
enjoyed the most prominent growth

 Year 2007 – Abundant supplies gave way to

widespread of shortages.

 Between 2005 and 2007 – Increased food prices

push almost 100 million into poverty.

 Current recession led to a decline in agricultural

prices but food prices speculated to remain high
 Pressure of high food prices – Due to restrictions on
agricultural exports and by biofuel policies in industrial
countries.
› 18 developing countries imposed limitations on exports –
Resulting in contraction of global food supplies and high
prices.
› WTO was of little help because it permits taxes and
quotas on agricultural export
› Under normal conditions – Subsidies introduce huge
distortions
› Under abnormal conditions – Countries prevent export,
liberalize import regulations
› Ethanol mandates, tax credits for ethanol producers,
tariffs on imported Brazilians ethanol led to more land
being used to produce corn for biofuel
› Other countries have also enacted similar policies –
accounting 70% of the increase in food prices

 Therefore, trade agenda needs to be enlarged to include

discussion of all trade barriers
• New trade agenda will include a discussion on energy

• Uncertainty about supplies and demand have resuscitated fears

about energy and increased prices

• Another factor – The cartelization of oil markets by exporters

– Power wielded by OPEC grows with demand
– A striking gap in the trading system is the absence of formal rules to prevent
collusion by oil producing states.

• Rising oil prices prompted a number of unilateral reponses

• Oil importing countries attempt to cushion consumers against high

prices by subsidization.

• They have also sustain high world prices by dampening incentives to

reduce consumption

• States are considering in taking action against OPEC in retaliation for

their collusion on export quotas but there is no protection offered
currently.

• New trade rules should target cartels – E.g.: Drafting new rules on
global energy trade, outlaw collusions on supply quotas
• Problem of undervaluation of major currencies,
especially the yuan.

• Undervalued currencies are import tax and export

subsidies.

• Companies relocate capital  low skilled labour

bear the impact

• Some American economists and lawmakers have

called for imposing a duty on imports from
countries with undervalued exchange rates. 
unilateral action
• multilateral approach  IMF can influence member
countries that borrowed from it but cannot affect
economic policy in countries that do not need IMF
money

• IMF failed to provide enough money to countries in need

and attached tough conditions to its loans.

• Possible solution: IMF and the WTO to cooperate on

exchange-rate issues.

• IMF  continue to provide technical expertise to assess

the valuation of currencies.

• WTO  enforcement mechanism, which is credible and

effective.
• Governments in the developing world are holding increasingly
large amounts of wealth in the form of foreign exchange reserves.

• Macroeconomic concern funds can easily destabilize global

currency and bond markets.

• Microeconomics concernsovereign wealth funds (swFs) could

end up controlling sensitive or strategic industries in other
countries.

• United States is tightening scrutiny of investments by foreign

governments, the European Commission is considering to prevent
corporate takeovers.

• Exporters of capital want secure access to investment

opportunities in foreign markets, and importers of capital have
legitimate concerns about the motivations of state investors and
the consequences of such transactions.

• One way to manage such investments not to impose too much

restrictions on investments.
 Major changes shook US financial system in 2008
Many icons of capitalism disappeared or fell under government
control in a matter of weeks

Crisis will lead to a reexamination of national policies and

international rules

What rocked the system?

Lax regulation

Macroeconomic cause – Excess Liquidity which allowed for cheap

loans and poor lending standards and kept afloat an
unsustainanably leveraged housing market.
Such global imbalance calls for a multilateral approach.

Cooperation on exchange rates and excessive commodity prices are

a good way to start, followed by multilateral cooperation in
regulating the financial sector.
Efforts require coordination between WTO and IMF to help guarantee
states’ financial openness and, Bank for International Settlements
and Financial Stability Forum to deal with financial regulation.
 Copenhagen Summit Conference 2009 12/12
Hosted by Danish government to unite international business around a
few strong messages

A global climate change agreement is necessary so that we can limit

the negative man made effects on the climate system. Global
warming at a faster rate and increase of man made emissions.

In US, the most discussed bill is on restricting imports from countries

that do not act adequately to protect the environment.

Key objectives is to ensure participation of all major carbon emitting

countries including developing nations. Negotiations should exclude
trade sanctions,
sanctions even if there is a provision for it, they should serve
as enforcement to be place only after cooperation and not to threaten
for cooperation in the first place.
Trade sanctions- trade penalties imposed.
 The framework of WTO is to harness exporters’
interest in liberalization to overcome opposition from
domestic producers fearful of foreign competition.

 Impose agricultural export taxes, increase fuel

subsidies and tighten anti-inflationary policies.

 Next step for government to cooperate on furthering

the security-minded interests of their constituents.

 Challenge is to resolve differences between the

world’s traditional powers and its new powers.
 The proposed new trade agenda would create
more common interests and greater scope for
give-and-take between existing and rising
powers.

 All large consumers share an interest in an open

energy market without artificial restrictions on
supplies.

 If such a market is achieved, China and India

would be less tempted to secure supply sources
through costly bilateral deals.
 2 questions remained:
- which countries should participate in the
negotiations?
- what is the appropriate forum for the talks?

 It may not be necessary for all countries to be

invited to discuss all issues and are bound by any
resulting rules.

 Some issues such as investment by SWFS would be

best resolved by the countries which are directly
involved.

 Questions on exchange rate issues  WTO and IMF

 Energy issues  both organization that represent

oil exporters such as OPEC and those that
represent importers.
 Doha Round was one of the serious attempts at
multilateral cooperation despite its latest failure.

 Multilateral cooperation is needed to prevent any

protectionist measures that these issues may provoke.

 Despite the difficulties, it is time to start working on a

new agenda instead of trying to resuscitate an
inconsequential enterprise.

 This calls for a new approach to international

cooperation and reallocation of responsibilities among
international institutions.