Nairobi meeting to audit benefits of Doha Round talks

By 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 January 1, 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.

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?

These are 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 Monday and Tuesday.

The meeting will audit the possible results of the Doha Round based on an analysis of the current negotiations text to understand their potential economic implications. The meeting is essential because most economic simulations show that Africa will receive the least benefits if the Doha Round is concluded based on the current text.

A forthcoming study by Carnegie Endowment Foundation says Doha-induced liberation can increase Kenya’s trade. Averaged across years, annual exports are four percent higher and imports are three 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.

However, gains are notably small. General equilibrium estimates of the impact of trade reforms usually render small changes 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, 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.

— Dr Karingi is a trade expert with United Nations Economic Commission for Africa.