SERVICES IN DOHA DEVELOPMENT ROUND – GOALS ANDNEGOTIATIONS Universityof WarsawFacultyof Political Science and International RelationsInstituteof International RelationsEfeYegulJanuary2018 1) INTRODUCTIONTheneed for a more inter-connected world as a means of economy and peaceful globewas a high necessity right after thehorrors of the Great Depression and the Second World War.
The General Agreementon Tariffs and Trade (GATT) which was evolved to the World Trade Organization(WTO) in 1995 took over these purposes by aiming to regulate the trade ingoods, services and intellectual property between the member countries. Today,WTO also provides a structure for dispute settlement and trade negotiationsbetween parties and it plays a significant role in the world trade. Inthe last decades, with the growing globalization trend in almost all theaspects of the international affairs, developing countries started to becomethe major players in the world trade, for example, China, India and Brazil.There was a great need to an agenda which would focus on the developingcountries to integrate them better to the world trade by reducing the tradebarriers, creating a bigger interconnectedness and cooperation in the trade inservices and increase the world trade. Therefore, in 2001, the Doha DevelopmentRound was launched by the WTO in Doha, Qatar.
The negotiations couldn’t befinished in its deadline in 2005. There was a big breakdown in the negotiationsin 2008 and since then, the negotiations are stalled due to various reasons. Intoday’s world economy, trade in services negotiations are having a greatimportance, since it is a vital step towards the development for the emergingeconomies. Integrating these economies into the global services can beconsidered as a new frontier for the developing countries, therefore, thedetails of this component of the Doha Development Agenda needs a detailedreview.
This paper first willgive brief information about the Doha Development Agenda. Afterwards, thefundamental information about the General Agreement on Trade in Services willbe examined, in order to better understand the services negotiations.Afterwards, the trade in services negotiations and goals of the Doha Agenda willbe intensely discussed. At the end, the various reasons of the failure of theDoha negotiations will be discoursed. 2) DOHA DEVELOPMENT AGENDAAsit was mentioned in the introduction, a more effective trade system in theworld was both WTO and GATT’s fundamental purpose. In order to achieve this,there was a necessity to adjoin the developing countries into the tradingsystem, especially after the growing globalization trend. Also, giving adequateand efficient opportunities to the all parties of the organization would helpto achieve the organization’s essential purposes. Therefore, the fourthministerial conference of WTO gathered in Doha in 2001 and in this meeting, theministers of the member states decided to launch new series of multilateraltrade negotiations under the roof of WTO.
January 1, 2005 was determined as the official deadline forconcluding the negotiations by the Doha Ministerial Declaration.1Also, some key principles and procedures were announced alongside with thedeadline, such as: transparency, special and differential treatment fordeveloping and least-developed countries, single undertaking the negotiationsand debating the developmental and environmental aspects of the negotiations. Inthe means of the work programme, there were 21 subjects listed in the DohaDeclaration. These subjects are: Implementation, agriculture, services, marketaccess (non-agriculture), intellectual property, investment, competition,transparency in government procurement, trade facilitation, anti-dumping,subsidies, regional agreements, dispute settlement, environment, e-commerce,small economies, trade, debt and finance, trade and technology transfer, technicalcooperation, least-developed countries, special and differential treatment.3) General Agreement on Trade in Services (GATS) Before explaining the trade in services negotiations and itsgoals in the frame of the Doha Development Agenda, the General Agreement onTrade in Services should be introduced. The General Agreement on Trade inServices was created in the Uruguay Round in 1995 and it is considered as thelandmark achievement of the round. Essentially, GATS shares the same objectiveswith the GATT, such as creating a more liberalized and multilateral tradingsystem to service sector.
“While services currently account for over 60 percentof global production and employment, they represent no more than 20 per cent oftotal trade.”2 The mentioned numbers arereflecting the importance of the services in world trade. Moreover, the tradein services, which was considered as a domestic issue for the countries, isbecoming more international and mobile, especially after the technologicaladvancement and the globalization flow in the world. TheGATS now covers a number of different service sectors, such as transportation,banking, telecommunication, insurance and etc. Also the Agreement divides theservices into four modes. These are: cross-border supply, consumption abroad, commercialpresence and presence of natural persons. · Cross-bordersupply generally covers theservices which is transferring from one member country to another· Consumptionabroad indicates the consumer’smovement to another country to obtain services, such as tourism.· CommercialPresence mentions a presence ofa service supplier in another country to provide services by investment andownership· Presence of natural persons refers to the service supplying activities of thepersons of a member in the territory of another Member.
4) TRADEIN SERVICES IN THE DOHA DEVELOPMENT AGENDA Servicenegotiations in Doha included the telecommunications, banking, insurance,construction, distribution and transportation sectors. There were two mainobjectives of the negotiations on services in Doha Development Agenda; firstobjective was to renovate the GATS rules and principles and the secondobjective was to reduce the limitations on the market access and thereforeliberalize the trade in services in order to promote economic growth anddevelopment. The negotiations on the services initiated two years before theDoha Round thanks to the fact that the realization of the importance of theservices sector in the international trade. In DDA, The Council for Trade inServices, which meets in special sessions, is the main body for supervising thenegotiations. About the modalities and proceduresof the services negotiations, the guidelines stipulate that: “The negotiationsare to be conducted in special sessions of the Council for Trade in Services andopen to all WTO members and acceding countries. The starting point of the negotiationswould be the scheduled commitments at the time. The “request-offer” format isto be used for negotiating new commitments.
In addition, special attention isto be given to the special needs of developing countries in requestingcommitments from them and making commitments to them.”3 With the start of the DDA, theMinisterial Declaration determined the 30 July 2002 as the final date forsubmitting the initial requests for the market access and national treatmentcommitments for each member state. Also, 31 March 2003 was marked as the finaldate for stating the commitments which the member countries willing to accomplish.
Just as other topics which were discussed in DDA, the deadlines for trade inservices negotiations haven’t been met. In general, the negotiations wereheld under the two paths; in order to develop the market conditions for tradein services, countries involved to the bilateral and plurilateral negotiations.These negotiations were mainly about the specific commitments in the certainareas of the services. The second path was conducting the multilateralnegotiations in order to adjust the domestic procedures, government subsidies, emergencysafeguard measures and etc.4.1 The NegotiationStructure and Major Issues Therules of the negotiations administered by the group of working representativesin the DDA.
The “request-offer” format was used in order to conduct thenegotiations on the national treatment and market access commitments. Thisformat requires a first initialrequest from a member country which it would like other members to offer tomake. After this first “wish-list” from the member countries, the negotiationscontinue with the responses to the initial offers that other members would bewilling to make. Afterwards, the negotiations progress with more discussionsand offers until the member countries reach a consensus among them. In thisway, the negotiations on the services in DDA were different than the usual wayof the WTO.
In the negotiations on goods, WTO managed the negotiations in amultilateral way at the same time among all the member countries, whereas theservices negotiations conducted simultaneously in a bilateral, plurilateral andmultilateral way. The final decisions had to be accepted by the allparticipants. The methodology of the servicesnegotiations took a lot of criticism.
According to some negotiators, therequest-offer format hampered the process and made it more difficult to reach aconsensus. In order to prevent the slowdowns and congestion, United States andEuropean Union suggested creating benchmarks on certain sectors in order toease the negotiations. United States wanted to establish the benchmarks onenergy, express delivery, financial services, telecommunications, computer andother information-related services, and audio-visual services.
The conflictbetween the developed countries and developing countries which we accustomed tosee in the Doha Development Round occurred again after this suggestion. Somedeveloping countries expressed their concerns about the benchmark proposal.According to them, developed countries may focus on the fields which they aremore comparative advantage comparing to the developing countries. Moreover,there were other participants who thought that changing the rules in the middleof the game is not legitimate. The positive list method which was used on themarket commitments also had been criticized. “The “positive list” is anotherapproach of commitment under which the subject sectors of liberalization andthe conditions and restrictions are specifically and explicitly inscribed inthe list regarding national treatment and market access, and no obligations areto be undertaken regarding national treatment and market access with respect toany other sectors which are not inscribed in the positive list.”4The main reason of the criticism to this approach was its potential dissuasiveeffect to the new sectors and subsectors.Presenceof natural persons, which was named as the mode 4, was one of the mostcontroversial topics in the trade in services negotiations.
The negotiations onthis mode caused a lot of divisions among developed and developing countries,thanks to their different immigration policies. It should be stated that thestarting date of the DDA, which was just two weeks after the 9/11 attacks inthe United States, had an important and also, a negative impact on thedisagreements.4.2 Key stages andGoals of the NegotiationsInitially,the Doha Declaration determined 1 January 2005 as the final date to completethe trade in services negotiations.
However, there was no progress for theservices negotiations in the Cancun Ministerial Meeting in 2003. “Theconcluding statement reaffirmed the Doha Declaration and Decisions andrecommitted members to working to implement them fully and faithfully.”5The so-called “July package”‘ which was adopted by the General Council on 1August 2004, brought some momentum to the negotiations in 2004. This packageannounced on May 2005 as the final date to submit the recommendations relatedto which were discussed in Council for Trade special session. The packagerecommended to the member countries to send their recommendation as soon aspossible, to give high priority to least developed countries, to mind theinterests of the developing countries and also, to give the necessary technicalassistance to the developing countries. Hong Kong Ministerial Conference startedon December 2005 and it called the member states to boost the trade in servicesnegotiations in accordance with the objectives.
In the ministerial declarationof the Hong Kong Round, the Annex C affirmed the objectives, approaches anddeadlines. Alongside with these, the Annex C created frameworks for the new orimproved commitments, most-favoured nation (MFN) exemptions and schedules andclassifications of commitments.6 Plurilateralnegotiations between the group of member states which has common interest incertain sectors and individual member states started in 2006, based on 21collective requests. However these negotiations were suspended alongside withthe other negotiations under the Doha Development Agenda in July 2006, thanksto the deadlock on the agricultural and non-agricultural market access (NAMA)cases. OnMay 2008, Council for Trade in Services announced a draft services text, whichmarked the issues related to the participants’ willingness to reach anagreement and increase the cooperation in the services field. Also, itaddressed the export interests of the developing countries beside with levelsof market access. On the other hand, a signalling conference was gathered onJuly 2008 and it drafted a new schedule for the negotiations and enabled theparticipants to evaluate the level of the progress made in trade in servicesnegotiations.Afterthe deceleration on the DDA talks, the trade in services talks accelerated in2011.
“In April 2011, the Chairman of the Council for Trade in Servicessubmitted a report to the Trade Negotiations Committee on the achievements andremaining gaps in all four areas of the services negotiations: market access;domestic regulation; GATS rules; and the implementation of LDC modalities”7 InDecember 2011, the WTO members disclaimed the most-favourite nation obligationfor giving special treatment to least developed countries. 5) WHYDOHA DEVELOPMENT AGENDA FAILED?TheDoha Round negotiations, which was initially aimed to lower the trade barriers,contribute to least-developed and developing countries’ economies and toresolve the difficult issues of trade declared as failed by WTO members in2015, after 14 years of negotiations. “At a meeting of the W.T.O. inmid-December in Nairobi, trade ministers from more than 160 countries failed toagree that they should keep the negotiations going.”8The failed negotiations, which were officially supposed to end in 2005, causeda lot of time and energy and the reasons of its failure lies beneath bothmethodological and political reasons.
Firstof all, the need of consensus on decision making process made it very difficultto reach an agreement in the Doha Development Agenda, considering each country’sindividual political aims, populations, geographies, domestic politicaldynamics and etc. On the other hand, developing countries are having biggerinfluence on the global trade and global economy today than in 2001. This growinginterests and importance of the emerging economies caused a big divisionbetween member countries in the round talks. Seeking a total consensus betweenthese countries was way too ambitious for WTO.Asit was mentioned before, contributing to developing county economies was one ofthe fundamental aims the Doha Agenda. For this reason, developing countriessought more flexibility and the focused on the compromises of developedcountries in the World trade, while the developed countries felt the burdens ofthe tariff cuts on their economies. Also, agricultural subsidies were anotherimportant issue.
European Union and United States subsidize their agriculturesector as a policy and in order to foster the developing countries’ economies,these subsidies needed to be reduced and importing the agricultural goods fromdeveloping countries was necessary. But it was really difficult for thegovernments to explain this necessity of the negotiations to their internalinterest groups. Especially, the legislatives of the developed countriescouldn’t handle the pressure coming from the agricultural lobbies. In general,it can be said that the negotiations were way too burdensome for the developedcountries. Even though we roughly mention a twoopposing groups in the Doha talks as developed countries versus developingcountries, it is difficult to say that there is a total solidarity among thedeveloping countries. Especially in the agricultural field, there were deepconflicts between net importers and net exporters.6) CONCLUSIONIfeverything went right, Doha Agenda would have strengthened economies of thedeveloping countries and increased the cooperation in the services field andalso, it would have reduced the government subsidies on certain industries inthe developed countries.
The failure of the negotiations showed that theagriculture lobbies in the European Union and United States would never allowthe low cost foreign agricultural goods into their economies and allmultilateral trade agreement on this field is doomed to an end. In short, itcan be said that especially for the developed countries, the self-interestovercame the interests of collective goods. On the other hand, failed multilateralnegotiations in WTO have canalized the countries to have bilateral and plurilateralservices and trade agreements. “Regardless of the motivation, on the long term,the quality of those agreements is doubtable as the vast majority exclude othertrading nations, including developing countries.”9 Eventually,these trade blocs may create deeper divisions on both world economy and worldpolitics.
Especially in the services area, owing to the no significant progresson Doha Round, 50 WTO member states started to negotiations on a separateplurilateral Trade in Services Agreement (TiSA) in 2013, by aiming to improvethe GATS and form a better and more beneficial agreement. Continuingto 14 years of negotiations, which came to a lot of deadlocks in this period, couldhave endangered the ultimate goals of the WTO in the World trade. In thissense, ending the Doha negotiations may lead the WTO countries to differentapproaches to liberalize the World trade lowering the trade barriers and biggercooperation in the services field. On the other hand, even though WTO hasfailed to reach an agreement in Doha, the Organization keeps its importance tobe the policeman for the international trade. After the failed negotiations,WTO has to respond quickly to the new challenges of the world trade and itshould seek new opportunities to reach its fundamental goals by seeking mutualbenefits for both rich and poor countries of the world.
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