Beyond the Doha Round: Time to Reform the WTO

The failure to reach an agreement at the Doha Round of trade negotiations is not only a bad omen for the efforts to strengthen global trade relations and collaboration, but it also does not bode well for the urgently needed measures that would enable the developing countries to accelerate growth and reduce poverty. The failure of Doha is bound to postpone the entire process of trade negotiations by several years, weaken the WTO by giving incentives to organize world trade in bi-lateral and regional trade agreements, and significantly damage the prospects of the least developed countries to develop their economies. It is paradoxical and indeed rather ironic that this should be the outcome of the round of negotiations that was meant to be “The Development Round.” This paper argues that the failure of Doha is largely due to a fundamental flaw of the current structure of the negotiations, specifically their organization within the framework of a Grand Bargain that includes many loosely related agreements and a multitude of modalities. The basic concept underlying the Grand Bargain is that it should facilitate the achievement of a compromise deal that represents a win-win quid-pro-quo for all participating countries. In practice, rather than facilitating the negotiations, this structure made them more difficult. The paper examines a different organization of the negotiations that is based on the principles of game theory, in which progress is made in a series of small steps with well-targeted agreements that require much less give-and-take and fewer concessions; therefore, fewer objections are likely to be raised, which would facilitate compromise at each step and keep the process moving.