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    Doha,What Next?

     

     
     
    © International Trade Centre, International Trade Forum - Issue 3/2006

    © Event Fotografen/R. Hausmann Patricia Francis addresses ITC's Executive Forum in Berlin in September 2006.

    The business community needs to show the power of partnership in making the Doha promise a reality. Businesses of developing countries have an interest in staying engaged and making their views known to government negotiators - and to the public at large.

    People have varied reactions to the suspension of trade talks on the Doha Development Agenda. That is because the stalemate in the Doha Development Agenda reflects both the promise and the perils of globalization.

    Businesses in developing countries are the prime audience concerned by the outcome of the talks. But the voice of business needs to be stronger. Without their input, trade negotiators cannot be effective.

    Two sides to a coin

    Globalization has made its mark, with trade between countries skyrocketing. According to the World Trade Organization (WTO), trade has risen from $2.3 trillion in 1980 to $12.6 trillion in 2005. WTO has been an important driver in this process. More open trade rules have allowed firms to take advantage of markets and technology advances, and discover new business opportunities. These firms trade across borders as they never have before, with developing countries getting an increasing share of the benefits.

    Indeed, a recent report on the world economy in The Economist magazine notes that the emerging world now produces 43% of world exports, and buys half of the exports of America, Japan and the Euro area combined. What's more, last year it accounted for over half of global economic output (measured in purchasing power parity) and over half the growth in global output. It also holds 70% of the world's foreign exchange reserves.

    Yet there is lingering discomfort among those who are left out; the world's 50 poorest countries have not had a share in the growth of global trade. Globalization has had a social cost. Despite its success, the challenge of globalization remains the growing gap between rich and poor, as demonstrated by the confrontations and political stalemate attached to the Doha Development Agenda.

    The vision behind the Doha Development Agenda was to contribute to the efforts of governments to alleviate poverty in their countries while creating real and sustainable opportunities for wealth creation. Poor countries have real concerns about preference erosion and declining terms of trade for commodities in general, as well as market access for specific commodities, such as cotton. They express concerns about the food and livelihood security of their people, as well as their positions on services and trade facilitation. These concerns reflect their perceived inability to implement commitments arising out of these agreements.

    Where is the voice of business?

    In part, this situation has arisen because governments have a lack of trust and confidence in the process to address the real problems of transforming business sectors without major social dislocation. Regardless of the state of play, countries must prepare their economies and governments should be armed with the information they need to negotiate terms that will allow their businesses to compete internationally. To be effective, government trade negotiators need to listen to business. Without the input of business, trade negotiators cannot be effective. Without the inputs from business, governments are not in a position to establish request lists and cannot reply in substance to requests submitted by other governments. Unless exporters tell their negotiators which non-tariff barriers they encounter in major markets, how can they ever think of getting such issues redressed in the context of any negotiation?

    There is growing recognition that a proliferation of regional and bilateral trade agreements will complicate the way business is done, and therefore a need to get the Doha round restarted. ITC has promoted business advocacy in the developing world for quite some time. We continue to be engaged in empowering business leaders to play an active advocacy role with their governments in shaping the new international trading environment.

    No country has met the material needs of its citizens or implemented sustainable social programmes without a dynamic private sector to mobilize savings and investment, create meaningful jobs, meet consumer demand, generate exports and contribute to tax revenues. When WTO Director-General Pascal Lamy talks about trade negotiations being in crisis, member countries should worry about the interests that represent the process of development - the private sector. After all, it is enterprises that trade, not governments, which are there to play a facilitating role.

    Building capacity to compete

    In response to these challenges, ITC has been working proactively with developing countries. Our work ranges from facilitating contacts between business and government leaders on market access issues, to working with African countries to develop alternative markets for cotton, to helping countries develop the skills to exploit new opportunities and diversify their economies. Without the input of business, trade negotiators cannot be effective.

    A recent article in the UK's Financial Times newspaper makes the point about the value of diversification. Infosys, an Indian company founded only 25 years ago by six individuals, crossed the $2 billion mark in revenues last year. The outgoing chairman, as a parting gift, gave his 55,000 employees a bonus of $27 million. When have we ever been able to do that in any of our commodity-driven industries?

    Diversification and transformation is the way of the future. While market access is part of the solution, the other part is to build the capacity to compete in world markets. While the Doha talks may have stalled, there remains broad consensus on the need to help developing countries improve their capacity to supply international markets through Aid for Trade. Here too, the voice and participation of business is important. Aid for Trade cannot be effective without input from the business community.

    Let the business community show the power of partnership at this crucial juncture in the Doha Development Agenda, and continue to work with governments to make the Doha development promise a reality.

    Patricia Francis is Executive Director of the International Trade Centre.