An Analytical Framework for Further Research
If the Doha Round proceeds in the same way as its predecessor, informing the negotiating process with research results will not be easy. The Uruguay Round made erratic progress. A Draft Final Act had been produced by the end of 1991, but the agricultural proposals were rejected by the European Union (EU) (Croome 1995: 328). There followed two years in which most of the “action” took place in bilateral talks between the EU and the United States (USA) from which other states were largely excluded. Even when the formal negotiations were re-launched in July 1993, there were at least three tracks: the discussion in the formal General Agreement on Tariffs and Trade (GATT) groups; the personal “facilitating” of the new GATT Director General, Peter Sutherland, who ‘kept up a punishing series of whirlwind visits to top-level political leaders in the major countries’ (Croome 1995: 349), and bilateral negotiations between the EU and USA, with their respective chief negotiators, Sir Leon Brittan and Mickey Kantor, having from November ‘a crucial series of meetings ... that were to continue with only short breaks over a period of more than three weeks’ (Croome 1995: 364).
THE PROGRESSIVE TARIFF REDUCTION SCHEME
As economists have known since Adam Smith, free trade should benefit all nations by allowing them to take advantage of gains from specialization.1 Indeed, the benefits of trade are supposed to justify unilateral liberalization: as the late British economist Joan Robinson once remarked, if your trading partner throws rocks into his harbor, that is no reason to throw rocks into your own. While unilateral liberalization has occurred in many countries to varying degrees, it has obviously not led to global free trade. Rich countries apply an average tariff of 5.2%, and poor countries apply an average tariff of 14%.2 Some countries choose to protect important industries as an integral part of their development strategy.3 For other countries, even if liberalization were to make the country better off as a whole – in the sense that there are more winners than losers in the long run and the winners could, in principle, compensate the losers – it may still be politically unfeasible, if those losers have political power and cannot be effectively compensated. (Part of the problem is making a credible commitment to compensate in the future.) The persistence of protection suggests that, in most countries, political leaders continue to find that the balance of economic and political-economy considerations falls in favor of protection.
Developing an Issues-Based Approach to Special and Differential Treatment
Trade liberalization is a positive sum game from which all can benefit. Well-defined rules, and the mechanisms of making binding commitments and concessions, are beneficial to increasing the stability of reforms.