Will the World Trade Organization Enjoy a Bright Future?

The Doha Round is not the first multilateral negotiation to collapse under the weight of substantive disputes and tactical blunders, but revival this time requires a greater miracle than in the darkest days of the Tokyo or Uruguay Rounds. After near-death moments, those talks concluded with a big red bow tied around a comprehensive package. Ministers went home comforted that the next big negotiation would commence well after they left office. This time is different. There will be no red bow unless the Doha package is firmly joined to an immediate follow up round of talks—conducted under entirely different rules—both on old subjects that were badly neglected in the round and urgent new subjects that have surfaced since the round was launched in 2001. Hufbauer and Schott propose a "grand bargain" that couples a significant harvest from the Doha agenda with the future negotiation of plurilateral agreements among WTO members willing to take rewarding, yet challenging, steps forward. The harvest should start—but not stop—with agreements that create minimal commercial pain for any member but deliver widespread gains: trade facilitation, duty-free, quota-free treatment of imports from least developed countries, phaseout of agricultural subsidies, discipline of farm export controls, and reforms to dispute settlement. The harvest should then move to harder parts of the Doha Round—agreements that deliver significant benefits to some members but cause noticeable pain in others. The other side of the grand bargain is approval from the WTO membership for like-minded countries to negotiate deals between themselves. Five topics should be served up for plurilateral talks, as part of a grand bargain commencing in 2013: services liberalization, currency undervaluation, climate and energy, zero-for-zero tariffs coupled with disciplines on nontariff barriers, and state-owned enterprises.