Gallagher, Kevin. "Understanding developing country resistance to the Doha Round". Review of International Political Economy, Vol.15, No.1 (2007): 62-85.

Gallagher, Kevin. "Understanding developing country resistance to the Doha Round". Review of International Political Economy, Vol.15, No.1 (2007): 62-85.

• The second round of WTO negotiations, the first Uruguay Round ended in 1994 with the foundation of the organization, were initiated at the requested of developed countries, but only initiated on the precondition imposed by developing countries that development issues rest at the center of the debates (62).
• Throughout the Doha Round, developing countries have complained that the proposals of the developed countries constrain the 'policy space' they need to conduct development projects (62)
• In a globalized economy, market failures in a single state can have reciprocal effects in global markets, allowing crises to spread rapidly, a trait exacerbated by the admixture of developed and undeveloped economies in global markets (63).
• In the current global economy, market failures are caused by failures of information, where the private sector lacks the information needed to make productive investments; coordination failures, where supply and demand are mismatched; failure of competition, where concentrated markets do not allow competition; and environmental failures, where costs of production are not reflected in pricing, leading to a glut or dearth of supply (63-64).
• Liberalization exposes industries in different parts of the world to these kinds of market failures, so that a failure in one country can have a negative effect on the rest of that sector globally (64).
• Many developing countries argue that current rules prevent them from achieving the economic success of East Asia because those policies are forbidden under WTO rules (62-63).
• Many developed countries have suffered from a relative failure of international bodies to correct the global effects of market failures. This had led to demand that the ability to deliberalize economies,as protection regimes did in East Asia, be allowed so that states can correct market failures at the national level (64).
• The incredibly successful development of East Asian countries can be attributed to targeted industrial policies which allowed those states to obtain a comparative advantage in distinct sectors; loose regulation of intellectual property; education of smartest nationals abroad; and heavy investment in infrastructure and education (65).
• A number of economists have advised against letting the monumental success of East Asian development influence their development policies. Governments are usually terrible at picking successful industries to focus on, as demonstrated by the failure of East Asia-type policies in Brazil, Nigeria, and Indonesia (65-66).
• The success of East Asian countries was not only their industrial policies, but also the close relationship they maintained between government and the private sector. They were able to discipline those industries that failed to perform by abandoning them, which preventing industrialization projects from becoming failed cesspools of government-sponsored corruption and incompetence (66).
• During the Uruguay Round, developing countries lost a great deal of their 'policy space' in regulating trade in goods, intellectual property regimes, subsidies, investment rules. In return for this, however, they received a number of significant economic benefits (67).
• East Asian nations relied on high tariffs in select industries to encourage the development of their nascent industries, a capacity which has not been significant reduced for developing countries following the Uruguay Round. Most developing countries chose to keep most of their tariffs unbound, allowing them to be raised in the future (67-68).
• Since developed countries hold 86% of all patents and receive 97% of all patent royalties, reducing the impact of intellectual property laws has become an important means of reducing the costs of development; tactic employed by East Asia during its development. Under the WTO, patents are universally enforced and have to be recognized for a minimum of 20 years, making development more costly (69-70).
• The Agreement on Subsidies and Countervailing Measures, signed in 1995 as part of the WTO, has limited the ability of governments to use subsidies, although it does recognize their value as an economic tool or to promote 'green' industries. It specifically prohibits most subsidies of export goods, the main tactic for industrial development (70-71).
• Investment in East Asia was so successful partially because of substantial requirement which forced investors to work in firms owned by nationals and engaged in a minimum amount of technology transfer. The Trade Related Investment Measures agreement [TRIM] limits the ability of government to impose some restrictions or to require that inputs be purchased domestically. Other investment restrictions, however, are still allowed (71-72).
• The General Agreement on Trade in Services [GATS] is fairly liberal, because it is implemented voluntarily, but when implemented, the quality of financial services available in developing countries tends to decline. It is optional, however, meaning it places little pressure on WTO members (72).
• Although WTO agreements did involve major concessions in 'policy space' for developing countries, in return those developing states received the liberalization of textiles and agricultural markets of the developed world and some concessions on investment and trade in services policies (73).
• The benefits of the Uruguay Round were not proportionate, and individual countries or groups severed under the system. The biggest loser was sub-Saharan Africa, which experienced net losses of maybe $1.2 billion, largely as a result of Chinese entry into the global market and its domination of the global textile industry (73-74).
• Although, ultimately rejected in 2005, the developed world proposed a reduction to tariff barriers on manufacturing and services in the developing world in exchange for subsidies to the developing world and cuts on agricultural tariffs in the developing world (74).
• The reductions on tariffs for non-agricultural goods proposed by developed countries would be enormously costly for those countries that are poorest and maintain the most protectionist policies. The proposed changes would have the largest affect on states with the highest tariffs, generally those without competitive industries (76-77).
• Developing states, which do not have a strong tax base, are also generally the most dependent on tariffs as a proportion of government revenue. This means that reducing tariffs in the developing world would also slash revenue needed to fund education and infrastructure, both needed for development (77).
• The developed world has proposed an increased liberalization of service sectors, especially financial services in the developing world. The developing world responded by demanding the inclusion of an emergency measure in case the financial situation deteriorate, but the developed states have not agreed to this (77).
• Developing states have been the most vocal in arguing for the liberalization global labour markets and the free movement of persons, a form of liberalization from which they would benefit enormously. The developed world has not agreed to such suggestions as of yet (77).
• Overall, the costs of the tariff reductions were not high in terms of 'policy space', especially since no additional intellectual property or investment regulations would be enforced, raising the question about why developing states did not accept this deal in return for decreases in tariffs and subsidies of the agricultural sector in developed countries (78).
• The authors respond that the benefits of such a deal were extremely small, as developed countries were not willing to greatly reduce the subsidization of agriculture. In light of small gains, the costs of the Doha Round were seen as too political costly considering the unpopularity of the concessions made during the Uruguay Round (78-79).
• The gains from the liberalization discussed during the Doha Round will also flow disproportionately to a small handful of developing countries: Argentina, Brazil, China, India, Mexico, Thailand, Turkey and Vietnam (79). For all other developing countries, the gains would have been minimal or negative, with losses hitting areas of particular political vulnerability (80).