Christopher Langman, current head of the DFAT’s Office of Trade Negotiations, with particular responsibility for Australia’s participation in the WTO, presented a seminar to the Lowy Institute today.


Mark Thirwell, Program Director, International Economy of the institute, introduced Mr Langman and noted two reasons for continued interest in the Doha Round of the World Trade Organisation (WTO) negotiations:

  1. The “powerful asymmetry” in the consequences of concluding the round. That is, there are small but significant gains to be had from a successful conclusion to the round but potentially great damage to the WTO itself, with flow on effects to the global economy, should the outcome be a failure.
  2. The WTO is one of the few fora that demonstrates the positions and attitudes of the emerging players in the global economy.

Mr Langman opened by addressing some of the criticism of the Doha round (of which there is plenty). Some of the criticism is appropriate, but much is unfounded. The round is not dead. Mr Langman explained that a nations approach to WTO negotiations should not, and cannot, be short term. The previous round took 8.5 years. By comparison, the current round opened following 9/11 in 2001. Perhaps flowing from the success of the (previous) Uruguay round, we are now less patient, expect more and must deal with more uncertainty in the global economy.

Mr Langman explained that the current round is operating on a Single Undertaking model. Breifly, the model means that nothing is agreed until everything is agreed. While the requirements of this model make acheiving that consensus far more difficult, Mr Langman explained that the model is far more powerful than an ad hoc approach, and can deliver significantly greater rewards.

Unfortunately, the focus on developing nations/emerging economies has stymied progress to the extent that the round is focused upon allowing access for developing nations to developed nations’ markets to the exclusion of opening up those developing nations’ markets. Perhaps contrary to popular (lay) belief, Mr Langman explained that it is widely understood by the member states of the WTO that opening up a nation’s market is the single most beneficial act that can be made to expand that nation’s economy.

Focusing on commercial (or real or meaningful, as opposed to theoretical) outcomes is a further hurdle in the round. For example, due to unilateral but unbinding decreases in tariffs, to achieve a decrease in the tariffs imposed upon exports of lamb to the EU would require a 70% decrease in the tariff that the EU is allowed to impose under the current WTO regime. A decrease of 50% looks great on paper, but because the EU has decreased that tariff of its own accord to a level so far below the tariff that it is currently allowed to impose, that 50% decrese would not cause any decrease in the tariff the EU currently imposes.

Mr Langman listed the following as reasons for the difficulty encountered in the current round:

  1. the issues under negotiation are by nature difficult: agriculture, industry, services;
  2. the use of the Single Undertaking model, as described above;
  3. the increasing role of emerging players has made consensus more difficult to acheive (the days when the US and the EU could agree the terms and have everyone else largely agree are gone);
  4. the negative consequence of the focus upon developing nations (leaving aside the positive consequences of that focus);
  5. business is not pushing each of the member states for movement on their positions or in their negotiations in the round; and
  6. the increasingly protectionist stance of many of the states, flowing from the increasing power of emerging players, the current global fiscal uncertainty and the increasing focus upon services.

Mr Langman concluded by stating that importance of the WTO and that we should continue to hold the current round as important to our and the global economy. He explained that the current WTO system is the foundation of much of the increase in global trade and pointed out the effectiveness of the WTO Dispute Settlement Understanding (DSU) and Dispute Settlement Body (DSB). He also highlighted the importance of not underestimating the transaction costs of Free Trade Agreements upon global trade.

In answer to questions:

  1. Mr Langman stated that while there are issues concerning the capacity of developing nations to engage in dispute settlement in the WTO, emerging economies have used the DSU to great effect (Brazil v US – Cotton; Australia, Thailand and Brazil v EU – Sugar).
  2. Additionally, he agreed that there is an increasing focus on “behind the border” measures (domestic regulation) consequent to the focus upon services, and stated that the issue was both very difficult and delicate, giving the example of concerns over regulating tertiary education.
  3. Mr Langman stated that Australia’s position on the single desk has not and will not change.
  4. He explained that there may be agreement on the issue of “sensitive goods” (relief on some goods from cuts to tariffs), but again, it was a difficult issue.

Mr Langman’s presentation will likely be published on the Lowy Institute website.