It can therefore be difficult to identify the relevance of the Doha Development Round to international business. In fact, the Round has the potential to enhance significantly the openness of many country’s markets to international trade, including trade in insurance, creating new business development opportunities for entities trading globally. The Round is intended to maintain the process of reform and liberalisation of trade policies, supporting economic growth and development.
Multilateral trade talks have taken place for many years, the latest Round can be viewed as having started in November 2001, with the fourth World Trade Organisation (WTO) Ministerial Conference in Doha, Qatar, which agreed the ‘Doha Declaration’, a statement covering 21 separate subjects. Insurers are most interested in the section on services. The Declaration says:
“...negotiations on trade in services shall be conducted with a view to promoting the economic growth of all trading partners and the development of developing and least-developed countries.”
Negotiations on services had already started, under the WTO’s 1995 General Agreement on Trade in Services (GATS). Those negotiations were incorporated into the Doha Round and are conducted by Special Sessions of the Council for Trade in Services, reporting to the WTO’s General Council. The main method of negotiation is known as the ‘request/offer approach’, under which countries make bilateral requests of other countries and table multilateral offers, addressing the requests received. This process was speeded up in February 2006 by the introduction of 'collective requests’, signed by and aimed at groups of countries.
The UK does not participate in this process on its own: it is represented by the European Commission, the EU’s executive body, alongside the EU’s 26 other member states. As the EU accounts for 19% of world trade (and 26% of trade in services), it is a major player in negotiations. Insurance is part of ‘financial services’, one of 12 different services sectors. Within the EU, service providers are represented by the European Services Forum (ESF). The ESF’s membership is made up of trade organisations and international corporations, including Lloyd’s, as well as the Comité Européen des Assurances (CEA), the European insurers’ association.
The ESF and its members, including Lloyd’s, have worked with the European Commission to identify barriers to trade, and the Commission is seeking the removal of such obstacles to the conduct of international insurance as:
• Funding requirements that discriminate against foreign insurers and reinsurers.
• Discriminatory taxes on premiums ceded abroad (ie where the tax on premiums paid to local insurers is lower or non-existent).
• Compulsory reinsurance cessions to local reinsurers (often state-owned).
• Prohibitions on the insurance of certain risks by foreign insurers.
• Restrictions on the ownership of a licensed insurer by a foreign entity.
• Restrictions on the ability of foreign insurers and insurance intermediaries to obtain licences to trade locally.
Success would improve the access of international insurers – including Lloyd’s – to insurance markets that currently sit behind trade barriers, and could reduce administration and costs in some territories where Lloyd’s underwriters are already trading.
Unfortunately, progress has been slow. Trade negotiations in the Doha Round were supposed to be completed by 1 January 2005, but are still ongoing. This has less to do with the merits of the case for liberalising insurance markets than with more controversial aspects of trade liberalisation – those to do with agriculture and manufactured goods (talks on the latter are referred to by trade negotiators as 'NAMA’ – Non-Agricultural Market Access). Until progress is made in these areas, nothing is likely to happen on services.
Since 2001, there has been a succession of talks. Although some progress was made, overall agreement remained elusive and, in June 2006, the WTO General Council supported Director-General Pascal Lamy’s recommendation to suspend the Doha negotiations. Talks resumed in 2007, but a June 2007 meeting of key WTO members (the ‘G4’, ie the US, the EU, Brazil and India) in Potsdam ended early, without resolution. But the Round did not end there: discussions continue and, recently, leading politicians and trade negotiators have been making optimistic noises about a successful conclusion to the Doha Round in 2008.
As well as the multilateral trade talks through the WTO, countries also make bilateral trade agreements. The EU has agreements with Russia, Mexico and Chile, and is engaged in bilateral trade negotiations, including trade in services, with a range of other countries and regional groups. Some international businesses consider that the slow progress of the Doha Round means that bilateral trade talks offer better prospects for the removal of trade barriers.
The story of the Doha Development Round suggests some apparently contradictory conclusions. Firstly, it demonstrates the enormous difficulty of multilateral trade negotiations. They require agreement over a vast range of different products and services by more than 100 nations, many of which recognise the theoretical advantages of freer trade but are deeply concerned at the potential consequences for (sometimes politically influential) groups in their societies with particular economic dependencies. Secondly, it shows the surprising resilience of the process. Despite the many setbacks and disagreements since 2001, negotiations are continuing and optimism about a successful outcome is still possible. Even if one is impatient about the slow pace of the Doha Round, one can recognise the WTO’s achievement in keeping so many countries with divergent views talking.
