Globalization and the competitiveness of developing states have long been issues of interest for politicians, economists and policy-makers. Academic and on-the-ground evidence indicate that developed and developing countries do not equally share the benefits of a globalized workforce, and efforts to empower Southern states continue to be ineffective.
On the surface, viable solutions that can be successfully implemented outside theoretical frameworks have proven elusive. The Brookings Institution Managing Director William J. Antholis believes that the Doha Round at the World Trade Organization (WTO) demonstrated a simple truth: "Doha has been a failure because of the failure of industrial countries, both [in] Europe and the U.S., to reform their agricultural policies."
Phrased differently, the initial Doha round at the WTO failed because the narrow spectrum of United States and European Union interests were not served by fairer trade practices that offer pro-development change.
While agriculture reform has always played an important role in the stalled Doha Round, a key, new development is now affecting progress: a dominant China. According to a recent Peterson Institute for International Economics policy brief, attention has shifted away from agricultural reform to manufacturing.
The brief points out that China's market share of global manufacturing has doubled since the beginning of the Doha Round, growing from 9 percent of global industrial imports in 2001 to 16 percent in 2009. Despite demonstrating an appreciation for international markets and a high degree of trade openness, China's trading partners argue that an undervalued renminbi (RMB) functions as a subsidy on Chinese exports. U.S. and European officials fear that any trade liberalization resulting from Doha will further increase China's market share of global manufacturing exports.
People's Bank of China, the country's central bank, announced on April 14 that it will increase the band of trading prices against the U.S. dollar. The bank's press release read: "Effective from April 16, 2012 onwards, the floating band of RMB's trading prices against the U.S. dollar in the inter-bank spot foreign exchange market is enlarged from 0.5 percent to 1 percent."
While it is unlikely that the value of the RMB will increase to a level that will appease foreign trade officials and reflect China's growing role in the global economic system, this adjustment signals a rare opportunity for international pro-development reform.
China's ambassador to the WTO Yi Xiaozhun believes that China has honored its commitments to the WTO and has made above-average contributions to the Doha Round. He said: "China is open to any form of negotiations, as long as those negotiations respect the development demand, build on the progress achieved and center around the multilateral process."