With no Doha Conclusion in Sight, WTO Considers how to Proceed 1
The recent financial crisis and its repercussions on the real economy generated an outburst of political mobilization in the international community and the G-20 Summit this past November is its most illustrative example. Well-placed among the various suggestions for curtailing the global economic recession, the proposal to resume the talks of the Doha Round stands out, while such plan is based on the “false hope” to sustain the driving forces of international cooperation.
Yet, in December 2008, Pascal Lamy, Director-General of the World Trade Organization (WTO,) refused to summon the participants––as requested by the G-20 Summit––because of a “lack of political will”. The G-20 Summit was thus put in the accused dock to justify, once again, the failure of the Doha Round negotiations.
In its December 17, 2008 article, which is excerpted below, the International Centre for Trade and Sustainable Development (ICTSD) reviews this programmed failure and presents all viewpoints currently available to the international community… save one, and not the least: Revising the principles that conduct the Doha Round negotiations by acknowledging the specific nature of agriculture compared to other activities and its strategic importance. Indeed, there may rest the solution.
momagri Editorial Board
WTO Director-General Pascal Lamy announced on Friday (editor’s note: December 13, 2008) that there will be no conclusion to the Doha Round of trade talks before the end of the year (editor’s note: 2008), making this the second major setback for the round in fewer than six months.
Although some had feared that the Round would soon go into hibernation as administrations change in several countries and the economic crisis continues around the globe, Lamy told a meeting of the Trade Negotiations Committee on Wednesday afternoon (editor’s note: December 18, 2008) that their work would continue in the New Year, albeit with perhaps a slightly different tone. “Concluding the Round should remain our focus in 2009,” he said, “but this endeavour takes place within a more global portfolio of WTO activities.”
Continued disagreement over sectoral agreements - sector-specific liberalisation initiatives in manufactured goods that were strongly supported by the US - and an agricultural safeguard mechanism proved too much for negotiators to overcome. Addressing the WTO membership on Friday (editor’s note: December 13, 2008), Lamy said the bottom line was that “I have not detected the political drive, from my interlocutors, to make the moves which would give the final push to the establishment of modalities on these two issues. My sense is that there was no readiness to spend the political capital needed to get to modalities now.”
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What role for the G-20?
Some trade experts see the failure to strike a framework WTO deal as a serious blow to the credibility of the G-20, just as the group of rich and developing countries was seeking to take on a more prominent role in the governance of the global economy.
Richard Baldwin, a professor at the Graduate Institute in Geneva, and Simon Evenett, of the University of St. Gallen, called governments’ inability to deliver on their commitment to agree on Doha Round modalities by the year’s end “the first concrete demonstration of the G-20’s ineffectiveness.”
The G-20’s principal role has been to bolster confidence that governments can keep the current from spiraling out of control, they wrote on the voxeu.org website. “In this light, the Doha failure could not come at a worse time.”
A separate G-20 pledge on trade – to refrain from raising new barriers the movement of goods and services – has also fallen by the wayside. Since the group’s November summit, Russia has increased car tariffs, and India has increased import duties on a range of steel products.
To restore its credibility on trade, Baldwin and Evenett recommend that the G-20 pursue a ‘plan B’ of initiatives at the WTO “that would signal the seriousness of their support for the WTO system while Doha is on hold.” These initiatives could include a multilateral accord on trade facilitation, a constantly updated monitoring mechanism for all increases to trade and investment protection, or even a “temporary binding commitment” by the G-20 and Pacific Rim nations not to raise applied tariffs or farm subsidies beyond their November 2008 levels. “Since much of the crisis-induced protection will be WTO-legal, we must find a way to unwind the barriers after the crisis,” they said, reflecting the fact that many countries have significant room to raise tariffs and subsidies before running up against WTO limits.
The Next Steps
It is not clear how much support there would be for such a ‘plan B’. In the wake of past negotiating breakdowns, some governments expressed opposition to calls to take trade facilitation outside the Doha framework.
But Lamy left open the possibility of having some sort of an ‘early harvest’ in the meeting of the Trade Negotiations Committee, or TNC, on Wednesday afternoon (editor’s note: December 13, 2008).
“Some of you have mentioned the idea of some sort of early outcomes and have mentioned areas such as Trade Facilitation, Duty-Free Quota-Free Market Access, cotton or the banana issue,” he said. “Trade facilitation is the one on which I have detected more consensus. My own sense is that whether we harvest it earlier or not, at the end of the day this pleads for accelerating the work on these areas in the coming months, starting with Trade Facilitation.”
First and foremost, though, Lamy urged negotiators to carry on with their work in January.
“Looking ahead, our aims should not change,” he said. “I do not believe that either the political will to preserve the achievements so far or even the necessity to do so will go away, even more so with the continuing deterioration of the economic situation.”
In his TNC address, Lamy outlined a dual-track framework for progress in 2009. On the negotiations front, talks in agriculture and NAMA will proceed on technical issues and on the basis of the most recent draft texts. Lamy also urged talks in all other areas, which are in various states of play, to proceed. Many of these negotiations had been stalled, awaiting agreement in agriculture and NAMA. Indeed, the chair of the negotiating group on Rules has stated his intent to move from a single draft encompassing anti-dumping, horizontal subsidies, and fisheries subsidies, to three separate texts as early as this week.
On a second, wider WTO front, Lamy introduced three ideas. The first was to establish an “internal Task Force” to provide regular updates of the impact of the financial crisis on trade. And Lamy indicated he was ready as early as this week to submit such a report. Second, Lamy talked of the importance of reviewing developments and mobilizing finance for trade financing. Finally, Lamy said that a clear roadmap for Aid for Trade was desirable.
Most delegations that spoke up at the TNC meeting expressed their disappointment that the Round had not been concluded but said that they supported using the 6 December draft texts on market-opening in the agriculture and industrial sectors as starting points for future talks.
Many delegations expressed support for the idea of an early harvest, in all the areas indicated by Lamy, and in particular, the more development orientated area of cotton.
Support was also indicated for the creation of a ‘monitoring system’ – similar to the one proposed by Baldwin and Evenett – to track trade policy changes that Members make in response to the global economic crisis. Many fear that countries will resort to protectionism as they ride out the economic turmoil, but others say that those warnings are unjustified.
But no one expects any quick fixes, and many fear that political momentum may be irretrievably lost due to the recurring setbacks and worsening global economy. Another major question mark hovers over how high the conclusion of the Doha Round will be placed on the agendas of new governments in Washington, New Delhi and Brussels.
But Lamy stressed that negotiators must carry on with their work, despite the recent setback.
“While the year may end in disappointment, we should now gather ourselves and work in 2009 to demonstrate that the WTO remains as necessary and credible as ever,” Lamy said. “The world trading system needs the Doha Round to better respond to the needs and aspirations of its Members. Concluding the Round should remain our focus in 2009. But this endeavour takes place within a more global portfolio of WTO activities in which we need to keep investing. This task starts today.”
International Centre for Trade and Sustainable Development (ICTSD)
The consecutive breakdowns of the Doha Round negotiations and the analysis of their causes are showing that the WTO is not capable at this time to meet the international community’s expectations:
- Harmonizing member States’ expectations regarding sensitive issues, and agricultural questions in particular;
- Accounting for the specific nature of agriculture compared to other economic fields;
- Proposing a strategic framework to meet the challenges of the 21st century by deciding the role to be played by markets in the future.
All the options and attempts considered by Pascal Lamy have failed and we fear that his recent proposals, whatever supposed usefulness they have (such as the “Internal Task Force” for instance), will meet the same fate.
Thus, as President Nicolas Sarkozy recently stated, it seems that “the agreed upon method is not the good one”. Unregulated liberalization of agricultural trade will not advance development and growth of all regions of the world, on the contrary. After eight years of repeated failures, should not the WTO contemplate that it needs to reform itself and modify its own grasp of international governance in agriculture?
momagri Editorial Board
1 First appeared on ICTSD website http://ictsd.net ; and published in Bridges Weekly December 17, 2008 (volume 12, n°43). Please visit http://ictsd.net/i/news/bridgesweekly/36562/ for the article complete text. |