DNA, January 12, 2015

By Pradeep S Mehta

Bob Zoellick will never learn. Following closely on the heels of his EU counterpart, Pascal Lamy. Zoellick is currently on a whist-lestop tour of Asian capitals to push the Doha Round, and adding new words to the trade lexicon, each smelling of arrogance and bullying. At Tokyo, he warned that countries reluctant to push the global talks will be ‘left out’, as the US cuts bilateral deals on their own.

At Cancun, Zoellick spoke in an equally undiplomatic manner about the world being divided into two camps: The ‘Can-do’ and ‘won’t-do’ countries — hardly a reassuring message for countries who are grappling with the stalled agenda with the hope of achieving something this summer, at least a framework for negotiations on the modalities.

Who is Zoellick fooling? Soon after Cancun, the Free Trade Agreement members of the Americas met at Miami to achieve nought. Brazil and Argentina did not go along. A recent meeting at Pueblo, Mexico also saw the two strong sides locking horns. At Miami, the US wished to push investment, stronger IPR rules etc, while Brazil pushed for agriculture. Brazil, the leader of G-20 (southern alliance which emerged at Cancun), didn’t show any appetite for tariff reductions within the proposed FTAA. Other bilaterals which the US are pursuing are generally insignificant, except that with Australia.

Is the US willing to work with the right spirit of trade liberalisation? History shows that it is not. Just after the successful conclusion of the Doha meeting, the US brought about a new farm subsidy bill, which enhanced doles to its farm sector by more than half. The steel tariffs issue too was a sign of increasing protectionism, though now relaxed under the domestic consumer lobby pressures. Similarly, the Byrd Amendment, which distributed the spoils of anti-dumping and anti-subsidy rulings, has been struck down by a WTO panel, but is yet to be scrapped.

Zoellick has sent out a letter to all the 146 members in Jan-uary, urging them to move on the Doha Round, and also made an offer to address export subsidies in farm goods. This letter merely reassures others that in spite of the US presidential polls, it is prepared to move ahead. But sceptics say that it’s one thing to negotiate a deal and another to give it real effect.For example, in spite of a clear mandate to negotiate implementation issues at Doha, nothing was done the whole of 2003.

Lately, the process issue at the WTO was also held to ransom by the US. New chairs were to be elected for the General Council (GC) and all subsidiary bodies, and it was not in favour of Japan taking up the GC chair. However, that bump has now been removed and things will move forward at Geneva. The new appointments have, however, signalled something for the opponents of Singapore iss-ues (investment, competition, transparency in government procurement and trade facilitation), as no chairs have been appointed for these working groups. Except, that on trade facilitation, WTO deputy director general, Rufus Yerxa, will continue to consult members.

Speaking about the process issue, Lamy has been repeatedly speaking about giving more powers to the D-G of the neolithic (sic) WTO so that he can move contentious issues. But what he doesn’t realise is that the WTO is about hard-nosed economic issues, and members will not accede any further powers to the DG. There is too much at stake.

The EU is also not covering itself in glory. True that it has a notorious record of protectionism in agriculture, now it is trying to deflect the same by bringing on board new trade-unrelated issues. Earlier, when farm negotiations were going on, the EU had introduced the issue of animal welfare standards. In a discussion paper released in February, which is yet to be adopted, the EU proposed that countries should be allowed to ban imports from countries that did not share their “national values and standards”. This will be a nightmare, if implemented, as it will be highly subjective and divide the globalising world further.

WTO rules do allow banning imports of goods under Article XX on several grounds, such as health, safety etc, but the WTO jurisprudence also says that it should be tested on the grounds of “necessity” and “least trade restrictive”. Hormone-treated beef and genetically modified food are some examples of trade friction, as being against the consumer interest, have been quoted in this paper.

Be that as it may, both the two trading giants continue to come up with confidence-reducing measures, which vitiate the negotiating atmosphere at Geneva. Another such measure is challenging the role of UNCTAD in the trading system. Ever since the WTO came into being in 1995, UNCTAD’s role as a negotiating forum has diluted. However, it has continued to be engaged in generating excellent analyses and providing advice to poor countries on trade negotiations.

On the eve of the UNCTAD XI, to be held in Sao Paulo in June, 2004, the US and EU have suggested that UNCTAD’s role be limited to providing technical assistance and capacity building. This would mean that the work of analyses will either be stopped or reduced. As it is the developing countries, save a few big ones, have a very limited capacity to analyse, and have thus been dependent upon UNCTAD etc.

Thus, the levels of confidence and trust in the trading system continue to be eroded. That will certainly have an adverse effect on moving on the Doha Round. This is other than the fact that at Geneva, negotiators are often too immersed in the nitty gritty of negotiations, ie, looking at even the commas, semi-colons and full stops very carefully. Given this scenario, the parties will need greater resolve to move the agenda forward. That was the half-empty glass scenario. There is a half-full glass feeling too, as it is in the interest of all to move the Doha Round. If properly negotiated, benefits will also accrue to the developing world. In the words of the former GC chair and the Urug-uayan ambassador, Carlos Perez de Castillo, “We are all blinking, but things can move only if we blink together”.