Published: The Kathmandu Post, Nepal, September 22, 2005

By Pradeep S Mehta

Pascal Lamy has a tough job in getting some movement on the WTO`s Doha Development Round. There is no stress on his face, in spite of a gruelling 16 hours plus a day. He devotes every day of the week, including weekends. In a recent editorial, Financial Times had called upon Lamy to don the role of Zorro, the fictional sword-swishing masked bandit, who robbed the rich and helped the poor. Will he be able to do that? With his usual impish smile, he says, that he would be able to achieve two-thirds of the agenda before the Hong Kong ministerial meeting in December. How does he define the two-third figure, which he has been throwing around lately? I don’t, he admits, not in precise measurable terms but that there will be progress in all parts of the agenda, which can be aggregated.
“The perimeters are not precise, that it will be exactly possible to define where progress will be made or not”, Lamy admits. “What surprises me more is that many think that Hong Kong is the end of the road. It is not”. The Doha Round will move on, while the exact date to settle it will be to meet with the deadline of the US trade promotion authority, which expires in July 2007. Any extension of the same is also not foreseeable. As it stands, the trade deals that have passed muster recently in the US Congress, have been won with just one or two votes.

What happens if the US is out of the WTO? Will it matter, considering that the US has a share of only 11-12% of the world trade, and it is not a party to various international treaties, which continue to work for the rest of the world? Such as the Kyoto Protocol on climate change or the International Criminal Court. “It is not a feasible phenomenon, otherwise we will find the US Congress raising tariffs on everything, even if it will hurt them more than it does others. The problem with the US is that under their constitution it is the US Congress which has the ultimate authority over all international treaties on commerce, and hence the rest of world has to live with it”.

The crux of the matter is how the US and EU agree on the three pillars of agriculture liberalisation. It is holding up all progress in moving the Doha agenda. All negotiations are mortgaged to what happens in agriculture. The US says that it is ready to move on farm goods, if the EU moves. The EU will not move because it is not too sure of what the US will do. “If we jump, whether the US will take a leap”, says a European negotiator. “If US doesn`t take the leap, we will be stuck on our jump”. So the agenda is stuck again between the two trading powers. Commentators therefore expect that this will be decided only at the last moment: at Hong Kong.

This really means that Hong Kong will be another turning point in the road to further liberalisation, somewhat like Cancun. The only difference will be that countries will go to Hong Kong without an ambitious agenda.

Given such a hiatus, will Lamy, the former EU trade commissioner influence the EU? He is not so sure. The EU does listen to me now, and that too will diminish over time. Few days ago, speaking to the trade negotiations committee, which Lamy heads, he stressed upon the development dimension of the Doha agenda. Given the backdrop of the recent not-so-successful UN summit taking stock of the Millennium Development Goals, Lamy believes that `development` still remains the leitmotif of the Doha agenda. He believes that there are three bits to achieving the development package of the Doha agenda.

First, nearly two thirds to three-quarters of the issues under negotiations are for the benefit of the developing world. They can be pretty obscure and whether they will result in being development-friendly or developing country-friendly, is yet to be seen.

Secondly, there is forward movement on aid-for-trade, i.e. to enable developing countries, particularly least developed countries to be able to garner the benefits of trade liberalisation through extra assistance to enable them to do so. This includes putting some meat on the integrated framework for LDCs, which is being shepherded by six international agencies: the WTO, UNCTAD, UNDP, ITC, the World Bank, and the IMF. Bilateral donors too are chipping in this arrangement which was languishing.

Thirdly, on special and differential treatment and implementation issues. These are now back on the radar, and will need constant nudging.

Whatever may happen on the Doha agenda, and assuming that farm issues will be resolved to mutual satisfaction by 2007, the bigger problem, developing countries will face in the future are the increasing non-tariff barriers. In his avatar as the EU trade commissioner, Lamy had launched a discussion paper on “collective preferences”, which had outlined that values will override commerce priorities in trade. Lamy continues to hold similar views, that countries should be allowed to use value-based choices.

On his pronouncement that the WTO is a medieval organisation and needs to be reformed to cope with the changing times, Lamy would take it up after the Hong Kong ministerial meeting. “WTO members are like Gerald Ford, the former US president, who always had a difficult choice of walking down a staircase and chewing gum simultaneously,” says Lamy with mirth. If WTO members are really so inept in handling just two things at the same time, one can imagine the plight of the world trading system, which is again on another cross-road, and not knowing which road to take.

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