Published:The Financial Express, October 01, 2005
By Pradeep S Mehta
The whole world’s eyes are on the Hong Kong ministerial of the WTO, loaded with questions on whether it will succeed like in Doha, or will it fail like in Cancun. While Doha was successful in spite of the less than full agreement on several contentious issues, Cancun was not exactly a failure like in Seattle. In fact, it was the Doha Development Agenda and its contours which caused the suspension of the Cancun meeting. Anyway, Hong Kong is not the end of the road, so it will be another milestone in the quest for further liberalization.
Cancun was a turning point in the long road to further trade liberalization, when the South asserted itself and said ’no’ to one-sided proposals by the North. These included the Singapore issues (investment, competition and transparency in government procurement, of which trade facilitation is on the negotiating block) and the thorn in the flesh of rich countries: agriculture. Thus Cancun was a deferred success rather than a failure or a flop. It lead to the consolidation of the developing countries in the shape of the G-20 and the G-90. And these informal networks are still around, in spite of best efforts to break them.
While all this was going on, another important development took place in the WTO, the selection of the Director General. To begin with there were four candidates, two of them belonged to the G-20 group, one to G-90 and the other to the rich, or the quad. One by one, three of them dropped out of the race. Consequently, Pascal Lamy, the former EU trade commissioner was selected as the supremo of the WTO secretariat for a 4-year term. He succeeded because he was perhaps the best candidate having the insight and capacity to push for a successful conclusion of the Doha round, which he mid-wifed in his earlier avatar.
Lamy too is sanguine and doesn’t expect the Hong Kong ministerial to be able close all the gaps. He believes that about two third of the agenda will be covered. What is this two-third? I don’t define two thirds, says Lamy, but many issues will get resolved and that would be more than half the agenda. A good group of four deputies, people with experience of trade negotiations, have been assembled by Lamy to assist him. Geographical balance has also been ensured i.e. one each from the US, Latin America, Asia and Africa. Officially they have been engaged to join from 1st October, but they are already there at the WTO. However, there is a catch in each one’s appointment, and that has a bearing on the Doha round. Including Lamy, each of the four deputies have a contract for just two years, of course there is an extension clause. The grapevine in Geneva is buzzing about the 2-year contracts, with one negotiator speculating that Lamy will indeed have to be a magician to finish off the round by the end of 2006, to be signed, sealed and delivered by mid-2007. This deadline is because the US trade promotion authority expires in July 2007, and is unlikely to be extended. Whether the rest of the world likes it or not, if the US burps, the rest of the world turn their eyes towards it. Appetite for trade liberalization in the US is very low. The last three US lead trade deals: the US-Singapore and the US-Australia FTAs and the CAFTA passed through with just one or two votes in the US Congress. Another speculation about the limited contracts is that Lamy would like to head back to the heady world of French politics, considering the expected rise of Socialists after the recent fall of Chirac, a conservative.
Lamy too is sanguine and doesn’t expect the Hong Kong ministerial to be able close all the gaps. He believes that about two third of the agenda will be covered. What is this two-third? I don’t define two thirds, says Lamy, but many issues will get resolved and that would be more than half the agenda. A good group of four deputies, people with experience of trade negotiations, have been assembled by Lamy to assist him.
Well, reverting to the Doha round, it is France and some of the new EU member states, such as Poland, which have adopted an over-my-dead-body position on reining in farm subsidies. The only redeeming feature on the horizon is the internal budget problems that the European Commission is and will continue to face in the near future, when the farm subsidies will come down. They currently constitute 40% of the EC’s budget.
The US magnanimously proclaims that it is ready to move on the farm agenda, if the EU does. As one European negotiator succinctly argued: if we jump, will they leap. And if we take the jump, and they don’t leap, we will be stuck in the quagmire of negotiations. Well as its stands today, the Doha round is stuck on these two trading powers’ dilemma. At the same time, other issues too are not moving, as countries adopt a wait-and-watch posture on agriculture.
If one has to speculate on the future scenario, it appears that Hong Kong will be another ’approximations’ meeting, with the limp hope that these can be resolved in 2006. This will give a fillip to further preferential trade deals, thus adding noodles to the spaghetti bowl. As a result, the already pressed negotiators in the capitals will become busier in pursuing bilaterals and regionals. All want more liberalization, and if the multilateral forum is not delivering it, then side deals will become more alluring.
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