Published: The Financial Express, Bangladesh, July 09, 2006

By Pradeep S Mehta

THE recent mini-ministerial of the World Trade Organisation (WTO at Geneva expectedly flopped, because the divergences remained unresolved. Repeating their Hong Kong solidarity, over 100 developing countries joined together to voice their concerns and warned the rich countries not to undermine the development thrust of the Doha Round of global trade talks. This mini-ministerial was held to take forward the Hong Kong Ministerial Declaration adopted in December, 2005. “We are in a crisis”, exclaimed Pascal Lamy, the head of the WTO secretariat, who is now moving at a hectic pace to get it back on track in 15 days. Virtually an impossible task, but one can never rule out miracles.

What happened at Geneva? This can be best summarised in the utterings of key ministers who were there to try and hammer out a deal. The Indian trade minister, Kamal Nath rued that “India was prepared to negotiate commerce, but not subsistence”, while the Zambian trade minister and spokesperson of the least developed countries (LDC) group in WTO, Dipak Patel asserted that, “We are not here to bend backwards to accommodate more market access for industrialised nations. We are not going to allow ourselves to be blamed for any failure”.

Kamal Nath’s comrade-in-arms in the G-20 alliance, Celso Amorim, foreign minister of Brazil, observed: “The burden of leadership in this particular case has to be on those who have more to give, and those are of course the richer countries”.

What did the rich countries have to say? The newly appointed US trade representative, Susan Schwab noted, “We have clearly reached something of an impasse, though the round is not dead”. Her European compatriot, Peter Mandelson was more circumspect, “the meeting was neither a success nor a disaster”.

All fingers seemed to point to the obdurate position adopted by the USA, which continued to toe a mercantilist line which relies on the metaphor: ‘exports are good, imports are bad’, rather than what can actually help move the agenda forward. This is in spite what the US President, George W. Bush had to say about the need to conclude the trade talks to every ones’ satisfaction, a few weeks before the Geneva mini-ministerial took place.

The European Union (EU), which had initially offered to reduce their farm support by 39% as against G-20’s demand of 54% and a US demand of 64%, relented to step up its offer to 50%. This was not enough for the US, which also refused to undertake further cuts in its own farm support measures. Not only that, the US is also allergic to the poor countries’ demand for ‘special products’ and the applicability of ‘special safeguard measures’ to protect their own farmers from cheap/dumped imports. Secondly, the demand by both the US and the EU on linking further movement on agriculture to better market access in industrial goods in developing countries was another stumbling block. Even in that area, the poor countries are hesitant to accept higher reductions to protect their own industries, and rightly so.

In brief, I have tried to spell out the causes of the hiatus in as simple terms as possible, though experts might have wanted me to go into more details, such as the battle over co-efficients etc., in the matter of industrial goods, and also tell the reader that the promises of cutting farm support will perhaps be just window dressing. Alas, the editors of this newspaper have asked me to limit my piece to 1200 words, and also the fact that the lay reader would just get bored if I went into detailed analytical explanations.

So, what next? I see three future scenarios, and explain them briefly. First, the baton has now been passed on to Pascal Lamy to cajole heads of governments of key countries to move and spell out their bottom lines to him. In the dog-eat-dog world of trade negotiations in Geneva, ministers could not have spelt out what their countries can do at the maximum. Because, often offers made by ministers/delegations can become binding with other parties then wanting more than what has been offered. That is something which any negotiator can comprehend. In his forthcoming field visits, Lamy’s first stop is Tokyo.

What will Lamy ask from Japan? He will ask the Prime Minister to address the high protection which is given to its farmers and how it affects the farmers in the poor countries. This is the crux of the problem, and has always been so even during the Uruguay Round of negotiations. It was this particular issue that the Doha Development Agenda was agreed to in 2002, when poor countries were made to believe that their development problems will be addressed in the context of the WTO agreements, i.e. by reining in absurd subsidies in the rich countries which did not allow the poor countries to farm and sell their goods under fair competition.

More importantly, Lamy will also address heads of the G-8 governments in St Petersburg, Russia mid-July, so as to push the Doha agenda. It is also likely that heads of non-G8 member governments, such as Brazil and India would also be attending the meeting. This is where Lamy will have to collar the big leaders and remind them that the Millennium Development Goals (MDGs) will be imperiled, if the Doha Development Agenda is not delivered. Lamy is hopeful that his desperate efforts will pay.

If Lamy’s efforts do not pay, then what next? Then as the second scenario, or as Plan-B, since the fundamental issues of agriculture, NAMA and services cannot be settled, the WTO members should consider what can be agreed upon. The controversial issues can be left on the back burner until the US and the EU sort out their political situation which may take a few years. It is time to turn the Hong Kong declaration on its head and straighten out negotiations in other areas, such as WTO rules, TRIPs, trade and the environment, trade facilitation, aid for trade and the Integrated Framework, all of which are crucial for developing countries and have been unaddressed during negotiations.

A hint towards the Plan-B came in a joint article by Nath and Mandelson in the International Herald Tribune of 5th July: “Doha round: It’s not only what we trade, but how”. Here they have argued that addressing the archaic customs procedures should be the centre piece of the final Doha deal. The article cleverly avoided dealing with the more contentious issues, which are bogging the progress of the whole Round.

The third scenario is that the Doha Round is declared sick and efforts made to wrap it up by 2011 or perversely, until the world faces another 9/11. That is what had spurred nations to agree at Doha, what they agreed to. We do not want an external impetus like 9/11 but we do wish to remind George Bush, that it is he who can deliver the Doha Round by being less mercantile and ensure that the poor are lifted out of their poverty through liberalisation of trade and cutting out of farm subsidies in the rich world, which mainly benefit the fat corporates. If ‘you are not with us, then you are with them’, might be used to remind Bush about what the poor expect out of the world’s leading power.

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