Published:The Economic Times, December 08, 2005

By Pradeep S Mehta

Justice was not done to the developing countries in the Uruguay Round. Hence, it would be unfair for the developed countries to ask for greater market access from their poor counterparts at Hong Kong

Hectic parleys among key ministers to try and get a deal on the Hong Kong declaration of the WTO have ended, and the rest will be seen at Hong Kong. The movement is about 20 yards on the text which has been put out on November 26.

The efforts being made by governments to do this were unprecedented in WTO’s history, with ministers flying in and out of capitals in western countries almost on a weekly basis, while negotiators in Geneva meeting day in and day out.

These efforts are to mainly push the Doha development agenda forward, but there are too many differences. Therefore let’s pray that the ministers will address the gaps and possibly arrive at some better text at Hong Kong.

Alas, what has never been discussed upfront are the costs of failure? And these can be huge, particularly for the developing world because the Doha Round has an overwhelming mandate to deliver on development. It is therefore that India, as a fast-growing economy and a leader of the developing world, has to bear a huge burden.

One clear direction which is emerging, is that it will not be possible for ministers to sort out the differences at Hong Kong, thus they may agree to call for another special ministerial session within three to six months, so that a consensus can finally emerge and the round is wrapped up by end-2006 or at the latest early 2007.

The reasons to do so is the expiry of the US President’s fast track authority in July, 2007. There is a diminishing appetite in the US for trade liberalisation, thus the end date is certainly a big incentive for WTO members to do a deal.

Negotiations at the WTO are mainly guided by trade-offs, and are quite complex as well. It is fairly easy for armchair commentators to suggest what should be done and what should not be done. But, when it comes to the crunch, negotiators have to look for what they would gain as against what they will lose.

As most negotiations take the final shape at the eleventh hour, the wits of negotiators are tested. And they need to look behind their backs for promises made to their polity and people before they went out to sign up these deals. For example, the Doha meeting was extended by one day due to India’s rightful insistence, and finally a compromise text was arrived at. At that meeting the ghost of 9/11 was looming behind the international community, which spurred the effort of restoring confidence of people in the international economy.

The Doha declarations were themselves full of trade-offs, and the language on Singapore issues (investment, competition, transparency in government procurement and trade facilitation) was changed to agree to discuss modalities rather than actually launch negotiations. The EU also agreed to end all export subsidies but the end date was left for further negotiations, which is currently under debate. The Singapore issues were the pound of flesh for EU to agree to reduce its farm subsidies.

Due to latent realisation and strenuous opposition of developing countries, particularly the Africa group, on Singapore issues, the Cancun meeting collapsed. Nevertheless, the meeting succeeded in launching the G-20 a powerful coalition of developing countries which decided to tackle the dodgy offers of liberalisation in farm goods by both the US and the EU.

Now that the Singapore issues are no longer on the table, the EU is insisting on a fresh pound of flesh to surrender on farm goods (Making the Doha deal work, Peter Mandelson, ET Dec 5). It has linked further commitments to getting better deals on industrial goods and services. That is certainly the main cause of dissent on the draft ministerial text being. But that is not all, the US wants better market access on farm goods in the EU and other countries.On the other hand, the poor countries feel that by such demands, the rich countries want a ‘round for free’.

India and many others have also reminded the rich countries that this is a development round and not a market access round. One problem which clearly emerges in current demands on reducing tariffs of industrial goods, as that it will accelerate de-industrialisation in many developing countries.

Thus, there is a demand for exemptions on account of ‘policy space’ which will enable them to be selective rather than offer concessions on a broad basis. The term ‘policy space’ is a controversial one in international trade lexicon. Even at the Unctad XI meeting in Sao Paulo, June, 2004 the draft declaration was held up due to strong opposition to inclusion of these words, but in the end the developing world succeeded.

This is what is required at Hong Kong also. The Round must fulfill its development promises, which is a bigger issue than just salvaging the Doha Round at any cost. It is because of the developmental elements of the Doha agenda, the expectations of the developing countries have increased manifold. They also know that justice was not done to them in the Uruguay Round. Hence, it would not be fair on the part of developed countries if they ask for greater market access from their poor counterparts in the ongoing trade talks.

Looking back, the Uruguay Round too plunged into a similar crisis in early 1990s, after the two consecutive failures of ministerial meetings: Montreal and Brussels. What did the then director-general of GATT, Arthur Dunkel do? He stepped in and proposed his own text, popularly called ‘Dunkel draft’, which in spite of the hue and cry, ultimately broke the deadlock. Lamy needs to replicate him. Given his past background, Lamy is in a difficult position but he will have to do it if he wants to deliver.

After all Lamy was one of the chief architects of Doha development agenda. Therefore, it is his moral duty to make all possible efforts for its logical conclusion — without losing the sight of the bigger goal.

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