Published:The Financial Express, Bangladesh, December 04, 2005

By Pradeep S Mehta

Key Ministers are continuing their parleys in a bid to try and getting a deal on the Hong Kong declaration of the World Trade Organisation (WTO), which will be better than what has been put out on November 26 last. The efforts being made by governments to do this are unprecedented in WTO’s history. Ministers are flying in and out of capitals in western countries almost on a weekly basis, while negotiators in Geneva holding meetings day in and day out.

These efforts are to mainly push the Doha Development Agenda forward, but there are too many differences. Hence the 26th November declaration is a draft prepared with the hope that the ministers will address the gaps and come out with a better text at Hong Kong.

Unfortunately, what is not being discussed upfront is the cost of failure? And this can be huge, particularly for the developing world because the Doha Round has an overwhelming mandate to deliver on development. Therefore, the G-20 alliance of developing countries in particular has 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 the end of 2006 or early 2007 at the latest. The reason 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 the WTO members to strike a deal.

Negotiations at the WTO are quite complex in nature and are mainly guided by trade-offs. 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 peoples before they decide 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 over the international community, which spurred the effort for restoring confidence of the 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 European Union (EU) also agreed to end all export subsidies but the end date was left for further negotiations. The Singapore issues were the pound of flesh for the EU to agree to reduce its farm subsidies. Due to the 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. 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. But that is not all. The US wants better market access on farm goods to 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. Even at the UNCTAD XI meeting in Sao Paulo, June, 2004 the draft declaration was held up due to strong opposition to the 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.

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