Published:The Business Times, Singapore, December 09, 2005

By Pradeep S Mehta

IN the run-up to the World Trade Organisation (WTO) Ministerial meeting in Hong Kong next week, hectic parleys have continued among key ministers to try and get a deal on the Hong Kong declaration, which will be better than what has been put out on Nov 26.

The efforts being made by governments to do this are 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 meet day-in and day-out.

These efforts are to mainly push the Doha Development Agenda forward, but there are too many differences. Hence the Nov 26 declaration is a draft with the hope that the ministers will address the gaps and possibly arrive at some better text at Hong Kong. Alas, what is not being 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. Therefore, the G-20 alliance of developing countries has a huge burden.

One clear direction which is emerging is that it will not be possible for ministers to sort out their 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 reason for this 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 make 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 at what they would gain 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 go out to sign up these deals.

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. The Singapore issues were the pound of flesh for the European Union (EU) to agree to reduce its farm subsidies. Due to latent realisation and strenuous opposition from 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 for 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 in the EU and other countries. On the other hand, the poor countries feel that by making such demands, the rich countries want a ’round for free’.

One problem which clearly emerges in current demands is on reducing tariffs of industrial goods, as that 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 in 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 fulfil its development promises, which is a bigger issue than just salvaging the Doha Round at any cost. It is because of 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 the early 1990s, after 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 the ‘Dunkel Draft’. In spite of all the hue and cry, it ultimately broke the deadlock. WTO director-general Pascal Lamy needs to replicate this. Given his past background, Mr Lamy is in a difficult position, but he will have to do it if he wants to deliver. After all, he was one of the chief architects of the Doha Development Agenda. Therefore, it is his moral duty to make all possible efforts to bring it to its logical conclusion – without losing sight of the bigger goal.