Developed
country negotiators and officials at the World Trade
Organisation, the powerbrokers in global trade, are
striving hard to impose a limited ''consensus'' on
members of the organisation. Holding out the threat
of the breakdown of the multilateral trading system
and the emergence of damaging bilateralism, they are
seeking an agreement on the framework for the next
round of global trade talks before a self-imposed
''drop-dead deadline'' of July 31. For the last few
days WTO director general Supachai Panitchpakdi has
been warning the organisation's 147 member countries
that a ''failure this month means the continuation
of an unsatisfactory status quo, certainly for the
remainder of this year and next and possibly for years
to come.'' Trade negotiations are known to extend
way beyond the deadlines that members set for themselves.
This makes the alarmist statements of the dangers
of dissent from interested parties like the director
general difficult to understand.
The Doha round sought to be launched in November 2001,
was expected to go on stream soon after, so that details
of an agreement could be reached by January 1, 2005.
But, half way through 2004 even the framework for
the talks has not been agreed upon. This makes the
original deadline impossible to meet, even if consensus
on a framework could be forged by the end of July.
So why failure to reach a framework agreement by that
date implies the end of the road is not immediately
clear.
The real concern of those pushing for an immediate
agreement on the framework is that unless such an
agreement is struck the new round is not even launched,
given the partial agreement at Doha and the failure
at Cancun. As Peter Sutherland, former Director General
of the WTO put it: ''failure this month would mean
we had not moved one jot from the Doha Declaration.
The Doha round would, in effect, be dead. When meaningful
negotiation is again possible in the WTO - say, in
a year from now - we will be looking at a complete
relaunch. It might take several years to achieve consensus
on a new agenda.''
What is more, if negotiations are not formally launched
in July delays driven by politics in the developed
countries is inevitable. First, the impending American
elections rule out any deal being struck by US negotiators
after this General Council meeting on July 27 till
late into next year. Second, the impending appointment
of a new European Commission in November would introduce
new uncertainties about the European position and
render consensus on the framework and modalities of
a new round elusive.
Thus the ''consensus'' being sought just now is limited
to one which declares that the Doha round is on. It
requires countries to commit themselves to reviving
the aborted negotiations and agree to a framework
of rules that would govern the conduct of those talks.
Once the framework is in place, the modalities can
be worked out and a new multilateral consensus negotiated.
That would take time, but global trade barons could
at least be certain that they are still in the game
of shaping a new, more liberal regime.
The problem is that the developed countries are willing
to give very little while demanding too much of the
developing countries as the price for their endorsement
of a framework agreement. This is not surprising,
since they want to load the agenda from the very beginning
with rules and caveats that ensure that their interests
are protected and advanced, if and when the final
agreement for the Doha Round is arrived at. Given
the influence which the developed countries wield
in global trade in general and over the WTO in particular,
the framework agreement, drafted through a quasi-formal
process that was by no means transparent and released
barely 10 days before the General Council meeting
on July 27, reflects in large measure the bias in
favour of the developed countries. Not surprisingly,
controversy surrounds the draft – released on July
16 - of even this preliminary agreement.
The lack of transparency reflects the many hurdles
that those pushing for a limited agreement have to
manoeuvre in a divided world. The stumbling blocks
to consensus include: the unwillingness of the developed
countries to accept substantial trade liberalisation
in areas crucial to each one of them; the consequent
divisions within the developed-country camp; the disappointment
in the developing world with the actual implementation
and the results (that have fallen far short of promises)
of the Uruguay round as well as the position being
adopted by the developed countries on old and new
issues; and the unwillingness of the developed world
to prioritise redressing of the existing equities
in the multilateral trading system rather than seek
new advances on the liberalisation front.
Given these constraints, the only way an agreement
can be pushed through is to appease the powerful and
pressure the weak into quiescence. This precisely
what the General Council chair Shotaro Oshima, WTO
director general Supachai Panitchpakdi and EC trade
commissioner Pascal Lamy, have been attempting to
do in recent months. Their problem, however, was that
obtaining endorsement from the major trading powers
itself has proved extremely difficult. As in the Uruguay
Round, the main bone of contention within the developed
country camp was the $600 billion global market for
agricultural commodities.
During the Uruguay Round, besides the device of defining
certain measures of support to agriculture as ''non-trade-distorting''
and including them in a permissible Green Box, European
endorsement of the Agreement on Agriculture (AoA)
was won through the Blair House Accord, which was
an in-house deal struck at an informal meeting between
the developed countries. The accord involved the creation
of the Blue Box, into which a set of support measures
that were officially defined as trade-distorting could
be incorporated and exempted from reduction commitments,
allowing the developed countries, especially the EU,
to provide substantial protection for their farming
community. Further, while provision was made for the
phasing out of the Blue Box at then end of implementation
period of the Uruguay Round, it was agreed at Blair
House that the AoA would explicitly specify a Peace
Clause that prevented countries from challenging those
measures during the implementation period. In the
event, the focus of agricultural reform in the developed
countries, especially the US and the EU, has been
the transformation of the nature of agricultural support
into measures that fall in the Green and Blue Boxes,
so that the support that would be subject to reduction
commitments would shrink. By pressurising developing
countries into accepting these patently protectionist
instruments, a global consensus that yielded the AoA
and the WTO was forged.
This time around too, an important step to progress
on a framework agreement remains a consensus between
the developed countries on agriculture. If at all
the developed countries were to be seen as making
new concessions towards freeing trade in agriculture,
they had to agree to do away with export subsidies
on agricultural products, accepted larger market access
commitments than required of developing countries,
and substantially reduce overall support provided
to their agriculture through various Blue and Green
Box measures. However, with the EU relying heavily
on Blue Box support, it was unwilling to consider
any framework agreement which did not retract the
Uruguay Round commitment to phase out such measures.
So the negotiations have focused on what the EU would
give in areas like overall support reduction and reduced
export subsidies in return for the retention of the
Blue Box.
The first signs of a partial consensus within the
developed-country camp came when the EU trade commissioner,
Pascal Lamy, offered to end EU export subsidies if
the US eliminates subsidised food aid and export credits,
and Australia, Canada and New Zealand curb state trading
monopolies in agriculture. Lamy also confirmed that
the EU had softened its position on US farm export
credits and might be willing to accept less than their
total elimination.
