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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.
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