WTO – Doha in 2004

A clear sign that the US is willing to take the lead on global trade talks, its Trade Representative Bob Zoellick this week sent a letter to fellow trade ministers in an attempt to get the Doha Development round of negotiations moving. Claiming that he does “not want 2004 to be a lost year for the WTO negotiations”, Zoellick urged his colleagues to commit themselves to an end of agricultural export subsidies. Unless they do so, it will be difficult to conclude meaningful negotiations. He is less clear about what he proposes on internal support for farmers or food aid policies at this stage.

However, this is a welcome New Year’s gift to negotiators in Geneva. Let’s hope negotiators and Ministers don’t resort to the predictable mantra of “it doesn’t go far enough”. It is a basis for further talks and the time has come for adults to start turning their cards over behind closed doors.

Agriculture was always to be the deal maker or breaker. It proved to be a deal breaker in Cancun when the Ministerial Meeting collapsed. Before Cancun, the US and the EU put together an agricultural proposal that pleased no one, including themselves. Instead of being used as a basis to advance, some countries, encouraged by some NGOs, wanted to do specific deals on products such as cotton. That was a cruel hoax. The fate of any one product – cotton, dairy, coffee – or any single issue such as government procurement was ever going to decided at Cancun or anywhere else. We have a Trade Round so that products and issues can be traded off to ensure that no one sector or country is seen to lose. It’s called a single undertaking.

What’s important now is that Ministers use the opportunity to shift gear, not to fight to the death over detail. One feature of Cancun’s failure was the emergence of a new group of 20 developing countries (known as the G20), lead by Brazil, China, India and South Africa. These 20 nations believe time is on their side and point out that within 40 years their combined GNP will be larger than the US, Japan, Germany, Italy and the UK. I think this group, internalising differences such as the gap between India and Brazil, working together with shared objectives, will make negotiations easier and, as such, is a healthy development.

Far less healthy from the perspective of countries such as Australia, New Zealand, Canada and the US will be if the EU join forces with Japan agree to free up agricultural trade limited only to developing countries. This selective approach is reminiscent of the EU initiative prior to Doha to allow less developed countries to export anything but arms. As some cynical observers in Geneva have noted, it meant anything but farms.

The Cairns Group of agricultural producers formed in the 1980s to provide a joint platform for non-subsidised exporters has been noticeably silent. Some suggest the emergence of the G20 is partly the result of the failure of the Cairns Group to become the force we hoped it would be. G20, and the Cairns Group before it, are important to prevent the combined strength US and EU ‘stitching up’ agriculture negotiations. This was exactly what happened during the Uruguay Round when the infamous US and EU-sponsored “Blair House Accord” delivered only modest progress in agriculture. The Cairns Group failed to live up to its promise.

The time is right for the Cairns Group to join forces G20 and grab the olive branch extended by the US and get the trade round back on track.

After Cancun, the major players have shifted their focus to bi-lateral and regional free trade agreements. Meanwhile, the multilateral system remains paralysed.
The much-vaunted Free Trade Summit of the Americas was heralded a success, but this was mainly because contentious issues were postponed and taken off the agenda. Similarly, this week’s leaders summit of the Americas in Mexico will studiously avoid substantial issues in trade. I guess this is so that Prime Ministers and Presidents can claim they didn’t fail. It reminds me of those unctuous, bland and media friendly declarations on trade issued from meetings of Commonwealth Leaders that can never be implemented.

This Trade Round can succeed. Pascal Lamy, the EU Trade Commissioner, has made a step in the right direction by dropping two contentious issues for developing countries, investment and competition policies. This leaves government procurement and trade facilitation as outstanding barriers to agreement. Both of these areas can be managed by careful sequencing, a stringent best practice approach, and the option to opt in or out over a set period of time.

With the US and the EU both showing signs of flexibility, we should not allow momentum on the Round to be slowed because of upcoming elections in the States or elsewhere. The growing impetus behind regional trade agreements, support for which is growing in China, India and elsewhere in Asia, should remind us again of the importance of multilateralism.

It is dangerous for us all if multilateralism is rejected or sidelined while the regional options gather momentum because they create a diversion, put too much power in the hands of the big guys and never address the difficult issues that always end up in Geneva. Yet the new year has begun well in Geneva. The Hong Kong conference conclude the round, but the smart money is betting that the Conference will do this time what failed in Cancun – lay guidelines, set timetables and relax the scope of the agenda.