THE ROAD FROM DOHA TO HONG KONG, A CRITICAL WEEK

In December, Trade Ministers will assemble in Hong Kong, a critical meeting that should advance the negotiations to conclude the Doha Development Round. We launched the Doha trade round when I was Director-General of the World Trade Organisation, it was to be an ambitious agenda with development issues at its core. Since then, deadlines have been missed, a Ministerial meeting in Cancun, Mexico fell apart in an unseemly manner. Headlines always rage, “Trade Talks in Danger,” multilateralism becoming irrelevant, the World Trade Organisation could be like the League of Nations. This is normal, no trade round has ever come in on time and none has totally failed. However, the Doha negotiations are now at a critical phase if the Hong Kong Ministerial, to be held this December, is to successfully reach understandings that could provide the ‘space’, confidence and momentum to conclude the round next year. Next year is several years late but if the deal is not done, other unpredictable political factors come into play. The U.S. President negotiates under legislative authority from the Congress, that will expire. Then there are elections in France, with the right candidates trying to outflank left pretenders to be the most nationalistic against the forces of globalisation which President Chirac has called worse than communism.

Major players will be talking again this week, unless they can get closer together it’s hard to see how much real, substantial progress can be made before Ministers assemble in Hong Kong. There is now a new group, the Group of 20, lead by Brazil, India, China and South Africa. This is a positive development. If they can bury and accommodate their many differences, then you have a disciplined position that can be useful. So with the EU, U.S., Japan, G20 and sometimes Australia, we have a core group that when agreement is close can fan out and retail the agenda to others. Missing in action is the Cairns Group of exporters which is not playing the role it played during the Uruguay round. It’s not the end of the round if Ministers cannot get a broader consensus next week, but it’s getting hard to be positive. The short term future of the round is being held hostage to those who have vastly different views of what the European Union should be. The French are leading the charge against agricultural reform, hiding behind them are other agricultural subsidisers. This is the first trade round to substantially address agricultural protectionism, the round will go nowhere, nor should it if agriculture reform is not advanced. Some countries opposed even starting a new round unless agriculture was fixed first. But 10 years of going nowhere convinced them their best hope was to link agriculture to a wider, new trade round. American, European and Japanese consumers are robbed blind by subsidies that make food dearer and reduce choice. Rich countries spend over a billion dollars a day in subsidies. You couldn’t find an economist anywhere who can’t point to study after study that shows these policies are bad for rich country consumers and poor country producers. The U.S. had made a substantial offer to reform their policies, but demand the EU match them, Japan is showing no leadership but is expected to join up a dollar short and a day late. The agricultural deal is a deal breaker or a deal maker. At the World Trade Organisation, they say nothing is agreed until everything is agreed. Therefore look for pressure, to advance issues such as geographic indicators where Europeans want to own the rights to the names of some wines, cheeses or hams as a trade-off. We stopped a clause calling for special treatment for sensitive products during the Uruguay round and at Doha, now it’s reappeared. This has the potential to be a show-stopping loophole. Look for pressure on developing countries to make some openings in service sector areas such as investment, communications and rules on facilitating trade. Carefully constructed, this could widen the agenda and allow the EU to demonstrate to its members there’s enough in this for everyone.

More than multilateralism is at stake, more than an open trading system that has given the world the most sustained and successful period of global growth is at stake. The alternatives are very dangerous. Last week I was cautiously optimistic, this week I’m cautiously pessimistic.

"PS: A story has it the wires that the WTO Conference in Hong Kong may be cancelled or postponed. This could be real, a tactic to force up a better compromise, or both. Nervous Ministers and offiials suggested I postpone the Doha meeting. This would need to be accepted by a WTO members but all power is bluff especially in the WTO and could be done."