TWO CHEERS FOR THE HONG KONG MINISTERIAL

After 4 years of negotiations, Trade Ministers in Hong Kong made modest progress that will keep the trade round going and hope alive. Good work. Ministers dropped expectations so low that any progress would look good. Farm export subsidies which represent only about 5% of farmer support will go in 2013 when most Ministers will have retired and when the EU will again address its common agricultural policy. The Europeans had already accepted that export subsidies should go but a date is important. A lot can happen in 8 years. Market access for the poorest countries has been improved. Cotton export subsidies will go next year. Yet cruel exemptions remain on sensitive products - Japan has already said that’s rice, fish and maize! This could mean little for the poorest countries unless infrastructural support and capacity is built and an enlarged fund for this purpose has been pledged. Good stuff and builds on the work I did as Director-General. New deadlines have been agreed for proposals to be considered, let’s see if these deadlines are met because they have been ignored before. Can all this be put together by April next year?

What can happen in the next four months that could not happen over the past 4 years? Potential failure can focus the mind. European elections in France next year and the U.S. legal ability to negotiate expires in 2007 will stir negotiators. What won’t work is to tell Ambassadors in Geneva to try again, unless there are changes in instructions and positions from capitals. It was appalling in the old days when the big guys ganged up and rolled things through. There is only one thing worse than the big guys ganging up and that’s when they don’t. If the U.S., EU, Japan and now China, Brazil and the Group of 20 cannot reach an understanding, then nothing will keep happening.

They need to do the trade-offs, then the Director-General needs to ensure that the special needs of the other members are taken into account and then retail the deal via capitals before the next Ministerial. But he can only do this with direct and specific intervention by leaders.

Remember all those ringing, noble communiqués released after meetings by APEC (Asian Pacific Economic Conference), G8 (Group of 8 leaders of industrialised nations), British Commonwealth, G7, Finance Meetings. All said the same thing, “do the deal”. Yet these statements are so broad and bland, nothing happens, they are statements of best intentions and hide the substantial differences countries have. Perhaps these leadership meetings ought not to keep saying “try harder”. But to admit the truth to their differences and inflexibility, or resolve them .

No deal without agriculture, true and good, but this cannot be an agriculture round alone. Therefore smart negotiators ought to be working not only in their needs but what the other guy needs to be able to take home to capitals also. One thing for sure is that trade liberalisation will not go away because it works. The big question leaders must ask themselves is do they want a multilateral system or not? Because they are spending more time on bilateral and regional deals than they are on multilateralism.

Not far from the Hong Kong meeting during the same week as the WTO Ministerial, in Malaysia Asian and some Pacific leaders meet to discuss an ASEAN plus concept. It was a unique meeting, South East Asian leaders, plus India, China, Japan, Korea, Australia and New Zealand. Interestingly, Russia was invited as an observer, but wait a minute, no U.S. invitation? Leaders spoke of a possible free trade deal eventually in the future when they have all safely retired, bit like APEC which agreed to free trade among developed countries by 2010 and developing countries by 2020. It’s embarrassing to remind ourselves of these failures. These regional and bilateral deals insult the concept of free trade, there are costly exemptions, new privileges, new contradictions, new red tape, new excuses, and no dispute system that works has ever been created outside the WTO. I’d do the same if I were a leader, it’s better than nothing and dangerous to be left out.

The Doha deal stands waiting to be done. I fear a small, weakened, watered down, agreement could be reached and then everyone can again congratulate themselves.

But then, as always, every deal is just yesterday’s compromise, the best countries could agree to. That’s why I still get annoyed when the media says “WTO fails”, it doesn’t, it can only do what its members allow it to do.