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Lessons not learnt at the WTO

by Rammanohar Reddy

Chennai, Aug 2001 - It is not too much of an exaggeration to say that the next couple of months will decide the shape of the World Trade Organisation in the future and how far the institution is going to enjoy the confidence of a majority of the world’s Governments.

Between now and the Doha ministerial conference in November, an intense tussle will take place at the headquarters of the WTO in Geneva and in national capitals about whether or not a new round of trade liberalisation talks should be launched - the first since the wide-ranging and controversial Uruguay Round of 1986-93 - and, if so, what the agenda should be.

A WTO round of talks is expected to further open national markets to trade by lowering import duties, formulating new trade facilitating rules and expanding the domain of multilateral trade disciplines in national economies.

It is no wonder then that the proposal for a new round is proving to be so controversial. But it is not a new round and its contents that will define the WTO in the years to come, but how the decision on its launch will be taken.

As events in recent weeks have shown, feelings run strong in all countries on this issue. After more than 18 months of negotiations, countries are not very close to taking a final decision. If evolving a consensus on the agenda for negotiations is proving so difficult, one can visualise how difficult it will be to reach a final agreement.

Similar tensions bedevilled the preparatory process for the 1999 ministerial meeting in Seattle, which also was all about drawing up an agenda for a new round of trade talks. But two things make Doha different from and perhaps more important than Seattle.

First, the protests in Seattle made the organisation and its members realise that they had to give answers to the people on the streets, whatever they may have felt about the questions. Second, the collapse of the Seattle talks demonstrated to the major trade powers that they could no longer push through a WTO agenda at their will and on their own.

So the decisions that will be taken at Doha and how they are taken will be the first major occasion when it will be known if the WTO and its members have learnt their lessons and come up with a broad-based, transparent and inclusive negotiating process. The signs, unfortunately, are that the WTO has not learnt too many lessons from Seattle.

Just two examples will illustrate why things have not changed.

One is in dealing with the specific demands of a large group of developing countries. It became a mantra soon after the Seattle meetings that the “implementation concerns” of the developing countries, a set of demands to correct the shortcomings in the existing WTO agreements, would receive priority as a part of confidence building measures.

As WTO officials never tire of saying, more time has been spent discussing implementation than anything else in the past 18 months and efforts have been made to consult all Governments. But the end result has been that the confidence-building measures have not delivered. Settlement of these issues, if at all they are to happen, is now going to be postponed beyond Doha and may even be made hostage to the launch of a new round.

The situation confronting the world’s poorest, the Least Developed Countries, is not very different. They have been offered duty-free access for many of their products as part of the confidence-building measures. But the price they are now being expected to pay is agreement on the launch of a new round of talks on a number of new issues about which most of them are clueless. Few LDCs have the institutional capacity to negotiate on complex subjects and fewer have the capacity to implement the WTO agreements which they have already signed.

The second example of things not having changed is the way in which, in the words of a WTO Ambassador from a developed country, “the entire institution has been turned inside out to accommodate the interests of the European Union”.

It is the EU which wants a comprehensive round of trade negotiations and it is the EU which wants the WTO to expand its domain to newer areas such as foreign investment and national competition policies and is now talking of rules for environment and trade. Since 1996, when the EU first proposed a “millennium round” in 2000, all the other countries - including the US - have had to scramble to respond to this agenda.

The reason behind the EU’s agenda is simple. During the Uruguay Round (1986-93), the EU fought for and partially succeeded in continuing to protect its agriculture. But it had to agree then to new negotiations in 2000 on farm liberalisation. To neutralise the effect of such an eventuality, the Europeans have kept coming back to the WTO with their huge agenda for a new round, for which few other countries have an appetite. If a growing number is having to agree, the only reason is that they think this is the only way talks on agriculture can move forward. The current impasse about what the WTO should do next can be broken only if either the EU climbs down or if the rest of the WTO membership moves closer to the EU.

So, much like before, the one or the other of the two major trading powers is deciding matters at the WTO. The question is not just one of negotiating a settlement. Because the Europeans have a problem with removing their protection of agriculture and because they are a major trading power, they can keep pushing their agenda on all the other members of the WTO. Now that it is crunch time and a decision has to be taken soon on a new round, the confidence-building measures are being sidelined and the old tactics of cajoling, blandishments and inducements have begun.

Snide remarks are occasionally made of countries representing 90 per cent of world trade wanting new trade talks. That is, insignificant trading powers such as India are holding up a grand vision. (Population and not the share in world trade counts only when the argument has to be made by the WTO that the members of the organisation are democratically-elected Governments of more than 4 billion people.)

The WTO Director-General, Mr. Mike Moore, has made no secret of his desire to see a round launched during his tenure (which ends next year) and talks of the “irrelevance” of the WTO if this does not happen at Doha. As the price for speeding up its accession, China has been persuaded to make a statement, even before it has joined the WTO, that it wants a new round of negotiations.

This anxiety to launch a new round of trade negotiations and the manner in which the proposed agenda is being formulated will have their own consequences. At present, there is a more than 50 per cent chance that all the WTO members will agree in Doha - a considerable number resentfully - to begin new negotiations.  The bigger question is how narrow or how broad the agenda should be. If the current impasse is not broken by the time of the ministerial conference, countries may well agree on a general political declaration announcing the launch of a new round without specifying the agenda.

This will be a face-saving compromise because the WTO members have invested too much in the preparatory process and few would want to openly cause another Seattle. But the problem with such a ‘solution’ is that it will postpone the resolution of differences to later, tying up officials in months and even years of more negotiations. That may well prove fatal to the institution.

(*Mr. Rammanohar Reddy is the Deputy Editor of The Hindu (www.hinduonnet.com), and was at Seattle, and more recently at Geneva, for the ‘reality check’ at the informal General Council meeting of the WTO end July. He wrote the above opinion piece in The Hindu of 4 August, from where it is reproduced with acknowledgement and permission.) – SUNS4951

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