TWN Info Service on WTO and Trade Issues (July 07/05)
12 July 2007
Below please find a commentary by Chakravathi Raghavan, who is a renowned analyst of the trade system and of WTO negotiations, on the current state of trade negotiations.
It was published in the SUNS on 9 July 2007.
DISCONNECTS AT ALL LEVELS
By Chakravarthi Raghavan*:
[Published in South North Development Monitor 9 July 2007]
Geneva, 21 (Chakravarthi Raghavan*) - If even a more than average reader of political, economic and business news and news about the Doha multilateral trade talks at the World Trade Organization feels confused these days, he or she has every reason to be.
There are disconnects all around, with too many spins by too many of the leading participants, who are trying to repeat history.
Take the simplest 'disconnect': the time-span or duration set for the negotiations.
2001, when the negotiations were launched at
the 1999 collapse of the Seattle Ministerial meeting (and efforts to
launch a new trade round), the WTO General Council meeting in
the EC, Lamy (as his predecessors did before him) had been looking for
ways for the EC not to have to take any measures on the path of further
liberalisation of agriculture and ending agri-subsidies. At
days of the 11 September terrorist attacks, Lamy and Zoellick joined
hands to launch a new trade round at the WTO ministerial to be held
Ministerial declaration was drafted in long 'green room' meetings and
The same Lamy, now in his avatar as WTO Director-General, at a 'breakfast meeting' with journalists on 13 June 2007, said that the negotiations which started more than five years ago has been a very long process, but that it should not be surprising that the negotiations are lengthy and complex, and pointed out that the Uruguay Round of negotiations - with fewer members and fewer topics - had lasted eight years. He went on to add: "We are now at the stage when the conclusion of the round could be envisaged sometime end of this year/beginning of next year provided a few headline issues are settled. All these years have created a situation where we now have a very clear political vision of what these few headline gateway issues are.." (SUNS #6271 of 14 June).
Lamy spoke to the media, the ability of the
Lamy, other trade officials, chairs of negotiating bodies, and trade
negotiators, have been travelling around the world, holding mini-meetings
and "negotiations" to agree on a
the collapse of the G4 efforts at
last year, after the St. Petersburg G8 summit, where he asked the G8
and heads of the outreach countries, for impetus to the
Lamy took over as DG, the practice at the WTO was for informal HODs
to be called by the Chair of the General Council, and consultations
held with the GC chair and the DG sitting together. But when Lamy took
over, after one such meeting with the then General Council chair,
even after the formal end of US fast track authority on 30 June, Lamy,
and the chairs of the agriculture and non-agricultural market access
(NAMA) negotiating bodies, have announced plans to prepare and put forward
by mid-July draft modalities texts in agriculture and NAMA, and for
them to be reflected upon in capitals, for further intensive talks and
tentative accords by September/October. There is also talk at and around
the WTO of some mini-ministerial, and Lamy putting forward a take-it-or-leave-it
draft package text to enable the
After the collapse of the recent G-4 (Brazil, India, EC and US) talks at Potsdam in Germany, the USTR, Susan Schwab, came to Geneva and met Lamy, and indicated at a media briefing that she would encourage Lamy tabling a text.
before taking over as the Director-General in August 2005, Lamy is known
to have had a lengthy conversation with former GATT Director-General
Arthur Dunkel about the Dunkel text (the Draft Final Act, that he had
tabled during the Uruguay Round) and explored the possibilities for
a similar Lamy text to conclude the Doha negotiations. These reports
surfaced at the time of the 2005
Over the past few weeks, with talk of the Doha negotiations having come back to Geneva and the multilateral process, while the US fast track authority has expired and the Congressional Democratic leadership has announced that new Trade Promotion authority is not a priority, trade officials and several leading WTO protagonists have been privately saying that the talks here and idea of a text being put on the table by Lamy (with ground prepared by Agricultural chair Falconer and NAMA chair Stephenson) is to put on the table an attractive enough market opening package for the United States administration to be able to sell to Congress and get new fast track authority to conclude the Doha negotiations -- which like the Bush 'war on terror' has run aground and proving to be an embarassment.
All the talk at the WTO, or of Schwab and others in their trips around the world, on the trade issue appear to be addressed to the US Congress, and the Democratic leadership, to persuade Congress to provide fresh fast track authority (with out which the administration cannot negotiate or conclude any bilateral, plurilateral or multilateral trade accords).
So much so that what was initially described and sought to be sold by the WTO leaders and major protagonists to the developing countries, and their policy-makers and public as well as to civil society as the Development Round, has now become what the Economic and Political Weekly of India recently (after a Lamy visit and seminar or meeting in India) had called the Trade Promotion Authority Round.
A briefing paper by the US Congressional Research Service (updated as of 18 October 2006), provides the background to these matters.
terms of the
After the Havana Charter, and the post-war efforts to create an international trade organisation (as part of the Bretton Woods scheme) collapsed, because of the US Senate refusal to ratify, and the entry into force of the provisional protocol of application for the GATT 1947, as an Executive arrangement, various US tariff reduction accords, including the initial tariff rounds under the GATT were in terms of this annual authority.
Until the Kennedy Round, the trade agreements only covered tariff reduction issues. The Kennedy Round had a small involvement in the non-tariff issues, in regard to the anti-dumping issue.
or three erroneous rulings in the early years of the GATT, involving
agricultural processed products (the wheat flour case involving
It was only in 1973, when the Tokyo Round was launched, and some of the non-tariff issues (safeguards, subsidies, and anti-dumping) came on the agenda, that the US administration had to get authority from Congress before it could negotiate these questions, or for its trading partners being willing to negotiate with the US and reach accord - since they did not want to get into a subsequent process of further negotiations to satisfy Congress or situation of later having to agree to changes sought by Congress.
led to the 1974 Trade Act in the
fast track authority continued till 1994. The
Clinton, elected to the White House in November 1992 (and who entered
office in 1993), used that authority to first get NAFTA approved by
Congress, and then the
when George W Bush was elected and entered White House in 2001 (by a
majority decision of the Supreme Court), Zoellick as the USTR could
not get the Republican controlled Congress to give him fast track authority.
But after 11 September 2001, Zoellick and Lamy joined hands to launch
Now, with the US domestic agenda and public concerns rising over the Iraq war, and the 2006 elections which brought several new Democrats to both Houses of Congress, mostly reflecting US concerns over the Iraq war, 'globalization' and 'free trade', any idea that fast track would be extended even to conclude a Doha round seems to be illusory.
While lobbyists, and their funding of Congressional elections, give them great influence over Congressional agenda, some of the studies of voting patterns over time by public interest groups show that such lobbying influences figure considerably at the committee stage in both the House and the Senate, but not so much when issues come to the floor for a vote.
But that apart, it is difficult to envisage Congress now giving the Bush administration any new fast track authority.
The mid-term Congressional elections ended on 7 November 2006. And on the next day, all those Presidential candidates, Democrats and Republicans alike, aiming for the White House in 2008, lost no time in starting one kind of a campaign or other - making the 2008 Presidential election period the longest so far.
And there are domestic problems in other major countries too.
Negotiations at the WTO have been focussing mainly on agriculture (subsidies and tariff cuts) and NAMA cutting tariffs by use of coefficients (a concept difficult to understand for even traders and enterprises). Neverthless, unlike in the past, with internet, civil society activists are more well-informed than many government officials in countries.
At the High Level segment meeting of the United Nations ECOSOC this week, Lamy said that currently a number of substantive rules of the WTO do perpetuate some bias against developing countries, and that while political decolonisation took place more than 50 years ago, "we have not yet completed economic decolonisation. A fundamental aspect of the Doha Development Agenda is therefore to address the remaining imbalances in the multilateral trading system."
Yet in the meetings at the WTO (and especially at the small meetings by the chairs of the main negotiating groups) it would be difficult to locate and identify the proposals and discussions and negotiations to "address the remaining imbalances" in the multilateral trading system.
At the ECOSOC, Lamy spoke of the multilateral negotiations entering a crucial stage in Geneva, that what remained to be done was small, that reaching agreement on (agricultural) subsidies depends on additional concessions from the US equivalent to less than a week's worth of transatlantic trade, on an additional handful of percentage reduction in the highest agricultural tariffs by the EU and Japan, and on an additional handful of percentage reduction in the highest industrial tariffs by emerging economies such as Brazil and India.
comments and questions to Lamy, Amb. Munir Akram of
Lamy replied that he doubted there was room for a Development Package if the Round failed. If the Round failed geopolitical consequences will go beyond trade, he said.
"I doubt the negotiations are about morals, it is about trade offs," said Lamy. If it was about morals, the subsidies and tariffs would have been reduced already. In the negotiations, the developed countries have to pay, developing countries have to pay less, and there is no need for the LDCs to pay. Lamy said that he doubted this could be substituted by morals.
The idea that in such a situation, Lamy could repeat a Dunkel act is bizarre.
It is difficult to say what would happen at the WTO if Lamy attempts to repeat history.
At the moment, the WTO seems to be staging a sort of Wagnerian opera - the four part Ring Cycle of Wagner. Wagner took 26 years to compose that libretto and the music, and it is a 14-hour opera (18 hours if intermissions are taken into account), normally played in four parts over four successive nights. The Ring Cycle, a story based on German and Nordic myths and gods, was about possessing the magic ring that assured dominion over the entire world, and ends in the last part, the 'Twilight of the Gods', in a final cataclysm with Wotan and other gods being destroyed!
In 2006, when the G6 talks collapsed, and Lamy suspended the talks, Crawford Falconer (chair of the agriculture talks), in an interview to Washington Trade Daily, recalled some English history and said, he did not believe as a general proposition that it is a good idea to suspend the Parliament. "Charles I made a bit of a mistake when he had suspended the Parliament, because he suspended it before he had raised any money. He paid a historical price for that and things had gone sour in the meantime."
In the rebellion where Oliver Cromwell triumphed to become the Protector of the Realm, Charles I was beheaded.
It remains to be seen whether this whole exercise at the WTO will end up as a tragedy or a farce.
(*Chakravarthi Raghavan, Editor Emeritus of the South-North Development Monitor, contributed this commentary.)