TWN Info Service on WTO and Trade Issues  (May08/17)
15 May 2008
Third World Network

Trade: Complicated Doha situation as some push for "June or bust" deadline
Published in SUNS #6472 dated 13 May 2008

By Martin Khor, Geneva, 9 May 2008

As WTO Director-General Pascal Lamy, EC Trade Commissioner Peter Mandelson and a few others push hard to hold a mini-Ministerial to conclude modalities in agriculture and non-agriculture market access (NAMA) within the next few weeks at the WTO, there is a lot of uncertainty over when or whether this will happen.

The WTO Director-General at the General Council meeting on 7 May said "we have only a few weeks, not months" to finalise the modalities if the Round is to end by 2008. The EU Trade Commissioner Peter Mandelson a day earlier called for the new papers by the Chairs of the agriculture and NAMA negotiations to be issued by mid-May at the latest followed by a ministerial meeting in May or June.

However, it has become clear that the mini-Ministerial (targeted originally for March and then postponed to April in Easter and then the week of 19 May) will not take place in May. There simply isn't enough time. If the Chairs' new texts appear in the week starting 12 May - say on 14 or 16 May - the diplomats in Geneva and in the capitals will need at least a week or two to digest them and to plan their response.

If the Members are satisfied with the texts, there may be grounds to go straight to a "horizontal process" at senior officials' level. But if some of the Members are not satisfied (and this is more likely), they may ask that some discussion be held first at the level of the negotiating groups.

There will then be a tussle between the camp that says that meeting a tight deadline is of the highest priority, and the camp that believes that getting the content right is still more important than meeting a deadline.

Whatever the result of that tussle, the earliest that the senior officials can meet would be in the last week of May. If the aim of the officials' meeting is to remove most of the disagreements so that the Ministers will have only a few key points to decide on, it would be difficult or impossible to imagine this meeting will take only a few days or a week.

If the senior officials take 10 to 14 days, we are already into the early part of June.

On 7-29 June, there is the Euro football tournament held in Switzerland and Austria, and hotel rooms are over-booked in Geneva, so there will be tremendous logistical problems holding a Ministerial meeting in June. Besides the lack of hotel rooms, the security personnel (who are required for a Ministerial) are over-stretched with having to deal with the tournament.

However, the football games in Switzerland will be held in the first half of the month, and the matches will go to Austria in the second half. So, according to some sources, it is possible to target the second half of June for a possible mini-Ministerial.

Another possibility, favoured by those who want to rush the process even faster, is to hold the mini-Ministerial in early June, in a town in France close to the border with Switzerland. It will be able to accommodate the Ministers and their entourage.

The reason most stated for having a Ministerial by June is that it would take many months to prepare the tariff schedules after the modalities are settled. July will be too late, if the whole Round is to end by December.

However, some diplomats speculate that another reason which may be more pertinent is that France takes over the Presidency of the EU in July. Given its well-known opposition to the EC giving away too much on agriculture, France will make it difficult for Mandelson and his officials to engage in the negotiations as they may like.

According to this theory, in a town full of theories, this is the real reason why Mandelson, for one, is so adamant in pushing for a deadline of May or June, as July will bring the headache of a French EU Presidency.

As for the old favourite theory, that the modalities must be concluded urgently to beat the deadline for the US fast track authority, this is not mentioned anymore because the Trade Promotion Act has long expired, and any hopes of a new TPA being granted to President Bush have faded.

There is very little if any talk anymore about having to get a new full-fledged TPA, especially given the recent high-profile dog-fight between the Bush Administration and the Democrat-controlled Congress over trade policy, and specifically over the US-Colombia Free Trade Agreement.

But there is a new twist in the argument regarding US domestic politics. A group of eight WTO Ambassadors from developing countries has just returned from a week-long visit to the US.

According to one of the officials on that trip, they were given conflicting messages from different groups that they met. On one hand, some American NGOs and think-tanks were puzzled why the developing countries were still negotiating when the Bush administration no longer has a fast track authority, and will not get one.

On the other hand, the Ambassadors were told by some members of Congress involved in trade issues that "if there is a good deal for the US", there is still a "window of opportunity" for a Doha deal to be passed on by a lame-duck President to a lame-duck Congress to adopt in the period after the elections and before the inauguration of the new President.

The chances of this happening have, however, been dismissed by independent observers of the US political scene, who believe that the Democrat Congress leaders are not going to hand Bush a farewell present of rushing through a Bill on such a complex Doha agreement. It is more much more likely that if a Doha agreement is adopted by the end of this year, it will be thrown over to the new President and the next Congress to consider.

Mandelson, in an interview on Hardtalk on BBC World on 8 May, said that Bush was in his last months but could still do a deal, get the bulk of a full deal with a single undertaking on his watch, and then pass it on to his successor and Congress.

He said that key Democrats in Congress assured him that they would honour the deal of the previous administration. "If we get the bulk of it done in 2008, I'm sure it's OK. If not, a new President and Congress will want to put their own stamp on it."

On deadlines, Mandelson also reiterated that "there won't be a later." If there is no breakthrough in May or June, people will have "complete disillusionment and fatigue, I have no doubt. People will say Bush's term is at an end, we will face a new administration, there won't be a trade friendly transfer of power."

He also attacked the Presidential candidates for disengaging in trade issues, and being irresponsible for pretending to people that you can erect protection and yet sustain jobs. This stance will lead us to a vicious cycle and take us decades back, he said.

In the Mandelson scenario above, Bush would sign the full Doha agreement, and then pass it on to the next President and Congress to endorse. There is no expectation that the present Congress itself will adopt the deal.

In contrast to Mandelson's expectations of the new President and Congress, the director of Public Citizen's Global Trade Watch, Lori Wallach, is of the view that if Bush agrees to any Doha deal, changes will be demanded by the next President to make a deal passable in Congress.

"At this juncture, US positions in the Doha Round negotiations cannot be relied upon to represent what is politically viable in the US Congress," said Wallach. "This dangerous situation derives from the fact that President Bush is extremely desperate to create a legacy for himself by announcing a Doha deal while he is simultaneously 100 percent free of any responsibility to ensure congressional passage of such a deal, which is a task that will be left to the next president."

Bush's presidency has been an abysmal failure, and his popularity ratings are at a record low, said Wallach. Thus, the Bush administration is likely to agree to a "deal" even if it is not something that could get through the US Congress, simply so that Bush can claim that he is the president who achieved the Doha WTO Round.

"This legacy-not-viability approach is precisely what occurred a year ago when the Bush administration agreed to a Korea Free Trade Agreement it knew could not get through Congress, just so it could claim it had completed another FTA before Fast Track expired," said Wallach.

"If a Doha deal or even detailed modalities were to be "agreed to" by the Bush administration in its remaining eight months, an incoming president is extremely likely to demand changes simply to make such a deal congressionally acceptable. This is likely the case even if McCain wins."

According to Wallach, among the issues that would make a deal dead-on-arrival in Congress are any new Mode 4 commitments; NAMA tariff rules that allow large developing countries like China and Brazil the same flexibilities in avoiding tariff cuts that are provided to even the several dozen other target NAMA developing countries; and any limits on existing US anti-dumping laws.

"For instance, an entire Doha Round deal would be rejected by Congress if the Rules negotiations resulted in a ban on zeroing, as both Republican and Democratic members of Congress are very focused on that issue," said Wallach.

According to an Ambassador who was on the trip to the US, one issue that was unresolved was what the Members of Congress they met meant by a deal that is good for the US.

What is a good deal to them may not be what we deem a good deal for us, said the diplomat. He added that the impression he got was that the US had some "red lines" (issues that they cannot accept), such as any changes required to their anti-dumping practices (including "zeroing"), and any relaxation of visa or immigration rules.

This corresponds to the analysis of Wallach.

Meanwhile, in Washington, the Indian Commerce Minister Mr Kamal Nath told Reuters on 7 May that India is willing to offer significant openings in services - if the US provides more temporary visas for its workers. "We want a good US offer on Mode 4 and we would be willing to reciprocate," he said.

India's WTO Ambassador, Ujal Singh Bhatia told Reuters in the same interview session that recent India-US services talks in Geneva were not positive. "We need some reciprocity and even today the US was not able to indicate any positive movement on Mode 4," he said.

Another emerging area of discord is the issue of the TRIPS Agreement and the disclosure of countries of origin for genetic resources and associated traditional knowledge in patent applications.

At the General Council meeting on 7 May, Lamy said that in relation to the horizontal process, there would only be reports on the state of play on IPR issues (the TRIPS/CBD relation and geographical indications), and not solutions.

However, India, China and Brazil, among others, demanded at the meeting that actual progress must be made in relation to negotiations on text on the disclosure issue, as a condition for the success of the horizontal process.

All the above factors make for a very complicated brew for the immediate and medium term prospects for Doha.

On Friday afternoon, the chair of the agriculture negotiations, Ambassador Crawford Falconer of New Zealand, will convene an open-ended meeting on agriculture which will review the progress on negotiations on tariff quota expansion in sensitive products, and on tropical products and preference erosion, which are three difficult issues that have to be cleared so that his new draft can be drawn up.

It is also expected that the meeting will give indications as to when the Falconer paper will be issued, and what may happen after that - whether there will be time given for reactions within the agriculture negotiating group, or whether the next discussion will be at the "horizontal process", where agriculture and NAMA will be negotiated together. +