Building a new trade architecture (on Doha’s desert sands?)

by Chakravarthi Raghavan

GENEVA: The WTO has launched a new  round of trade negotiations (though coyly calling it a “work programme” and not a “round”) as a “single undertaking” and with a very large, ambitious and comprehensive range of subjects to negotiate. It was difficult enough to launch but is going to be even more difficult to complete and conclude, if ever.

The Doha ‘success’ has been acclaimed in the Western media as providing a boost to the ailing world economy, reversing the recessions in the US, EU, Japan and other industrialized countries, and having positive effects on the developing world.

Unfortunately, whatever the gains of international trade and its rules, trade in its immediate effects only distributes or redistributes benefits. Recovery and growth out of the current recession depends not on trade nor on further shifting the burdens of adjustment from the North to the South, but on coordinated global macroeconomic expansion and  policies to enable the poorer countries to buy the goods and services of the North.

Mere measures to force open the markets of the South, or attempting to create ‘high-consumption’ enclaves in Southern economies for Northern suppliers (of goods and services), would not be able to lift the world economy out of recession. And, indeed, there are few signs of this happening, not even as a result of the ‘global war on terrorism’ and the boosts that war and military buildups supposedly provide to economies.

(Even the OPEC decision (since Doha) to engage in a ‘price war’ against Russia over oil (which Kuwait predicts would bring prices down to $10 a barrel) may not help; it would also have some negative effects on high-cost US oil production itself, and an ‘economic price’ for Alaska and other oil drilling (sought by the Bush administration to benefit its ‘friends’ and promoted as part of the global war on terror). It would help some of the energy-deficient importing countries, but not too much on balance since the price for the consumer does not have any direct relationship to the price per barrel of crude at exporting countries.)

Legitimacy questioned

The very complexity and ambitious nature of the WTO’s Doha work programme - achieved by means of naked, undisguised power-play of and bullying by the US and EU, in total disregard of the rules of the “rules-based” WTO system -  may ultimately prove to be its Achilles heel. Or, to change the metaphor to suit the rhetoric of the ‘Bush global war on terrorism’, it may be akin to an attempt at rebuilding the twin towers of the World Trade Centre on the desert sands of Doha without laying the necessary steel pile foundations.

For, the processes adopted at Doha and the disregard shown for rules and procedures have brought into question even more than before the legitimacy of the system. Such legitimacy for any system like that of the WTO comes not through the assertions of its Director-General but through public perceptions of the WTO’s transparency (internal as much as external) and decision-making process, which should involve the willing participation and agreement of all member countries, and bring and be seen to bring benefits for the public, the poor in particular.

Without such legitimacy, the trade negotiations launched at Doha under the guise of a work programme, which even its promoters privately acknowledge will take several years to complete,  will be difficult to conclude or implement and enforce in countries whose economic space is sought to be further ceded to the giant corporations headquartered in the Quad countries (the US, the EU, Japan and Canada).

The normally partisan (pro-American and pro-European) secretariat of the WTO excelled itself at Doha, with Director-General Mike Moore and (guided by him?) the Chair of the Doha Ministerial Conference, Qatari Minister Sheikh Youssef Hussain Kamal, employing the torture tactics of sleeplessness and fatigue to force trade ministers to consent to the agreements, denying some of them the counsel (by their side, in the “green room”) of their ambassadors or senior trade officials.

According to several experienced trade diplomats and officials, Doha, which witnessed  the return of the green room (on the night of 13-14 November) -  despite statements of WTO officials on the opening day of the conference that it would be the first conference without the green room, and despite the claims in the opening ceremonial session by Moore and  General Council Chair Stuart Harbinson of  ‘transparency, and thus legitimacy’ - had all the worst features of the Uruguay Round processes and its Marrakesh Agreement. The repetition of claims of transparency and participation by Moore and company thus comes across as Goebbellian.

As an experienced trade ambassador of a developing country told this writer, in the prolonged green-room consultations at Doha, almost through the night of 13-14 November, apart from the US Trade Representative Robert Zoellick and the EU Trade Commissioner Pascal Lamy being able to call at will on the expertise and advice of their lawyers to put forward a new and even more objectionable and partisan formulation than the previous one on which Indian Commerce Minister Murasoli Maran had expressed his country’s concerns, the partisan secretariat too excelled itself.

Some senior trade diplomats and officials of developing countries (both pro- and anti-new round), who spoke on condition of anonymity, said that while Zoellick and Lamy engaged in some bullying, Moore had added  his own voice berating and almost insulting critics and opponents of the ‘comprehensive and all-encompassing’ agenda.

(The 67-year-old Maran, who has a history of some cardiac problems, laughed off these tactics at some press briefings and comments to media (as he walked to and from the meeting place): if they (Zoellick, Lamy and Moore) had applied pressures on him, he had also applied pressures on them.)

And within the secretariat, one old-time secretariat official said, Moore’s deputy, American national Andrew Stohler, took care of American interests while French national Paul-Henry Rivere attended to French and then EC interests; in the process all three have helped further delegitimize the WTO as an institution.

Indian resistance

When India’s views were brushed aside, and after consultations with the Indian Prime Minister Atal Behari Vajpayee, Maran, at the heads-of-delegation meeting on 14 November, announced that India would be unable to join the consensus if its concerns (about the launch of negotiations on the Singapore issues at Doha, with only modalities left to be settled by express consensus at the next Ministerial) were not accommodated.

A few other countries spoke after Maran at that meeting, sharing India’s concerns though stopping short of announcing they too would withhold consensus.

While senior trade officials and the Western media went around portraying India as the “spoiler”, bilateral consultations were held between Maran and Moore, and some talks also took place among the majors, resulting in the Chair’s statement at the final plenary providing the Chair’s understanding and clarification of the phraseology used in the Ministerial Declaration on all the four Singapore issues, namely, that “... negotiations will take place after the Fifth Session of the Ministerial Conference on the basis of a decision to be taken, by explicit consensus, at that Session on modalities of negotiations.”

In providing the clarification, Chairman Kamal said, “Let me say that with respect to the reference to an ‘explicit consensus’ being needed, in these paragraphs [paras 20, 23, 26 and 27 of the declaration covering the four Singapore issues], for a decision to be taken at the Fifth Session of the Ministerial Conference, my understanding is that, at that Session, a decision would indeed need to be taken, by explicit consensus, before negotiations on Trade and Investment and Trade and Competition Policy, Transparency in Government Procurement, and Trade Facilitation could proceed.

“In my view, this would give each Member the right to take a position on modalities that would prevent negotiations from proceeding after the Fifth Session of the Ministerial Conference until that Member is prepared to join in an explicit consensus.”

Kamal read it out in one go, and no official text was immediately available, nor was it clear whether this had been shown to Maran or his aides beforehand. But some time later, the unofficial text, with the last sentence shown as a separate paragraph, was made available by WTO sources to some media at the conference centre.

Going by past GATT practices, this statement, which was made before adoption of the Ministerial Declaration, is as binding as the declaration itself, but given the WTO secretariat’s abilities to find a precedent for anything it promotes at any particular time (vide WTO spokesman Keith Rockwell’s 31 October statement, about the precedents for General Council Chairman Harbinson forwarding his draft texts on his own authority to Doha, that the secretariat research showed “a degree of inconsistency in procedures, but that flexibility was the watchword”), the meaning of Kamal’s clarification could be stretched or changed to denote something else.

Even the Financial Times (15 November), almost the official mouthpiece of the WTO, while reporting the successful launch of the new trade round at Doha and berating India as the “big loser” for having resisted and thus not gaining anything, acknowledged in its editorial  that reaching a deal “required so many compromises and caveats that the final agenda is almost meaningless.”

India was presented in much of the Western media as both the spoiler and villain of the piece but also as if it was the only player. It was blamed by some international secretariat officials for having taken a “negative attitude”, though it has never been clear what a “positive attitude” or “positive agenda” (term that the UN Conference on Trade and Development (UNCTAD) used before and after Seattle) would mean in the face of the US-EU agendas.

Faustian bargain?

While many developing countries saw some benefit or other in some part of the Doha agenda that could be used to justify domestically their joining or supporting the consensus, and several countries of the African, Caribbean and Pacific (ACP) group ‘comforted’ themselves that they were able to take back to their capitals and people the waiver granted by the Ministerial for the EU-ACP agreement as a benefit of agreeing to launch a new round with Singapore issues (which they had vehemently opposed before the Doha meet), several of their delegates were pretty uneasy; many were concerned that their ministers were unprepared for such jobs at such conferences and came and shattered the unity the ambassadors of their countries had painstakingly built up in Geneva.

Brazil’s Foreign Minister Celso Lafer, who participated in the Doha talks and supported the consensus and the launch of the negotiations and work programme, nevertheless added that the documents adopted “do not constitute a good accord” but formed part of the balance in the multilateral trading system.

Nigeria’s Trade Minister Mustafa Bello, meanwhile, (while virtually giving up the Abuja mandate of African Trade Ministers) cautioned that the Africa Group had accepted with reservations the decisions at the conference regarding negotiations on the four Singapore issues, and were concerned about the WTO approach to environmental questions and the agricultural issues affecting the least developed countries (LDCs).

The Africans and the LDCs have agreed to a Faustian bargain of sorts, in the hope that this would bring them genuine technical assistance and help for capacity-building (unfulfilled promises of Marrakesh, and the Singapore and Geneva Ministerials), though it has never been clear what this means - the WTO and the major donors view it as help to implement whatever agreements are reached, while the Africans and LDCs see it very differently.

An ambassador from an Asian country which supported the new round was very cautious and somewhat less euphoric than some of the developed countries about the conclusion of the negotiations or the assumption that the African nations have been won over. He noted that the technical assistance and capacity-building sought by the African countries is very different from what the WTO would or can deliver, and that even exempting them from the obligations in a long transition phase would not work.

Much would depend also on how China, which has just been accepted as a WTO Member (it has only to complete its ratification process to sign and become a Member (30 days after signing)), is going to view and deal with these new issues and the WTO rules on them.

China, in its accession protocol, has given away much more than the WTO rules require (as even several Chinese officials concede) in an effort to be able to use the WTO requirements to ‘reform’ its domestic systems and procedures. But whether, once a Member, it would take the same position on the new issues, remain slightly ‘passive’ as in some other economic negotiations elsewhere, or decide that it should have a different attitude on WTO matters and remits in these new areas, is very much an open issue.

Just as India and Pakistan, despite their major political differences and rivalries, have seen fit to function together at the WTO (though Pakistan’s officials and minister became quiescent in the green room and towards the end), China in its own interest (for example, WTO rules on investment etc may have a reverse effect on foreign funds flowing to China as now) may decide to cooperate with India and others, even as Chinese goods compete with other Asian countries in their own and in American and European markets.

And though it could not resist and yielded in the final stages, Africa was not a minor player either. On the issue of TRIPS and public health at least, it was because of Africa’s refusal to be taken in by US promises of special treatment to LDCs (in the US’ effort to divide African LDCs from other sub-Saharan African countries, and Africa from India and Brazil), and the willingness of Africa to rely more on the technical understanding and help of India and Brazil (than on the WTO’s, UNCTAD’s et al) that the final declaration became possible.

For their part, the countries of Latin America, including many of the important members of the Mercosur (Southern Cone Common Market) bloc, supported the launch of a new round with new issues, in the hope (or assurance) that with these subjects in, the EU may become less protective in agriculture. If the agriculture talks do not see much progress before the next Ministerial, Latin American views may change and their support may be less enthusiastic.

Nor should civil society and its coalitions (North and South) which were relatively muted at Doha and in the North, be underestimated. There is an element of regrouping under way for use of some carefully selected targets for ‘consumer actions’.

On another front, some of the seeming concessions that the USTR Zoellick made at Doha “to broker the deal” (as several American sources described the US position) - by putting the anti-dumping rules on the table for future talks (albeit hedged with many conditions) or over labour standards - have been viewed in several US media reports and by Washington observers as concessions that  may have further complicated the ability of the Bush administration to gain fast-track negotiating authority from Congress.

With investment on the WTO agenda, and rules to protect investors, it would also be difficult to resist genuine concerns and moves to provide rules to safeguard the interests of labour, being another factor input. This is all the more so as some recent studies have shown that international trade in fact contributes to the growing inequality in the North and the South, though this is due to the sub-contracting and outsourcing deals of the transnational corporations made possible by taxation and other benefits to them in the home countries and hence needing different remedies.

And Southern NGOs, which have been largely responsible for muting some of the extreme environment and labour lobbies of the North, might move to use the leverage to support the moves for new rules on labour in new areas.

A remarkable feature of the Doha meeting was that none of the international secretariats played any role either in the real preparatory process or in the outcome, though everyone was scrambling to get a work programme for themselves and trying to get funding from development cooperation ministries of Europe (which, before Doha, used their control over the purse-strings to ensure that international secretariats mobilized the developing countries to support the Singapore issues instead of helping them to resist).

Agriculture and other imponderables

The Cairns Group of agricultural exporters provided support for the new round, including the Singapore issues, as the price for expanding the mandate for the agriculture negotiations beyond that of Art. 20 of the Agreement on Agriculture, with the formulation “reductions of, with a view to phasing out, all forms of export subsidies ...”.

However, this formulation in the Ministerial Declaration was perhaps more than counter-balanced by the qualification that this is “without prejudging the outcome of the negotiations”, and the stress on the “long-term objective” of the AoA “to establish a fair and market-oriented trading system through a programme of fundamental reform ...”. This is presented as merely ‘cosmetic’ and intended to help Chirac in his presidential campaign in France. But such ‘cosmetics’ have a nasty way of making their presence felt.

Another element to undercut Cairns Group hopes is the fact that the US is now as big an agricultural subsidizer and producer as the EC, though the US has provided its support by a different name and under a different basket of sorts, claiming, for example, that its export credits are not subsidies. The EC is unlikely to give up its export subsidies or even reduce them without America acting symmetrically or being forced to act on its own methodology of subsidizing, and this will be tougher to bring about now.

And unlike in the Uruguay Round, when the final agreement on agriculture was basically one that was reached by the US and EC, with some Cairns Group members, but not all, getting some benefits, this time around there are other players with other interests in agriculture.

Also, Cairns Group and Mercosur member Brazil could get nowhere during the Uruguay Round on its demands for market access for its oranges and orange juice concentrates into the US, which, for domestic reasons, would not reduce protection for Florida growers. If anything, Florida grower interests will weigh even more heavily with the Bush administration, which faces a re-election campaign in November 2004. The Doha programme may thus lead to an outcome similar to that in the Uruguay Round. And if it does, will Brazil, a “friend of the round”, again accept the outcome as before?

Furthermore, this time around, apart from its position on the Singapore issues, India and several others (who will not depend on or be influenced by the extra-budgetary driven technical assistance from other international organizations like UNCTAD or other intergovernmental bodies) are better prepared themselves and have several Asian Cairns Group countries on their side; and the agriculture talks themselves may prove very interesting.

One Cairns Group member from Asia referred to this and thought that if there is no tangible progress in the agriculture talks due to the tactics of the EC, the situation could well change by the time the 5th Ministerial Conference convenes in 2003.

In any event, the agriculture talks are tied into the four Singapore issues (and the launching of negotiations on them at the 5th Ministerial, with a built-in requirement for explicit consensus). The isolation of India at this meeting on this issue (as it sought to withhold consensus) may evaporate or India may change its stand. But these are very imponderable and uncertain.

In earlier drafts of the Doha Ministerial Declaration, the subjects of government procurement and trade facilitation were set for launch of negotiations at Doha. In the final draft, however, these two issues have been placed on a par with the investment and competition policy negotiations, that is, for further study and report, and launch at the 5th Ministerial, and subject to the same “explicit consensus” as clarified and announced as an understanding by Chairman Kamal.

With the EC pushing for and insisting on a single undertaking, and with an overall agenda that is much larger than even the agenda of the Uruguay Round, a three-year target for conclusion of the work programme appears to be  one that would need some miracle to achieve. (SUNS5012)

 The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.