Global Trends by Martin Khor
Monday 23 April 2007
Last week the WTO made a strange decision, to “bring home the talks” to its headquarters in Geneva. It is the last chance to save the WTO’s Doha Round.
The World Trade Organisation’s Doha negotiations have been going around in circles for many months.
Time is not on the WTO’s side as in 2008 there will be the American Presidential elections and no one expects the United States to engage in negotiations then.
So the Doha Round must conclude by the end of this year. And that means that the most difficult part -- agreeing on the “modalities” or the formulae and degrees of cuts on tariffs – must be done by the end of July.
Yet no solution is in sight. That could be because the WTO’s Director-General Pascal Lamy had decided to focus on the “Group of 6” to come up with a deal among themselves. Then the rest of the 150 members could be persuaded to go along with it.
This has backfired. The G6 (comprising the U.S., the European Union, India, Brazil, Japan and Australia) could not agree in their Ministerial meetings last July and the talks were suspended altogether at the suggestion of Lamy.
When the talks resumed again three months ago, again the focus was on these six members to get their act together.
At a meeting of their Trade Ministers in New Delhi a fortnight ago, the G6 came up with nothing except another deadline (end of 2007) and a promise to intensify their efforts.
The other countries have reached the end of their confidence that the G6 process will work. Worse, they feel left out and resent being asked to be “rubber stamps”, expected to endorse what the big players may agree to.
Thus, last Friday, a strange decision was taken – that the WTO talks would shift back to the WTO in Geneva.
Yes, the G6 will continue to meet among themselves, and good luck to that. But serious negotiations involving all WTO members will resume this week in Geneva itself.
It is an admittance that the undemocratic practice of a few big players negotiating on behalf of everyone else has failed.
But that does not mean that the multilateral talks, open to all, will succeed either. As one diplomat put it, “If the G6 had problems, the same issues will crop up when the talks involve everyone, with the same logjam.”
The difference is that at least all countries will have the opportunity to know what the problems are, and to take part in the discussions.
At Friday’s WTO meeting, many developing countries warned that the rush to meet the end-of-year deadline should not be at the expense of the content of the negotiations.
Development is supposed to be the goal, and this has to be adhered to and not sacrificed, they stressed.
The need for development to be the test and centre of the talks is however just not on the radar screens of the developed countries.
The US, EU and Japan want to continue to protect their agriculture through high subsidies. But they want to pry open the industrial, services and agricultural markets of the developing countries.
Even within the small G6 grouping, there could be no deal. The US has offered to put a maximum limit of US$23 billion for domestic farm subsidies. But this is higher than the US$19 billion it provided to farmers in 2005, so everyone is asking the US to do better than that.
The US has so far refused, insisting that others improve their offers. It wants food tariffs to be slashed in developing countries. India, Indonesia and another 43 developing countries insist, however, that they need sufficiently high tariffs to protect the jobs of their small farmers.
The US and EU meanwhile also insist on suppressing tariffs of industrial goods to a maximum of 15% in developing countries. Most of these countries say that if that happens, their industries will be unable to compete with cheap imports and will close or will never take off.
It is clear the richer countries want their cake and eat it – to protect their own vulnerable sectors, especially agriculture, while asking the poorer countries to open up everything.
The developing countries are astonished at the audacity of the double standards, and are resisting.
This is at the heart of the WTO’s deadlock. This week, the agriculture talks resume, with a new paper being issued to “challenge” the members to make their intentions clearer.
There are fewer and fewer optimists around who expect any breakthrough anytime soon. For that to happen, the developed countries have to change tack by allowing more access to their markets while demanding less of developing countries.
That is not likely, given the history of the trading system. For a deal to complete soon, developing countries would then have to bow to the demands of the developed countries, and surrender their own development prospects.
That is also not likely, since the developing countries are now speaking up to defend their interests with more clarity than they used to.
The deadlock looks like remaining locked, but anything may still happen in the next few weeks which provide the last chance for the WTO to get a deal done before the year ends.