Global Trends by Martin Khor

Monday 2 April 2007

WTO talks going round in circles

As the World Trade Organisation misses another key deadline, its Doha negotiations are going round in circles as everyone waits for the United States to make a move.


Another deadline has passed for the World Trade Organisation, which is still struggling find the magic formula to get its Doha Round moving again.

March 31 was the last date for the United States Congress to receive notice that the United States had agreed to a WTO deal, while still catching the present “fast track authority” of US President Bush.

That authority allows Bush to put forward a trade deal which Congress can only adopt or reject overall, but cannot amend.  Without the fast track authority, it is thought that no deal can really survive as Congress can then try to amend many parts of it.

The fast track authority ends on 30 June but since a trade bill needs 90-days notice, in effect 31 March is the deadline for submitting bilateral or multilateral treaties to Congress.

The WTO negotiations are far from finished, so the missed deadline marks yet another troubling turn in its Doha Round that started in 2001.

This week, four of the WTO’s largest members, the United States, the European Union, Brazil and India, which are known as the G4, will meet in Paris to try again to kick-start the talks back into action.

As the 31 March deadline is missed, the only hope is that the US Congress will now renew the President’s fast track authority.

On 28 March, Bush urged Congress to renew his trade authority, saying this is the only way that the WTO talks can be completed. He said no other country will negotiate with the US if the president lacks the fast track authority.

A sense of crisis is enveloping the WTO.  The major stumbling block remains the refusal or inability of the US to commit to a better offer to reduce the maximum limit of its agricultural domestic support.  

Its October 2005 offer, that the allowable or bound level of total trade-distorting support would be reduced to $22.7 billion was not credible since in 2005 the actual level was $19.7 billion, or $3 billion lower.

The failure of the U.S. to provide a lower figure is widely accepted as the main factor causing the suspension of the Doha negotiations in July 2006.  The talks have gradually resumed since February, but reportedly the U.S. has not yet made a fresh offer on domestic support.  So the discussions, both at the G4 and the WTO levels have been going around in circles.

Several diplomats see it as a chicken-and-egg problem.   The U.S. insists that it cannot make a new commitment on agriculture unless it is satisfied that others make prior commitments to open up their agricultural and industrial sectors to produce “real trade flows” (code for drastic cuts in applied tariffs so that new US exports penetrate the countries). 

Other WTO members say they cannot make further commitments until the U.S. proves its sincerity by substantially cutting its allowable total domestic support to well below the actual present level.  Figures of $12-15 billion as a credible new offer have been mentioned.

The US and also WTO officials like Director-General Pascal Lamy have been arguing that the other WTO members, particularly the developing countries, have to make new significant offers now to open their markets, so that the US negotiators can convince Congress to renew the trade authority.

But most developing country officials feel the expiry of the trade authority is an artificial deadline and that they should not make sacrificial lambs of their economies in order to appease the US or its Congress, especially since there is still no sight of the much-anticipated US offer to cut its domestic farm subsidies.

India’s WTO Ambassador, Ujal Singh Bhatia, said the focus cannot be to meet deadlines established by the TPA imperatives, or to meet the demands of any one country because it has to satisfy its Congress.

He added that if there is to be a breakthrough, it would have to be based on the content of the issues, and not because there is a need to meet the requirements of the US deadlines.

Meanwhile, the WTO members that are not part of the G4 have been increasingly frustrated that the “real negotiations” are taking place among only four members, that there is little information on what is happening there, and that meanwhile they are kept waiting, with little opportunity to participate or make decisions.

The developing countries’ biggest fear is that the G4 will somehow strike an agreement, and then all other members will be asked to immediately endorse it (in order to meet US fast-track deadlines) with hardly any room for members to deviate. 

Those who resist will be cajoled to go along for the sake of consensus. Those who persist in differing may have blame heaped on them for attempting to wreck the Round and even the multilateral trading system.

Several developing country diplomats say this expectation is naďve because many of the developing countries, big or medium or small, are no longer willing to be passive, have organized themselves in their respective groupings, and will not just take anything that is presented to them on a platter.

The mood in the WTO is predominantly one of waiting, for some signal of a breakthrough, among the G4 members, or among whichever countries are embarking on new political initiatives.  There is little movement in substance at the WTO.

The chicken and egg problem remains.  The question is who if anyone will move first, and if so will it be enough.  And if there is no breakthrough, each country hopes it can avoid carrying the blame.