Global Trends by Martin Khor

Monday 7 November 2005

Week of decision for the WTO

The success or otherwise of the world trade talks known as the Doha Round could be decided this week, when a last-ditch effort is made to save the World Trade Organisation’s ministerial meeting in Hong Kong from failure.   Several small meetings of selected Ministers will be held in London and Geneva.  But developing countries complain they are being left out of the action.



This is expected to be the crucial week that will determine the success or otherwise of the World Trade Organisation’s Ministerial conference in Hong Kong in mid-December and the trade talks known as the Doha Round.

The WTO secretariat, and a few major countries, will be going all out to make a big push – perhaps the last – to save the Hong Kong meeting from being a failure, or a “non-event.”

On Monday a meeting will be held in London of the Ministers of the “big four” WTO members – US, EU, India and Brazil – which will reportedly focus on a range of key issues, starting with agriculture and moving on to services and industrial goods.

Presumably that meeting may come to some political conclusion on the “level of ambition” that will be possible (at least for these four members) for Hong Kong and maybe the rest of the Round.

On Tuesday the action shifts to Geneva, where the Ministers of the four countries are expected to continue their meeting and also meet with some other Ministers to review the status of the talks. But this will be meaningful only if the four have already made some progress in London.

Senior diplomats from some developing countries are however skeptical of these mini-Ministerial meetings.  In their view, almost all the Ministers coming to Geneva would be from the developed countries.

The developing countries would be under-represented, and will not feel they “own” the decisions that may emerge. Some feel the situation has been manipulated to get a majority of members to go along a certain route, when they could not take part, even as spectators, said one diplomat.

This week’s meetings are seen by many as a last-ditch effort to have Hong Kong produce “high-ambition results.”  

In recent weeks, there have been setbacks in the key issue of agriculture. There is deadlock in talks among the EU, US, Brazil, India and Australia.  Others have produced their own proposals, including the African, Caribbean and Pacific Group and the Group of 33 led by Indonesia.

How to reconcile the different interests on a wide range of issues, in such a short time, has become an improbable task. 

Ordinary members of WTO are also voicing their frustration that the priority has been given to the major agricultural exporting countries that want trade barriers to go down fast.

Most developing countries, however, want to be able to protect their farmers from cheap imports, and fear that they cannot do that if they are required to bring down their tariffs too much.  Their views have however been sidelined so far.

Meanwhile, the negotiations on services are also in trouble.  A broad spectrum of developing countries are increasingly exasperated with the insistence of the Chair of the negotiations, Ambassador Fernando de Mateo of Mexico, to include “benchmarking” or “targets and indicators” as a new negotiating approach, even though they have objected to it so many times.

The Chair’s procedural ruling that his draft Ministerial text on services cannot be changed unless there is a consensus on amending it have earned the ire of many delegations, as well as 60 civil society groups that issued an open letter of complaint last week.

At stake is the freedom of the developing countries to decide their own policies on whether and when to open up various services sub-sectors, such as banking and finance, telecommunications, distribution and the professions. 

“Benchmarking” is an initiative by the rich countries to get the developing countries to compulsorily open up in half or more of their services sectors, thus greatly removing their present freedom of choice.

This week will also see talks intensifying on reduction of tariffs on industrial goods. Disputes remain on what kind of formula to use to cut the tariffs, how to treat those tariffs that are presently not “bound” in the WTO, and the special treatment (if any) for developing countries.

Smaller developing countries are now worried they are being asked to slash their tariffs too sharply, and that many of their local firms won’t survive the flood of cheap imports.

The latest European proposal, demanding such drastic cuts, has raised the temperature.  Several developing countries are expected this week to counter this with their own proposals that are more “development friendly.”

It would be overly optimistic to expect that these thorny and complex problems in agriculture, services and industrial goods will be resolved this week.

At a WTO meeting last Thursday, the Director General Pascal Lamy gave a rather bright view on the state of the negotiations.

Many countries however complained about how the majority of members were being ignored.  Venezuela expressed concern about the process of drafting of the Ministerial text, especially the practice of Chairs of negotiating groups presenting texts on “their own responsibility”, instead of allowing the members to undertake the drafting.

It complained that in one case the Chairman kept putting a proposal in the draft even though it was repeatedly opposed by many delegations.

Cuba, Bolivia and Botswana also raised concerns about participation of developing countries in the talks.

At present, many countries are not invited to take part in small and “informal” meetings on various topics.  Cuba proposed that at least the minutes of such meetings be given to all members.  But this was turned down as not feasible by the Director General.

Thus, on top of the already complex issues to be resolved in agriculture, services and industrial products, is the long-standing issue of democracy in the WTO -- the rights of the developing countries to take part in decisions that have such important consequences for their people.

It remains to be seen whether enough progress is made this week on the “road to Hong Kong”.