US and allies ‘strike work’ on post-Bali, Doha

Negotiations at the WTO seem to have reached a standstill in the wake of the recent failure to push through the controversial Trade Facilitation Agreement. Who are the “intransigent” parties responsible for this state of affairs?

by Chakravarthi Raghavan

GENEVA: The United States and its close allies in other industrialized countries appear to be bent on continuing their campaign to paralyze all negotiations and talks at the WTO – on the other parts of the Bali package, a post-Bali work programme and the Doha Round – by refusing to work on other issues until the US-EU cherished protocol on the Trade Facilitation Agreement (TFA) is agreed to and delivered.

Work on the protocol for incorporating the TFA into the family of WTO agreements has been blocked by India and a few others, in the absence of equivalent progress on implementing the other parts of the Bali package including on food security and the package for least developed countries (LDCs), which at Bali were adopted on a “best endeavour” basis.

At the WTO General Council in July, India had refused any consensus on taking up and adopting the TFA without comparable progress on the food security issue, the LDC package and other parts of the Bali package.

Since then, at various meetings – BRICS, the G20 trade ministers and other such fora, as also at the WTO since meetings resumed after the summer recess – India has stuck to its position, undeterred by the vehement campaign against it in the mainstream media, echoed by several leading sections of the Indian media too.

Since the WTO resumed in Geneva after the December Bali Ministerial Conference, even as work on trade facilitation (TF) moved ahead – with the WTO Director-General and secretariat pushing at breathless speed work on putting into legal language the Bali decision on TF and on a draft protocol on the TFA – there have been no negotiations to move other parts of the Bali package of decisions forward.

And various statements by the US, both in Geneva and elsewhere, leave little doubt that as far as the US and the EU are concerned, they wanted from the WTO and the Doha Round talks only the TFA, and when that is delivered they have no further interest in the Doha Round, the Bali package or the post-Bali work programme, but would talk them out or use them to end the Doha agenda and bring on new issues.

Services stalemate

The tactic of the US, and the moribund “Quad” (the US, the EU, Canada and Japan), was made clear at the WTO’s Council for Trade in Services (CTS) in the week of 15 September.

Once upon a time the Quad dictated things in the old GATT and then the WTO. However, after the failure of the WTO’s Ministerial Conference at Cancun in 2003, and the partial resurrection of the Doha Round via the July 2004 package agreement at the General Council, evolved by Brazil, India and a few others, it became clear that the old decision-makers could no longer force their will on the trading system. The Quad then gave way to the new grouping of the US, the EU, Brazil, India, China and a few others on an ad hoc basis.

At the CTS, the old Quad met and came to the meeting to act in an orchestrated and coordinated way, with some other industrialized nations and a few developing countries joining them and hanging on to the US’ coattails.

The CTS is negotiating on mandated (to begin from 1995) work (including on drawing up disciplines on emergency safeguards and on subsidies) and further liberalization of services trade in all four modes of delivery, negotiations that were actually launched in 2000 and that in November 2001 were rolled into the Doha work programme and its single undertaking.

On 19 September, at the special session of the CTS where the Doha negotiations on services are held, the US and its friends announced that there would be no further discussions or negotiations by them on these until the TFA and its protocol are signed, sealed and delivered to them.

The US blamed the deadlock surrounding this, the rest of the post-Bali work programme and the rest of the Bali package, on what it called the “intransigence” of one member, India, with some of its friends in blocking adoption of the TFA protocol.

China, India, South Africa and a few others insisted they saw no justification and viewed the services negotiations as being on a separate track from the TF issue, and part of the Doha Round single undertaking.

[The US stance on services talks at the CTS has also to be seen in the context of its drive for separate plurilateral negotiations on a Trade in Services Agreement (TISA). The proposed TISA chapter on financial services, for example, aims for liberalization of trade in financial services with very few exceptions. It would restrict the ability of countries to adopt regulations, prudential or otherwise, that come in the way of US financial service providers repeating on a global scale their activities on the US market that created the 2008 crisis. While everyone else has suffered as a result of the crisis, US financial firms and traders, rescued by the state, are continuing on their merry way, garnering more and higher benefits for themselves.]

Interestingly, until the post-Bali development on TF, it is the US that has been consistently intransigent: it has repeatedly said NO as the sole nation holding up the agriculture modalities text of 2008 (which has a provision to address the issues pertaining to public stockholding programmes for food security). The US has blocked the 2008 modalities text since it will curb US support programmes to its farming sector.

The US has also not agreed to ending its cotton subsidies or to providing duty-free, quota-free market access for LDC products. Most other nations, developed and developing, with some product exceptions, have already provided such access unilaterally. The richest nation in the world alone has been refusing to agree to this trade benefit to the globe’s poorest nations.

Perhaps the major developing nations and their leaders have to blame themselves for this state of affairs.

As early as 2010, it would appear that US President Barack Obama, in his remarks to the Toronto summit of the G20 major economies, made clear that he had no interest in concluding the Doha Round, as US calculations had shown that if the Round were concluded, the additional benefit to the US would be no more than a day’s worth of exports.

At the time of that summit, Obama’s economic honcho who was the sherpa was Michael Froman, the current US Trade Representative, who is carrying on with that policy perspective even now.

The heads of developing nations at Toronto, who presumably had heard Obama,  however  chose  to ignore  it, perhaps thinking that after the 2012 presidential elections, Obama would change.

And developing countries have continued to negotiate with the US in the belief things would change. Some of them may share the reported view of WTO Director-General Roberto  Azevedo that the US has to be kept engaged at the WTO, and that if this involves giving in to the US and making repeated concessions without any reciprocal benefit, it should be done so that the US will remain engaged and possibly change its views in future. (SUNS7880)                                         

Third World Economics, Issue No. 577, 16-30 Sept 2014, pp8-9