Changes In Global Power End Hopes For Doha

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By David Jessop

News Americas, LONDON, England, Thurs. Aug. 4, 2011: Anyone who has read the recent pronouncement by the usually optimistic Director General of the World Trade Organisation (WTO), Pascal Lamy, cannot help but conclude that there is no longer the global political will to deliver an all-embracing deal on trade liberalisation.

In an apparent recognition of this and the danger that he sees for the WTO and its rules led approach to global trade, Mr Lamy, last week urged trade diplomats to reflect on their inability to complete the Doha round, and to return after their long summer break prepared for what he described as an ‘adult conversation,’ ahead of a planned ministerial meeting on December 15.

“What we are seeing today is the paralysis in the negotiating function of the WTO, whether it is on market access or on the rule-making,” he told the WTO’s Trade Negotiations Committee

Mr. Lamy’s remarks were made in the context of the failure of WTO members to agree even a limited trade deal that would have benefitted the world’s poorest in the Least Developed Countries, (LDCs).

Although discussion on a special and early arrangement for these nations had been underway since May, it became apparent this month that some nations including the United States were only prepared to agree to such a deal if there were trade-offs on a broader range of issues not related to LDCs. This in turn led to other nations also introducing conditions.

Since then, countries from Australia to China have suggested that agreeing a small package of concessions for LDCs the WTO could keep the round alive as a single undertaking, but if such a minimal level of agreement was not possible, then the whole credibility of WTO was in jeopardy.

In private, Geneva based officials and diplomats make clear that while there is no overt debate on the subject, any serious movement towards a full round or probably even the smaller package for LDCs is now highly unlikely. They believe that until a new global economic and political equilibrium emerges, any new understanding on how a trade agreement might be achieved is impossible.

They point out that in the ten years since the Doha negotiations began, the world has not stood still. The 1990’s global economic and political framework within which the round was conceived no longer exists. Nations, they suggest, think differently about what they are prepared to agree to, and have become concerned about the domestic political cost of doing so.

In the time during which Ministers and officials have been negotiating, the same officials note, the global balance of power has changed. This was particularly the case between developed and advanced developing nations. There was no longer a North-South divide. North America, Europe, Japan and others, observing rapid economic growth in nations such as Brazil, China and India, were demanding greater access to what were now the only expanding markets in the world.

The issues had in reality ceased to be about negotiations on tariff lines, but about how to graduate advanced developing nations. What had occurred, they argue, cannot be fixed quickly as a key question needed to be addressed: should the BRICS (Brazil, Russia, India, China and South Africa) go on being treated by industrialised economies in the same way as less significant developing nations?

The consequence was that for long as there was no answer it was politically impossible for an agreement of the kind anticipated in Doha to be reached.

These were, they suggest, matters that the WTO’s membership was slowly adjusting to. No one was yet prepared to try to define what a developing country is.

In Geneva the lack of clarity on what to do next or how best to respond to Pascal Lamy’s cri-de-coeur is now real.

Should the December Ministerial, as some officials suggest, attempt to create a further road map for the completion of the round or might there be more sense in recommending a two year period of reflection during which officials and Governments could work out if the round as presently envisaged has a future?

Achieving an outcome from either approach will be far from easy as it would mean also facing up to the difficult questions of whether there needs to be fundamental change in the negotiating paradigm, whether the aims of the Doha round need changing, and questioning whether the whole concept of a single undertaking needs reengineering.

One consequence of the present stasis is that the focus is shifting back to the general work of the WTO. Internally this is resulting in WTO officials giving consideration to where resources might best be applied in future. Should work be undertaken in upgrading the role of the Technical Barriers to Trade Committee, improving the trade policy review mechanism? Should more attention be paid to bilateral trade agreements? Was there, one official asked, a role for new WTO bodies being developed?

What now seems likely is that the December Ministerial will place a much greater focus on non Doha issues. In the last week there have been discussions in the WTO on what such an agenda might look like. What appears to be emerging is, after ten years of discussion built around a single agreement that the WTO as a body now needs to takes steps to restore its reputation and authority and show that it is about more than the Doha Round.

One probability is a greater focus on aid for trade initiatives and issues relating to LDCs and small and vulnerable economies. There is also the suggestion that much more attention needs to be paid to issues that have risen to prominence while the Doha Round has dominated thinking: matters affecting severely affecting poor and small developing nations such as such as food security, climate change, and currency exchange rates.

As European institutions close for their traditional long summer break and a period of private reflection, the Caribbean might give some thought to whether there is any longer much value in concluding the Doha Round or if it might be better to pursue some more useful alternative in Geneva.

David Jessop is the Director of the Caribbean Council and can be contacted at david.jessop@caribbean-council.org. Previous columns can be found at www.caribbean-council.org

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