WTO PROCESS
Doha Derailed
For an LDC like Nepal , the collapse of Doha Development Round could bury the promises of duty free access to developed countries’ markets
By SANJAYA DHAKAL
In the words of suave master of one-liners, the Indian Commerce Minister and its chief trade interlocutor Kamal Nath, the Doha round is somewhere “in between the intensive care and the crematorium.”
Nearly eight months after the Hong Kong Ministerial, the Doha round – named after the 2001 WTO Ministerial conference held in Qatari capital that decided to pursue development agendas in the global trading regime - could not be saved despite a series of intensive haggling among the trade representatives of six major economies – the US, the EU, Japan, Brazil, India and Australia – in Geneva.
But the news did not come as a bolt from the blue. Most civil society organizations and trade watchers had concluded that the talks were doomed to fail since the major actors were adamant on their positions. The main issue under discussion was opening up the agricultural market of developed countries and industrial market of developing countries – which are of immense trade interest to each other.
This time the developing countries led by India and the EU have blamed the US for the collapse of the talks. “There is no roadmap as of now for trade talks. There are big gaps in mindsets. The US wants access for its subsidized agricultural products in India and other developing countries without cutting its huge farm subsidies,” Kamal Nath stated after the breakdown of talks in Geneva last week. He added that the US had been “virtually isolated in the trade talks, even as the EU supported the position of developing countries led by India and Brazil .” The US gives $19.6 billion to its farmers as subsidies and wants flexibility to increase it by another $3 billion, which is unacceptable, Nath said. Added the European Trade Commissioner Peter Mandelson, “The US was unwilling or unable to show any flexibility on cutting the amount of support it gives to its farmers.” However, the US Trade Representative Susan Schwab argued that the talks failed because “unfortunately, the promise of flexibility on market access coming from G 8 summit did not materialize.”
The Doha round was being looked upon with big hopes by the developing as well as the Least Developed Countries (LDCs). They hoped to use trade as a means of overcoming acute poverty. However, the talks collapsed after the US and EU refused to reduce farm subsidies and to reduce tariff on farm imports, respectively. Reports say that although agriculture comprises of only 10 percent of total international trade, it is the sector that has most distortions. Between them the US and EU are said to subsidize their farmers to the tune of $360 billion a year. Unfortunately, this is the sector where developing countries and LDCs, too, can expect to make headway into the markets of developed countries. That is why the Doha round was so crucial for developing and LDCs.
With the failure of the G 6 Geneva talks to carry forward the Doha Development Agenda, the pace of liberalization has slowed for the time being. Earlier, the WTO members had set the deadline for reaching the agreement on Doha round by this August in order to allow the US president George Bush to endorse the deal on a fast track basis. However, he loses this special authority provided by the US Congress in June 2007. Whether the US Congress would renew the special authority would depend on the result of Congressional elections later this year in the US .
Implications Of Doha Collapse
From the perspective of LDCs like Nepal , the collapse of Doha means that the promises made by developed countries during the December Hong Kong ministerial to provide a number of concessions could disappear.
In Hong Kong , the developed countries had promised to provide duty free and quota free access to 97 percent of products from LDCs. They had also promised to provide technical support in an integrated framework and provide aid for trade incentives. All these hinged upon the success of Doha round negotiations. “With the suspension of Doha round indefinitely, these commitments may not materialize now,” said Navin Dahal, executive director of South Asia Watch on Trade, Economics and Environment (SAWTEE). “Although the WTO process is an evolving trade round and earlier commitments will continue to stand, the pace of liberalization could be delayed by what happened in Geneva last week,” he added.
That apart, the failure of Doha round, which would most certainly delay the next round of liberalization, could spur the rush for entering into bilateral trade deals.
This kind of total or partial failure of WTO process could spur the already happening rush for signing RTAs (regional trading agreements) and BTAs (bilateral trade agreements). Since January 1995 (when WTO formally came into being), 130 Free Trade Arrangements (FTAs) have been notified to the WTO.
“There are two facets to this proliferation: on the one hand, the establishment of the WTO (and its Single Undertaking) has facilitated the expansion of FTAs by setting a set of common trade obligations, particularly disciplines on non-tariff measures; on the other hand, setbacks in advancing the multilateral agenda through Ministerial Conferences have created new outlets for consideration of bilateral and regional options,” write Murray Gibbs and Swarnim Wagle, in a discussion paper titled “The Great Maze: Regional and Bilateral FTAs in Asia.”
The situation has evolved in such a manner that due to the slow-pace in multilateral progress, even traditional multilateralist countries like Japan are entering into FTAs with other countries or regions. Likewise, South Asia has also seen a burst in BTAs like between India and Nepal ; India and Sri Lanka ; Sri Lanka and Pakistan and so on.
However, the spur of BTAs may not be good news to small developing and LDCs since in most cases, such agreements have WTO-plus obligations.
Reasons Bhagirath Lal Das, a prominent expert and former chief of UNCTAD, “In the FTAs between north and south countries, the latter are being asked to give in areas other than trade like in TRIPS, security etc.” Furthermore, WTO-plus obligations like in environment and labor standards, intellectual property rights etc are included in such FTAs, which could be detrimental to the interest of developing nations.
Why Doha Collapsed?
Apart from the visible standoff in issues such as farm subsidies, there may be larger reason for the collapse of Doha round. Many trade watchers believe that the failure in Geneva reflects a larger problem that has started haunting the WTO process. “The Doha Development Round has started suffering from the political realities,” stated Amir Khosru, former Commerce Minister of Bangladesh , who was recently in Kathmandu to take part in a Regional Meeting on “ South Asia and Doha Round Negotiations” organized by South Asia Watch on Trade, Environment and Economics (SAWTEE). “Realities have surfaced now and things have started to grind to halt because for politicians, whether from South Asia or United States , at the end of the day what matters most is another election,” he said.
Therefore, in recent months, the US or European leaders have not been able to meet the demands made by developing countries on slashing domestic farm subsidies as they have to confront their constituencies. Initially, the trade issues got the prominence and everyone started making promises, but now when the time to deliver or as WTO general Secretary Pascal Lamy likes to call “moment of truth” has come, the politicians have developed weak knees leading to the derailment in the pace of liberalization.
