News and Analysis • Volume 13 • Number 2 • June 2009

1 - India, US Agree to Work on Doha Deal

With signs of new engagement by India and the US, hopes have revived for serious political momentum to push ahead with global trade negotiations, stalled since last July.

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Atmospherics in Geneva veered from gloom to cautious optimism when the new chief trade negotiators of India and United States joined the call of the Cairns Group to restart Doha Round negotiations between senior officials before the WTO’s August break. In a communiqué issued after a three-day meeting in Bali in early June, trade ministers of the 19-strong agriculture-exporting countries’ grouping stated: “Senior negotiators must reconvene in Geneva as soon as possible to map out a clear path towards the conclusion of the negotiations, and to start down that path before the European summer break. USTR Kirk and Commerce Minister Sharma of India fully endorsed these views.” See page 6 for more on the Bali communiqué.

Although the ambiguous wording has left many wondering how ‘mapping out a clear path towards the conclusion of the negotiations’ will translate into practice, trade delegates have generally welcomed the signs of re-engagement. It had been widely acknowledged that substantive progress in Geneva (or elsewhere) would not occur until the new administrations in New Delhi and Washington had given some indications of where they stand vis-à-vis the negotiations. The latest attempt to reach a deal collapsed in July 2008 largely due to disagreement between the two countries on the extent of safeguard duties that developing countries would be allowed impose to ward off surges in farm imports (Bridges Year 12 No.4 page 1).

No ‘Insurmountable’ Obstacles; Lamy Eyes 2010 Conclusion

US Trade Representative and India’s Commerce Minister Anand Sharma held bilateral talks on the sidelines of the Cairns Group meeting to explore a way forward for the Doha Round. Describing the dialogue as ‘very positive’, Minister Sharma told a press conference that India was “not looking at the difficulties, we are looking at the possibilities, to do our best and take this process to its culmination. There are no obstacles which are insurmountable.”

Mr Kirk did not enter into the specifics of the discussions, but confirmed that the United States would outline a ‘new basis’ for completing the round by August. Alluding to a proposed change in approach he said: “Doing nothing, rejecting pursuing an alternative to what we have been doing for the past three rounds is in fact a decision that leads to a failure of Doha, and that is not an acceptable conclusion.” Many developing countries have expressed serious concerns over this emphasis on pursuing an ‘alternative’ negotiating track (see page 2).

During his visit to the WTO in May, Mr Kirk had reaffirmed the Obama administration’s continued commitment to reaching a conclusion in the long-running negotiations, which it viewed as “a critical component of what the president believes should be an overall worldwide response to the current economic crisis.” Nevertheless, he emphasised that without evidence of new export opportunities for American businesses, the administration would not be able to convince a trade-sceptical Congress to endorse the deal (see related article on page 23).

Ambassador Kirk and Minister Sharma were to meet later this month in Washington to follow up on their discussions in Bali. Meanwhile, WTO Director-General Pascal Lamy likened the flexibility shown by the two negotiators to pushing the ‘reset’ button on the Doha Round. “What I got from here is that … yes, we should conclude this by 2010,” he told reporters.

New Approach to Doha Is Controversial

While visiting Geneva in May, Mr Kirk noted there was a need to consider changes in the negotiating process. “Whatever vehicle we’ve all been loaded on to get to Doha hasn’t gotten us there,” he said. The United States has repeatedly complained that it is easy to for other Members to see what they stand to gain from its concessions, but that the US cannot determine the extent of future benefits due to the uncertainty surrounding the way in which large developing economies will implement the exceptions and flexibilities in the negotiating texts.

As a possible way of dealing with this problem, Canada and the US have informally suggested bypassing the negotiations on ‘modalities’ - the broad outlines for tariff and subsidy cuts required from developed and developing countries - and moving directly into scheduling specific tariff commitments.

The idea is controversial. Most developing countries are wary of changing tactics this late in the game. Skipping the modalities phase would be ‘completely outside the mandate’ of the Doha Round, one developing country delegate said, and could risk erasing the delicate balance that has been painstakingly built up in negotiations thus far.

Speaking to Washington Trade Daily after the Cairns Group meeting, Indonesia’s trade minister Mari Pangestu said that the follow-up to Bali must be “to identify the problems and gaps to finalise modalities before going to the scheduling process.” South Africa’s new trade minister Rob Davies has also stressed that Members need to focus on the framework agreement: “I think we have reached an impasse in the process. To break the logjam we need to go back and address the fundamental issue of an imbalance in the underlying deal. It’s a complicated deal that has made huge concessions to developed country needs.”

Attempting to bridge the gap, Pascal Lamy suggested to the General Council in May that further work on modalities and a scheduling exercise could run on ‘two simultaneous tracks’. Although the modalities approach was ‘sacrosanct’ for some Members, he noted that certain other countries believed it would lend greater clarity to the process if governments could indicate what products would be accorded more flexible treatment in the scheduling stage, whether on sensitive and special farm products, on duty- and quota-free market access for least-developed countries, or on the use of flexibilities regarding market access for non-agricultural products.

“This is, in my view, doable provided that we see serious political engagement on the part of Members. In other words, provided [that] ministers give the necessary instructions for substantive work to happen on these two tracks,” Mr Lamy concluded.

It was not clear at the time of writing whether Mr Kirk and Minister Sharma intended to base their discussions in Washington on the dual-track proposal.

Date Set for ‘Different’ WTO Ministerial

At long last, the General Council agreed in May to hold the first regular WTO Ministerial Conference in four years from 30 November to 2 December in Geneva. The ‘scaled-down, no-frills, low-key’ event will allow Members to focus on an “overall review of the WTO, and one that is not inextricably tied to any particular ongoing negotiations,” General Council chair Mario Matus said. Discussions under the general theme of The WTO, the Multilateral Trading System and the Current Global Economic Environment will be held in open plenary sessions rather than in the small informal negotiating groups that hogged the limelight - and excluded many - at recent ministerials. The last three such meetings focused almost exclusively on advancing the Doha Round (see page 4 for more details on the Geneva ministerial).

Calls for an event such the one now planned for December have been multiplying in recent months. Many have argued that regular ministerial involvement is necessary to reinforce the WTO’s institutional legitimacy and to ensure good governance practices. A number of countries also wish to discuss a broader agenda, including, for instance, the risks to the multilateral trading system arising from the proliferation of preferential trading schemes, particularly if Doha fails, or the WTO’s response to global challenges, such as climate change.