Bridges Weekly Trade News Digest • Volume 12 • Number 42 • 10th December 2008
Planned WTO Mini-Ministerial Postponed As Prospects for Doha Deal Diminish
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In another blow to the WTO’s struggling Doha Round of trade talks, a mini-ministerial meeting that Director-General Pascal Lamy had tentatively planned for 13-15 December was postponed this week as major trading powers signalled they were unsure whether a deal could be struck.
The high-level gathering had originally been scheduled for this weekend, following recent calls from 20 economic powers for a deal to end the faltering Doha round of trade talks before the end of the year (see Bridges Weekly, 19 November 2008, http://ictsd.net/i/news/bridgesweekly/34105/). But negotiators have increasingly questioned the feasibility of that deadline, as intensive discussions over the past few weeks have failed to narrow gaps on the most controversial issues.
In a letter to delegations dated 8 December, Lamy left open the possibility that a ministerial could be called from 17 to 19 December, the last possible dates before the WTO breaks for the year. The draft negotiating texts on market-opening in the agricultural and industrial sectors that were released on Saturday had been “generally well received,” Lamy said, and they had successfully “consolidate[d] the very real progress that has been made in the last few months” (see related stories, this issue).
But the Director-General struck a note of caution as well. “It is clear that we are closer to modalities today than last July,” Lamy wrote. “At the same time the risks if we do not get there are higher today than they were last July. The potential cost of a second failure in less than six months and a deteriorating economic situation call for prudence; for a step by step approach in trying to minimise the risks while enhancing the chances of success.”
But many officials have become increasingly gloomy as prospects for a deal seemed to diminish over the past week.
“There are still serious differences,” Indian Commerce Secretary GK Pillai told India’s Financial Express on Monday. “It is not sure if these texts can lead to a ministerial meeting,” he said.
But sources indicated that recent consultations led by Lamy, as well as committee chairs Crawford Falconer (agriculture) and Luzius Wasescha (industrial goods), have produced some forward movement on contentious issues.
“We’ve seen some progress in Geneva in areas that really hung us up in July. That’s really, really positive,” US Trade Representative Susan Schwab said on Thursday, Reuters reported. But “there still are multiple outstanding issues,” she added.
Sources indicated that Lamy was set to hold a teleconference on Wednesday with ministers from China, India and the US to discuss the three issues he has identified as critical: sector-specific liberalisation initiatives in the industrial goods talks, and cotton subsidies and the special safeguard mechanism in agricultural discussions.
Of these, several negotiators stressed to Bridges that resolving differences over sectorals would be critical to bettering the odds of striking a deal. Recent discussions between the US and China seemed to suggest that both parties are entrenched in their positions (see related article, this issue).
Trade sources acknowledged that progress had been made on the SSM since September in Falconer’s informal consultations, and suggested that the recent Democratic victories in the US congressional and presidential elections might mean that the US may be more easily able to compromise on some agricultural issues.
But domestic politics in the US could hinder USTR Schwab’s position in the talks. On Monday, 22 US Senators sent a letter to US President Bush warning him of their “serious concern about the direction of global agricultural trade negotiations in Geneva.”
“We believe that the calendar should not drive the negotiations,” the bipartisan group of lawmakers wrote. “An agreement that lacks the necessary balance will fail to win support in the Congress.”
The letter, which has been widely circulated, could seriously undermine Schwab’s credibility in the negotiations.
But economists warn that failing to produce a global trade deal could have far-reaching and strongly negative effects, especially given the ongoing economic crisis. A Doha agreement would prevent countries from further closing their borders to trade in the midst of the financial turmoil. Protectionist tendencies have arisen at times of economic instability in the past, only to exacerbate the downturn.
Australian trade minister Simon Crean echoed that sentiment on Monday: “We need to act now, hold a ministerial meeting, and reach a framework deal – because a breakthrough on Doha would make a major contribution to restoring confidence in a global economy battered by considerable uncertainty,” he said in a statement.
Whether negotiators can bridge their remaining differences remains to be seen, but their window of opportunity is narrowing quickly.
ICTSD reporting. “Schwab sees progress in WTO talks, hurdles remain,” REUTERS, 4 December 2008; “Differences in revised WTO texts will lead to Doha Round failure,” THE FINANCIAL EXPRESS, 8 December 2008.
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Developed countries are deliberately delaying the Doha round as developing countries for the first time achieved ’somethings’ after hectic bargain there. Time has come when judicious way of decision making process should be adopted at wto ministerial meeting.
vidyanand acharya