Bridges Weekly Trade News Digest • Volume 11 • Number 42 • 5th December 2007
WTO Negotiators Look To 2008, Though Doha Deal Prospects Remain Slim
Until recently, trade officials from many governments were warning that the Doha Round trade talks would die or go into indefinite hibernation without a breakthrough agreement on cutting tariffs and subsidies by the end of the year. The troubled WTO negotiations now look set to remain alive, if not quite kicking, into 2008, despite the unusually early start to the US election campaign.
Nevertheless, it remains far from clear whether Members will be able to bridge differences that have divided them for years in order to strike an accord. Even if they succeed, support in Washington for ratifying a multilateral trade deal is uncertain at best.
New draft framework deals from the chairs of the WTO negotiating committees on agriculture and industrial goods trade are expected "somewhere around the end of January," Director-General Pascal Lamy confirmed to ambassadors at an informal meeting of the Trade Negotiations Committee (TNC) on 30 November. These draft negotiating texts, intended to serve as the basis for final-stage negotiations, had initially been expected by early December.
The WTO chief explained that the delay was positive, a result of progress in the agriculture talks. The more issues that Members can agree on now, the fewer will be left up to the chairs’ conjecture, or for ministers to decide.
Lamy: conclusion in 2008 possible
A deal on ‘modalities’ for agriculture and non-agricultural market access (NAMA) would be possible "about a month" after the texts are released, following a "horizontal process" of cross-sectoral tradeoffs possibly involving trade ministers, Lamy said. These formulae and figures for tariff and subsidy cuts would be the "gateway to concluding the round." "If we agree on modalities early next year, I believe we could be able to conclude the round before 2008," he added.
Lamy cautioned however against focusing on agriculture and NAMA alone, reminding delegations that the ’single undertaking’ - the notion that nothing is agreed until all issues are - would require them to lay the groundwork for agreement in areas such as services and rules as well.
He said that "setting short-term deadlines would not be helpful" to the current text-based negotiations process, which he said would be driven by "substance."
Deadlines, though once thought necessary to keep negotiations from drifting, have had an unhappy history in the Doha Round. Since the multilateral trade talks were launched in late 2001 - with a scheduled end-date of 1 January 2005 - far more deadlines have been missed than kept. In fact, every year since 2004 has concluded with Members setting their sights on finishing the round by the end of the following year (see BRIDGES Weekly, 22 December 2004).
At last week’s meeting of the TNC, the body that oversees the Doha Round negotiations, delegations largely agreed that the negotiation process should be driven by substantive progress rather than a specific timeline. For instance, Uganda stressed that realising the developmental aspects of the Doha agenda was important, while "artificial deadlines were not."
The absence of new deadlines notwithstanding, according to sources the EU delegation said that Members need a breakthrough across the board in February. The delegation stressed that it would not be able to accept potential terms for an agreement on agriculture and industrial goods without knowing the likely outcome in other areas of the talks. The EU was not alone in mentioning other areas of the talks. The US, for example, called for countries to involve senior officials, including capital-based ones, in these other negotiating areas, prompting Jamaica to point out that many in the Africa, Caribbean and Pacific group of countries simply lacked the capacity to do so. India pointed to the importance of services, and to a proposed amendment to WTO intellectual property rules that would require patent applicants to disclose the origin of genetic resources or traditional knowledge used in an invention. These comments appeared to sit uneasily with interventions by Bolivia and Argentina stressing the primacy of agriculture.
Ag progresses, NAMA pace glacial
The agriculture talks have in recent weeks made progress on preventing policies for food aid and export credits from effectively subsidising the exportation of farm products. Negotiations Chair Ambassador Crawford Falconer (New Zealand) last week turned his attention to more controversial issues, notably the ‘flexibilities’ that developing countries will be allowed to use to shield some products from tariff cuts. For instance, he suggested that developing countries could, for food and livelihood security and rural development reasons, be allowed to designate between 12 and 15 percent of their agricultural tariff lines as ’special’. Roughly two thirds of these would have to be cut by a certain minimum percentage, say 15 percent, in order to collectively meet an average reduction target, also subject to negotiation. The remaining 3 or 4 percent of products would be eligible for lower reductions; some, none at all.
Falconer announced earlier this week that he would continue consultations with Members until 7 December, and then resume discussions in early January. There are "quite a lot of things we’re moving on," he told reporters after a meeting at WTO headquarters.
While agriculture negotiators have been able to answer some of the many questions that remained open in the draft agreement text that Falconer circulated to Members in July, the industrial goods talks have made little progress since September.
In part this is because there were many fewer issues left to resolve: the much simpler terms of the NAMA negotiations meant that the draft text Chair Ambassador Don Stephenson (Canada) issued in July more or less revealed how Members stood to be affected. And some, such as Argentina, Brazil, India, China, and South Africa, were not happy with what they saw. They argued that the liberalisation the text would demand of them was disproportionately deeper than the industrial tariff cuts it required of rich countries, and indeed compared to the farm reforms on offer in Falconer’s text.
Lamy acknowledged the demands for ‘balance’ between the agriculture and NAMA negotiations, telling the TNC that "there are also some subjects [in the NAMA talks] where the final decision will depend on the overall package and the balance contained therein." He said that the text-based process was nonetheless "on the right track." The structure of the mathematical formulae used to calculate countries’ future tariff levels was now "more or less stable," even if the numbers to be plugged into these formulae remained undetermined.
Rules leads other issues
The negotiations on WTO rules - primarily on governing fisheries subsidies, the use of anti-dumping duties, and industrial subsidies - received a boost soon after the TNC meeting on 30 November, when committee Chair Ambassador Guillermo Valles Games (Uruguay) circulated a comprehensive draft text for further talks. The text proposes banning a range of payments that boost fisheries capacity, with various exemptions, especially for poor nations. It also attempts to split the differences between the US and a group of countries that want to see tighter rules placed on the use of anti-dumping duties. Valles Games stressed that the text was nothing more than "the first step in a new phase involving further intensive discussions," asking Members for their views on whether it contained elements of what might go into an eventual agreement.
As for the services negotiations, Chair Ambassador Fernando de Mateo is consulting with Members on what might go into a possible text whose purpose would be to guide the negotiations. Lamy said that this could potentially "be produced in a first draft form at the same time as revised texts on agriculture and NAMA modalities."
US political climate raises questions
Even a modalities breakthrough would not necessarily clear the path for a Doha Round agreement. US Ambassador Peter Allgeier told the TNC last week that the immediate priority for WTO Members is to establish modalities on agriculture and NAMA in order to enable them to start scheduling liberalisation commitments. Negotiators expect that this process, which would involve countries haggling over which products to shelter from tariff cuts, would take nine months at the very least.
Furthermore, sealing a Doha Round agreement would require the US presidential administration to secure a ‘trade promotion authority’ mandate allowing it to put trade deals to Congress for a yes-or-no vote without the possibility of amendments. US trading partners want this in order to be sure that lawmakers in Washington will not pick apart already-finalised agreements. The beleaguered George W. Bush administration’s chances of winning TPA from an unfriendly Democratic Congress are slim, though some believe a Doha-specific mandate may be possible if a modalities deal is reached early enough in the year.
The political climate surrounding the WTO negotiations may not become any more friendly even after the elections in November. Hillary Clinton told the Financial Times this week that if elected US president, she would take "a hard look" at the Doha Round before deciding whether to pursue it. "I am concerned by provisions that would prevent countries from enforcing stronger environmental and safety rules under the WTO," she said. "I think we have to take a hard look at this [the Doha Round] and do it in the right way."
The New York senator and frontrunner for the Democratic presidential nomination has called for a "time out" on all trade deals as well as a review of past accords, including the North American Free Trade Agreement that her husband Bill Clinton pushed through as president in 1993. "I want to have a more comprehensive and thoughtful trade policy for the 21st century," she told the Financial Times. "There is nothing protectionist about this. It is a responsible course. The alternative is simply to pick up where President Bush left off and that is not an option."
Although leading Republican presidential candidates have not been openly critical of trade agreements, supporters of that party are also growing increasingly sceptical of the value of open trade. According to polling data published in the Wall Street Journal in October, six out of ten Republicans believed that free trade had been bad for the US, and said they would support a Republican candidate who favoured tougher limits on foreign imports.
ICTSD reporting; "Clinton doubts benefits of Doha revival," FINANCIAL TIMES, 3 December 2007; Republicans Grow Skeptical On Free Trade," WALL STREET JOURNAL, 4 October 2007.