Trade Negotiations Insights • Volume 7 • Number 10 • December 2008

WTO roundup

by Caitlin Zaino, ICTSD

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Prospects for a late year mini-ministerial disintegrate

The WTO’s struggling Doha Round of trade talks recently took another blow after a mini-ministerial meeting that Director General Pascal Lamy had tentatively planned for 13-15 December was called off. The decision to cancel came after major trading powers signalled uncertainty that a deal could be struck.

Trade ministers initially came together for the year’s first mini-ministerial in late July at the WTO headquarters in Geneva in an attempt to conclude the ailing Round. And though negotiators were close to a breakthrough on agricultural and manufacturing issues—the two main areas that have long blocked a deal—the meeting collapsed following strong disagreement between the US, India, and China over provisions of a “safeguard” mechanism intended to protect developing country farmers from a surge in imports.

Since the failed end-July gathering, Lamy has actively worked to bring ministers back to the negotiating table before the year’s end. But in recent weeks and days, any hope of a meeting has disintegrated as intense discussions have failed to narrow gaps on the most contentious issues.

Play it again: NAMA and Ag continue to plague advancements

New draft texts from the chair’s of agriculture and non-agricultural market access (NAMA) negotiations—the two issues that have thus far prevented the conclusion of Doha –were circulated on 6 December 2008 and were intended to serve as the basis for further talks.

The agricultural text, and accompanying working documents, reflects progress in a number of areas since the last such draft in July. In particular, it incorporates concessions made on the controversial cuts to subsidies and top-level tariffs that negotiators discussed at a ministerial meeting at that time.

A working document on the special safeguard mechanism—a key component for any eventual Doha deal—contains reflections from the chairman on agriculture, Crawford Falconer, on the ways forward. It also illustrates the progress that has been made in the informal consultations Falconer has held with negotiators since September. The most recent text includes new options that might allow exporters and developing country importers to move towards agreement: while the former oppose a far-reaching safeguard mechanism, the latter insist it is a vital component of an eventual Doha deal.

As for industrial goods, or NAMA, the most recent draft text includes specific formulae and figures for determining countries’ future tariff levels. Swiss Ambassador Luzius Wasescha said that convergence on several issues enabled him “to present a text which is almost complete.” But he stressed that the entire text remained subject to negotiation.

Sources have stressed that resolving differences over sectorals would be critical to bettering the odds of striking a deal. Initial reactions by Lamy were that the texts were “generally well received,” and that they served to effectively “consolidate the very real progress that has been made in the last few months.” But recent discussions between the US and China seemed to suggest that both parties are entrenched in their positions.

Waiting on change

In addition to persistent divergences among major actors in the negotiations, domestic politics in the US has also contributed to the failure to strike a final deal. The short time that the Bush administration has left in office complicates the US’s position, even if they could have successfully cut a deal.

“It’s always the case at the end of a negotiation that you have to decide whether there’s enough on the table to justify making a deal even if it’s not perfect, and then trust your ability to sell it afterward,” an analyst reported to Reuters. “The trouble here is the team that’s cutting the deal isn’t going to be around to sell it afterward,” he added.

Failure to conclude a deal adds to economic crisis woes

Adding to the woes of trade ministers, economists are warning that failure to produce a global trade deal could have far-reaching and strongly negative effects, particularly given the ongoing economic crisis. A Doha agreement would have prevented countries from further closing their borders to trade in the midst of the financial turmoil. Historically, protectionist policies typically rise during times of economic instability, serving to exacerbate the downturn.

Whether trade ministers will be able to act collectively to reach a final deal and restore confidence in the global economy now remains to be seen in the year ahead.

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Sources

• “Planned WTO Mini-Ministerial Postponed as Prospects for Doha Deal Diminish,” Bridges Weekly Trade Digest, Volume 12, number 42, 10 December 2008.
• “New NAMA Text Released Amidst Doha Gloom,” Bridges Weekly Trade Digest, Volume 12, number 42, 10 December 2008.
• “Revised Ag Text Reflects Progress, But Final Deal Still Elusive,” Bridges Weekly Trade Digest, Volume 12, number 42, 10 December 2008.
• “Doha trade deal unlikely despite leaders’ call,” Reuters, 11 December 2008.
• “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.