Doha Round negotiations—- trouble or travail?

Don’t pan­ic. The “Finan­cial Times”: has joined a cho­rus of con­cern that a deal on world trade reform now looks ‘remote’. It’s true that trade nego­ti­a­tions are over only when they’re over, but Doha will con­clude with broad­ly based,significant agree­ment in the next 12 to 18 months. That’s my bet, and I think you’ll agree if you look close­ly at the form guide I am more opti­mistic about the prospects than Alan Beat­tie who wrote the FT com­men­tary or, appar­ent­ly, the Direc­tor-Gen­er­al of the WTO who has been giv­ing the most “explic­it warnings”: of dis­as­ter he can. I have only the same infor­ma­tion as them, but a dif­fer­ent analy­sis based on three fac­tors # The impact on dis­cred­it­ed brinkman­ship tac­tics of the ‘drop dead’ date of July 2007 is pos­i­tive, not a rea­son for’alarm’
# The tra­vail in this round is no worse than those of ear­li­er nego­ti­a­tions and is due to a high­ly desir­able devel­op­ment in glob­al gov­er­nance
# The pro­posed changes in trade bar­ri­ers are more sub­stan­tial than in the last (Uruguay) round of nego­ti­a­tions and need deter­mined polit­i­cal lead­er­ship For tac­ti­cal rea­sons, economies in trade negotiations—especially the largest of them—are reluc­tant to make bank­able offers until they are cer­tain that the “brink” is near. Their offers in mul­ti­lat­er­al nego­ti­a­tions dri­ve the pace so they want to be sure that the rush to completion—it is always a rush—will see their offers giv­en full weight or bet­ter and that this eval­u­a­tion will be sus­tained through the final deal mak­ing stage. They don’t want their hand, once played, to lose its impact. There’s noth­ing new in this. Com­men­ta­tors like Alan Beat­tie argue that this tac­ti­cal delay, appear­ing almost to be a lack of inter­est in reach­ing agree­ment, under­mines the cred­i­bil­i­ty of the process. Their warn­ings, too, are by now part of the process that brings the brink in trade nego­ti­a­tions clos­er. But ‘brinkmanship’—the pure­ly tac­ti­cal delay of decisions—has lost its val­ue, in my view. I explain why in a book on the first 10 years of WTO that will be pub­lished by WTO and Cam­bridge Uni­ver­si­ty Press lat­er this year. Briefly, I believe the tac­tic no longer pres­sur­izes the small­er economies in WTO as it once did because the WTO’s sin­gle under­tak­ing has awok­en the major­i­ty of the mem­ber­ship to the dan­gers of agree­ing to any pack­age of deals in which there are ele­ments in whose eco­nom­ic val­ue and pri­or­i­ty they do not share. The col­lapse of the con­sen­sus at the Seat­tle and Canc√∫n min­is­te­r­i­al meet­ings demon­strat­ed the use­less­ness of brinkman­ship. Alan Beat­tie argues that the major economies have not learned this les­son: bq. But if they thought they had weaned them­selves off the brinkman­ship of tra­di­tion­al nego­ti­a­tions, they were wrong. Almost all parts of the negotiations—agriculture, indus­tri­al goods and services—are well behind sched­ule and some have reached impasse. Only talks on the rel­a­tive­ly minor area of “trade facil­i­ta­tion” eas­ing the way for trade through stream­lin­ing cus­toms and bor­der pro­ce­dures and help­ing devel­op­ing coun­tries build up the infra­struc­ture to trade seem to be mak­ing much progress (“FT”:,i_rssPage=6e6e833c-cbff-11d7-81c6-0820abe49a01.html) Per­haps I have greater faith in the polit­i­cal anten­nae of Ambas­sador Port­man and Mr Man­del­son, but I don’t agree that this is _anything like an inevitable con­clu­sion from obser­va­tion of the cur­rent state of nego­ti­a­tions. Nor do I think that the les­son of Canc√∫n has been lost on Cel­so Amor­in, Brazil’s For­eign Min­is­ter and leader of the G‑20, or on his Indi­an col­league Arun Jait­ley. I am con­fi­dent, too, that Supachai’s suc­ces­sor as Direc­tor Gen­er­al of WTO, Pas­cal Lamy, knows bet­ter than anyone—from per­son­al experience—the hol­low­ness of a pure brinkman­ship tac­tic and that he will be active and effec­tive in dis­suad­ing any of the largest economies from adopt­ing it. Rather than blame dis­cred­it­ed tac­tics for the appar­ent slow progress in nego­ti­a­tions, I’d like to draw your atten­tion to four fac­tors that deserve more weight in any assess­ment and that, on the whole, lead to a more opti­mistic out­look for the Doha round:

*1. The next reforms are dif­fi­cult*: The Doha nego­ti­a­tions on agri­cul­ture, ser­vices, ‘rules’ and even ‘devel­op­ment’ are tak­ing place inside a frame­work built dur­ing the ground-break­ing Uruguay Round. Set­ting up the frame­work was hard—taking eight years of slow progress and sev­er­al reversals—and the frame was not filled-in by the end of the nego­ti­a­tions in 1994. That’s what is *hap­pen­ing now*. Mak­ing sub­stan­tial cuts to the agri­cul­tur­al tar­iffs cre­at­ed by the ‘tar­if­fi­ca­tion’ process agreed in 1994; elim­i­nat­ing the export sub­si­dies that were capped in 1994; open­ing ser­vices mar­kets using the con­cepts and ‘modes’ estab­lished by the 1994 GATS agree­ment; mak­ing the rules on e.g. anti-dump­ing that were _unified_ only in 1994 work bet­ter; giv­ing some _operational_ mean­ing to ‘dif­fer­en­ti­a­tion’ in the trade rules that began to affect most devel­op­ing coun­tries _for the first time_ in 1995; all of these are *big steps* that need top lev­el polit­i­cal engage­ment of the sort that the *G8 Plus* “said”: at Gle­nea­gles exists. Yes, _talk is cheap_, but I am not quite cyn­i­cal enough to mere­ly dis­miss their dec­la­ra­tion and assume that brinkman­ship will triumph.

*2. Glob­al gov­er­nance on trade has changed*: Hooray! There’s lit­tle point in “regretting”: the end of benign US/UK hege­mo­ny of the trad­ing sys­tem under GATT. The emer­gent _giant_ economies of Brazil, Chi­na and India are the ben­e­fi­cia­ries of glob­al­iza­tion; each began a process of sig­nif­i­cant eco­nom­ic lib­er­al­iza­tion in the late 1980s and ear­ly 1990s that has pro­pelled them—with Chi­na in the vanguard—to a share of glob­al wealth and pro­duc­tion that *demands* that they take greater respon­si­bil­i­ty for the gov­er­nance of the trad­ing sys­tem. But none can step up to a lead­er­ship role eas­i­ly; each car­ries its own *bag­gage* includ­ing a domes­tic polit­i­cal econ­o­my that is dif­fi­cult to man­age and region­al or glob­al fric­tions that are dif­fi­cult to deal with. It takes time to make the new lead­er­ship struc­tures of the trad­ing sys­tem work. But there is every rea­son to believe that we are see­ing that *more secure* struc­ture now put in place through the medi­um of nego­ti­a­tions in the Doha round. The pre­vi­ous eight mul­ti­lat­er­al rounds of trade nego­ti­a­tion came down to a deal _across the Atlantic_; for exam­ple the infa­mous “Blair House”: accord between the USA and EC in 1992 let to the even­tu­al con­clu­sion of the Uruguay Round. There is no doubt, now, that agree­ment between the USA and EC remains nec­es­sary. But if the fail­ure of their ‘joint’ approach to agri­cul­tur­al reform at Can­cún proved any­thing it was that a trans-Atlantic accord is now *no longer suf­fi­cient*. _Point final_, Pas­cal Lamy might say. “ ‘Watch this space’ ”:, say Brazil, Chi­na, India etc. Mak­ing a deal among the emerg­ing mul­ti-cen­tered lead­er­ship takes time.

|*Economy*|*GNI PPP basis 2003*|
| |$US _billions_|
|*Unit­ed States* |10,914|
|*Chi­na* |6,435|
|Japan |3,641|
|*India* |3,068|
|Ger­many |2,267|
|France |1,640|
|Unit­ed King­dom |1,639|
|Italy |1,543|
|*Brazil* |1,322|
|Russ­ian Fed­er­a­tion |1,279|
|Cana­da |941|
|Mex­i­co |915|
|Spain |905|
|Korea, Rep|859|
|Indone­sia |689|
|Aus­tralia |563| Source: World Devel­op­ment Report, 2005

*3. We’re not out of time, yet*: I agree, of course, with Alan Beat­tie that the July 2007 expiry of the U.S. Pres­i­den­t’s nego­ti­at­ing man­date from Con­gress is a _drop-dead_ date for the end of nego­ti­a­tions. Like his infor­mants, I doubt that Con­gress would imme­di­ate­ly renew or extend the man­date. But, where­as the FT com­men­tary describes this as a cause for ‘alarm’, I think there is rea­son to be glad that this lev­el of pres­sure is oper­at­ing on the new, *broad­er lead­er­ship* of the trad­ing sys­tem. It gives an objec­tive focus to the timetable for polit­i­cal lead­ers, of a kind they can all under­stand. In fact—as they’ll be advised by their negotiators—the July 2007 date implies agree­ment on the details of reform before the *first quar­ter of 2007* so there is time to have the nation­al sched­ules of com­mit­ments sub­mit­ted to the required ver­i­fi­ca­tion pro­ce­dures before the Pres­i­dent has to send the details of his agree­ment to the U.S. Con­gress; at most 90 days after he informs them that the deal has been done. Can the deal be done before (say) March 2007? Absolute­ly. I think that on the _gristly questions_ of agri­cul­tur­al mar­ket access we’re *get­ting clos­er* than many com­men­ta­tors allow.

*4. Agree­ments don’t hap­pen under TV lights*: Or in time for the 9 PM news, for that mat­ter. Nor­mal­ly, they emerge from sub­ter­ranean sources, at least as far as the pub­lic is con­cerned. In a big, com­plex are­na such as a WTO trade nego­ti­a­tion, there are many streams of exchange between nego­tia­tors that run under the sur­face. They are not vis­i­ble and not ‘bankable’—so Com­mit­tee Chairs like Tim Gross­er (Agri­cul­ture) don’t dis­cuss them in a “Sta­tus Report”: But, when run­ning, they com­prise a big­ger flow than the trick­le seen on the sur­face. I sus­pect sev­er­al such streams are run­ning right now. I believe that the past two weeks has seen “sig­nif­i­cant progress”: on the issue that most ana­lysts con­sid­er is at the heart of the whole round—agricultural mar­ket access. I do not claim that I can see agree­ment in sight: I put no store in that hap­pen­ing this side of the Hong Kong min­is­te­r­i­al meet­ing. But it would be a mis­take to miss the sig­nif­i­cance of the *move­ment by the G‑20 and Aus­tralia* toward some form of stepped or smoothed lin­ear cuts in each of the pro­posed tar­iff bands or to ignore the _hard won_ progress in the res­o­lu­tion of tech­ni­cal dis­putes on the ad-val­orem equiv­a­lents of obscure spe­cif­ic rates of duty in agri­cul­tur­al mar­kets. I believe that there has been progress on the vexed issue of food aid and dif­fer­ences over when “aid” is cir­cum­ven­tion of export sub­sidy dis­ci­plines. These hints are not about the _end_ of the debate; but we have come a long way from the begin­ning of nego­ti­a­tions and are head­ed, I think, *in the direc­tion of agreement*.

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