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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