Limp in October, too late in December

The “World Bank(link to World Bank site)”:http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0„date:12–08-2003~menuPK:34461~pagePK:34392~piPK:34427~theSitePK:4607,00.html#Story4 pro­vides a round-up of press opin­ion on the resumed WTO nego­ti­a­tions next week: bq. Attempts to get coun­tries back to the nego­ti­at­ing table to relaunch WTO trade talks by a Decem­ber 15 dead­line are in trou­ble, and diplo­mats doubt much progress will be made until next year at the ear­li­est The talks will con­tin­ue in a desul­to­ry fash­ion: actu­al nego­ti­a­tions how­ev­er will prob­a­bly not take-off again for anoth­er 15 — 18 months. In the inter­im, expect a lot of wheel-spin­ning, argu­ments over process (read “chair­man­ships of the nego­ti­at­ing groups”) and diplo­mat­ic churn. On this occa­sion, the devel­op­ing coun­tries are not to blame. The prob­lem is trans­par­ent­ly a fail­ure of lead­er­ship in the world’s largest economies. Imme­di­ate­ly after the dis­ap­point­ing Can­cún meet­ing, the USA and EU nego­tia­tors passed-up an oppor­tu­ni­ty to show the sort of imag­i­na­tion or com­mitt­ment that could rea­son­ably be expect­ed from real lead­ers in the world trad­ing sys­tem. There was a peri­od, in ear­ly Octo­ber, when it was clear that the con­se­quences of their actions had start­ed to dawn on the lead­er­ship of the African/­Car­ribbean/Least-Devel­oped group of coun­tries who had pulled the plug at Can­cún. They had giv­en away their best oppor­tu­ni­ty to keep up the pres­sure on the EU over agri­cul­tur­al export sub­si­dies and on the USA over domes­tic sub­si­dies to e.g. Cot­ton farm­ers. The lead­er­ship of the G-21 group of devel­op­ing coun­try agri­cul­tur­al exporters (Brazil, Egypt, Argenti­na, South Africa … although per­haps not India) were obvi­ous­ly shocked by the ear­ly ter­mi­na­tion of the Can­cún meet­ing and were undoubt­ed­ly ready to re-engage on agri­cul­ture. They thought they had been close to a win at Can­cún when the talks went bel­ly-up over invest­ment etc. Despite behind-the-scenes pres­sure from Cairns Group mem­bers includ­ing Aus­tralia, how­ev­er, nei­ther the EU nor the USA was will­ing to ‘take charge’ of the talks after the col­lapse by offer­ing a new way for­ward on key prob­lem areas such as agri­cul­tur­al sub­si­dies or indus­tri­al tar­iffs. Both USTR Zoel­lick and EU Com­mis­sion­er Lamy retired to lick their wounds over the fail­ure of their pre-Can­cún strate­giz­ing and to shield them­selves from the inevitable recrim­i­na­tions. In Octo­ber, the per­for­mance of both of the indus­tri­al­ized majors was, to put it gen­er­ous­ly, a bit limp. Now, in Decem­ber, it’s a bit too late. The imme­di­ate shock of fail­ure at Can­cún has come and gone with­out the sky falling. The incen­tive to repair the faults of mis­un­der­stand­ing, sus­pi­cion and crossed-pur­pose, evap­o­rat­ed. The after­math did not bring any new think­ing; only the same old scep­ti­cism about the WTO and the motives of oth­ers in the last hours of the Min­is­te­r­i­al meet­ing. Now, in Decem­ber, the forth­com­ing Pres­i­den­tial elec­tion makes it impos­si­ble, or even dan­ger­ous, to nego­ti­ate with the USA. Although Bush has shown that there is no peri­od in the US elec­toral cycle that need be free of pro­tec­tion­ist log-rolling, the year or so lead­ing to a Pres­i­den­tial elec­tion is tra­di­tion­al­ly the time when trade-dem­a­gogery is at it’s worst. Nei­ther Europe nor Japan nor Chi­na will press ahead with mul­ti­lat­er­al nego­ti­a­tions under those con­di­tions. From a trade pol­i­cy view­point, Europe is in still worse shape to lead world trade reform. The acces­sion of the East Euro­pean 10 to the Com­mu­ni­ty next year is test­ing eco­nom­ic and con­sti­tu­tion­al “cohe­sion” in the EU and the coher­ence of Union eco­nom­ic pol­i­cy is still more obvi­ous­ly in doubt fol­low­ing the col­lapse, last month, of the fis­cal ‘sta­bil­i­ty pact’ of the Mon­e­tary Union. The pres­sures for fun­da­men­tal eco­nom­ic restruc­tur­ing high­light­ed in André Sapir’s ground­break­ing report are still work­ing their way through the polit­i­cal econ­o­my and still meet­ing resis­tance. The Council’s reluc­tant, incre­men­tal, self-inter­est­ed tin­ker­ing with reform of spend­ing on Agriculture—far from the biggest of the restruc­tur­ing chal­lenges in eco­nom­ic terms—has put paid to any progress on lib­er­al­iza­tion before the end of the cur­rent bud­get cycle in 2006

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