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Doha Round: Hopes even after missing a deadline?
| Progress depends principally on the U.S. and the EU |
For developing countries multilateral trade as embodied by the WTO is the way forward. There is therefore plenty at stake in speeding up the Doha round.
The Hong Kong ministerial promised much but its main achievement has been to keep the Doha round of multilateral negotiations alive. All 149 countries that attended signed the draft declaration. A few months before the ministerial there were great expectations: it was hoped that as much as two-thirds of the Doha agenda would be wrapped up at Hong Kong leaving the balance to be completed by 2006. In the event those expectations were belied.
From hindsight they appear to have been a wish list from trade officials intent on breaking the logjam and pushing the trade talks closer to fruition.
Unfinished agenda
The Hong Kong meet did deliver on two specific items of relevance to India and other developing countries. The agreement to phase out subsidies on agricultural exports by 2013 was claimed to be a major concession wrested from the developed countries. The other concession was in NAMA. The principle of "less than full reciprocity'' was accepted: developing countries would not be required to lower their tariffs to the same extent as the developed countries. However, as in agriculture there has been no agreement on the exact mechanics for such reduction. Besides, there was very little progress on services and, even in agriculture, the vexatious question of domestic support remains.
To resolve all these — mainly the unfinished Hong Kong deliberations — it was agreed to convene another high-level meeting of trade ministers by April 2006. If everything had gone according to plan that would have put a political seal on the modalities in agriculture and NAMA that were expected to be finalised through some intense negotiations by trade experts at Geneva and a few other places. Negotiations did take place but once again breakthroughs were elusive leaving no options to the WTO but to call off the proposed ministerial in April.
No new deadline
No new deadline has been set. In March, WTO Secretary General Pascal Lamy had said that missing the April deadline would be a "huge collective mistake.'' He has now urged members to engage in non-stop negotiations on agriculture and NAMA in the coming weeks. He has also said that waiting until July for the modalities in the two areas "would guarantee failure.''
Egging on trade negotiations is one of the principal tasks of the WTO, especially its Secretary General. Raising expectations, as was done before Hong Kong, is one of the accepted ploys to energise negotiators. Predicting dire consequences in case the original promises are not met even partially is the other part of the strategy. Both have been in evidence recently.
Intractable farm issue
Not that in the instant case they are not warranted. The Doha round was launched in November 2001. Modalities on agriculture were expected to be finalised by December 2003. That remains the most intractable item in the agenda till date and the one that has to be tackled before anything else.
It is going to take plenty more besides cajoling and threats to move forward substantially. Many observers feel that very little has been achieved in the four months since Honk Kong. Differences between the U.S. and the European Union in agriculture, always a potent disruptive factor, seem to have increased. As for developing countries, many share India's view that despite the nomenclature very few development issues have been discussed so far.
One factor that underlined the urgency was that U.S. President George Bush's "fast track'' power to submit a trade deal expires in mid-2007. As long as the power vests with the President, Congress cannot carry out amendments to the deal. Any delay in the agreement could therefore see the rampant protectionist sentiment in the U.S. resurfacing to the detriment of multilateral trade.
Already in the U.S. the extent of domestic support to agriculture has been opaque and largely kept out of the current discussions. Even with lower tariffs foreign agricultural products will not be able to compete in the U.S. domestic market.
Much of the objection to agricultural tariff reductions in Europe has come from the fact that unlike in the U.S. where farming is an industry, it is a way of life there. Cheaper imported products will threaten the socio -economic fabric. Such arguments heard in France and a few other countries find resonance in countries such as Japan too. This may sound illogical but has widespread support across the political spectrum in many countries of the EU.
In India, of course, agricultural issues have more to do with sustenance and food security. There are certain issues that are simply non -negotiable. Opening up trade in a way that does not disrupt the agrarian economy is one of them.
To the extent that further progress depends principally on the U.S. and the EU the outlook does not seem bright. For developing countries such as India multilateral trade as being promoted under the WTO banner is perhaps the only option.
If the Doha round does not succeed the alternative will be a further mushrooming of bilateral trade agreements. Recent experience has shown that such arrangements do not always work to the advantage of both countries. Those who remain optimistic over the Doha round point out that missing deadlines by themselves need not have catastrophic consequences. The expiry of U.S. fast track authority is still 15 months away.
Also, the ongoing negotiations in agriculture are particularly challenging because unlike in NAMA, no agreements have been reached before.
C. R. L. NARASIMHAN
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