A trade initiative on its last legs
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A handful of powerful members seems intent on killing a multilateral trade initiative on African soil. It is an initiative that was launched in 2001, immediately after the 9/11 terror attacks. These powerful members assured the developing and poorest countries of numerous gains from joining the initiative—the Doha Development Agenda (DDA) trade negotiations.
On Friday, the US, the European Union (EU) and Japan made it clear that they are not going to reaffirm continuation of the DDA negotiations at the World Trade Organization’s Nairobi ministerial meeting beginning on 15 December.
Despite the intransigent opposition of the US, the EU and Japan, an overwhelming majority of countries have stated their resolve in written submissions to press ahead with DDA negotiations to iron out the remaining issues. Therefore, “the views of a vast majority of members based on their written submissions cannot be ignored or wished away”, South Africa’s trade envoy Xavier Carim maintained.
Intervening immediately after South Africa at a meeting of trade envoys, US envoy Michael Punke gave several reasons for Washington’s refusal to pursue the Doha negotiations. He cited the missed timelines for concluding the negotiations on 1 January 2005, the failed meetings in 2006 and 2008, and also the missed deadlines over the past two years. He did not elaborate the causes for these repeated failures, nor did he provide any account of his own role.
Surely, a credible account of the underlying causes for the failures as well as his role over the past five years could have convinced the WTO membership to bury the Doha negotiations once and for all. Having covered almost every meeting of Doha negotiations since 2001, it is tempting to provide the reasons for each failure as well as significant breakthroughs.
To start with, the first major health check for the Doha negotiations came at the WTO’s fifth ministerial meeting in Cancun, Mexico, in 2003. A few months before the Cancun meeting, which was billed as a mid-term review of the DDA negotiations, members had concluded TRIPS (Trade-Related Aspects of Intellectual Property Rights) and Public Health Accord. But negotiations broke down at Cancun because of two factors. First, a large number of developing countries refused to join an “explicit” consensus for continuing negotiations on four controversial Singapore issues—investment, competition policy, government procurement and trade facilitation. And second, the US was unwilling to agree to ambitious cuts in farm subsidies, including cotton subsidies, as demanded by the G20 group of developing countries under the leadership of Brazil. Consequently, all the four Singapore issues had to be dropped.
A sigh of relief came in July 2004, when members agreed to a framework agreement. It established the benchmarks for the possible tariff and subsidy reduction commitments in agriculture and tariff cuts in industrial goods. As a compromise, the developing countries agreed to resurrect the discarded trade facilitation chapter in the final package. Certainly, trade facilitation was not a central issue of the DDA. Its core mandate is tackling the global inequities in farm trade and other non-tariff barriers.
The 2005 Hong Kong ministerial declaration went a step further by cementing the goals for a truly developmental outcome. At one point, the negotiations at Hong Kong almost broke down on the issue of stringent disciplines on food aid which the EU had demanded but the US opposed. After Hong Kong, the negotiations broke down in 2006 because of the inability of the US to reduce its farm subsidies in the face of impending elections to Congress.
Consequently, the then WTO director general, Pascal Lamy, suspended the negotiations to help the US overcome domestic political difficulties. Subsequently, the negotiations among the US, the EU, India and Brazil broke down in Potsdam, Germany, in 2007, because of unrealistic demands made in industrial goods.
In 2008, the Doha negotiations again broke down due to the US’s opposition to reducing the trade-distorting farm subsidies to around $14.5 billion and India’s insistence on simple and effective benchmarks for a special safeguard mechanism. Although India finally agreed to a compromise on a special safeguard mechanism, the US was not prepared to change its position on both farm subsidies and a special safeguard mechanism.
Nonetheless, there was a major takeaway from the meeting: the former chair for Doha agriculture negotiations, Crawford Falconer, had issued what are called the revised draft modalities in December 2008, in which he showed the landing zones for concluding the Doha negotiations. Except the US, the rest of the WTO membership had accepted the 2008 modalities.
Punke’s entry into the Doha negotiations in early 2010 suddenly transformed everything. In his first press conference on 10 May 2010, he launched a blistering attack on China, India and Brazil as the culprits for the hurdles in the Doha negotiations. “Are advanced developing economies like India, China and Brazil ready to accept the responsibility and leadership that goes along with their new position in the global economy?” he asked. “If they are ready to accept that responsibility and leadership, we will have a successful outcome to the (Doha) Round.”
The moot issue is whether the three developing countries are living up to the mandates. There is not an iota of evidence to show that they did not adhere to the mandates of 2001, the July 2004 framework agreement and the 2005 Hong Kong ministerial declaration. Clearly, Punke’s preferred strategy is to shift the goalposts of the negotiated Doha mandates through an extreme form of diversionary tactics. The EU, which was a countervailing power to the US in the previous Uruguay Round negotiations, chose to play second fiddle to the US in the Doha negotiations.
The developing countries were unable to stand united in the face of a new form of slash-and-burn strategy that the dominant players adopted with perfection. Consequently, they signed on to the trade facilitation agreement in the hope that the trans-Atlantic partners will deliver on other Doha issues. But today, they feel cheated that the trans-Atlantic trade elephants ran away after pocketing the trade facilitation agreement without resolving the bread-and-butter deve-lopmental trade issues of the Doha Round. Will the Narendra Modi government allow this daylight robbery in the Nairobi meeting?