Will WTO’s Buenos Aires meet be the mother of all trade summits?
Donald Trump’s rise, a weakened EU after Brexit and now Angela Merkel’s troubles in Germany have dramatically changed the contours of the WTO meeting in Buenos Aires
Is this going to be the mother of all trade ministerial summits? That is a question that will face 164 trade ministers when they congregate in Buenos Aires on 10 December. Already immersed in tracing a missing submarine with 46 crew members, the Argentinian government has another major task now: how to ensure that a ministerial summit for which it has worked assiduously for the past two years doesn’t get drowned in its Atlantic waters due to irreconcilable differences among the participants.
That trade ministerial summits tend to be spasmodic and volatile is well known. There are more failures than successes at these meetings. They take place in pressure-cooker mode and in an opaque setting with most participants excluded from decision-making. The Uruguay Round of GATT (General Agreement on Tariffs and Trade) trade negotiations which began in 1986 were supposed to conclude in Brussels in December 1990. But the Brussels meeting collapsed due to an impasse over agriculture between the trans-Atlantic trade elephants—the US and the European Union (EU).
The Marrakesh Agreement, which was negotiated at per US and EU demands, bestowed “pre-eminent” status on the World Trade Organization (WTO). Last week, the US challenged the WTO’s pre-eminent status for overseeing multilateral trade liberalization. The Trump administration doesn’t think it deserves the status.
The WTO’s third ministerial conference in Seattle in 1999 set a new record for collapses. It took the battle against globalization to the streets amid violent clashes. Seattle finally ended in bedlam because of US and EU insistence on introducing controversial social standards.
In 2001, ministers succeeded in launching a new round of trade negotiations called the Doha Development Agenda (DDA) in Doha, Qatar, against the backdrop of the 9/11 terrorist attacks in the US. Developing and poorest counties were promised that their bread-and-butter issues in global trade will be resolved with a human face.
But the talks collapsed in Cancun, Mexico, in 2003 because the US and the EU, which formed a grand alliance, were not ready to end their egregious farm support programmes. The two elephants, particularly the EU, insisted on four controversial issues—trade and investment, government procurement, trade and competition policy, and trade facilitation for goods. The US focused its energies on trade facilitation.
The DDA negotiations, though, crossed a major hurdle in July 2004, when the elephants along with their cubs promised to address the core issues of the ants (the developing and poorest countries) in agriculture and improvements in special and differential flexibilities. But in 2008, the US finally pulled the plug on settling the differences on agriculture when then-Indian trade minister Kamal Nath demanded simple and effective rules for safeguarding the interests of farmers.
In December 2013, the elephants and their cubs pocketed their prized jewel—a brand new agreement on trade facilitation for goods—without paying the developing and poorest countries for it. Then, they began the process of erasing the remaining Doha issues that the developing countries demanded for immediate resolution, particularly after the last ministerial meeting in Nairobi, in 2015.
Surely, WTO director general Roberto Azevedo and the former US trade envoy in Geneva Michael Punke deserve credit for their sustained role in bringing about a deathly transformation in the Doha negotiations. They worked to ensure that the Doha project is put to bed with little public knowledge in order to clear the ground for negotiating new issues without resolving the DDA issues. Little wonder the director general has become the main spokesman for launching negotiations on new issues such as electronic commerce, investment facilitation, and disciplines for small and medium enterprises without concluding the existing Doha negotiations.
The entry of the Trump administration last year coupled with a weakened EU after Brexit and now the Merkel government’s troubles dramatically changed the contours of the Buenos Aires meeting. For Trump, the WTO is not a fair body because its panels and the appellate body harm American interests. Therefore, the US doesn’t want any negotiated outcomes at Buenos Aires, including a ministerial declaration that sets out the priorities for work after the eleventh ministerial conference in Buenos Aires.
More than the US this time, the EU and a group of countries seem determined to inflict bigger damage in Buenos Aires. But the EU reckons that the US and India are blocking the outcomes while China is remaining silent. Nevertheless, the EU is forcing conditions for resolving what are called mandated issues for the Buenos Aires meeting. One of the mandated issues is the permanent solution for public stockholding programmes for food security which is at the core of the Indian demands. The EU, for example, is insisting that it will only agree to an outcome on the permanent solution for public stockholding programmes for food security if India and China agree to address domestic farm support programmes as per its blue print.
The EU, Brazil, Australia, Pakistan, and Paraguay among others are calling for stringent transparency provisions as well as backbreaking safeguard conditions in the permanent solution. They say these conditions are needed for ensuring that stocks procured for public distribution programmes do not get exported into international markets.
Effectively, they are making it hard for India and other beneficiaries to use the permanent solution. The US wants to ensure that the permanent solution for public stockholding programmes remains the same old wine of the Bali interim decision of December 2013, in a new bottle to be packaged with the Buenos Aires logo. In short, the Narendra Modi government has to decide whether it will forego the interests of its 400 million farmers by not securing a credible permanent solution at Buenos Aires to avoid being labelled the spoilsport.
The EU and its allies are also going to pose a major problem in Buenos Aires by demanding a new work programme for launching the e-commerce negotiations, addressing investment facilitation, and creating new disciplines for small and medium enterprises. The two trans-Atlantic elephants have their priorities set out for Buenos Aires and the question remains: who will become more roguish? That will be known only on 13 December.