Deadlock on global trade deal needs to be resolved

Business Daily, May 16, 2013

By Pradeep S Mehta

Faced with the conundrum of a deadlocked Doha Round at the World Trade Organization, fragmentation due to multiplying preferential trade agreements and the global financial crises, Pascal Lamy, outgoings WTO director General, established a high level panel of stakeholders to ideate on the future of the international trading system.

It was expectedly controversial because it articulated several subjects that had otherwise been contentious, such as investment and competition. Other than that, it called for revisiting flexibility and reciprocity which is not acceptable to a large number of poor countries, including India. Most importantly, the report suggests better coherence among several global economic governance bodies and to reinforce multilateralism as the way forward.

First, the controversy was about the subjects of investment and competition. This was on the agenda of the Doha Round but was dropped due to opposition by developing countries after a debacle at the WTO’s Cancun ministerial in 2003. The argument was that an investment policy will shrink their policy space and they do not have experience of a competition policy. The counter factual is that nearly all bilateral trade and/or investment agreements have provisions on investment and competition.


Second, the controversial issue of revisiting reciprocity and flexibility, which is being suggested by the rich countries as a way out of the Doha deadlock. It is a reality and therefore one has to accept it. In no way it undermines development concerns and the right to trade, particularly those of the poor countries, including emerging countries like India.

Third, the issue of coherence and convergence. Primarily, members need to find a common ground on negotiations and their sequencing, so that progress is achieved. The international community need to find convergence of the multilateral system with the PTAs, which is causing trade diversion. Countries also need to develop better coherence internally and implement effective flanking policies, such as in health and education, to harness the gains from open trade.

Considering the heterogenic competition of the panel, like all such bodies, there is the usual disclaimer that all members of the panel do not agree with every word in the report.

Furthermore, the report says that it is for the WTO member states to decide, and that the report does not propose a negotiating agenda. One cannot run away from realty; multilateralism is in a crisis and the poor suffer more. In the words of Benjamin Franklin: “We must indeed all hang together, or most assuredly we shall hang together separately.”

(Mehta is secretary-general, CUTS International)

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