By Pradeep S Mehta
At a recent conference on WTO and Doha Round at Wilton Park in UK, many were taken aback by the candid comments of Gareth Thomas, the UK minister of state for international development, expressing frustration over the lack of movement by the US on the WTO agenda. He was only reflecting what the whole world feels. The Round is in the intensive care unit and the main protagonist, the USA, has not got its act together on international trade issues.
This conference, the 976th Wilton Park Conference, had precisely this among other current hot topics on its blurb: “How will the new US administration, global financial crisis, economic downturn and food security concerns impact future international trade negotiations?” Quite realistically it added: “Can the Doha Development Round be re-launched? Is it time to reform the functioning of the multilateral system? If so, how?”
The Doha Round is like a bicycle standing at a traffic light with all three colours flashing. This confusion was visible among the august audience, but there was also a lack of realisation about the shift in global polarities and redistribution of power that has followed the collapse of the WTO’s Cancun ministerial meeting in September, 2003. A new quad comprising of US, European Union, India and Brazil has replaced the old quad comprising US, EU, Japan and Canada. China too has come into the picture, first under the Southern Alliance of G-20 floated at Cancun and in July 2008 mini-ministerial on its own steam. In spite of all efforts to engineer disintegration, this alliance, comprising of variable interests, continues to be functional even today. The whole geometry has changed and the western world, reeling under the financial crisis, is unable to digest this.
The standoff is bad for the multilateral system and the global economy. It can perhaps spill over to the climate change talks as well. Even in these talks, the western world is pitched against China and India. The meeting at Copenhagen in December is, therefore, also fraught with signs of failure. There is a tussle about how far do China and India need to move on capping their carbon emissions. Fact is that the western world has been the major emitter historically, while China and India are only now emitting more because of their economic growth, and even then account for very little in terms of per-capita emissions.
The Western stand, at the same time, is fractured on both trade and climate change. While the EU is ready to move forward in the Doha Round, the US is less inclined as it wants a pound of flesh for each pound lost through a cut on its farm subsidies. This arouses a sense of déjà vu because it was the EU which had wanted new rules on investment, competition and government procurement to move on their own farm subsidies, but did not succeed. In the end they gave up their demands but the talks did not falter. Now the USA wants more market access in China and India for agreeing to cut its subsidies. And it is seeking that goal more through bilateral overtures than in the multilateral negotiations.
The climate change agenda is also in a flux due to the lack of political will in the US. While the Clinton administration had signed the Kyoto Protocol, the US senate turned down its ratification. The question then and valid even now, is whether lack of action by the US is associated with whether China and India will make binding commitments. The US is working bilaterally on China and India, admittedly with some success, before making its position clear multilaterally. The mood in the US on both Doha and Copenhagen is that compromises will affect the battered economy. Therefore, there is a lack of will to move forward.
The pitch on the Doha agenda is further complicated by the poorest countries, which met in September in Tanzania and demanded an ‘early harvest’ as a ‘down payment’ for agreeing to a deal.
There maybe some valid grounds to demand early benefits, but negotiating partners wishing to use them as negotiating chips will not agree. After all, in WTO jargon, nothing is agreed until everything is agreed. In the process, delay in conclusion of the round is adversely affecting the least developing countries even more than the others. Unlike them, the bigger developing countries like China, India and Brazil have a big domestic market to sustain delays.
Thus, the Doha Round and the climate change talks at Copenhagen are both imperilled due to the features these have in common. Both are multilateral in nature with groups taking different stands on the basis of economic positions and geopolitical realities: United States is still the world’s only superpower and hell bent on maintaining its position; the EU resents the dominance of the United States and is trying to enhance its position through greater internal cohesion with BRIC economies; the large and vibrant emerging economies in Brazil, China and India have now acquired enough economic muscle to make unilateral and independent changes in policy; and the poorest countries of the world still lack the supply side, technological and negotiating capabilities to leverage the international economic order for mutual gains or induce any significant progress in climate change issues which pose a significant threat for their economic well being.
In the Doha Round as well as climate change negotiations, the large emerging economies can make a huge difference through unilateral moves which might shame the developed world into responding.
In the climate talks, such signs are emerging. They will, of course, need more than full reciprocity, particularly from the US, the biggest emitter. In the trade talks, it will be perfidy of its ‘development’ content if the US insists on matching pound for pound when negotiating with developing countries. In both cases, the insular approach of the US in maximising national gain at the expense of global welfare casts a grim shadow over the proceedings.
The author is the Secretary General of CUTS International and can be reached at email@example.com. Atul Kaushik and Siddhartha Mitra of CUTS contributed to this article.