At a time when the global economy is set for a slowdown, particularly in the developed countries such as the US and the European Union (EU), the call for opening up trade is not heeded and the tendency is to erect barriers, both tariff and non-tariff, to protect one another from the blast of competition.
But it is precisely in these troubled times that the world needs a rule-based multilateral trading system where the gains of liberalisation and economies of scale would help many a nation in weathering their domestic troubles – this is applicable to both developed and developing countries.
Yet, in an irony of sorts, the members of the World Trade Organisation (WTO), a group of 153 countries, failed to evolve the modalities or parameters for such liberalisation in agriculture and non-agricultural market access (NAMA) at a crucial mini-ministerial meeting in Geneva during end-July.
It is not for the first time that the talks among trade negotiators under the Doha Round of the WTO have failed; the deadlines have been repeatedly missed – Cancun (Mexico) in September 2003, Hong Kong in 2005, and subsequently in Geneva (2006) and Potsdam (Germany) in 2007.
However, the WTO Director- General, Mr Pascal Lamy, who was in the Capital recently to attend the silver jubilee function of CUTS (a civil society organisation) and also to try and pick up the thread of broken talks with the Indian authorities and to gauge their moods, seemed unfazed by the string of failures to arrive at a consensus on contentious issues.
Being an avid jogger and indefatigable interlocutor in the adroit art of bringing warring members to the negotiating table to try and succeed in the trade opening exercise, Mr Lamy concedes that though the opening up of markets spawns benefits to many, it also exacts adjustment costs which cannot be ignored.
He avers that opening up of trade works for development and removal of poverty but only “if we address the imbalances it creates between winners and losers, imbalances that are all the more dangerous the more fragile the economies, societies or countries.”
Not the one to ignore detractors who upbraid the WTO as an octopus organisation, Mr Lamy contends that WTO is “a consensus-based member-driven body, providing the basis of a system in which each country – even the smallest – counts. This is where its legitimacy lies. No Security Council in the WTO and no board of directors”.
In his sojourn interspersed with a spate of meetings and interviews, Mr Lamy spared half-an-hour to talk to Business Line.
What follows is Mr Lamy’s take on what happened in Geneva and what he is doing to make members meet so that they all can deliver results to bolster the multilateral trading system:
“After the talks broke down in with the membership and they all said that what was there on the table remains on the table, so conclusion of the Round is still in people’s minds.
“The negotiations stumbled on the issue of the special safeguard measure (SSM) but designing a special safeguard measure to protect developing countries against import surges in food remains part of the “to do” list. Given the differences in positions between India and the US over the volume of imports which would be the trigger for the safeguard measures and on the size of the remedy, I decided to visit India and the United States to see how the differences could be bridged.
“My objective of the visit to Washington is the same as my mission here. Look back at what happened on the SSM – is it a technical problem or political problem? Has India well understood what the US concerns were? Has the US well understood what India’s concerns were?
“We have a long history of safeguard spanning 60 years in the GATT-WTO (GATT is a predecessor to the WTO). The discussion has been on not whether there should be safeguards or not but what should be the parameters so that they are used in exceptional circumstances without disturbing normal trade. This time, what is normal and what is exceptional is where the differences could not be bridged.
“We have a single undertaking and the rule is that nothing is agreed until everything is agreed. Within this single undertaking, it happened that agriculture and industrial tariffs (NAMA) should go together as set out in the famous Hong Kong Declaration in Para 24. Once modalities in these two are framed, other issues like rules, services and anti-dumping would automatically get moving.
“At the July meeting, 17 out of 20 items in the list on the agenda were agreed. Later, the reports of the Chairs of Agriculture and NAMA, released in August 11 and 12 in Geneva, faithfully reflected the state of negotiations. The ministers did not do item number 18 – whether this is a sort of insurmountable hurdle or whether this hurdle can, with a little bit of time, understanding, talking, research and negotiations, be overcome remains to be seen. Now we still have issues such as cotton subsidy in the US, and intellectual property rights.
“No doubt, there has to be an agreement on slashing down subsidies on cotton by the US as they are more than corn or peanuts. We did not get there because of the linkage between productspecific caps in the amber and blue box (permissible subsidies).
“G-7 process composing Australia, Brazil, China, the European Communities, India, Japan and the United States works in concentric circles within which possible compromises are presented and these float in the G-7 and go to G-30 or G-35 (five times bigger) and if the talks float there too, they go to the whole WTO membership numbering 153 (five times bigger).
“I am not in the betting business. Negotiators are in the business. I am in the business trying to make things happen from the moment members want me to help them trying to get there. I can’t set the timeline for conclusion of the Round.
“Contrary to what western and sometime Indian media write, China is a very active participant in the WTO negotiations. “Any WTO agreement will have to be ratified by the US Congress like it has to be ratified by constitutional process in India or Israel. If you look at the history of trade negotiations, no trade treaty has been agreed by the US Congress on a partisan basis. It has always been part-Democrats and part-Republicans.”
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