Multilateral talks never fail

Economic Times, August 09, 2008

By Pradeep S Mehta

After the Hong Kong WTO ministerial meeting on the Doha development round, some of the left leaders said that our trade minister Kamal Nath does not deserve any kudos. They were wrong. Now one of them says that he did well at the mini-ministerial at Geneva. The massive effort to try and get a deal for the benefit of all did not succeed. Once again farm goods proved to be the stumbling block. Commerce minister Kamal Nath has held his ground on the livelihood concerns of our 650 million farmers. As he observed recently, protecting our farmers was in the national interest, and that there can be no trade-offs.

It was actually on an issue of trade-offs and cotton subsidies that the United States maintained a rigid stand at Geneva, the cause for the breakdown. The US administration also took a gamble that their powerful farm business lobby will lean on their bipartisan Congress to accept a deal. That needed a price to be paid upfront, more so because the US offered to reduce its farm subsidies. In return, their agri-business wanted better markets in big countries like India and China. But both were not prepared to agree to softer terms of agriculture protection. For example, in soyabeans, where the US is a major producer. More importantly, the US wanted to avoid dealing with the more sensitive issue of cotton subsidies.

But does it mean the round is over? It is not, and may take another few years, and therefore countries avoided playing the blame game. However, Peter Mandelson, the EU trade commissioner called a spade a spade laying the blame, correctly on the US door, but that was an exception. In the absence of a fast-track authority with the US President, seasoned analysts and politicians had always known that the chances of getting a successful deal through are quite remote. But, the negotiations were essential to push the envelope and stop things from backsliding. So there is a general consensus that future negotiations will evolve from whatever was agreed, or not agreed, at Geneva. There will be a new administration in the US and a new team, and that will then have to take up the task to move ahead.

There were problems with the industrial goods tariffs, when the Europeans asked for disaggregating the tariff levels, which would have allowed import of automobiles and auto parts at lower tariffs into the developing world. But that was not acceptable, because of huge investments made in the sector in India. Even countries like Australia and Brazil which have an offensive interest in farm goods, would find it uncomfortable to allow import of cars at lower duties. Most developing countries too found it difficult to allow preferential imports of industrial goods which could have adversely affected their own industries and jobs. On the contrary, developing countries have been pleading for doing away with the rich countries’ protectionist tariff peaks and escalation in labour-intensive sectors such as garments and leather goods. Alas, that will also now take a back seat.

When things were not converging, somewhat like the Dunkel Draft (which midwifed the WTO in 1994), Lamy wrote out a Lamy Package to push the recalcitrant countries to try and arrive at a consensus. But there were too many differences for the effort to succeed.

If one examines the earlier failures, one can discern how realpolitik works, and the role of the US. Often smokescreens are presented which never featured as likely deal breakers. At the Seattle ministerial in December 1999, clearly there was no deal between the two giants on farm goods: US and EU, but the deal fell apart on labour standards.

Following the 9/11 disaster, the world was quite disturbed so a deal was arrived at Doha in November 2001 — the Doha development round, though many still wonder where ‘development’ is in the deal. But this is a dog eat dog world, and pretty mercantile too. So the rich continued to seek better market access for their goods, with the refrain that if they need to cut their farm subsidies they must get something somewhere else to satisfy their own constituencies.

At Cancun in September 2003, when Lamy was the EU trade commissioner, it was again agriculture which should have been the deal breaker. However, the meeting was called off suddenly by the Mexican chair, when the Africans walked out of a meeting on the Singapore issues. The talks never progressed to the more serious issues. After a lull of six months the talks were again revived in January-February 2004, which successfully ended with adoption of “July Framework Agreement” in July 2004. The Singapore issues minus trade facilitation were dropped from the Doha Agenda.

Coming back to the current scene, a quid pro quo was sought by the US in increased market access in farm goods in the big developing countries, and that caused the flop at Geneva. So what next? Clearly everyone knows that the train has to move on, even if someone has pulled the alarm chain. In the words of the Indonesian trade minister, Mari Pangestu: ‘Multilateral talks never fail, they just continue’.

The author is Secretary General, CUTS International, a leading research, advocacy and networking group and can be reached at

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