As the WTO returns from its summer recess, members are actively looking at what options remain for the struggling Doha Round of trade talks, especially given the fast approach of December’s WTO Ministerial. While some WTO members, such as the US, are suggesting that the global trade body’s membership acknowledge that the round is “deadlocked,” others are urging the exploration of other possibilities.
Prior to the August break, trade officials had agreed that the earlier plan to pursue an LDC-plus package – one that had deliverables for Least Developed Countries (LDCs) – for the December ministerial was no longer feasible (see Bridges Weekly, 28 July 2011). With members unable to reach consensus on what non-LDC issues, or even what LDC-specific issues, might be included in such a package, the decision was made to change tracks and focus on non-Doha issues for the ministerial, along with a post-December work plan for Doha.
Much of the stalemate being seen in the trade negotiations stems from a long-running dispute between the US and emerging economies, such as Brazil, India, and China, over industrial tariffs, along with disagreements over cutting farm subsidies in developed economies. In the former case, the US has asked for mandatory participation in ‘sectorals’ – the cutting of tariffs across an entire industry – insisting that emerging economies take on greater responsibilities to reflect their larger role in the global economy.
The agriculture dimension of the embattled Doha negotiations featured prominently in last week’s meeting of Cairns Group ministers. The group of 19 agricultural exporting countries met from 7 to 9 September in Saskatoon, Canada, to assess the state of play of the talks and urge WTO membership to push forward toward a successful conclusion of the Round. For more on the Cairns meeting, see our related story in this issue.
In a 9 September interview with LiveMint, a business news website that partners with The Wall Street Journal, WTO Director-General Pascal Lamy urged that it was time for members to recognise that the industrial tariff issue is holding up progress in other negotiating area. “The question is whether through smaller steps we can get to a final global deal,” he said.
Frustration over the industrial tariffs issue also surfaced in recent statements from EU and US officials. US Ambassador Michael Punke, in a hearing on 12 September before the US Senate Finance Committee, told committee members that “the Obama Administration, with the strong support of Congress, believes that China and other emerging economies must shoulder new responsibilities to reflect this change. So far, they have been unwilling to do so.”
Punke also rebuked some WTO members for their “reticence” regarding recent US suggestions for resolving the problems that caused the 2008 breakdown in Doha negotiations, adding that such reluctance left the US with “very little to show for those efforts.”
EU Trade Commissioner Karel De Gucht, in a statement made to the EU Parliament and European Commission president on the same day, also brought up the sectorals issue. He noted that the root cause of the impasse was “fundamentally divergent expectations regarding the reciprocity of commitments that developed and emerging countries should take in opening their markets: one side asked for almost full harmonisation of commitments, while others insisted on far-reaching and preferential treatments.”
De Gucht added that the EU remained in between those two extremes, and even made a proposal to that effect – one that, he found, “got large support from the concerned industries [but] there was unfortunately not enough traction around the negotiating table to negotiate further on the basis of this – I believe – good proposal.”
Next steps for Doha unclear
As one developing country official told Bridges, “the situation is very confused on the Doha track.” Members are now working with the Director-General on both non-Doha issues and a plan for Doha itself.
Over the summer break, various conflicting viewpoints on the general future of the Round have emerged. These viewpoints, the official noted, range from abandoning the Doha talks entirely, to freezing the Round and “taking time off” in response to the financial crisis, to abandoning the “grand design” under the single undertaking principle – under which nothing is agreed until everything is agreed – and instead addressing issues “piece by piece.” Some members also blame the mandate of the talks themselves, set in 2001, for being outdated.
As a result, the official stated, it becomes “inevitable” that the Doha discussion will shift to a more “holistic approach,” and delegations will have to “prepare and structure that discussion” for ministers in advance of the December gathering.
Punke, at the US Senate Finance Committee hearing, took a decidedly pessimistic tone when discussing the US’s view of the future of the trade talks.
“What we are doing today in the Doha negotiations is not working,” Punke said. “That is not a value statement, but a simple assessment of the facts. After ten years, we’re deadlocked.”
He added that whether the WTO’s membership can “acknowledge the reality of our situation will be the first test of whether we can devise a credible path forward that will expand market access and strengthen the institution.”
According to observers, delegates are being forced to acknowledge that pushing the Round through to a conclusion anytime soon is less and less of a realistic outcome.
“The air of pessimism is all pervasive, at the moment, because it’s hard to find anyone who seriously believes that much will come before the ministerial,” Simon Evenett, a trade professor at the University of St. Gallen, told Bridges.
“All you can say about the current situation that is good is that reality has finally intruded, and the people are able to see just how far we have to go,” he said. “The fantasy is over and the stark reality is laid before us.”
While consensus on how to resolve the Doha stalemate is lacking, many observers agree that any progress will depend largely on political leadership from members.
In a speech to CUTS International in New Delhi, Lamy told the audience that ministers will “have to talk turkey” at the December ministerial. “The debate is not about whether we bury the round or whether we fix another artificial deadline to conclude it. If we are clear that the issues in the Doha Agenda need to be fixed, the challenge before us is to find the political courage and the pragmatic steps which will lead our members to have an honest negotiation,” he stated.
The upcoming weeks
Next week will see a meeting of the so-called G-11, a group of WTO members that includes Australia, Argentina, Brazil, Canada, China, the EU, India, Japan, Mauritius, South Africa, and the US. Earlier this year, the G-11 tried to kickstart a “horizontal process” in which WTO members could make tradeoffs across different negotiating areas (see Bridges Weekly, 18 February 2011). The countries will now discuss the Doha and non-Doha agenda for the ministerial, according to sources, that will “hopefully give us an honest discussion of where we are.” It’s “essentially a political discussion” for ministers, the source added.
While talks on non-Doha issues for the ministerial appear to be in the early stages, some countries are putting together proposals on areas such as “21st century issues” – food security, climate change, etc. – and currency issues, among others.
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