TNC: WTO Chief Lamy Calls for ‘Serious, Active Reflection’ on How to Save Doha

4 May 2011

Trade diplomats at the WTO are finally saying openly what they have privately acknowledged for years: that serious gaps of substance and political perception stand between governments and an accord in the long-running Doha Round of trade negotiations.

Nevertheless, they refused last week to throw in the towel following Director-General Pascal Lamy's downbeat assessment of the impasse in the talks, and backed his plan for consultations aimed at finding a new way forward.

In his opening speech to an informal session of the Trade Negotiations Committee on 29 April, the WTO chief warned that "this round is, once more, on the brink of failure."

A failure, he emphasised, would carry serious risks for the global trade body, even though the WTO would in the absence of a Doha deal continue its existing functions of monitoring members' commitments, adjudicating disputes, and providing technical assistance to developing countries. "We need to be lucid and realistic: failure of the WTO to deliver on its legislative function, failure of the WTO to update the rules governing international trade... risks a slow, silent weakening of the multilateral trading system in the longer term." This weakening would be marked by a loss of interest from governments, "an erosion of the rules-based multilateral trading system [and] a creeping return to the rule of the jungle."

The meeting came on the heels of the 21 April release of draft texts summing up the state of progress - and outstanding divisions - in each of the negotiating areas in the Doha Round. In notes accompanying those texts, Lamy said that divisions on non-agricultural market access - and specifically, the participation of developing countries in initiatives to eliminate or deeply slash tariffs across entire industrial sectors - were "unbridgeable" and constituted the single largest obstacle to a multilateral agreement.

In his remarks to the TNC, Lamy referred to many of the reasons often cited for the round's  travails - insufficient interest from the outset, the growing number of WTO members, a multi-issue negotiating agenda that has been rendered out-of-date by the passage of nearly a decade, changed global economic circumstances, and "a general retreat from multilateralism." For all that, he noted, the talks were now "blocked because of a classic mercantilist issue: tariffs on industrial products, the bread and butter of WTO negotiations since their inception." He called it "deeply disappointing" that despite over 60 years of experience at finding compromises on cutting industrial tariffs, governments had been unable to do so in the Doha Round talks on non-agricultural market access (NAMA).

Calling for a "process of serious, active reflection" on how to break out of the deadlock, Lamy expressed the belief that "three options will not work:  Option 1, ‘business as usual' will not work.  Option 2, ‘stopping and starting from scratch' will not work, since the issues blocking progress today will be the same ones on the agenda tomorrow.  Option 3, ‘drifting away' by wishing the issue would simply disappear will not work either."

Several WTO members intervened during the TNC meeting, but none explored possibilities for a ‘Plan B' - the notion that, with a broad Doha Round agreement proving impossible, governments should try to salvage issue-specific agreements in areas where that may be possible, such as trade facilitation. Many said that starting from scratch was not an option, since it would require throwing away ten years of work.

While no one suggested that ‘Plan A' -- a comprehensive agreement - was out of reach, some called for realism. Brazil's ambassador to the WTO, Roberto Azevedo, said that members needed to "face the fact that, right now, the chances of success for gap-closing efforts in market access are disappointingly low," but that the WTO's credibility and legitimacy were not in "a death embrace" with the Doha Round.  The WTO "is bigger than the Round and transcends it," he said. US Ambassador said that members would "need to consider the viability of other pathways" if they agree that a full Doha accord impossible.

The EU outlined a proposal for NAMA sectoral liberalisation initiatives in chemicals, machinery, and electronics, under which developed countries would eliminate tariffs on all products, while participating developing countries would be able to maintain some level of duties on some products, albeit at lower rates than what would have resulted from the regular tariff cutting formula and flexibilities (see related article, this issue).

US Ambassador Michael Punke agreed with Lamy's assessment that "there is a fundamental gap in expectations among key Members," but argued that the gap was not limited to NAMA. "We do not agree with the suggestion in the report that if we could work out our differences in NAMA, then other areas of the negotiations would simply fall into place," he said, arguing that " fundamental differences also exist with respect to agriculture and services."

Punke reiterated the US's view that the outcome of Doha negotiations would "set the terms of trade for decades to come" - a reason why Washington has been so insistent that large developing countries accept very substantial tariff-reduction commitments as part of any agreement.

India, too, emphasised the depth of the gaps between key countries' positions, sources said.

Several groups of smaller countries, for which participating in the Doha Round talks has represented a substantial investment in terms of money and negotiating capacity since 2001, reiterated their call for an agreement. Speaking for the group of African, Caribbean, and Pacific countries, Mauritius said that a Doha failure would cause them to lose faith in the multilateral trading system, and that throwing away ten years of work was unacceptable. Kenya on behalf of the African Group said they support advancing negotiations. Not concluding the DDA is not an option for Africa. Failure will not just discredit Doha but the multilateral trading system as a whole. Both Mauritius and Kenya thanked the EU for its new proposal aimed at compromise on NAMA.

Bangladesh, on behalf of least-developed countries urged members to overcome the current obstacles, reminding them that LDCs have had to deal with the fallout from a financial crisis they did not cause. It called on developed world to show support for LDCs at an upcoming UN summit on LDCs in Istanbul. Barbados, for the small and vulnerable economies, called the chairs' reports "sobering" but said that there was still a chance to conclude the round. Burkina Faso intervened to say that it had not seen real engagement by others on cotton subsidy issues.

China, whose participation in NAMA sectorals is a key objective for the US and the EU, said that the new EU proposal only represented the interests of developed countries. It said that if the round is not concluded this year, developing countries will be hardest hit.

Australia, for its part, said that the reports cast real doubt on whether it would be possible to conclude the round this year.

Ministers from influential WTO members will have ample opportunity to discuss the Doha Round negotiations in the weeks to come. The Organisation for Economic Co-operation and Development's annual ministerial meeting is scheduled for 25-26 May in Paris; sources suggest that the French government will organise a trade ‘mini-ministerial' on its margins. The same will see trade ministers from Pacific Rim countries meet at an Asia-Pacific Economic Cooperation summit in the US state of Montana.

The TNC is set to meet next on 31 May, with a ‘green room' session of a smaller cross-section of members the day before.

ICTSD reporting.

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