THE 4TH WTO MINISTERIAL: ISLANDS OF WEALTH, OCEANS OF POVERTY

| | | |

THE 4TH WTO MINISTERIAL: ISLANDS OF WEALTH, OCEANS OF POVERTY

As we reported on September 16, the planned Doha WTO Ministerial Conference faces a quantum jump in security concerns, given both the Middle Eastern venue and the concentration of official delegations in a relatively confined area. Almost immediately after September 11, questions arose in Geneva regarding the advisability of proceeding. United States Trade Representative Robert B. Zoellick issued a statement September 14 regarding the November 9 - 13 Doha Ministerial, which noted that, "…it is important that the World Trade Organization meeting in Doha proceed …" By the time he had reached Singapore in mid-October for an informal meeting on preparations for a new round, Zoellick (and many others) was converted to the wisdom of a new venue for the Ministerial Conference.

The Qatari government evidently decided to weather the storm of security concerns, anticipating that an informal General Council meeting would not be able to reach a consensus to move the meeting, especially at such a late date. In the event, the Qatari government was right. On October 18, Singapore dissolved parliament and called a general election. Not unexpected, the election reduced the prospect of the 4th Ministerial being moved there. Before the week was out Mexico and Geneva were no longer regarded as viable alternative sites. WTO Director-General Moore's visit to Doha October 21 - 22 produced the only realistic result eighteen days before the opening ceremonies.

Despite Qatari security guarantees in the wake of September 11, the threat of a bioterrorist attack is being treated seriously. As the host state, Qatar has spent more than US$30 million preparing for the 4th Ministerial Conference. However, very little of that amount was budgeted for security related expenditures because the only threat of disruption to the conference - anti-globalisation NGOs - was effectively muzzled through a combination of factors, including the expense of participation, Qatari legal restrictions on protest, and limited NGO accreditation to Doha.

Key delegations are being reconfigured to address the perceived high risk environment that now exists. Japan is believed to be considering a mobile medical team to support its delegation. The US will be providing USTR Zoellick with a personal security team, and a detail for the protection of the other members of the US delegation. Given the circumstances being anticipated in formulating delegation membership, the Doha Ministerial will probably be the smallest gathering of trade officials in many years.

It appears that the September terrorist attacks are being used to bludgeon agreement on substantive issues. This is most evident by the Western rallying cry: we need a round to avoid a recession. Unfortunately, the US economy has been sliding toward recession for many months, and it is unlikely there is any immediate prospect for avoiding a deeper decline in economic activity. Mainstream economic analysts are now recognizing that a recovery in the US economy might not emerge until late in 2002 or early 2003.

Indeed, the very notion that the launch of a new round of multilateral trade negotiations could have a significant near term economic effect requires one to ignore the fundamental reality of trade negotiations: they offer incremental gains over the long run. The case for a round is yet to be made in the stark economic terms that propelled the Uruguay Round, which was seen as an essential ingredient to averting imminent global economic collapse. There is no such prospect facing the 4th Ministerial Conference.

However, there are other problems. In recent months, the process of developing a trade negotiations agenda has run into terrific resistance from leading players in the developing world. Notably, India has been very straightforward regarding the unacceptability of new issues making their way into the agenda. Throughout the summer and into the autumn, Minister of State for Commerce and Industry Digvijay Singh made it patently clear that the government opposed new issues arising under WTO auspices unless there was convergence among the WTO membership. India has signaled willingness to negotiate on industrial tariffs, TRIPs (Trade-Related Intellectual Property Rights), and TRIMs (Trade-Related Investment Measures). However, India has been standing against such issues as investment policy, competition policy, transparency in government procurement, environment and labour.

While true that India has all the appearance of posturing for improvement in developed country acceptance of its implementation issues agenda, there are issues upon which very little Indian movement ought to be expected. For example, India has brought along a great many WTO members who share the view that environment is not a legitimate trade agenda issue. The link to trade would provide a basis for developed countries to deploy barriers against developing country products on the grounds that the products violate WTO environmental trade rules. This is of course part of the broader position that argues developing world priorities and needs are not sufficiently recognised in the international trading system.

The Indian Cabinet met at the end of last week and endorsed a mandate for Doha that appears to concede the launch of a new round. In our estimation, the collapse of Indian resistance before Doha suggests strongly that there will be developing world acquiescence on the draft declaration to be approved in Doha. Commerce Minister Murasoli Maran will recoil only if expected concessions on linking trade with labour standards, environment, or competition policy are threatened. Even here there may be reluctance to appear too far out of step: the United States is considered to have Pakistan on board to support a Doha round of talks, which, ironically, was not in view as recently as August.

The main issue that must be finessed is trade in agriculture. President Bush has indicated that it is US trade policy to make agriculture the "cornerstone" issue for a new round of trade negotiations. Because a round will involve treating the negotiated results as a "single undertaking", it is expected that agriculture will be the top priority for the US negotiating team.

The European Union is continuing to hold out for something less than a declaration objective of the "progressive elimination" of farm subsidy practices. This is a key EU requirement, and has just been endorsed again by the European Parliament as part of Pascal Lamy's negotiation mandate.

There are trade issues that have yet to be definitively settled between the EU and the US. For example, the WTO decision against US Foreign Sales Corporation legislation is still in play. In some quarters, the WTO panel ruling moved toward questioning the very basis of the US tax system. US companies including Boeing, Exxon, Mobil, and Walt Disney are among thousands of businesses granted a 30 per cent tax rebate on export income. For its part, the European Union could in due course apply trade sanctions valued in the billions of dollars. This issue alone could further intensify the already troubled transatlantic trading relationship. As such, it presents difficulties in the context of the 4th Ministerial Conference.

The finesse could amount to this: the US and the EU could seek accommodation by taking a less ambitious approach on the reform of Foreign Sales Corporation legislation, and on the question of trade in agriculture, including export subsidies. Such a development would likely have support among developing countries as well; India's insular agricultural economy provides employment for about 70 per cent of the population.

Even with such a transatlantic bargain to launch a new round, neither the agriculture negotiations nor the services negotiations have reached a stage that would encourage one that bargaining will commence in the next year. Indeed, until September 11, there was nothing in play in Geneva that one might use as a means to leverage the system toward a new round. This is interesting because it means that efforts to build a genuine negotiation consensus since Seattle have had only marginal success.

In other words, with almost no sign of a consensus emerging in Geneva prior to September 11, it is hard to believe that substantive flexibility is now so widely available. This tends to suggest that at best the key players will paper over their lingering and fundamental trade disagreements to launch a new round. This illusion of consensus is dangerous because without addressing the diversity of Member interests and needs, including the globalisation concerns of the Islamic Conference, a round will prove difficult to conclude in a reasonable period of time. In such a case, the remarkable irony is that the premature launch of trade negotiations could further undermine the WTO's fast eroding credibility as a vital multilateral institution of the 21st Century.

Profile Services Search Trade Analysis Updates
Contacts Trade News Policy Street Link To Us Site Search