New Round Decision Point: July 2001

As the major players attempt to create momentum for the Qatar 4th Ministerial Conference, questions continue to plague the hoped-for launch of a new round of multilateral trade negotiations. Not the least of which is the massive slide into deep economic contraction now occurring in the US and rapidly spreading to other economies that have enjoyed the benefits of US consumer and industrial demand. This raises serious issues about the possibility of sustaining economic growth in Southeast Asia, South Asia, Western Europe, and South America.

The prospect of negotiating to allow more access for the goods and services produced by foreign suppliers is going to be difficult for political elites to justify, both behind closed doors and in public. Indeed, this is a climate inviting the adoption of protectionist tactics as the best line of defense against "predatory" foreign business practices.

Though Geneva was able to keep up the appearance of forward movement during 2000, in fact very little concrete progress occurred in either the WTO services or agriculture negotiations arenas, or on core issues of interest to the developing world. It is still widely held that measurable progress on agriculture will not come until the expiry of the Peace Clause in 2003. This is also likely to be the signal for potential deal making on trade in services as well.

Nonetheless, Mr. Lamy began this year as he did the last one: pimping for free trade. Mike Moore the beleagured Director General of WTO, and Dr. Supachi, the developing world spokesperson slated to assume responsibility at WTO in August 2002, have joined him again.

All three are taking the view that a decision to launch a new round will be based on whether or not WTO members can craft a consensus on a negotiations agenda by July 2001. Clearly, the next four months are extremely important if there is to be any likelihood of such an outcome this year.

Even then, however things may stand by July, the system will have less than three months to pull together a draft ministerial declaration, and supporting text on work plans, negotiation groups, and institutional issues. It assumes a very high level of international agreement, and represents a significant level of ambition for the balance of 2001.

There has been little thus far to suggest developing countries are prepared to accept a negotiation simply because the developed countries think it's the thing to do. In fact, in the context of what increasingly appears to be a broad based global recession, trade liberalisation may not be in the immediate interests of most of the developing world.

As well, neither the FTAA process nor the WTO membership can be expected to take negotiations seriously until the US Congress grants negotiation authority to President Bush. Dr. Supachi has perhaps been the most clear headed, bravely suggesting that in the absence of a strong US commitment, a new round is probably not going to be launched.

The Administration strategy is to package "trade promotion authority" with other trade legislation believed to have bipartisan support in Congress. This strategy has not met with widespread approval on Capitol Hill, perhaps because it projects a decidedly controlling business style. This certainly has Mr. Zoellick's modus operandi written all over it.

Parenthetically, it is worth recalling that USTR was almost downgraded when President Bush was preparing his Cabinet. Mr. Zoellick needs to demonstrate that the decision to retain USTR was correct for the times.

However, Republicans and Democrats are warning him that the approach - cynical if not Machiavellian - will not generate his wished for result: trade negotiation authority is not to be had in the near future.

The Congressional advice tends to run along the lines of suggesting that the Bush administration focus its efforts on bilateral trade agreements to build confidence on trade issues in Congress and then move to regional trade pacts such as the FTAA.

A key bilateral area that has been repeatedly identified is trade relations with the EU. Thus, the US agenda is prioritized in a way that diminishes the importance of the multilateral trading system for the immediate future. The Europeans however seem to see things a bit differently. As recently as March 7 UK Trade Minister Richard Caborn was pressing Mr. Zoellick to join the EU in working to begin a new round this year.

In the background at the international and national levels are the orphaned twins - environment and labour. The US Congress has not been able to structure any meaningful compromise on these issues since fast track authority expired in 1994; none is yet in sight.

In addition, developing countries have remained unyielding in their opposition to the inclusion of labour and environment on the trade negotiation agenda.

Dr. Supachai has frequently disagreed with the view that labour and environmental issues need to be linked to trade negotiations. He warned that developing nations would only cooperate if their issues of concern were part of the agenda.

Specifically, Dr. Supachai argues that negotiations should highlight the impact of globalisation on developing nations, and plan to compensate them for commercial losses they have suffered due to commitments made during the Uruguay Round.

In sum, it takes more than public relations to launch trade negotiations, and wishing alone has never been a lever on the international stage. The greatest disappointment thus far, however, is not the lack of government flexibility, which is to be expected.

It is the invisibility of the international business community, which by its silence and lack of initiative is ironically conceding the capacity to mobilise publics to the NGOS of the world.

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