With Brussels and national capitals closed for the month of August so little happening on the CAP front, it is timely for a stock-taking of the state of play in the multilateral trade negotiations.
In December later this year, the WTO at its 9th WTO Ministerial Conference in Bali, Indonesia will make yet another effort to salvage some concrete deliverables from the tortuous Doha Round negotiations. The negotiations have proceeded in fits and starts, but with more fits than starts, since the cancellation of what should have been the 7th Ministerial Conference (MC) in Geneva in December 2008 following the failure to agree on revised modalities documents.
The Doha Round negotiations were revitalised in early 2011 following strong political guidance by the leaders of the G20 at the Seoul Summit in November 2010. The objective was to reach outlines of a comprehensive package by the summer, and to finalise the agreement by the end of the year. However, in the spring it became clear that a full Doha outcome could not be reached in 2011.
Reports from the Chairs of all negotiating groups circulated to the Trade Negotiations Committee (TNC) on 21 April 2011 allowed members to see, for the first time, the entire Doha package including all market access areas and all of the regulatory agenda. But they also revealed the political gaps which remained, particularly in the area of non-agricultural market access (NAMA) where, according to the then Director-General Pascal Lamy, “the differences today are effectively blocking progress and putting into serious doubt the conclusion of the Round this year.” The breakdown at that time forced Lamy to rethink his strategy and led to a Plan B which is the immediate predecessor to the Bali agenda.
Lamy’s Plan B
In May 2011, following the failure of the ‘Easter package’, Lamy put forward a three-track plan to prepare for the 8th MC in December 2011.
Priority would be given to LDC-specific issues such as duty-free and quota-free access for goods produced in LDCs in the developed and developing countries’ markets, waiver of certain disciplines relating to agreements on trade in services and rules of origin and issues relating to ending subsidies for cotton producers in rich countries. These issues should be put on a Fast Track and agreed to immediately.
Secondly, he proposed LDC–plus outcomes with a significant development component by December 2011 which he called the Middle Lane. An indicative list for the LDC Plus package proposed the following month included issues such as trade facilitation, export competition, S&D Monitoring Mechanism, a step forward on fisheries subsidies and a step forward on environmental goods and services.
Thirdly, contentious issues like agriculture, non-agricultural market access, services, trade remedies and intellectual property would be moved into a Slow Lane for conclusion after 2011. An important element of this ‘Plan B’ package was that producing a partial outcome in December should not mean the remaining issues should be ditched. He also acknowledged that the WTO’s routine work remains valuable even without agreement in the Doha Round.
Agreeing on some sort of smaller, issue-specific package proved to be just as difficult for the WTO’s (then) 153 members as agreeing on a comprehensive multilateral accord, especially as it was also envisaged that agreement on Plan B would be achieved on the basis of consensus decision-making and as a single undertaking.
By July the Plan B initiative had collapsed. Lamy had to acknowledge that “What we are seeing today is the paralysis in the negotiating function of the WTO, whether it is on market access or on the rule-making. What we are facing is the inability of the WTO to adapt and adjust to emerging global trade priorities, those you cannot solve through bilateral deals.”
Obstacles to a mini-package
Lamy’s new approach focusing on a ‘mini-package’ or an ‘early harvest’ of deliverables from the Doha Round was legitimised by Paragraph 47 of the Doha Ministerial Declaration which launched the Round as a single undertaking. The paragraph reads:
…. the conduct, conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking. However, agreements reached at an early stage may be implemented on a provisional or a definitive basis. Early agreements shall be taken into account in assessing the overall balance of the negotiations.
The assumption behind the ‘early harvest’ initiative is that there are a number of negotiating issues which are potentially seen as ‘win-win’ issues for all the members, so that they can be carved out of the overall negotiations without materially affecting the intricate balance of gains and concessions represented by the draft modalities texts.
In practice, it has proved extremely difficult to identify such issues. Even trade facilitation, meaning steps to reduce the cost of trading, which might be seen as the most ‘neutral’ of issues and in the interests of all members, is not necessarily seen as self-balancing (some members fear that to make trading easier is more likely to lead to increased imports than to additional exports). Thus, even a ‘mini-package’ has a political requirement to include a number of elements to make it a balanced package in the eyes of members.
However, expanding the package beyond a small number of issues triggers calls for trade-offs in other areas, leading to an unmanageable number of topics and the risk of another failure. By the time of the 8th MC in December 2011 WTO members had failed to make progress on any of Lamy’s three tracks and the agreed statement adopted at the meeting glumly noted that “the negotiations are at an impasse”.
The path towards Bali
Nonetheless, the Chair’s concluding statement at that conference noted that “”Ministers commit to advance negotiations, where progress can be achieved, including focusing on the elements of the Doha Declaration that allow Members to reach provisional or definitive agreements based on consensus earlier than the full conclusion of the single undertaking”. This, in turn, became the negotiating mandate for the Doha Round element of the next MC in Bali.
Work on preparing a Bali outcome resumed at a formal TNC meeting in December 2012. The flagging impetus in the negotiations is underlined by the fact that this was over a year after the last informal TNC meeting in October 2011 and two years after the last formal meeting of the TNC in March 2010. Feedback from the negotiating group Chairs and from members now indicated that a small package for Bali built around trade facilitation, an element on agriculture, and an element on development/LDCs might be feasible.
Lamy, in his last address to the TNC as Director-General last month, provided an update on whether members are on track to deliver on this objective. In his cheerleading role, Lamy concluded that the glass is two-thirds full but that “the third part of the glass is no small beer”. More sober assessments conclude that members are far from the path that would guarantee a successful Bali outcome (see ICTSD Bridges reporting here).
Assessment
Another failure at Bali would surely bring the stuttering Doha Round to an end, even if no WTO member wants to be the first to pronounce it dead. But what should take its place?
Many countries seem satisfied with the status quo and are in no particular hurry to introduce new rules to regulate trade, After all, world trade has grown rapidly since the conclusion of the Uruguay Round Agreements in 1994 and the spectre of protectionism during the recent economic recession has, so far, largely been kept at bay.
For those countries which perceive the need for new rules, some seem ready to walk away from multilateral negotiations and to pursue their trade objectives solely through bilateral and regional trade initiatives. Others propose the negotiation of critical mass or plurilateral agreements within the WTO between groups of like-minded countries. Others argue that the Doha Agenda focuses too much on yesterday’s trade issues, and call for the relaunch of multilateral negotiations to address the new trade policy challenges which have emerged in the past ten years.
Each of these alternatives has its own problems. They also ignore the considerable amount of work that has been done within each of the negotiating areas of the Doha Round and that the ‘old’ trade issues including agriculture are still of great interest to many of the WTO’s members. Thus, there still seems merit in trying to bring about the conditions that would give the Doha Round a greater chance of success.
But with the US increasingly retreating from its role as the provider of global public goods (the most recent example being the expiration of its Generalised System of Preferences granting tariff reductions for imports from developing countries yet again on 31 July last), the EU and Japan beset by internal economic problems, and the emerging countries of China, Brazil, India and South Africa strongly constrained by domestic politics from making an impasse-breaking negotiating offer, it is hard to see from where the political leadership to create these conditions might come.
Picture credit: Embassy of Indonesia
