Masthead graphic based on a painting by Gudrun Thriemer.

Thursday, August 03, 2006

Aileen Kwa, "WTO: Reactions to the collapse of the Round," Focus on Trade, number 122, July 2006.

According to various reports, the 14-hour meeting on Sunday 23 July amongst the G6--US, EU, Japan, Brazil, India, Australia -- ministers ended in the early hours of the Monday morning. Ministers did not even get around to discussing NAMA. Most at the table had come with the expectation that there would be movement. Some numbers in agriculture market access were thrown around. However, according to inside sources, the United States trade representative (USTR) did not respond, and it became clear that, despite President Bush’s promises about flexibility at the G8, the US was not moving from their earlier proposals on domestic supports. WTO director general Pascal Lamy apparently became increasingly despondent as the meeting wore on.

At the informal TNC meeting of 24 July, Lamy said that, without the modalities in agriculture and non-agricultural market access (NAMA), “it is now clear that it will not be possible to finish the Round by the end of 2006 .”

He called for the suspension of negotiations: “Faced with this persistent impasse, I believe the only course of action I can recommend is to suspend the negotiations across the round as a whole… In practical terms, this m eans that all work in all negotiating groups should now be suspended, and the same applies to the deadlines that various groups were facing”. He went on to make clear that he was not going to set new deadlines. “I do not intend to propose new deadlines or a date for resumption of activity in the negotiating groups. This can only come when the conditions exist to permit renewed progress, and this means changes in entrenched positions. The ball is clearly in your court”.

Since this was an informal meeting, the decision to formally suspend the talks will take place at the formal General Council meeting of the 27 July.

In response to Lamy’s statement, WTO members made the following comments:

India's minister Minister Kamal Nath said that they had sensed for a long time that there was very little political flexibility amongst some members. The G6 meeting had simply brought this into the public spotlight. He sa id that in the course of the negotiating the round, the developed countries had turned around the mandate of the Doha Development Round (DDA). They were seeking compensation for cuts in domestic supports through enhanced market access. From India’s point of view, that was not what the deal was about. Instead, the round was about getting rid of the trade distortions, and enlarging the development aspects of the WTO, for the benefit of the developing countries. Nath reinforced the importance of safeguarding the livelihood of farmers and rural development.

The EU’s trade commissioner Peter Mandelson said that the collapse was caused by the US. The US could not quantify or qualify the flexibility they had hinted at in the G8. If they had done so, the EU would have shown more flexibility.

The EU was ready to move on issues that were ready for an early harvest. Mandelson suggested taking trade facilitation, special and differential treatment, aid for trade, and the quota free duty free provision for LDCs ou t of the single undertaking for early conclusion. (He was the only one suggesting such a strategy. Insiders think it was a political statement, and that it is unlikely to fly. The US is not likely to support this.)

Brazil's foreign minister Celso Amorin said the developing countries will be the biggest losers as a result of this collapse. He regretted that the G8 pledges of flexibility had not translated into practical and concrete flexibilities.

USTR Susan Schwab reaffirmed US support for the continuation of the DDA, their commitment to the negotiations and the conclusion of the round. She blamed the collapse on the unwillingness of others G6 to move. No addition al market access had been offered to the US.

There was then a long list of interventions from others. The mood apparently in the meeting was not too different from any other ordinary WTO meeting. Some common messages: Lamy was commended for his work and was asked to continue to provide guidance and direction. Almost all delegations said that they were deeply disappointed and expressed regret.

Benin, on behalf of the Africa Group, said that as a result of the lack of flexibility by the developed countries, small members of the WTO had been taken hostage.

Bangladesh, speaking on behalf of the LDCs, said they shared the view that suspension was the best if there was no political will to move forward. They also reaffirmed their concern regarding farmers’ livelihoods.

The Latin American countries set themselves apart from the other developing countries. These included Colombia, Ecuador, Uruguay, Costa Rica and Argentina. They said that the collapse was not a shock to them. They regrett ed that in the course of the negotiations, each member had become more concerned about safeguarding their flexibilities and had lost sight of their demands in market access (clearly referring to the Special Products and t he Special Safeguard Mechanism position of the G33, and perhaps also to the sensitive products position of the EU). As a result, the market access gains for some were not large enough to justify a deal.

No one addressed the issue of when the talks would restart. However, much depends on the mood in the US Congress with regards to domestic supports, if and when the trade promotion authority (so-called fast track) could b e extended (or renewed) until the conclusion of the round, and whether the US Congress, after the November elections, will be more amenable to movement on domestic supports? Whilst movement cannot be ruled out, some observers on the ground in the US think it would be an uphill battle for a lame duck President next year to get the approval of Congress for his agenda.

Some WTO insiders are of the view that this week’s collapse will be much more serious than the temporary collapse which took place during the course of the Uruguay Round. At that time, the WTO was about to be born, and ma ny wanted to realize the promise of this new institution. This is no longer the case – there are no more illusions, neither on the side of those wanting more market access, nor on the part of the majority of developing co untries, regarding what the institution can deliver to them.

Despite the formal declarations of regret in the TNC meeting, outside of the meeting, a few developing country delegates I spoke to could barely contain their euphoria. One delegate cautioned against prematurely labeling the round as dead. He said he would believe it “only when he sees it”. However, he was clearly delighted but said he should contain it “while I’m still here (in the WTO compound)”.

In press release after press release, civil society groups are celebrating the collapse and calling for alternatives to the current multilateral trading system - one which is based on people's needs rather than corporate profits. [But Brazil's Foreign Minister Celso Amorim sees it differently. -jlt]

- Aileen Kwa is a research associate with Focus on the Global South based in Geneva.
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