A New Trade Round, Virtually
Volume 18 - Issue 24, Nov. 24 - Dec. 07, 2001
India's National Magazine
from the publishers of THE HINDUAt the end of much posturing and tough talk, the Fourth Ministerial Meeting of the World Trade Organisation in Doha produces a mixed outcome. And India's lone hand had a crucial role to play in the deal.
SUKUMAR MURALIDHARAN
in Doha
LATE on the evening of November 13, the scene at the Sheraton Hotel in Doha suggested nothing so much as a crucial conference plummeting towards failure. Delegates and officials to the Fourth Ministerial Meeting of the World Trade Organisation (WTO) were bargaining furiously over a draft declaration that had been prepared earlier in the day to the satisfaction of the United States, the qualified approval of the European Union (E.U.), and the barely concealed rage of the developing world.
PATRICK BAZ/ AFP
At the closing ceremony of the WTO conference in Doha.
Having yielded the previous day in approving a declaration on the centrality of public health concerns in enforcing the WTO's patents regime, the U.S. had seemingly earned the mantle of the honest broker. But the E.U. was playing hardball. As rumours swirled around the conference centre of a pullout threat from French President Jacques Chirac, the E.U. was holding firm to its insistence on deleting a reference to the objective of phasing out export subsidies in agriculture. And despite being the only outlier on this issue, the E.U. was playing for high stakes on other fronts, in demanding an explicit acknowledgment that negotiations on a bundle of issues of special interest to European corporations would begin no later than the next Ministerial Conference.
Developing countries were equally adamant that there could simply be no presumption that the WTO could venture into these areas - collectively known as the Singapore issues since the Second Ministerial Conference of the WTO in 1996 approved of a study programme in them. Negotiations on investment, competition policy, government procurement and trade facilitation were potentially deeply intrusive on national decision-making processes. And even as the developing countries were engaged in studying the deeper implications of the Singapore issues, they could not be herded into a commitment on negotiating them.
The Africa, Caribbean and Pacific (ACP) grouping had welded this concern onto another one - over the possibility that WTO rules on uniformity of trade rules would lead to the removal of a special waiver that it enjoyed in exports to E.U. markets. Bewildered by the complexities involved, New Zealand's Trade Minister withdrew from the fray late that evening. He chose to spend his time in the cavernous lobby of the Doha Sheraton playing out a pensive tune on the grand piano. His befuddlement and urge for relief was widely shared.
But the WTO was not about to give in. After the fiasco of the Seattle Ministerial Conference in 1999 (Frontline, December 24, 1999), a second consecutive failure was simply too terrible an eventuality for it to face. The U.S. and the E.U., which have found the WTO a convenient instrument to render the multiplying complexities of the world into some semblance of simplicity and order, had to make that extra effort. And as the night wore on the full repertoire of feint and manoeuvre, coercion and cajolery, was brought into play.
Late in the night, the ACP grouping won the assurance that its special waiver in E.U. markets would be sustained. Concurrently, promises of technical assistance for capacity building - in the over-used cliche of trade diplomacy - won the undertaking that the least developed countries (LDCs) and the Africa bloc would contain their dissent over the Singapore issues. Then an acknowledgment by the E.U. that it would not be averse to the objective of phasing out export subsidies in agriculture provided that the outcome of negotiations were not prejudged, seemed to eliminate another obstacle to agreement.
India then stood well and truly isolated. Early on November 14 it was presented a draft declaration that put in place all the issues that it had spared no effort to remove from the WTO's negotiating agenda. Crunch time had come and the Indian delegation without further heed to diplomatic delicacy made it known that it was on the verge of voting with its feet. Commerce Minister Murasoli Maran, as the leader of the delegation, informed the conference that India would not agree to a consensus. The next step in the battle engagement called for blocking the process of placing the declaration before the Ministerial Conference. And finally in the contingency plans that were being hatched in those feverish hours, the Indian delegation would complete its pull-out from Doha, presumably leaving the WTO in chaos and disarray.
U.S. Trade Representative Robert Zoellick (left) with E.U. Trade Commissioner Pascal Lamy (standing) during the final session.
Apart from the blow to the WTO's credibility, such an outcome would have constituted a serious loss of face for the conference organisers. Finally, it was the conference chairman, Qatar's Minister for Industry and Commerce Sheikh Youssef Hussein Kamal, who came up with the formulation that clinched the deal. While placing the declaration before the Ministerial Conference, Sheikh Kamal issued a clarification in two paragraphs. This was to the effect that the Singapore issues would be taken up for negotiations after the next Ministerial Conference only on the basis of a decision to be taken then by explicit consensus. This meant that each WTO member would be at liberty to take a position on modalities that could prevent negotiations from proceeding until that Member (was) prepared to join in.
The final declaration now contains the same formula on all four Singapore issues, that Ministers agree that negotiations will take place, after the Fifth Session of the Ministerial (Conference) on the basis of a decision to be taken, by explicit consensus, at that Session on modalities of negotiations. This seems to presume that negotiations will take place, with a decision being awaited only on modalities. It is in this sense, perhaps a relatively stronger assertion than the earlier draft, which said that the Fifth Ministerial Conference would decide whether negotiations should take place. But with the Chairman's clarifications appended, India was willing to accept the final declaration as an adequate compromise in order to win the E.U.'s concurrence on the agriculture text.
Ironically, however, no sooner had the conference concluded than the U.S. delegation began casting doubt over the long-term negotiating consequence of the Chairman's declaration. The final declaration, said a trade official cited by the policy journal Inside U.S. Trade, is the governing document of the conference. It alone will set the agenda for the future work of the WTO.
Similar polarities in interpretation were evident also with regard to the declaration on agriculture. The Cairns group of major agricultural exporters called it an unequivocal triumph against E.U. recalcitrance. The E.U. likewise claimed victory in having eliminated all discussion about the end point of negotiations in agriculture. These rather mixed assessments are perhaps inevitable. But they also highlight how the WTO agenda is always a work in progress, continually flowing into certain new areas and ebbing away from others in response to the compelling needs of its most powerful members. India may have won a reprieve on the Singapore issues, but the study programme sanctioned in 1996 will continue. And with WTO personnel being actively engaged in the research effort, the findings of the study could well be pre-ordained. A momentary lapse of attention on the part of the developing countries may be all that is required for these issues to make their appearance as full-blown items for negotiations on the WTO's slate.
Expectations were mixed when the Ministerial Meeting began on November 9 amidst high security in the capital city of the Gulf kingdom of Qatar. The U.S. delegation, ringed by layers of security, had been considerably reduced in size as a consequence of the September 11 terrorist attack and its aftermath. But in insisting that the conference would not be postponed and would be held at the venue that was decided in February, the U.S. was giving an obvious indication of the importance it placed on the occasion.
The U.S. and the E.U. had both stated their intention to see that a new round of global trade negotiations was kicked off at Doha. Preliminary briefings by the two sides made it apparent that conflicting perceptions and priorities divided them. The U.S.' principal concern, as elaborated by senior trade officials just prior to the conference, was market access in the most general sense, with trade in agriculture being earmarked for special attention.
RABIH MOGHRABI/ AFP
Mike Moore, Director-General of the WTO.
Early statements of the U.S.' negotiating posture were interpreted as a direct challenge to the E.U., which continues to maintain the most comprehensive system of agricultural subsidisation possible under WTO rules. The E.U. for its part responded aggressively, with the assertion that it would support a programme of agricultural trade liberalisation provided that it benefited all. Even before the formal inauguration of the conference, delegations were grappling over the language of a Draft Ministerial declaration jointly prepared late in October by Mike Moore, WTO Director-General and Stuart Harbinson, the Ambassador of Hong Kong (China) and president of the WTO General Council. This text, called the Harbinson Draft, was a catalogue of a number of subjects and priorities for action by the WTO as part of an expanded work programme, which many developing country delegations believed referred to a new trade round by another name.
On agriculture, the Harbinson text affirmed that the WTO's priority would be to initiate reductions of, with a view ultimately to phase out, all forms of export subsidies. The E.U. placed on record its reservations about this clause right at the outset, but in order not to hobble the discussions, expressed its willingness to go along with a programme of subsidy reduction provided all forms of trade distortions were disciplined. As elaborated by E.U. Agriculture Commissioner Franz Fischler, these would include export credits and the use of food aid not to relieve suffering but to dispose of surpluses, open up markets (and) drive out competitors.
THESE subtle manoeuvres between the U.S. and the E.U. on the question of agriculture provided an early pointer to the direction in which the talks would move. The E.U. was evidently determined to hold out on agriculture in an overture for the U.S.' support on the Singapore issues, as also environment and labour. India had vocally expressed its opposition to the new issues, but other developing countries were expected to acquiesce. Arriving at Doha amidst a chorus of media comment about India's isolation, Murasoli Maran soon discovered substantial support for its position. Most developing countries were convinced that the WTO should handle the issues of implementation of existing agreements before taking on a broader negotiating agenda. But during informal interactions with the media Maran was careful to underline that these principles, bilaterally agreed between developing countries, might not stand up within the hard bargaining of the Ministerial Meeting.
Apart from the contentious issue of subsidies, the E.U. had staked out a lone position in insisting that environment, rural development and food safety should also feature in the agriculture negotiations. This was viewed by other member-states as a thinly disguised protectionist device. The U.S. likewise was alone in its belief that the anti-dumping provisions of the WTO agreement were not in need of review. Among the developed countries Japan was known to have a grievance on this score and seemed likely to join the E.U. in wielding anti-dumping as a weapon against the U.S.' resolve to curb their agricultural subsidies.
Among the implementation issues of concern to India, the Harbinson text proposed that the pace of dismantling textile export quotas and integrating textiles and clothing into the WTO framework could be accelerated. In the area of agriculture there was a recognition that the green box subsidies, that is, those subsidies that are employed to safeguard food entitlements and ensure nutritional security to the vulnerable, should be exempted from reduction commitments. The Harbinson text, though, remained in the main quite oblivious to developing country interests.
ADDRESSING the opening plenary, Maran sharply attacked the Draft declaration, characterising it as neither fair nor just. He also took issue with the tone of the letter that had been addressed to the member-states by Moore, while forwarding the Draft declaration for consideration. Disregarding the reservations expressed by various countries, the Director-General had in his letter made out a case for quick agreement on the terms listed in the Draft declaration, saying that it represented a near-consensus among the member-states. This failed to reflect the substantive differences that had been stated and reiterated, said Maran.
V.V. KRISHNAN
Murasoli Maran, India's Commerce Minister.
The Doha Ministerial had the opportunity to provide a strong impetus to ongoing negotiations on agriculture and services as also to accelerate the process of reviewing existing agreements. These negotiations had already been mandated and could not be held hostage to unreasonable demands that new issues be brought on board the WTO agenda, said Maran. The WTO is not a global government, he continued, and it should not seek to arrogate to itself responsibilities that legitimately belong to national governments and legislatures.
Maran's intervention was rightly regarded as a signal that the Doha Ministerial Conference continued to face unbridgeable gaps of perception. This was pointedly if unwittingly emphasised by Robert Zoellick, the U.S. Trade Representative who led his country's delegation to Doha. Articulating U.S. priorities on market access for agriculture, industrial goods and services, Zoellick praised the draft declaration as a document that skilfully cleared many impediments to the opening of a new round.
E.U. Trade Commissioner Pascal Lamy made a direct pitch for the allegiance of the developing countries. In his address to the plenary, Lamy sought to mitigate the anxieties about a new round of negotiations by couching it in the phraseology of a development agenda. The language undoubtedly appealed to the developing countries, though the details were far from agreed. At one of several media interactions, Iddi Mohammad Simba, the Tanzanian Minister for Trade, described a development agenda as a desirable outcome of Doha. But speaking on behalf of the less developed countries, the ACP and the Africa bloc, Simba placed on record his allergy for the notion of a new round. "We do not have the capacity to negotiate on the new issues," he said, "and there was a noticeable lack of will on the part of the developed countries to talk of a development agenda in the absence of these issues." The LDCs, the ACP and the Organisation of African Unity remained opposed to a new round of trade negotiations in the sense of a single undertaking, that is, a multiplicity of agreements all of which have to be accepted or rejected in their totality. What was required, said Simba, was a sequencing of the negotiations, an ordered priority that would put development first.
IN procedural terms, the negotiations at Doha kicked off with an innovative feature. The infamous green room, where the decisive bargains would be struck between key players and recalcitrant elements would be summoned for inquisitorial hectoring, was done away with. After the collapse at Seattle, the green room had been denounced by several members of the WTO as an undemocratic and medieval feature. In its place the conference chairman, in consultation with the WTO Director-General, appointed six facilitators (or friends of the chair) who would coordinate the discussions.
RAVEENDRAN/ AFP
CPI(M) Polit bureau member Sitaram Yechury, former Prime Minister V.P. Singh, CPI(M) general seceratary Harkishan Singh Surjeet and Samajwadi Party leader Mulayam Singh Yadav at an anti-WTO rally in New Delhi.
Visiting Trade Ministers from South Africa, Canada, Mexico, Venezuela, Singapore and Switzerland were appointed facilitators in six key areas. In a crucial intervention in the WTO Committee of the Whole - which is the final decision-making body in the Ministerial Conference - Maran emphasised the need for the facilitators to follow a completely transparent process in eliciting opinions. The facilitators in turn should present a text to the Committee of the Whole only if there is consensus, he said. Failure to forge a consensus should be duly reported to the Committee. There must be no attempt to presume a consensus where none exists, and as a precaution against the manufacture of consensus Maran demanded that all delegations be given an opportunity to scrutinise the texts of the facilitators' reports before they were presented to the Committee. The Indian Minister's intervention was broadly endorsed by a large group of developing countries, though it was flagrantly disregarded as pressure mounted to produce an agreed outcome.
Signalling further the deep divisions, Japan on the second day of the conference reacted strongly to U.S. suggestions that it was not showing sufficient flexibility and leadership in the negotiations on agriculture. It also chose to reiterate its reservations over the U.S. proposal to broaden the discussion on anti-dumping rules to bring the alleged unfair trade practices of other member-states under scrutiny. Till the third day all participants were doing little else than repeating their well-known and inflexible positions. Early on the fourth day, a compromise text on Trade-Related Aspects of Intellectual Property rights (TRIPS) and access to essential medicines was worked out in a nine-member sub-group and referred to a wider committee. A considerably modified version, with certain sections reflecting persisting disagreements, was placed before the Committee of the Whole that evening.
HUSSEIN MALLA/ AP
An anti-WTO protest in Doha on November 13.
In the unique bargaining procedures used in the WTO, where nothing is agreed until everything is agreed, it seemed likely that agreement on the medicines issue could break the deadlock in other areas. But these remained unfulfilled. India and other developing countries continued to encounter resistance in the textiles negotiations. The U.S. and Canada stuck to their insistence that the proposal to accelerate the elimination of quotas amounted to an amendment of the existing Agreement on Textiles and Clothing (ATC). The E.U. continued to support the declaration on textiles, on the understanding that it only involved the full utilisation of existing flexibilities in the ATC. Japan, while remaining loftily unconcerned over this argument since it maintained no textiles quotas, expressed pessimism about the prospects of a deal. And in an evident effort to ratchet up the pressure, Maran characterised the persistent stalemate in textiles as a potential deal-breaker.
With the compromise text on TRIPS and essential medicines clinched, the U.S. had seemingly relieved itself of its most onerous negotiating burden. It was now free to use its good offices and coercive power to stitch together a deal. It was clearly amenable to bringing on board the Singapore issues if it could induce the E.U. to back down on agriculture. It was also keen to see Japan relent on anti-dumping measures. And if when the final day of the conference dawned the latter deal seemed closer to realisation than it was at the beginning, the former seemed as elusive as ever.
The E.U. was if anything only hardening its position, refusing to give any ground on the Singapore issues. As the last day of scheduled talks began, an E.U. spokesperson brusquely brushed aside the reservations repeatedly expressed by the LDCs about the new issues as being dilatory and diversionary. With surpassing manipulative skill it had worked overnight with the U.S. in presenting a Draft declaration - the third draft in conference shorthand - that was a virtual and exclusive charter of its demands.
The Indian delegation was incensed. Speaking at the final plenary, Maran chose a relatively moderate-register idiom to present India's disagreement, expressing his strong sense of disappointment at the third draft. The declaration, he said, failed to reflect India's concerns and demands in a substantive manner. Maran identified the weak provisions on implementation of the Uruguay Round agreements as one of the specific shortcomings in the third draft. In comparison to the Harbinson text, the third draft that had been placed before the Committee of the Whole represented a considerable dilution on implementation issues. It placed the entire section on textiles, for instance, within square brackets, indicating that there had been no agreement on it.
The draft declaration also put in stronger preambular language on the issue of environment and trade. It removed a crucial qualifying phrase, thus recognising the International Labour Organisation (ILO) as the appropriate forum for a substantive dialogue on trade and labour standards. On the issues of investment, competition policy, government procurement and trade facilitation, the third draft mandated either immediate negotiations or a decision at the next Ministerial Conference on beginning negotiations. Expressing a sentiment that was widely shared by developing countries, Maran told the plenary that all this was premature, since the decision on negotiations could only be taken after the results of the study programme authorised by the Singapore Ministerial Meeting of the WTO were known.
India was also concerned about the single undertaking clause of the declaration, which stipulated that negotiations in all areas - including the implementation of the Uruguay Round - would be conducted, concluded and enforced as a package involving all members. This effectively meant that in order to obtain a discussion on the implementation of the Uruguay Round India would have to begin negotiations in areas as diverse as investment, competition policy and perhaps even environment and labour.
AFP
Chinese Foreign Trade and Economic Cooperation Minister Shi Guangsheng signs his country's accession to the WTO.
Till late in the evening of November 13, the Ministerial Plenary remained deadlocked. The E.U. showed no sign of relenting from its insistence that the clause on phasing out export subsidies in agriculture should be deleted. It was also raising the stakes by demanding stronger language on environment, labour and the so-called Singapore issues. The U.S. and Japan were in relative terms the least dissatisfied with the third draft. Since the declaration on essential medicines, the U.S. had managed to position itself as a credible broker for a comprehensive deal. But its insistence on not conceding ground on textiles removed a vital element of flexibility in the bargaining process. Japan had for its part worked out a compromise agreement with the U.S. on the use of anti-dumping measures. But even with movement along these directions, the Doha Ministerial remained deadlocked between the E.U.'s insistence on more than the developing countries could yield and the U.S.' reluctance to relieve pressure by granting crucial concessions of interest to the developing countries.
As often happens, minds were focussed by the possibility of failure. And an expedient of rather dubious value - the conference chairman's prefatory statement to the tabling of the final declaration - was deployed to wear down India's resistance. Nomenclature is of course not of any great consequence. It is not yet clear that the negotiations that will begin in the WTO's expansive offices in Geneva early next year will be called a new trade round. These are more likely, as a verbal concession to mitigate the material injuries that are likely to be caused to the poorer countries, to be called the Doha Development Agenda. But for India the negotiations on market access in industrial products will be crucial. With a large number of industrial tariff lines remaining unbound, India will be compelled to undertake binding commitments beyond which customs duties will not be raised. Whether these amount to a new round or not is a matter of terminology. But clearly, a period of wrenching adjustment is foretold for Indian industry, as also for agriculture and services.