Published: The Financial Express, November 24, 2003
By Pradeep S Mehta
We will miss your delicious lunches”, said K M Chandrasekhar, the Indian ambassador to the World Trade Organisation, to the Japanese trade ministry’s director general, Nobuo Tanaka. He was not referring to a ‘free lunch’ but to the fact that Tanaka had threatened that Japan would resign from the WTO and leave Geneva. The reason: Japan’s insistence on negotiations on investment policy at the WTO under the impasse-ridden Doha Round.
This conversation took place on the sidelines of a high-level seminar organised at Geneva in the first week of November on how to move the Doha agenda. The sentiment reflected the net outcome of the seminar — and the bleak scenario at Geneva — that countries are not very serious about moving the Doha Round forward.
Chandrasekhar was being humorous, but Tanaka sounded serious. His colleagues and the Korean ambassador to the WTO, Eui-yong Chung, were also equally determined. One can understand Japan’s demand — they want a handle on China where a large amount of Japanese foreign direct investment is flowing. They also do not have any bilateral treaty to govern investments.
Investment was one of the causes of the failure of the September Cancun ministerial. It was one of the four Singapore issues, along with competition policy, trade facilitation and transparency in government procurement. Many countries were opposed to investment, in particular, and all Singapore issues, in general. The Africans walked out of the green room in opposition to all Singapore issues. On the other hand, the European Union was ready to withdraw investment and competition, but wanted negotiations on transparency and trade facilitation. It was, however, not clear whether both or just one issue could have been agreed to by all parties. It is another story that the meeting actually collapsed due to agriculture, as neither the United States nor the European Union were prepared to do more than what they offered on agriculture just before the Cancun meet.
That was not enough, which led to the creation of a formidable developing country alliance with Brazil, China, India and South Africa in the lead. However, the Mexican chair, Derbez, called off the meeting after the failure of the green room on Singapore issues. He did not go that extra mile in calling for the green room on agriculture. That’s an issue which will continue to haunt historians.
Be that as it may, it is surprising that European business has not been a demandeur for all Singapore issues. Even at the Geneva seminar, European business representatives said that they would be happy if negotiations were launched only on trade facilitation. That can certainly help move the agenda forward if, simultaneously, some steam can be obtained on agriculture. However, EU officials at the seminar did not wish to reveal their cards as clearly as their business did. They stated that they would be flexible only if other countries showed greater flexibility. In India’s context, this means that she has to reduce her agriculture tariffs more than what she would care to.
On the whole, the EU does not show any hurry to move the Doha agenda, as its trade supremo, Pascal Lamy, is very upset at the collapse of the Cancun meeting. The November 7 meeting of member states’ trade officials within the EU also could not arrive at any conclusions. On the other hand, the US has shown some willingness to move on the Doha agenda after such a call was made at a recent APEC summit. The problem with that is that the summit has called for ‘building’ upon the Derbez text of September 13. That draft was not acceptable to many, and thus they feel that it cannot be a ‘starting’ point.
Clearly, the situation is in a flux. The European Union continues to be quiet. One hopes that they will give some indication after an informal meeting of their trade ministers on December 2. As it stands today, they are testing the waters to see whether plurilateral approaches to competition and investment could fly, or whether negotiations can be launched on trade facilitation and perhaps transparency in procurement. Many are opposed to either the plurilateral approach or even the two less onerous Singapore issues. Renato Ruggiero, the former WTO director general, in fact, made a few good suggestions at the meeting to get out of the logjam on a long-term basis: First, that the ministerial process should be de-dramatised, ie, a ministerial should be held every six months with a narrow agenda, without engaging in any major institutional changes. Second, to expand the role of the director general, with powers to move on the agenda rather than leave everything to members, especially when there is an impasse. Third, to establish a group of eminent persons who can meet outside the rigid boundaries of the WTO system and build consensus on contentious issues.
Criticising the approach of the US and EU in pursuing regionals, Ruggiero made a smart suggestion that there should be a standstill on new bilateral and regional trade treaties till the Doha Round is over. And that the Committee on regional trade agreements should be given a strong mandate to examine the existing treaties and how compatible they are with the WTO’s fundamental principles. Many pundits have already criticised RTAs as stumbling blocks rather than building blocks.
Among other eminent persons speaking at the seminar, former Mexican president Ernesto Zedillo, who now heads the centre on globalisation and development at Yale University, stood out with some of his wise remarks. Responding to a participant’s suggestion he felt that the agenda can move forward only if heads of governments recognise that it is an issue which requires attention. He felt that neither senior officials nor trade ministers can move the Doha round forward, as much has to be done and they will not be in a position to make the desirable commitments. For example, agriculture subsidies in the rich countries can only be addressed if George Bush and Jacques Chirac are ready to talk about it.
Zedillo suggested that developing countries should file complaints on the agriculture subsidies at the WTO once the peace clause is over at the end of the year. That could be a sureshot way to move the two trading giants to first, start lowering their farm subsidies, and second, to move the Doha agenda forward.