In Search Of A Deal Maker At Cancun Round

Published: The Financial Express, August 04, 2003
By Pradeep S Mehta

Yet another mini-ministerial meeting at Montreal end-July to resolve the Doha Round conundrum was perhaps just another jet-setting opportunity for countries to restate their positions ad nauseum. The motion, if any, was there in Australia’s threat to walk away from world trade negotiations if global farm trade couldn’t be reformed during the current round of talks.

The EU’s continued persistence with launching negotiations on Singapore issues and objections by the US to a draft WTO agreement on access to essential medicines are giving many sleepless nights. In such a scenario, it is very difficult to predict what could be the possible dealmaker(s) at Cancun a few weeks away. One way or the other, countries are quite keen that the Cancun meeting doesn’t become another Seattle.

On agriculture, over the last one month there has been some progress. First, the agreement among EU members to reform their Common Agricultural Policy (CAP), though only a part of the problem has been addressed. This was followed by a decision by the EU and US to draft a joint WTO proposal on farm trade, which has released some tension. In such a complex situation, it is well known that agriculture is the one issue that can either make or break future trade talks. While the EU has shown willingness to give some concessions on agriculture, it is adamant on launching negotiations on Singapore issues. With equal determination, some developing countries are blocking negotiations on them. At the same time, developing countries want the EU to push the US for an agreement on TRIPs and Public Health and to liberalise the movement of professionals under Mode 4.

What does the EU have to gain in lieu of all this, so that they can satisfy their own domestic constituencies? The answer lies in some progress on Singapore issues. The EU is not as keen on transparency in government procurement and trade facilitation as it is on investment and competition. Investment is clearly the most opposed issue across the broad spectrum of developing countries. On this, even the USA remains ambivalent, while some of the EU members are not demandeurs. Competition policy, thus, seems to be the best choice.

The Doha Declaration suggests the launch of negotiations after the fifth ministerial meeting, subject to an explicit consensus on the modalities of negotiations. Till date, even the draft modalities of negotiations have not been worked out on which consensus can be sought. The likely scenario is the establishment of a committee on Trade & Competition Policy somewhat like the Committee on Trade & Environment, which was set up by a diktat of the Marrakesh ministerial meeting. The Working Group on Trade & Competition Policy has proposed this as one of the three ways forward in its latest report. A body like this can develop the modalities of negotia- tions, which can be launched on some appropriate future date. Though the Doha declaration speaks about exceptions and exemptions on grounds of developmental priorities and national policy space, developing countries are worried about the issue of the WTO’s core principles being a part of the deal, particularly national treatment.

They feel that this is essentially to push the market access agenda and that their right to discriminate on the basis of nationality may be impaired. The bite of national treatment can be substantially reduced and more acceptable by adopting a GATS-type positive list approach, as provided in the Doha text. This positive listing can be based on two-way classification: that of different types of anti-competitive practices and that of sectors. For services, the classification already made in the GATS can be adopted, while for goods, a similar classification can be made.

Similarly, different types of anti-competitive practices can be classified, for example, international (hardcore) cartel, domestic cartel, export cartel, import cartel, other restrictive business practices, abuse of dominance, and mergers and acquisitions. This would mean that the WTO obligations will be binding only in the sectors and the type of anti-competitive practices committed to by a member.

Another problem that many poor countries have been citing is that with no or very limited experience, they are not in a position to negotiate on competition policy at a high-stakes forum like the WTO.

The issue of adopting or not adopting a competition law can be addressed by taking an approach like the Agreement on Technical Barriers to Trade Agreement (TBT). It does not compel Members to have technical regulations, but rather governs their preparation, adoption and application to the extent that they affect the trade of other Members. The TBT has provisions dealing with co-operation (mutual recognition of conformity assessment) and includes a code of good practice. In all, the issue of timing as to when countries choose to adopt technical regulations is not a matter that is addressed by the TBT, other than an obligation to apply international standards as a basis for technical regulations.

Similarly, the code of conduct on competition policy would be applicable with the substance and application of national laws if and when a Member decides to have one, subject to the positive list commitment.

Such a code could establish the overall ground rules emphasising transparency and due process, and with other negotiated aspects that would be of interest to developed and developing countries alike. This might be better than a “plurilateral” approach, where by only a select group of countries negotiate a framework which is joined later by those who had no active participation in its negotiation on a “take it or leave it basis”. The proposed code would be a subject of negotiation and exchange by all Members, but lawfully applicable if and when a Member determines to have a law.

Another important aspect of the proposed agreement is co-operation. Even if the current proposal is for voluntary co-operation, an agreed framework in this regard can bring more coherence in the system.

There can be different types or levels of co-operation, ranging from purely technical assistance and sharing of non-confidential information to positive comity, sharing of confidential information, negative comity and mutual recognition and enforcement of laws.

Agreeing to this kind of a structure, like GATS, can give the WTO members something to build upon and thereby reach a ground for compromise. It also allows members, especially developing countries to participate without compromising their national interests.

Copyright © pradeepsmehta. All rights reserved.