One More Chance For Farm Deal At Montreal Meet

Published: The Financial Express, July 21, 2003
By Pradeep S Mehta

It’s a dog-eat-dog world. Whether it’s Iraq or the WTO, the USA will have its own will and way. In response to a critical article published early this month by Professor Jagdish Bhagwati in the Wall Street Journal, the US trade representative, Robert Zoellick, has countered in an article that if things (Doha Round) don’t move at Cancun, then the US will continue on its binge of bilateral trade deals. Let the world go to hell!
Bhagwati wrote that the binge showed that Zoellick is working like a handyman, busy filling potholes without a road map; that the US deserves better and that it should respond to the risk by foregoing other efforts to open markets. Zoellick responded: “This would both weaken our hand in the WTO and give up the benefits from advancing free trade on multiple fronts”. Bhagwati feels that Cancun may become another Seattle.

There is very little merit in this argument. Indeed, the run-up to Cancun has been miserable to say the least. Five deadlines have been missed. Frankly looking at the homework done at Geneva, governments would not like to risk an encore of Seattle. At Cancun, a decision is required mainly on the four Singapore issues (investment, competition, trade facilitation and transparency in government procurement). As things stand today, the decision may be to continue with the study process, because of widespread demands from the South, with the USA straddling the fence. “One needs to lower one’s expectations”, said the charismatic Malaysian trade minister Rafidah Aziz at a recent meeting in London. The meeting was not exactly a mini-ministerial but few Commonwealth trade ministers, business and civil society representatives had collected to debate the very same issues which are hogging space in Geneva. One important point which emerged at this meeting was that the Singapore issues need to be unbundled, so that competition policy and trade facilitation could move forward. Investment was clearly a no-no, and government procurement did not attract much favour. In this manner, the EU can at least get a part of the fig leaf to agree to move on agriculture. As things stand today, the EU is not agreeable to unbundling, but may relent at Cancun if other things are all right. In the WTO, one cannot say what may happen at the crux of the time. The last in the series of such informal talks at the ministerial level being held in the run-up to Cancun will be held at Montreal. The previous three such meetings took place in Australia, Japan and Egypt. There is a slender hope that the Montreal meeting might provide some impetus to the stalled WTO negotiations.

The ‘Luxembourg compromise’ on reforming the subsidy-laden EU Common Agricultural Policy (CAP), followed by the proposed meeting between EU farm commissioner Franz Fischler with Mr Zoellick and the US agricultural secretary, Ann M Veneman, just prior to the Montreal mini-ministerial, is seen by many WTO members as a light at the end of the tunnel. However, it does not look so simple. At the meeting held earlier, the EU ministers made it clear that they do not intend to automatically translate internal reforms measures into firm WTO commitments. Instead, they will only agree to binding reductions in the most trade-distorting farm subsidies in return for concessions from its trading partners. The pound of flesh are the four Singapore issues.

Agriculture has always been a ‘deal-maker’ or ‘deal-breaker’ for WTO talks. This was also the principal reason for the failure of Seattle. The US wanted deep cuts in farm subsidies but opposed efforts to cut peak US industrial tariffs or reform anti-dumping rules. The EU and Japan resisted farm reforms while seeking new deals on investment and competition policy. One cannot but forget that the US and the EU are the two who need to do a tango on the core issues for the WTO talks to progress.

Since the Uruguay Round, the developing world has learnt a huge amount. They have tasted blood at Seattle and since Doha, have also flexed their muscles. If a deal between the EU and US is important, so too are developing country interests, such as mobility of labour. The Geneva process after Doha has only widened the gap between the rich and the poor and enhanced the mistrust. If Cancun has to succeed, crucial issues of TRIPs and Public Health, Special & Differential Treatment (S&DT) and Implementation must be resolved before that.

On July 18, the WTO General Council chairman put out a draft ministerial declaration noting: “The somewhat skeletal nature of this first draft is a reflection of the reality of our present situation. It reflects how far we still have to go in a number of key areas to fulfil the Doha mandates. The task ahead of us in the short time remaining before Cancun is to fill in the gaps in this draft so that it becomes a workable framework for action by Ministers”.

The Geneva delegates and WTO officials are unlikely to have any summer holidays this time, as they will be busy trying to get the draft ministerial text moving. The issue of lack of participation and transparency has been raised on several occasions. If this is not paid proper attention this time, this might become a deal breaker or a spoiler. Many large and small developing countries had put forward a paper in the General Council on this issue, but nothing moved forward. Therefore, at Montreal, apart from trying to make a deal on agriculture, members should also work out the process of negotiations which can be adopted at Cancun. More importantly, unlike in past, this time, small countries, particularly LDCs, should not be left out of the process of negotiations or informal consultations.

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