Published: The Financial Express, May 12, 2003
By Pradeep S Mehta
It is certainly a matter of great satisfaction when one’s writing succeeds in actually moving the agenda. Publicly acknowledging my recent letter in the Financial Times asking the European Union (EU) to do better on its offers for movement of natural persons, the EU’s Trade Commissioner, Pascal Lamy, during his mid-March visit to India, agreed to talk to the EU ministers on a better offer. On his return to Brussels, he honestly did that, and succeeded, too. That may be one reason for India and other demandeur countries to feel satisfied that the WTO may not be such an unequal treaty after all. How-ever, while the EU prepares a better deal on this issue, contentious issues in the Doha Round appear to be immobile, raising fears about the success of the Cancun meeting.
“Not enough progress has been made to date on the development agenda, but our discussions here have shown a very high level of commitment to meeting the WTO goals and concluding the round by end-2004”, said the New Zealand Prime Minister, Helen Clark, while chairing the Organis-ation of Economic Cooper-ation and Development’s annual ministerial meeting held last month at Paris.
It is not enough that such sentiments are expressed at meetings, because the two trading giants have to stand by their solemn duty to ensure that the agenda moves forward and people do not lose faith. At the same time, at the Paris ministerial meeting, Robert Zoellick, the US trade representative, and Pascal Lamy agreed in a one-to-one pow-wow that the WTO negotiations should focus in the coming months on clearly defined core issues, and that the agenda has to deliver.
Cancun is only five months away and it is only the implementation of the Doha Work Programme which can bail out the trade talks from a possible debacle at Cancun. Neverthe-less, there is some progress, which may result in resolving the current deadlock over the Doha round of trade negotiations. The two important dev-elopments are the EU’s offer on services on temporary movement of natural persons (referred above), and the US and the EU trying to align their proposals on industrial tariffs. But there has been no further movement on the more contentious issues: Agriculture, TRIPs and Public Health, Implementation and Special and Differential Treatment. These are the core issues which can deliver the ‘development’ in the Doha Development Agenda.
From India’s point of view, the most significant development is the EU’s offer on Mode 4 of service supply under Gen-eral Agreement on Trade in Services (GATS). It started with Lamy’s March visit to India, when India supported the EU’s stand on agriculture for using the Uruguay Round formula for tariff reduction, and Lamy reciprocated by ass-uring India that he would discuss the issue of labour mobility with EU member nations.
Under the EU’s new offer on services, temporary workers will be allowed to stay for six months, rather than the present three. It has proposed to do away with the onerous economic needs test in spite of vigorous opposition by members states such as France, Spain and Germany. Instead, the EU would seek to negotiate a quantitative limit on the entry of foreign workers coming in under the provision. The EU insisted, however, that it would make no further concessions in areas of health, education, public utilities and social services. Second, its offer is restricted to skilled professionals.
However, for the Cancun meeting to succeed, much more work needs to be done in Geneva. Agriculture continues to remain central to the Doha Round and unless we make progress on this, fears will remain. Once again, all eyes are on reform of the EU Common Agricultural Policy (CAP) reform. A number of officials attending the OECD ministerial meeting exressed the hope that a planned mid-term review of the EU’s CAP would lead to movement in the WTO trade talks. Lamy recognised the high hopes that have been placed on the Brussels-based Commission’s “aggressive” proposal, but noted that it has yet to win approval from EU member states.
On the other hand, the European Commission has repeatedly said that it will not deliver on agriculture unless it can gain some progress on the ‘new’ issues: investment, competition, trade facilitation and transparency in government procurement. There may be some good things in possible accords on competition policy, trade facilitation, transpar-ency in government procurement, because all these are welfare enhancing. However, on investment many doubt the validity of its need at a multilateral level, and whether it can enhance any capital flows.
In a paper written for the EU India Network on Trade and Development, Peter Nunnen-kamp of the Institute of World Economics, Kiel, Germany, and Manoj Pant of the Jawaharlal Nehru University argue that there is no economic case for an investment agreement. However, for political reasons, the authors caution that developing countries should not shy away from negotiations if they are launched at Cancun. Indeed, since much of the negotiations are trade-offs, if the poor can get better market access, movement of natural persons, and reduction in EU’s agriculture subsidies, etc, as a deal, then an investment agreement based on the GATS-type bottom-up approach may not be such a difficult thing to digest.