Who’s going home naked?

Published on: Financial Express, November 14, 2001,
By Pradeep S Mehta
Trade ministers are still trying to find the right words to paper over the wide cracks in different countries views on the Ministerial Declaration. They need to reach some kind of consensus before the day is out or deal with the probably more painful consequence of another failed WTO Ministerial. Meetings were taking place with gathering pace in various forms – one to one, one to many – until midnight of Monday, and the tension rises palpably. One example of unexpected tension is the African group threatening a walk out over the refusal by some Latin American and other countries to accept the Cotonou waiver. These countries are the Philippines, Thailand, Colombia, Honduras etc.
The Cotonou Agreement is an extension of the Lome Convention which offered preferential tariffs to the former European colonies in Africa, Caribbean and the Pacific (ACP). The issue was not to be on the official agenda but after the challenge to the banana regime, the ACP countries do not wish to take chances. Therefore, they pushed the issue to be included in the Doha declaration for a sort of validation.

Officials are still holding out hope for a solution as the prospect of failure pushes them towards compromises against which they have been swearing for months. Seasoned negotiators say that this is a familiar pattern, with achievements in the last few hours greater than in the first four and a half days. However, all the sides are very reluctant to be the first: as long as the EU stands firm on agriculture, the developing countries will not make the concessions that they can easily afford to make in other areas. Still there has been some progress on access to drugs which could be the key to unlocking a series of deals in other areas. More importantly, the US is at least listening to some demands on the textiles front.

However, the real sticking point is agriculture for the EU, as its representative Pascal Lamy is in a very difficult position. The EU already seems to have lost two of their most important issues, investment and competition, that they were hoping would help them to distract the public back home from concessions on agriculture. Without some kind of deal on their third, environment, Lamy is in danger of “going home naked.”

EU’s allies are slipping away as the crunch point draws in. Japan, Norway and South Korea have now agreed to the language of the draft text on agriculture which calls for the gradual phase-out of export subsidies.

It’s not hard to imagine the tension there must have been in the room as EU’s trade ministers met together Monday night. The hard bargaining outside is also creating tensions in inside, as the French are increasingly isolated from the rest of the EU delegation who think time has come to show good will in return for progress across the board.

Another contentious issue is anti-dumping. The US is relenting from its tough positions and that can help in reaching some sorts of consensus on rules and negotiations. Another potential danger which can break a deal is EU’s softening of its position on environment. Developing countries and the US and Canada are opposing the EU’s approach to environment. Of the three major issues, as pushed forward by the EU, eco-labelling will likely go, but the relationship between multilateral environment agreements and the WTO will remain, whereas consensus is still elusive on precautionary principle.

The US insisted on formalising links between secretariats of MEAs and the WTO, not considering any legal language or issues clarifying legal precedence.

Meanwhile, the US and the EU are doing each other no favours. While a united front between the two would be formidable enough to break down the defences of the developing countries, they are badly divided. The Americans would be very happy to see that the EU was forced to reduce its farm subsidies, while the EU would be as happy to see the Americans rein in their anti-dumping regime.

Therefore, at the end of the fourth day of the ministerial, four deal-breakers have appeared: two from the developing world and two from the developed world (two-against-two).

Textiles and access to cheap drugs are pitted against agriculture and environment. On textiles, US and Canada declined to make any concessions beyond their Uruguay Round commitments, but the developing countries, led by Pakistan, are urging to accelerate the pace of liberalisation commitments.

On TRIPs and public health, amendments to the draft Ministerial Declaration went mostly in favour of the Third World. According to the new text, WTO Members may enact intellectual property rights legislation that permit them to import medicines from third countries rather than purchasing them directly from the manufacturer or its local licensee. “India today achieved a major breakthrough”, screamed an Indian government release.

On other issues, labour standards are nowhere in the scene. On Sunday, the EU, backed up by Norway, Switzerland and South Africa, was calling for changes in the draft declaration to incorporate stronger language on labour standards. A day after, Mr Lamy was forced to say: “We’re nowhere. We will push it, but for the moment there’s nothing more than the Harbinson text on the table.” Perhaps, the EU’s push was to satisfy its domestic constituencies for the time being and its subsequent retreat may broker a deal on other areas, notably agriculture and textiles.

Thus, of this two-against-two deal-breaking situation, its one-all between the developing and developed world. Developing countries got what they wanted in TRIPs and public health, while the EU was successful in pushing forward its agenda on environment (at least partially). The US is mostly playing off-the-ball game and trying to mediate between these two blocks. This leaves two issues (textiles and agriculture) without some sort of an agreement.

However, deals are always multi-faceted and within apparently cohesive blocks there is more interplay. If the Ministers come out with a declaration today, this in itself will be a major achievement, considering that a couple of months ago many people thought the meeting would not go ahead at all. In the end, the September 11 effect seems to have sensitised the rich countries a little more to the plight of the poor, and the developing countries have not lost the spirit of unity that they achieved in Seattle. This is a heartening news for the world trading system. Now all that is required is the courage to give a little ground in the knowledge that giving a little means gaining a lot.

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