Financial Daily from THE HINDU group of publications
Tuesday, May 20, 2003
Heading for deadlock in Cancun?
THE Doha Round of trade negotiations is in some difficulty. Whether the difficulties prove insurmountable depends on whether the developed world continues with the unnecessary rigidity it has shown so far on issues crucial to the developing world.
Four important deadlines on trade-related aspects of intellectual rights (TRIPs) and access to essential medicine, special and differential treatment (S&D) for developing countries, implementation issues and agriculture all of great concern to the developing world have been missed. And there is the risk that two more deadlines will slip by before the Cancun ministerial meeting.
The ambitious Doha Round, termed a developmental round, was launched during the fourth-ministerial meeting held at Doha in 2001. With separate declarations on implementation issues, TRIPs and public health, negotiations were launched on eight different issues.
These negotiations are part of a `single undertaking', meaning that the issues constitute a single package. Nothing is agreed till member-countries arrive at, and are bound by, agreement in all eight areas of negotiations.
What continues to dog many, a year-and-a-half later is, however, that the stalemate in crucial areas may lead to a gridlock in the overall negotiations. The pace of negotiations on services, for instance, have slowed down since it became clear that the deadline on agricultural modalities would be missed.
On the issue of S&D provisions, no progress has been made since the Doha meeting, as the fundamental divisions between member-countries persist. Thus, one after the other, three deadlines have been missed.
There are as many as 155 S&D provisions that provide favourable treatment to the developing and least developed countries; however, all of them are just best-endeavour promises. They are not legal obligations and, therefore, more often than not, are forgotten.
The Doha Declaration requires these S&D provisions to be reviewed with a view to strengthening them and making them more precise, effective and operational.
Subsequently, Ambassador Ransford Smith, Chair of the Committee on Trade and Development (CTD), identified 22 Agreement-specific proposals on which he felt it was possible to make immediate recommendations for a decision. However, "the Members were not willing to go the extra yard", he summarised the progress on consultation took place so far.
In agricultural negotiations, with the Cairns group and the EU being at loggerheads, and majority of developing countries playing the role of merely passive onlookers, efforts to agree on modalities by the end-March deadline have failed.
These modalities are to set out the broad aims, the negotiations, the methodology to be followed during the actual process, and the end-results expected, in the three main areas of reform export competition, market access and domestic support.
Stuart Harbinson, Chair, Committee on Agriculture, had issued a first draft of modalities paper on February 17 this year, seeking to average out the conflicting positions that had been advanced during the preceding negotiations.
The draft was rejected outright by the "friends of multifunctionality", who claimed that it was biased in favour of the Cairns group and did not address non-trade concerns such as environment, animal welfare and food safety.
The revised paper presented by the Chair on March 18 appears to respond to some of the key points put forward by the developing countries, including the concept of `special products', with respect to food security and livelihood security concerns. However, this has not been able to fascinate the members either.
While the majority of developing countries are analysing the second draft with a fair amount of scepticism, the EU and the Cairns group continue to indulge in the blame game.
The EU has lashed out at the loopholes for export credit and bogus food aid, freely used by Australia and the US. But it is clear that the pressure from farm lobbies within the EU is unlikely to allow it to bring in major reforms in its Common Agricultural Policy (CAP).
On the other hand, the discussion on TRIPS and health seen by many as the only positive outcome of Doha has also fallen into disarray. There is no sign of a deal, despite the US' heavy-handed efforts to blackmail southern governments to accept its demands that the agreement be limited to three diseases, plus a long list of other constraints that would effectively kill the local industry in developing countries where they exist and force the rest to source from the west.
The TRIPs Agreement allows all WTO members to issue a compulsory licence on a patented product to third party, without prior authorisation of the patent holder in the case of health emergencies or other circumstances of extreme urgency.
Many poor countries and small economies cannot take advantage of this flexibility due to lack of capacity to manufacture copies of patented medicines. The only potential course available to them is to issue the compulsory license to a manufacturer in a third country and import.
But the current rules rule out this option. TRIPs Article 31(f), requires use of Compulsory Licence restricted to `predominantly domestic market of the member, authorised such use.'
It was to overcome this limitation that the Doha Declaration mandated to "find an expeditious solution to this problem" and to report to the General Council before the end of 2002. However, the discussions broke down just before the deadline. The US rejected the text proposed by the Chair of TRIPs Council, outlining how `expeditious solutions' would work.
The US argued that the scope of diseases the solution would cover went too far beyond what its pharmaceutical sector was prepared to accept.
The dossier of happenings in the Doha Round so far indicates that it is almost certain that the negotiations will go beyond 2005. However, much depends on the developments before and during the forthcoming Cancun Meeting. But one thing is for sure that too much unfinished business could lead to a heavy burden at Cancun. It is unrealistic to expect trade ministers to resolve contentious issues in a meeting spanning only a few days.
Cancun is an important staging post on the road to mainstreaming developmental concerns. The developing countries will have to do their homework well to ensure that this happens, and that their unpleasant experiences of the Uruguay Round are not repeated.
But before that a change of heart is imperative on the part of the developed world especially the US and the EU. One last opportunity to sort out the major disagreements before Cancun is the forthcoming Mini Ministerial meeting in Cairo.
(The author is with TERI, New Delhi. The views are personal.)
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