The Hindu Business Line : Doha Round on a knife-edge

The Doha Round is delicately poised and it seems only a miracle at Hong Kong, the last checkpoint of progress, can push it forward. If the Hong Kong meeting has nothing important to tell the world about the ongoing negotiations the completion schedule of the Round itself would have to be pushed back, which would deal it a fatal blow. So, in the interest of the developing world that miracle is urgently needed.

IF EVEN the Americans have thought it fit to warn the international community that the ongoing negotiations for the Doha Round of multilateral trade negotiations have perhaps entered a phase which will decide the Round's success or failure, it only means one thing — that the next ten days will be the clincher as far as the Doha Round's future is concerned.

Since such warnings have in fact been sounded off and on over the past month (especially after the August holidays in the West), one may be justified in arguing that there is nothing new in the urgency which the WTO talks are facing at this particular juncture.

This may be true, but the fact remains that Washington too has come around to the view that things are pretty bad for the ongoing negotiations, which is an important indication in itself given the crucial position which the US enjoys in the WTO's scheme of things.

None other than the US Trade Representative, Mr Robert Portman, told a US House Agriculture Committee hearing earlier this week that "if we can't pull it together next week (meaning this week), then it will be very difficult to pull together other areas such as services and non-agriculture market access (NAMA) in time for a successful Hong Kong meeting (slated for the first week of December)."

Of course, Mr Portman, the diplomat that the USTR always has to be, has also said that there is nothing sacrosanct about the Hong Kong deadline.

As he sees it, although the failure to complete the current negotiations (specially on agriculture) may put the Hong Kong meeting "and the entire Doha Round" at some "risk," the forthcoming meeting is "only a milestone... (and) not the end of Doha (which it) was never meant to be."

This should be a happy thought for all those who are keen on the Doha Development Agenda being implemented as quickly as possible, not to speak of the legion (mostly in the poor world) who would like to see the entire WTO process control even more strongly the international trade flows.

But the fact remains that Hong Kong is meant to be a last checkpoint for the progress made towards the Doha Round, which, as of now, is scheduled to come into force in early 2007.

What this means is that if the Hong Kong meeting has nothing important to tell the world about the ongoing negotiations (the inference being that the deadline for agreements on issues such as farm trade and NAMA has gone haywire), it would be only logical to expect that the completion schedule of the Round itself would have to be pushed back.

And pushing back the schedule for the completion of the Round even further (the end-2006 deadline is itself a new one after the failure to keep the first) could deal it a fatal blow which, some may be tempted to think, would not be too unwelcome a development for those countries which have lately been finding the going — towards opening up their economies even further to exports from developing economies — inordinately tough.

Indeed, some people would argue that whatever Washington says about last-minute efforts being made to salvage the Hong Kong meeting (and the Doha Round), it would not be too disappointed to see the end of the Round itself — and ultimately the WTO.

This may or may not be true, and it really is a trifle pointless to spend any more time on the issue because the future will itself show decisively whether there is any truth in the surmise.

More important is the fact that, as of now, every indication points to the fact that it is the Europeans who are to blame for the lack of any progress towards Hong Kong, and that a bit more flexibility on their part with regard to phasing out of farm sops, etc., could work wonders for the future of the stalled negotiations.

As the US Secretary for Agriculture, Mr Mike Johanns, is reported to have told the House Agriculture Committee, "We will not settle for a package that does not increase real market access," adding significantly, "To be frank, a new global pact is in jeopardy unless Europe shows still more flexibility".

This is not to suggest that the Americans themselves are in a comfortable position with nothing to worry about other than extracting matching concessions on tariff reductions from the Europeans.

It must be remembered that the Bush Administration has stuck its neck out to make the offers it has in Geneva, and that it is bound to have a tough time making lobbies back home agree to its negotiated proposals once agreements are reached.

Even now, personages in Capitol Hill have upped the ante against the promises already made by the US President, Mr George Bush's negotiators, the overall concern being that in the rush to get a favourable setting for the Hong Kong meeting, the Administration may commit itself to decisions which could mean a reduction in the overall US farm programme expenditure.

Among others, the Chairman of the Senate Committee on Agriculture, Nutrition and Forestry, Mr Saxby Chambliss, has said that he is "deeply concerned because the Administration is using the current negotiations to reshape (overall US) farm policy without the full input of Congress and grassroots support."

For good measure, he added: "The agriculture negotiations can set broad parameters for spending limits, but they should not write the next Farm Bill". In an attempt to set the record straight, the Senator also said: "I firmly believe the US should commit to reduce trade-distorting domestic support in exchange for other forms (of trade concessions). But it should not reduce the overall farm programme expenditures in the negotiations".

In the days ahead, the Europeans are expected to make a fresh offer which is expected to mollify the US and the G-20 countries led by Brazil, India and South Africa among others, which is then expected to trigger a host of accords in sectors such as NAMA and services, to name only two.

In fact, as of now, Brussels has agreed to cut average farm tariffs by 46 per cent (up from an initial level of 38 per cent) compared to the G-20 offer of 54 per cent and a US offer of between 55 and 90 per cent. It remains to be seen whether EU members like France will allow Brussels to inch closer to the other offers on the table, but the chances are bleak given the political battles that have already been waged over the issue in the EU Council of Ministers. (In fact, Mr Portman would like the EU offer to be somewhere between the average 75 per cent made by the US and the G-20's 54 per cent.)

As for India, the Commerce Minister, Mr Kamal Nath, has said that the revised European offer on agricultural market access was "constructive and demonstrated the will to take the talks forward". But what could not be accepted is the link that Brussels sought to forge between the farm negotiations, on the one hand, and NAMA and the services talks on the other, something which EU officials have harped on openly before.

In fact, on October 11, the EU Trade Commissioner, Mr Peter Mandelson, had announced in forthright terms that unless countries such as India, Brazil and China open their markets to non-farm exports, "no outcome on agriculture or other parts of our negotiations" is possible. Three days later, on October 14, Mr Portman replied that progress on "other issues" such as NAMA and services was unlikely "unless the Gordian knot of agriculture" was untied and that the Europeans had to come forward "with a substantial market access proposal".

Against this background, Hong Kong in the first week of December seems so far away. Clearly, as of now only a miracle will do the trick. One is urgently required in the interest of the developing world more than anybody else's.

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