The Hindu Business Line : Fresh setback to Doha Round

It is disappointing to note that the trend of progress in the Doha Round negotiations has been reversed once again, in the process strengthening the hands of those who have always held that the Doha Round (and perhaps also the WTO) is terminally ill.

In early September, when the last meeting on the resumption of the Doha Round negotiations was held in Rio de Janeiro (the meeting being attended by Ministers and officials from the G-20 group of countries, the US, the EU, Japan and some West African cotton-producing economies), the world was presented with a ray of hope generating optimism that the round was not dead.

If one remembers, the Union Commerce Minister, Mr Kamal Nath, had described the status of the talks after the late-July Geneva meeting of the six most important member-countries of the WTO — which ended with the negotiations being formally suspended by the WTO Director-General, Mr Pascal Lamy — as being "between intensive-care and the crematorium".

Following the Rio meeting, the Brazilian Foreign Minister, Mr Celso Amorim, updated the condition of the patient as being slightly better. He announced: "The round is alive. We have taken the patient out of the intensive-care unit and now it's in the sick bay".

Signs of flexibility

But what was behind Mr Amorim making this statement? According to reports, he said he had seen "signs of flexibility" from certain key nations at the Rio meeting although what precisely the signs were in substantive terms he did not make clear.

Among the signs were perhaps the Press statement issued by the G-20, among other groups, which urged the WTO chief "to intensify the process of consultations with member countries in an inclusive and transparent manner in order to create the necessary conditions for the prompt resumption of the negotiations with a view to arriving at an agreement that is ambitious, balanced, and pro-development".

Reports also quoted the Japanese Ministerial representative at the Rio meeting as saying that "there should be some signs indicating the end of the cessation in October".

If this was the sole basis of Mr Amorim's guarded optimism, it was pretty weak. But, then, the Brazilian Minister, being an important player in the entire Doha negotiations (along with allies such as India) and the developed countries, must have had something more substantive to base his views on, particularly when he felt confident enough to see a reversal of a trend.

It is disappointing to have to note now that the trend of improvement in the patient's health, which Mr Amorim thought he had detected, has been reversed once again, in the process strengthening the hands of those who have always held that the Doha Round (and perhaps also the WTO) is terminally ill.

Failed effort

The cold water was poured at last week's meeting in Australia of the 18-member Cairns Group of farm-exporting countries, an event which many had seen as the last chance to resurrect the hopes for a successful Doha Round by the middle of next year.

In fact, the meeting, which was ostensibly held to observe the 20th anniversary of the founding of the group, was geared to getting the stalled Doha Round negotiations off the ground.

The host nation Australia had, in fact, circulated a proposal to break the ice currently separating, in particular, Washington and Brussels, a divide which has been seen by the international community as being one of the most important reasons behind the inability of the multilateral talks to make any progress in recent times.

Unfortunately, the effort failed, and it would be interesting to find out who was behind the failure this time because it could help to throw some light on who really was responsible for scuppering the Geneva meeting of the Group of Six held in July.

According to reports, Brussels rejected the Australian proposal even before the meeting was held, describing it as `unworkable'.

What was unworkable was the suggestion that the EU tariff-cut offer be raised by five per cent in return for an extra $5 billion reduction in US farm subsidies.

Read with the fact that Mr Peter Mandelson, the EU Trade Commissioner, did not find time to attend the meeting (for which a special invitation was sent) when the US Trade Representative, Ms Susan Schwab, and the WTO Director-General, Mr Pascal Lamy, were in attendance as special guests, one is drawn to the inference that Brussels had relegated the meeting in its list of engagement priorities even when the world knew that it was perhaps the last chance to hammer out something which would get people back to the negotiating table in time for the Doha Round to be finalised before the fast-track authority given to the US President to sign international trade agreements comes up for renewal in the middle of 2007.

It would, of course, be naïve to suggest that had the EU made acceptable noises at the meeting, the prospects would have brightened for the trade talks.

That is something which will never be known now, but the fact is that Washington has been quick off the mark, not just to take advantage of the faux pas made by Brussels but also to repair some of the damage which resulted from the wrong public face put up unnecessarily by Ms Schwab, the new US Trade Representative, at the July Geneva meeting.

It is reported that, last week, while Ms Schwab "hinted that Washington could make fresh farm trade offers to help resume the Doha Round", the Japanese Agriculture Minister, Mr Shoichi Nakagawa, said he had "cards in his pocket" which he would not reveal before the others showed their hand.

Sense of distrust

Given the record of EU intransigence on the issue of lowering farm-tariff barriers, the point can perhaps be made is that Ms Schwab let the Europeans off the hook in Geneva by her brusque and abrupt behaviour, which gave the world the impression that it was Washington which had put the spoke into the wheel of the Doha Round.

If in fact this was the case in Geneva, Mr Mandelson would have made it a point to have been present at the Cairns Group meeting if only to convey the impression that the EU has always been ready to negotiate and compromise for the sake of world trade liberalisation.

Perhaps there was advance information that Washington would adopt a line different from that taken in Geneva, which would have put Brussels in a spot.

All this is, of course, conjecture, the bottomline being that there is a deep distrust among the principal players (which includes the developing countries) of each other's motives.

As the Australian Deputy Prime Minister and Trade Minister, Mr Mark Vaile, put it, none of the protagonists want to move first. He put his finger on the spot when he said: "It's a matter of finding a mechanism for moving issues and the key countries forward with confidence, at the same time. That is going to be the challenge".

Meanwhile, time is running out. If next year's deadline is missed, it may not be before 2009, or even later, that the Doha Round — if it remains on the agenda till then — can hope to see the light of day.