The Hindu Business Line : WTO talks structure needs change

The latest failure in Potsdam of the G-4 countries — the US, the EU, Brazil and India — to hammer out an understanding among themselves on the subjects of discord which are holding up work on the Doha Development Round has, perhaps, come as the last straw for those who strongly feel that the World Trade Organisation ‘structure’ needs to be changed if it is to meet effectively the development requirements of its present-day membership.

Very briefly, the issue seems to be this: Given the diverse demand profiles of the organisation’s members, is the ‘single undertaking’ stipulation governing the Doha Round workable today? Conversely, given the deeply entrenched differing standpoints of the leading individual member-countries, as well as important blocs of member-nations, would it not be more sensible to clinch agreements in the different sectors as and when they are finalised, leaving the intractable sectors to their own time schedules?

The WTO Line

The official WTO line is, of course, very clear. As recently as June 22 the WTO Director-General, Mr Pascal Lamy, stated unambiguously that the Doha Round was a “Single Undertaking covering a broad agenda with development at its heart.” What this means is that nothing will be taken as agreed unless everything being negotiated is agreed upon. As Mr Lamy explained elsewhere, this is the best form of insurance for the poor world in that that their stronger competitors will not be able to get a better deal in some sectors while appearing to make concessions in elsewhere. Seen differently, the entire canvas of liberalising multilateral trade will have to be taken as one unit, the approval of the final outcome being acquiesced in by each and every member of the organisation.

Clearly, there can be no two views on the desirability of such a scheme, especially in a situation where the economically very strong and the very weak are the principal players involved. But it is also apparent that the system will work only where the spirit of give-and take holds sway. The problem with the WTO at the moment is that this accommodative spirit is becoming increasingly conspicuous by its absence, with both the rich economies and the developing (including the least-developed countries) world assuming inflexible positions at the negotiating table. As events have shown over the past couple of years, this is leading to an impossible situation as far as getting the Doha Round into shape is concerned.

High Stakes

The stakes are obviously high because if the Doha Round is scrapped it will represent a massive blow to the future prospects of multilateral trade liberalisation, if not to the existence of the WTO itself. No one can argue that such an eventuality will help the international economy by raising growth prospects and promoting a more equitable distribution of the proceeds. This, indeed, should be reason enough for every effort to be made to get the Doha Round off the ground in a respectable enough shape.

The long and the short of it is that, as of now, under the given framework of the negotiations, the prospects of such a happy development occurring are practically non-existent. Since the finalisation of the Doha Round is so indispensable to the future shape and growth of the multilateral trading system, it stands to reason that there should be no uncompromising opposition to the idea of altering the framework of the negotiations, if that helps the member-countries of the WTO to overcome the current obstacles they are facing.

It will of course be argued that there is no point in concluding a Doha Round without an agreement on agriculture issues and on the subject of Non-Agriculture Market Access (NAMA), which form the very core of the give-and-take matrix involving the rich and poor economies.

While this is true, is it not also acceptable that a truncated Doha Round would at least have the effect of bringing the developed and developing worlds closer to each other in the sectors where agreements have been reached?

In fact, this could be a more attractive alternative than a situation where there would be no Round at all (and, therefore, no points of interfacing between the rich and the poor at the multilateral level) because of the absence of accords on agriculture and NAMA.

Retaining Inclusivity

To say this is not to suggest that WTO members-countries would negotiate among themselves individually or on the basis of groups on sectoral aspects of the Doha Round corpus. Far from it. The WTO umbrella would remain intact for such negotiations, all the members being involved in equal measure in the process, thus keeping alive the principle of inclusivity.

Indeed, in recent times, there have been murmurs among the WTO membership that groups such as the G-4 have not been as transparent as they should be in their attempts to strike deals with the developed economies, a point of concern which has grown so strong in recent times that Mr Lamy himself has gone out of his way to reiterate the principle of inclusivity and transparency as being the very basis of everything that goes on in the Centre du William Rappard, the Geneva headquarters of the WTO.

If what Mr Bill Clinton told the Geneva Ministerial meeting in 1998 is anything to go by, Washington will not shy away from the idea of giving the ‘single undertaking’ a temporary burial.

To quote the former US President: “We should explore what new type of trade negotiating round is best suited to the new economy. We should explore whether there is a way to tear down barriers without waiting for every issue in every sector to be resolved before any issue in any sector is resolved. We should do this in a way that is fair and balanced, that takes into account the needs of nations large and small, rich and poor. But I am confident we can go about the task of negotiating trade agreements in a way that is faster and better than today.”.

The Commerce Minister has asked for the Doha Round negotiations to resume in Geneva, which is just what should be done now to revive the sagging fortunes of the Round. But this will certainly not be enough to effect a turnaround.

As was stated earlier, the time has come to alter the framework of the negotiations so as to make it conform to the changing ground-situation, which has principally been spurred by the new teeth which the leading lights of the developing world have grown the past few years.

Surely, there is an ample measure of confidence today among Brazilian, Chinese, Mexican, South African, Indian and other developing-world negotiators to enhance their economic welfare as a whole even if the protection and ‘insurance’ of the ‘single undertaking’ is not there. The WTO itself must change if it is to serve the cause of multilateral trade better than in the nineties.