WTO talks at the crossroads
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China Daily, October 12, 2011
The Doha round seems unlikely to reach a resolution anytime soon, reports China Daily.
The Director-General of the World Trade Organization (WTO) Pascal Lamy is on record as saying that 2011 was the "window of opportunity" for the Doha round of global trade talks, but now that window seems to be closing without any concrete results.
Irrespective of what Lamy expected when he made his remarks, almost everyone else involved seems convinced that there is little hope of the talks being wrapped up anytime soon.
At the Davos Forum, held in Switzerland in January, two dozen trade ministers were in high spirits and pledged to finalize the Doha trade deal this year, through a series of concessions and trade-offs in response to calls from Lamy.
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Dealers discuss trading in horticultural products at a fair in Shanghai. China has promised no subsidies for agricultural exports in its effort to push forward the Doha round of talks. [China Daily] |
However, while the developed regions and nations, which play a significant role in driving the talks, are fully occupied with their own economic woes, the Doha round, aimed at improving the prospects for developing nations, has been left out in the cold.
US President Barack Obama is busily involved in reviving domestic economy - which is expected to experience a double-dip recession - and fighting to prevent his poll numbers from sliding further. Meanwhile, European leaders are struggling to resolve a eurozone sovereign-debt crisis that started in Greece and now threatens to engulf Spain and Italy.
"It's sort of a hope to bring an end to the talks, but the real facts show there is no possibility of making it happen this year, for political reasons," said Shen Juere, a former vice-minister of commerce, at the China and WTO forum in mid-September.
"The success of the Doha talks depends greatly on political willingness, especially that of the developed nations. Given that many nations are facing the challenge of economic recession and the US is fully engaged in preparing for the upcoming presidential elections, they are unlikely to expend greater efforts on Doha," he explained.
Liu Guangxi, an economist and senior official of the State Administration of Foreign Exchange, agreed.
"We would probably consider resuming the talks after the presidential elections in the US. But it can neither be 2011, nor 2012, therefore 2013 might be the earliest opportunity," Liu, who is a WTO expert, said.
"However, I cannot agree that the Doha round will die. It's still on," he said.
The Doha round - also known as the Doha Development Agenda - was launched in late 2001, with the objective of opening up the world market and helping poorer countries to benefit from global trade.
However, the talks have been continuously suspended for the past 10 years because the major players, including the US, the European Union (EU), India, Brazil and China, have been unable to reach agreement on a set of rules for the agricultural sector, industrial goods and services.
"There is now a recognition that the 2011 window of opportunity to conclude the round is closed, that there will be no conclusion to the Doha round in 2011," according to Rob Davies, the South African trade minister.
Who's to blame?
Officials and experts at home and abroad have been pointing the finger at the US for postponing the talks.
The president of the World Bank Group, Robert Zoellick, has openly criticized the Obama administration for failing to provide leadership in the Doha round and for adopting a defensive stance that has helped to stall the discussions.
"If (US) negotiators wait for the US Congress to tell them it's OK to close a deal, they'll wait for a long time," said Zoellick, a US trade representative under former President George W. Bush.
"Congress thinks that the executive branch (the current Obama administration) is supposed to carry that load."
On Sept 23, India's Commerce Secretary Rahul Khullar said that Doha is "stuck". "One thing is clear: It will not be possible to conclude the Doha round by the end of 2011. It is also crystal clear that it will not be possible to strike a trade deal during 2012, because one country will be going through a very long, drawn-out election at that time," said Khullar, referring to the US presidential election in 2012.
However some Chinese experts say that the US itself can never accept that analysis, and takes it for granted that the developing nations, including China, should be held responsible for the Doha failure.
"One thing is clear: What we are doing today in the Doha negotiations is not working. That is not a value statement, but a simple assessment of the facts. After 10 years, we're deadlocked," said Michael Punke, the US ambassador to the WTO.
The US believes that the major emerging economies should make more generous offers (regarding concessions) to reflect their tremendous export growth over the past decade, Punke said, without referring to China, India and Brazil by name.
Punke also told the US Senate Finance Committee that "the Obama administration believes that China and other emerging economies must shoulder new responsibilities. So far, they have been unwilling to do so."
China's role
"As a key member of the developing nations' club, China has been actively involved in and pushing the Doha talks. No one can deny or distort what China has contributed during the past decade," said Shen Danyang, a spokesman for China's Ministry of Commerce, in response to critical comments from some developed economies.
China would make a 100 percent effort as long as there is as much as a 1 percent chance of advancing the talks ... but the major point is that we must not blame, but cooperate with, each other, he said.
As part of the Doha negotiations, China has promised no subsidies for agricultural exports and no duties on 95 percent of imports from the least-developed countries. China has also sharply reduced tariff duties on non-agricultural products since its 2001 entry into the WTO. The figure has fallen to 8.9 percent on average and the rate could probably fall to 6 percent if there were a successful conclusion to the Doha negotiations, said Chen Deming, China's minister of commerce.
A few nations are taking a "narrow-minded" approach to the negotiations, which is making Doha progress slowly and with difficulty, said Gu Yongjiang, China's former vice-minister of commerce.
If the larger nations had been as bold and generous as China in making compromises, the talks would have been concluded many years ago, he said.
Western countries annually spend $360 billion on protecting their agricultural sectors through a network of subsidies and tariffs, resulting in a potential loss of around $50 billion in agricultural exports for the developing countries, said Mark Malloch Brown, the former head of the United Nations' Development Program.
Agricultural subsidies cause an "extraordinary distortion of global trade", according to Malloch Brown.
A critical time
Developed regions are considering discarding the Doha talks and resorting to other alternatives.
Karel De Gucht, the EU commissioner for trade, proposed the drafting of another plan in preparation for the possible failure of the talks, as he believed there was no reason to be optimistic about Doha.
One way to improve the chances of a deal would be to move away from the current approach. The US would favor an approach allowing more ambitious countries to set the pace, according to Punke.
However, most WTO member nations don't agree.
China will continue to make efforts to revive and push forward the Doha negotiations, although the window for success is gradually closing, said Chen Deming.
Chinese experts have called for the talks to be wrapped up as soon as possible, in a bid to invigorate the world economy and to fend off global trade protectionism.
An acceleration of the negotiations would help the world economy gain confidence and combat trade protectionism, said Ren Jianxin, vice-chairman of the Chinese People's Political Consultative Conference, the top advisory body in the country.
In September, the World Bank and the International Monetary Fund warned that the global economy is entering a new and dangerous period and both poor and rich nations should join with each other to battle through the bad times.
Meanwhile, as there seems little chance of a resolution to Doha, many nations are increasing their efforts to establish free-trade agreements (FTA). However, this poses a threat to the multilateral trade rules under the WTO umbrella, and runs contrary to the WTO rules, said experts.
As an example, an FTA between India and the ASEAN (the Association of Southeast Asian Nations) trading bloc became effective this year. Meanwhile, China and Colombia are expected to start FTA negotiations shortly, and the EU and Georgia are expected to launch talks on a deep and comprehensive FTA "very soon".
However, these new relationships are probably the last thing that Lamy would like to see.
It is time for the WTO's member countries to think seriously about how they can advance global trade openings and make progress in updating the existing trading rules, said Lamy, who admitted that the negotiations are still "deadlocked".
