Bridges Weekly Trade News Digest • Volume 11 • Number 40 • 21st November 2007

Draft Texts Facing Delay, As WTO Contemplates End-2008 For Doha Accord

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For weeks, diplomats at the WTO had expected the chairs of the struggling Doha Round trade talks on agriculture and industrial goods to soon come up with new draft agreement texts that were to be the basis for a last-ditch attempt at a deal.

The drafts were initially due in mid-November, then towards the end of the month. Now, there are suggestions that their release may slide into early 2008, possibly as late as February - and at least some negotiators seem unperturbed. Even WTO Director-General Pascal Lamy acknowledged this week that he now expects the talks to be concluded by "the end of next year."

One delegate explained that while the pair of texts might still be released in December, the whole purpose behind issuing updated versions of the chairs’ July drafts had been to pressure Members to stop repeating long-held positions and instead to start bargaining seriously. Since this finally appeared to be happening, agriculture negotiations Chair Ambassador Crawford Falconer (New Zealand) was not opposed to letting the discussions continue.

The official, speaking under condition of anonymity, said that Members had made "significant progress" towards agreement on rules governing export credits and food aid. For instance, they had largely accepted a 180-day repayment period for export credits, as well as the notion of making such credits subject to disciplines in the WTO Agreement on Subsidies and Countervailing Measures (SCM) that aim to prevent government loans from acting as subsidies (see BRIDGES Weekly, 7 November 2007).

"People want ‘full modalities’ as soon as possible," the source acknowledged, referring to the trade jargon for detailed formulae and figures for subsidy and tariff cuts. "But not having a paper in the next few weeks is not a problem if there is real progress that [goes on to be] captured in the agriculture paper. The level of clarity now is good but not complete; it is not ripe for final negotiations [and] tradeoffs among ministers."

Delay could help clarify ‘moving parts’

In the farm trade talks, the extent of subsidy reduction and market access expansion will in several cases depend on multiple sets of numbers and technical definitions. For instance, all Members will be allowed to shelter some ’sensitive’ farm products from the full force of tariff reduction in exchange for expanding import quotas. However, even though governments have largely agreed to base the size of quota expansion on existing domestic consumption levels, they still need to decide on other considerations, such as methodologies for calculating consumption data and designating such products, before they can develop a clearer picture of precisely what they stand to gain or lose.

Further clarification of the various ‘moving parts’ in the agriculture talks would facilitate concessions in other areas of the negotiations, the vast majority of the WTO’s developing country Members implied after a 15 November meeting in Geneva. "Clarity about the actual contribution that will be made by developed countries will enable developing countries to do their part, in proportion with their capabilities and in line with the mandate," said a joint statement from the G-20, the G-33, the NAMA-11, the ACP group, the least-developed country (LDC) group, the African group, the small and vulnerable economies, and the so-called ‘cotton four’ - collectively dubbed the ‘G-110′. The industrial goods negotiations - where developing countries such as Brazil, India, and South Africa are being pressed to make further concessions - are far more cut and dry, with a handful of numbers largely sufficient to indicate future pain and gain.

Following the narrowing of gaps on agricultural export competition, and what negotiators described as a constructive discussion of data on sensitive products on 16 November, Falconer is expected to hold at least two more weeks of consultations starting 26 November, aimed at a range of issues that were not spelled out in great detail in his July draft text. In addition to sensitive products, these include the ’special products’ that developing countries alone will be able to slate for gentle or no tariff cuts in order to address food and livelihood security and rural development concerns. Also to be addressed are the potential structure of a ’special safeguard mechanism’ that is to afford developing countries a measure of protection from import surges, and the fate of an existing ’special safeguard’, used primarily by rich nations, which some developing countries want phased out over objections from the EU.

Challenges loom in 2008

The later the two texts are released, the later that ‘horizontal’ negotiations on tradeoffs can start. One source suggested that this might not even happen until after the World Economic Forum in January, to ensure that the draft deals do not become a political football for the handful of trade ministers sure to be present in Davos. Nevertheless, as the year progresses, the US elections in November will grow closer. So will the July assumption of the EU presidency by France, which has been famously recalcitrant in the Doha Round agriculture talks. One negotiator termed the combination "a perfect storm."

As recently as a fortnight ago, EU Trade Commissioner Peter Mandelson said that if the WTO talks are not concluded by early 2008, "this round is headed quickly for hibernation, from which I think it will be difficult to bring it out."

John Weekes, a former Canadian WTO ambassador who is now a senior policy adviser to law firm Sidley Austin in Geneva, suggests that reports of the Doha Round’s imminent demise are at the very least premature. He told Bridges that the agricultural negotiating process since September has been the "most intense since the fall of 1991," when countries were laying the groundwork for the "Dunkel draft," the controversial text tabled by the then-chair of the GATT that went on to become became the basis for the Uruguay Round accords. An indication of governments’ seriousness has been the near-constant participation of senior capital-based officials from influential countries in talks at WTO headquarters, he said.

A few additional weeks of clarification could well justify the risks entailed by the delay. The fewer unresolved issues Falconer’s consultations left to ministers, the better, Weekes observed.

With sufficient progress in the WTO negotiations next year - say, an agreement on modalities - it might be possible for the beleaguered George W. Bush administration to win a Doha-specific extension of ‘trade promotion authority’ (TPA) from Congress, Weekes noted. This mandate - which allows the White House to put trade deals to Congress for a yes-or-no vote without the possibility of amendments - is necessary to assure the US’ trading partners that lawmakers in Washington will not pick apart already-finalised deals.

India, Brazil ask US for TPA ‘road map’

In Geneva last week, Brazilian and Indian officials specifically asked Washington for a ‘road map’ for how it intended to seek a renewed TPA mandate, after the last one expired at the end of June earlier this year. "Regarding the way ahead [in the Doha Round talks], we have to acknowledge that the major uncertainty centres around the TPA in the US," said Indian Commerce and Industry Minister Kamal Nath, according to IPS news. "We call upon the US to tell us when this can be expected. This will obviously have a key role to play in the road map towards conclusion. We are willing to go along, but it is important that the US now provide us the comprehensive road map."

Without a TPA mandate, Weekes said, countries would be wary about tabling draft schedules detailing commitments to cut tariffs on certain products, shield others from liberalisation, or open services sectors to foreign competition. In the absence of TPA, US lawmakers might try to pick and choose between the various elements of an agreement when it came to them for approval.

Although Congress’ willingness to act on trade in the midst of an election campaign is widely doubted, Weekes noted that dealing with trade could become simpler after both parties choose their presidential candidates in February, since nominees would likely tone down populist rhetoric in order to broaden their appeal.

In order to conclude the round by the end of next year, as Lamy suggested during his remarks to a WTO conference on aid-for-trade on 20 November, Members would need to both agree on modalities and translate them into commitment schedules, a process that could take months. Even then, the US would be into the post-election ‘lame duck’ session, and the task of approving a Doha Round deal could well fall to the new presidential administration and Congress, which will take power in 2009.

There’s always next year?

US Trade Representative Susan Schwab said earlier this week implied that the timeframe for concluding the Doha Round had slid until the end of 2008, saying there was "every reason to expect that this [the conclusion] could happen under the current administration." "The Doha Round is not dead. It continues to move ahead," she told a press conference during the Association of Southeast Asian Nations summit in Singapore, reports Thomson Financial.

Calls for finishing the Doha talks "next year" are far from new. At the Hong Kong Ministerial Conference in December 2005, WTO Members agreed to wrap up the negotiations by the end of 2006. When they failed to do so, 2007 became the unofficial target.

There is a real risk that the Doha Round could become the first to disprove the axiom among longtime trade hands that multilateral negotiating rounds ultimately culminate in some sort of agreement, however many near-death experiences occur along the way.Weekes suggested that if Members fail to make significant progress in 2008, and the talks simply languish, the future US presidential administration might not think that resurrecting the potential package is worth the effort, and "it could just disappear."

One potential sign that the Doha talks are going into hibernation could be if capital-based negotiators stop travelling to Geneva, Weekes said. Another would be if governments start taking trade officials out of their diplomatic offices there. Negotiating committees might continue to meet as usual at WTO headquarters, but with Members providing far fewer resources to back the customary lip service paid to the importance of concluding the talks.

ICTSD reporting; "Developing Countries Close Ranks," IPS NEWS, 15 November 2007; "US says Doha trade round not dead, optimistic deal can be reached early 2009," THOMSON FINANCIAL, 19 November 2007.