David Jessop
WAVING OR drowning - sometimes it is hard to tell the difference. The World Trade Organisation's (WTO) Doha development round is in trouble and may be just weeks away from collapse, with hard-to-predict consequences.
Theoretically, the WTO Director-General, Pascal Lamy, may be able to encourage a convergence of views and achieve enough global support for there to be a multilateral trade agreement but the prospects seem poor. There appears to be insufficient political will in Europe, the United States, Brazil and India to enable compromises to be made on their differences. At best, any agreement is likely to be of limited ambition.
If there is little or no progress by the time of the next mini-ministerial meeting scheduled for the end of July, WTO members informally accept that they will have run out of time. It will not be possible to continue negotiating and to have a near to final text or for ministers to agree by the year's end, the fine detail of tariff cuts. If this happens, it is widely held that the round cannot proceed in its present form as in 2007, the U.S. President's fast-track trade negotiating authority expires and is unlikely to be renewed by a trade liberalisation hostile U.S. Congress.
FAILED TO COMPROMISE
In Geneva on June 30 and July 1, trade ministers from more than 60 nations, once again failed to compromise on the key issues that would enable a round to move forward.
Put in simple terms, what was required was for the U.S. to agree to make deeper cuts to its agricultural subsidies; the EU to offer increased agricultural market access; and for key developing countries such as Brazil and India to offer more in the way of reductions on industrial tariffs.
However, no such concessions materialised. The meeting intended to break the deadlock that has existed since last year, ended in crisis and a day earlier than intended. At its conclusion, the WTO Director-General, Pascal Lamy, was asked to begin a round of shuttle diplomacy to see if there was enough common ground among key governments to progress.
What makes the outlook so unpromising is that it is not only this top tier of issues that requires resolution. At many other levels, there are unresolved issues of principle and detail. For instance, it had been hoped that in Geneva a deal could also have been achieved on tariff cuts on non-agricultural goods and that convergence might have occurred on services issues but as with agriculture, this did not happen.
From a Caribbean perspective, the possibility of the failure of the WTO round that now seems far from being a development round, may seem attractive. However, to reach such a conclusion would be to miss the reasons why the region has been participating fully with the African Caribbean and Pacific group (the ACP) and other small developing nations.
TARIFF CUTS
What the Caribbean requires is an arrangement that will allow for a very gradual phase in of tariff cuts so that it can slowly open the regional economy to the world at large while developing its ability to compete. Central to this process has been a focus on achieving agreement on sensitive products, special products, and special safeguard mechanisms that would enable the region and others to declare certain products and services outside of the scope of the agreement.
Worryingly, however, the United States trade representative has begun to argue that such flexibilities offer 'loopholes' that may lessen the gains agreed more broadly from market opening. Although this position relates to U.S. concerns about larger developing nations, the previous unwillingness of WTO member states to agree a category of small and vulnerable states, suggests that the Caribbean and its friends will struggle to ensure that the content of arrangements on sensitive or special products recognises the unique constraints under which they operate.
As matters now stand in the negotiations, all WTO nations will be able to register some sensitive products for lower tariff cuts in return for import quotas on such products. For their part, developing countries will be allowed to remove certain designated products - so-called special products - from tariff cuts on the basis of food security, livelihood security or in relation to criteria relating to rural development. They will also be able to use a special safeguard mechanism to provide protection against import surges in agriculture.
However, the U.S. has made it clear that this aspect of the round "is not a negotiation that is going to come together" until there is much greater definition of the scope of such arrangements.
PREVENTING MERCANTILISM
It is little understood that the Caribbean needs the successful completion of a small, developing country-sensitive WTO round. The reason is that it will protect the region from an alternative of greater concern: The mercantilism that would follow a collapse.
Global consensus-based tariff liberalisation in a manner sensitive to the interests of small developing nations offers the region the chance to negotiate arrangements that allow long phase-in periods and what amounts to a degree of protection for products and services regarded as special or sensitive.
Without a new round, the likelihood is that there will be a rush for bilateral and biregional free trade agreements. If this were to happen, these would either exclude the Caribbean as it is for the most part of little economic significance, or would be on the basis of something close to full reciprocity. That is to say, without any development component.
If the round fails, a new era of trade uncertainty begins for the Caribbean. It would have to put its faith in rapidly completing an economic partnership agreement with Europe lacking in development intent. The region would also have to consider how and when an arrangement might be achieved with the U.S., its predominant trading partner, either in the form of a resuscitated Free Trade Area of the Americas arrangement or in the form a bilateral and most likely reciprocal Free Trade Agreement to replace the Caribbean Basin Initiative.
For the Caribbean and many other small nations, much now rests on Pascal Lamy's diplomatic and consensus-building skills.
Taken from The Sunday Gleaner, July 9, 2006
David Jessop is the director of the Caribbean Council and can be contacted at david.jessop@caribbean-council.org. Previous columns can be found at www.caribbean-council.org.
