TCS Daily

WTO: Nestorize It

By Alan Oxley - July 20, 2006 12:00 AM

The G-8 Summit has given their trade officials one month to install the Doha Round of trade negotiations. Had George W. Bush proposed applying the "Lebanon fix" (get Syria to get Hezbollah to "stop this shit") to the WTO (get the EU Council to get the European Commission to stop its (trade) shit), this might have made a difference. It appears he didn't.

If he had, the G8 would have asked Jose Manual Barroso, Prime Minister of Portugal and current President of the European Union to convene the EU Heads of Government to adopt a mandate to cut protection of EU farmers. Instead, the G8 spoke to the Heads of Government of India, Brazil, South Africa, Mexico and China in St Petersburg, then sent their trade ministers to Geneva and gave them a one month deadline to stitch a deal.

As troublesome as India and Brazil have been, the key to overcoming their obduracy towards trade liberalization is a substantial commitment by Brussels and Washington to reduce farm trade barriers. India and Brazil could not reject a substantial trans-Atlantic commitment.

The reason no significant progress has been made for nearly two years in the Doha Round is that the EU cannot offer substantial cuts in farm protection. This was underlined last December. While Trade Ministers marked time at the WTO Ministerial meeting in Hong Kong, EU Leaders were meeting in Brussels to settle the EU's budget and refused to heed Tony Blair's blandishments to review agricultural subsidies.

Peter Mandelson and Marian Fisher Boel (respectively the EU's Commissioners for Trade and Agriculture) will carry the same mandate into the resumed talks in Geneva.

Some hope is invested in the idea of giving "Pascal Lamy" the responsibility to produce an agreed package. No matter how much he stares at the wall in his office overlooking balmy Lake Leman in Geneva, there is little constructive he can do. There is no intellectual silver bullet or colorful concept which will produce an effective result.

Indeed we should worry about what he might produce. In his previous position as EU Commissioner he showed a marked disposition to want to lead the WTO away from its natural realm (negotiating rules for free trade) and into the mushy post modernist world of NGO-think (social, labor and environmental issues).

The only sort of result Lamy can produce is what has been labeled "Doha Lite". This would produce very little liberalization and lock into the WTO rules new rights for countries not to liberalize for which many developing countries have been pushing.

There is solid opposition to this from manufacturing industries in Europe, North America and Asia, as well as from farm groups in the US. It is difficult to see how the US Special Trade Representative could steer a "Doha Lite" package through the Congress.

There is only one practicable solution to the current impasse and that is to set the end date for the Round for late 2009. This would allow the political cycles in the US and Europe to turn. There will be an election in France in 2007 and there is a commitment to review the EU budget in 2007. The US Presidential election will be held in 2008. That Administration would be expected to secure Trade Promotion Authority from the Congress.

This would give three years to mount political pressure on Brussels and Washington to make the necessary changes. Trade negotiators in Geneva do not change domestic policy. National administrations do.

How the current negotiations are put on hold is matters. If there is a consensus to defer the current negotiations, this would remove institutional pressure on the European Union and the US Administration to commit to liberalize.

A significant group of countries who support trade liberalization need to declare there is no point continuing until the US and the EU commit to liberalize. We have been down this path before. Two years after the Uruguay Round negotiations began in 1986, the US and the EU proposed at a Ministerial meeting in Brussels in 1988 that negotiations on agriculture be deferred and put onto a longer time frame than the rest of the negotiations.

Argentina lead a group of Latin America countries to declare they would not support such a decision, effectively stalling the process, placing the onus on the EU and the US to take the necessary action to save the Round. They ultimately did, and it required giving that Round eight years to complete, four more than scheduled. We should note the Doha Round has so far taken four and a half years.

The Argentine official who masterminded this strategy was Ambassador Nestor Stancanelli. He is now the Argentine's senior trade official in Buenos Aires. We need him to step forward again.

Alan Oxley was Australia's Ambassador to the GATT during the inaugural stages of the Uruguay Round.


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