TCS Daily


Wait Till Next Year, and the Year After and the Year After ....

By Charles Finny - August 7, 2006 12:00 AM

Not a day goes by without some trade official or politician stating he is committed to salvaging an outcome in the WTO Doha Development Agenda negotiations, and that such an outcome is possible this year. But nothing is going to happen until at least the beginning of 2009. And what will the global trading scene look like by then?

Suggestions that the round can be saved are pure politics. Most recently, the G-20 group of developing economies claimed that the WTO round can be saved "if trade ministers hold intensive meetings in coming weeks and months". Australia's Deputy Prime Minister and Trade Minister Mark Vaile told the world that the meeting of the Cairns Group (a group of WTO members with strong agricultural export interests) next month "is the last chance to rescue world trade talks". Yet Vaile still sees only a small chance of success, and may soon leave the trade portfolio altogether.

NGO groups such as Oxfam -- which have played no positive role in the negotiations to date -- are expressing concern (and no shortage of self-righteous anger) about the collapse, while they predictably lay blame for the outcome entirely at the feet of the US and the EU. Other NGO groups on the far left are celebrating.

Significant compromise would be required on all sides if the Doha Round talks were to be concluded between the up-coming US mid-term elections and the expiry of the current US negotiating authority in 2007. Then even if the US President secures trade promotion authority from mid-2007 onwards, we'll find ourselves in the run-up to the 2008 Presidential election.

The EU will only become more rigid as the French elections of April/May 2007 approach. And a range of key developing countries, such as Brazil, India, China and Indonesia, would be required to give more on market access for agriculture, manufactures and services. One gets the sense that Brazil might be open to doing more, but it's difficult to have much hope for the others.

In light of these realities, it is hard to see negotiations resuming until the start of the second quarter of 2009.

So what will the changes in the global trade architecture look like? Free trade agreements will proliferate in an already heavy negotiating agenda. By 2009, most of the negotiations currently underway will have concluded. Australia and New Zealand will have operational FTAs with China. The US will have FTAs with Korea and Malaysia.

Meanwhile, Japan is pushing an interesting 16-nation partnership extending from India to Japan and down to Australia and New Zealand. Having done their best to kill the idea in previous years, Australia, as host of APEC in 2007, will be pushing an APEC-wide FTA idea.

ASEAN and the EU are talking, and the EU might also be looking for other potential partners. There is some talk of making a push in the OECD for some form of high quality FTA linking its membership. And there are whispers of a "coalition of the willing" type FTA, maybe led by the US, and including a few countries willing and able to do something very ambitions on goods services and investment -- essentially to shock the trading system, and put enormous pressure on those outside to be inside.

The WTO is likely to remain in place as the repository of international trade rules, and the place where international trade disputes are resolved. There has been nothing to suggest that the WTO's authority, in this area, has been diminished through recent events.

Charles Finny is CEO, Wellington Regional Chamber of Commerce, New Zealand.

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