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Countdown to WTO meet in Hong Kong

Divergent positions of negotiators slow progress

WITH THE Hong Kong ministerial meet of the World Trade Organisation less than ten days away attention has shifted to keeping the trade talks going beyond Hong Kong. Trade negotiators are reluctantly veering round to the view that the ministerial meet will be judged successful if it paves the way for more successful outcomes later. That, until a few weeks ago, was only a fall back option.

Since September when trade negotiations started in earnest, the primary objective was to cobble up a mutually acceptable draft of a declaration that could be adopted at the ministerial meet. Unfortunately, despite some hectic negotiations among member countries, the differences do not appear to have narrowed down. The first draft released by the WTO on November 26, says as much. On the key issues of agricultural trade, non-agricultural market access (NAMA) and services, the divergent positions of member countries suggest that the outcome of the Hong Kong meet will be less than satisfactory.

Elusive draft declaration

Realistic though the first draft of the ministerial text may be, it is not yet time to give up. On November 30, WTO Director General Pascal Lamy promised a second draft that would presumably be more encouraging to the negotiators. Simultaneously he has urged member countries to "exercise goodwill and redouble their efforts" to "find all possible convergence in the few hours available to us."

The Director General, who took over only in September, had been the European Union's trade negotiator before. Soon after assuming office at the WTO he had hoped that the Hong Kong meet would be a big step in moving ahead with the Doha round.

The Doha round is now four years old. For two-thirds of its agenda to be completed by the Hong Kong meet, there must be an agreement on "full modalities" in agriculture and NAMA. Besides, services negotiations will have to be placed on a firm path, with an actual agreement by next year.

Predicting such an outcome appeared overly optimistic even in September when the present round of negotiations gathered pace. Subsequent tardy progress has made practically everyone wary. Comments from important trading countries, including India, have tended to be extremely guarded.

More recently Mr. Lamy himself has been talking of "recalibrating expectations" from the Hong Kong meet. Instead of one giant leap forward, the ministerial at Hong Kong would be an intermediate stage. Presumably another high-level meeting will be needed to wrap up the Doha round. That will extend the date for closing the Doha round. In that case, trade talks will have to reckon with another major uncertainty. The fast track authority conferred on the U.S. President to clear trade proposals without referring to Congress lapses by mid-2007.

However, despite the sharply lowered expectations, the Hong Kong meet may still be a step forward. It may not live up to its initial promises but will certainly help in the days after. Clearly the focus is on the Doha round.

Pegging all hopes on the Hong Kong meet may be premature but it should help brighten up the trade environment so that the Doha talks can be concluded successfully later.

In a recent article, Prof. Jagdish Bhagwati says, "practically every round of trade talks in recent memory has oscillated between near breakthroughs and near breakdowns." According to him, the history of the Doha round has been more encouraging than is believed. The return of all 148 member states to the discussions is a positive sign.

Besides, some potentially thorny issues have been placed in the backburner. There has been no dogmatic insistence on the so-called Singapore issues. Neither is TRIPS (trade related intellectual property rights) a major bone of contention.

This is not to say that resolution of tricky issues will be less difficult even over a slightly extended period (which everyone thinks is inevitable).

Deadlock over agriculture

For India and other G-20 countries the deadlock over agriculture trade has been the biggest stumbling block. The U.S. and the E.U. have recently made their proposals. While they breathed new life into the talks, trade negotiators of other countries are still trying to figure out their ramifications.

Agricultural issues have been at the core of the Doha round. By September this year, when negotiations began in right earnest, it was clear that practically all schedules for agriculture discussions were going to be missed. There has been an inordinate delay, (attributed to the E.U.) in resolving just one issue, ad valorem equivalents (AVEs). The more critical discussions on market access could commence only later.

Agriculture trade negotiations are the most complex of the three main areas. But that is not to suggest that NAMA and services are going to have smooth sailing.

C.R.L. NARASIMHAN

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