Doha round proves a tough nut for WTO

EXIM MATTERS

The World Trade Organisation (WTO) is in a crisis of sorts. At stake is its credibility to get the member countries to agree on a host of liberalisation measures that would lead to successful completion of the Doha Development Round by the year-end.

Last week-end, the 60-odd trade ministers of the WTO member countries who had gathered at Geneva to hammer out an agreement had little progress to show after days of intense parleys.

Failure is not something new for the trade negotiators at the WTO. The last Uruguay Round went through eight years of hard bargaining and several hiccups before the Dunkel Draft laid out a framework on which most countries could agree. The earlier Tokyo Round also missed several deadlines before conclusion.

So, the WTO has survived such crisis in the past. That is, however, not enough reason to hope that it will do so in future. The reason is that this time there are different players in the fray.

Unlike the earlier rounds when the main deal makers were developed 'Quad' countries i.e. United States, European Union, Japan and Canada, this time India and Brazil have emerged as leading representatives of the developing countries and replaced Japan and Canada from the list of key negotiators. The divergence of views between the developing countries and developed countries is much wider and much more fundamental.

The major bone of contention is the extent of cuts in subsidies that rich countries give to their farmers. The poorer countries are demanding much deeper cuts than what the richer countries are willing to give. They are also saying that the commitments on farm subsidy cuts must precede any discussion on the extent of market access on non agricultural goods and services that they will give to richer countries.

Just before the latest meet, the European trade chief Peter Mandelson, who met earlier with European trade ministers, told reporters that the 25-nation bloc was ready to move towards a proposal by leading developing countries on cutting agricultural tariffs if other countries also made concessions. The statement provoked a rebuke from France that Mandelson was given no authorization at Thursday morning's meeting to improve upon Europe's existing offer.

Since the launch of the Doha Development Round, the WTO has gone through failures at the Cancun Ministerial Meet in 2003 and the Hong Kong Ministerial Meet in 2005.

An agreement before this year-end has become very necessary as the Fast Track Authority (FTA) that President Bush won from the US Congress expires next July. Under the FTA, the Congress can either accept or reject any agreement but not modify the clauses in the agreements that the US President consents to.

When Pascal Lamy took over as WTO Director General last year, there was widespread expectation that his skills as master negotiator and his vast experience as Europe's trade negotiator at the WTO will enable him to come up with creative proposals that will see the Doha Round move forward.

Last week, Lamy suggested that a workable compromise might be to cut average farm tariffs roughly in half and to trim industrial tariffs to no more than 20%.

WTO trade negotiators might yet find a compromise deal, because they know that a multilateral agreement is much better than a host of bilateral or regional trade treaties.

tncr@sify.com