The world Trade Organisation (WTO) Director General Pascal Lamy confirmed last week at New Delhi that the Doha Round was not moving ahead and if something drastic is not achieved, the multilateral process of trade liberalisation will continue to remain under pressure.
The director general of WTO travelled to China from India and delivered a similar message even as Beijing celebrated a decade of joining the WTO. Lamy has been, for the last few months, advocating different approaches to ending the current stalemate that many believe has been caused mainly due to lack of US leadership in the Doha Round.
Most countries are of the view that the reason for the slow movement of the Doha discussions is the US dragging its feet on several issues including providing a reasonable package to the least developed countries in the WTO during the Geneva Ministerial meeting in December this year.
Former US trade representative and the current World Bank President Robert Zoellick also recently criticised the US for “dumbing down” the trade talks at the WTO, though it is important to note that he did not hold the US solely responsible.
So is the US really stalling progress at the WTO as part of a strategy to stay away from trade agreements? The on-going negotiations for a Trans-Pacific Partnership (TPP) free trade pact that is being discussed at Chicago do not support this view. News reports state that President Obama is of the view that the TPP would be a “trade agreement of the 21st century” and would create jobs in the US. For the US, the TPP would be the biggest trade agreement since the North American Free Trade Agreement (NAFTA) and involves both developing countries and OECD members. The TPP will cover eight countries — Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam and is termed as the NAFTA of the Pacific.
Interestingly, the Obama administration is going ahead with these negotiations despite strong domestic protests against this trade agreement. Analysts in the US have been pointing to the changing stance of President Obama on free trade agreements while discussing the TPP. In 2008, President Obama reportedly stated that “I voted against Cafta, never supported Nafta, and will not support Nafta-style trade agreements in the future... While Nafta gave broad rights to investors, it paid only lip service to the rights of labour and the importance of environmental protection.”
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Importantly, the US is also going ahead with the negotiations despite some calculations that the economic benefit of this agreement may not be too high for Washington. It is believed that since other members of the TPP already have several other trade agreements this would not be beneficial for American business.
The main reason for the US, therefore, in moving the TPP forward seems to be more to do with geopolitics rather than trade benefits. That means the US is willing to take leadership in a trade liberalisation agenda, when needed.
The same spirit now needs to be reflected in Geneva. One of the solutions that have been stated by members to move the Doha Round forward has been the need to take one issue at a time and move ahead only after that issue is resolved. This may not be feasible since it would take away the existing possibility of trade-offs between sectors for countries. A good way to move forward may be to look at resolving market-access issues across industrial goods, services and agriculture first so that members can find a balance. Once these issues are resolved then countries may take up the other issues in the Round. However, to keep the WTO relevant there would be a need to ensure that the development agenda of the Doha Round remains sacrosanct.
It is clear that there is no exit option from the Doha Round without hurting the sanctity of the multilateral process of trade liberalisation. The best way forward would be to take one step at a time, while creating political consensus. There is also a need to identify some important roadblocks that can be resolved quickly.
It is time for business across the world to come together and provide direction to the WTO negotiations. They need to decide on a multilateral trade agenda that would help the sagging world economy recover quickly. A business-led agenda can be an important alternative for the WTO negotiators to salvage the Round.
The author is Principal Adviser with APJ-SLG Law Offices