The ongoing Doha Round of negotiations to clinch a multilateral trade deal has the potential to infuse $300-$700 billion to the global economy each year through trade liberalisation, which is one of the priority areas for the G20 leaders, says World Trade Organization (WTO) Director General Pascal Lamy. In an interaction with Nayanima Basu, he also says it is possible to technically agree to a deal by the set deadline of 2010-end. Edited excerpts:
Did the leaders discuss a possible roadmap for the Doha Round of multilateral trade deal in the G20 summit in Canada? What consensus emerged out of the meeting?
The issue of the Doha Round was certainly discussed among the G20 leaders. It is on their radar screen for sure. We will have a chance to review the progress at the next G20 meeting in Seoul and chart the path to the finishing line. Trade can provide the engine of sustainable growth that governments are looking for. We are beginning to see a shift, I believe, to a more positive position on trade.
Do you believe there are chances of wrapping up the talks within the targeted deadline of 2010?
Technically, it is possible. Whether the political energy required to make the tough decisions in the major countries can be summoned may be another matter. One thing is clear though, the sooner the give-and-take that is at the heart of every negotiation begins, the sooner a final deal will be sealed.
What is the current state of play in the negotiations on agriculture, non-agricultural market access (Nama) and services at WTO?
On the technical side, things continue to move along. In agriculture, for example, technical work has been done on the special safeguard mechanism (SSM), and in Nama, a lot of work has been put into non-tariff barriers. This sort of work is very important to prepare trade-offs. But technical progress is obviously not sufficient. For many reasons, some of them understandable, the level of political energy given to the Doha Round has been flagging. In the midst of a severe economic crisis, one can understand that the first priority of many governments would be to staunch the deterioration of the economy.
How important is it to have this deal in the backdrop of a recovery of leading economies after one of the worst recessions in modern history?
A Doha deal would deliver $300-700 billion to the global economy each year. This would be a huge economic stimulus package which would not involve taxpayers’ contributions or yawning budget deficits. It would help in creating jobs and also send a strong signal to markets that governments can work together to tackle the common problems we all face. The fact that governments in many countries have been hit by recession, and may worry about facing another one, has certainly made conclusion of the round more complicated. Rising unemployment has heightened anxiety about trade in some countries. But what we are seeing is that demand is growing much faster in many emerging markets than in the West and Japan. There is a need in some countries to consider trade in a new light — as a means of bringing them out of economic doldrums and into a more competitive global position.
Recently during an informal meeting of the trade ministers at OECD, US Trade Representative Ron Kirk had said that India, China and Brazil need to give more market access. However, the US itself is not showing flexibility by offering more. With this kind of a stalemate, are we heading for yet another hiatus?
Some WTO members are saying more ambition is needed to seal a deal. Other members say the final package needs to be balanced, with development at its heart and that any additional contributions should be made by all sides. What is clear is that no member wants to move first, fearing that these would be pocketed by others without obtaining anything in return. The only way to break the impasse is to have members start a process of ‘what ifs’, to test trade-offs that could take us to the finishing line.
Do you think a fast-track authority would induce the US to close the deal soon?
I don’t think the lack of a fast-track authority is a real factor in the negotiations. Where it is a factor is in implementation. When a deal is reached, the American administration will have to go to Congress for approval and it is at this stage that a fast track will be relevant. Of course, approval of fast track before a deal is reached could send positive signals that the US Congress may be receptive to an ambitious and balanced Doha deal.
What is the progress in services negotiations besides which is one of the main demands of India and other developing countries?
India is indeed one of the principal advocates for an ambitious deal on services, together with others like Egypt, the Philippines, Chile and Singapore. It reflects the importance that services play in our economies and the importance that many developing countries attach to opening up trade in services to foster competition and modernise economies. These negotiations are conducted on the basis of requests and offers. Offers have been tabled by around 100 members so far. These offers represent progress compared to the Uruguay Round, but, in general, they are below the current level of opening that WTO members apply. Obviously, services are seen by members as part of the market access package including agriculture and industrial products.
Do you think the main reason why the Doha Round of negotiations have missed so many deadlines is lack of political will?
A negotiation including 153 members and covering over 20 topics is by definition, complex and lengthy. It is true that these negotiations were more than nine years ago, but it is also true that over 80 per cent of the work has been done. Now, as in any negotiation, we will only cross the finishing line when we achieve 100 per cent of the work. For that, we will need a greater political determination to enter into trade-offs and a sense of urgency.
During the 2008 talks, SSM was seen as the deal breaker. Have the member countries reached an agreement on this issue?
Not yet, but as I said, they have made technical progress. This is a highly complex and technical area, where technical work is crucial to prepare trade-offs when the moment comes.
How important is it to address climate change issues in trade negotiations and liberalisation? Will this not result in several protectionist measures in the form of border tax and carbon tax, which in turn would lead to a series of trade disputes as these are largely seen as protectionist measures by the developed countries?
The UN climate change negotiations is the main forum for addressing climate change in particular, as it will tackle emission-reduction measures that counties will use to adapt to the effects of climate change, as well as funding to help poor countries combat this issue. Trade can contribute to this collective effort. The Doha Round already includes opening trade further in environmental goods and services. By reducing barriers to trade in clean technology, trade can make a contribution to help countries reduce their carbon emissions. There is also the reduction of fishery subsidies which contribute to over-fishing. And there is also a discussion about the articulation between trade rules and multilateral environmental agreements. But trade rules cannot be a substitute for strong and comprehensive commitment to cut carbon emission. My own sense is that this is better done through cooperative efforts, rather than in a unilateral manner such as the adoption of unilateral border measures by individual countries.
What would be the fallout of the long-drawn banana dispute between US and EU coming to an end?
The banana agreement is a very positive development, since it puts to bed one of the longest standing disputes in WTO. It has also brought greater clarity to the agricultural negotiations regarding tropical products and preference .... erosion products.
What are the main difficult areas where there had been no consensus among the negotiating countries? What is the status of talks on fisheries’ subsidies, tropical products, special products and cotton subsidies?
Well, these areas are certainly complex, although for different reasons. In the case of fisheries’ subsidies, an additional technical work is needed to identify subsidies which contribute to over-fishing and to sketch out how these could be disciplined so that we address the depletion of our oceans. In the case of cotton, the technical work is pretty advanced and what is missing is a final agreement about how much trade-distorting agricultural subsidies to cotton will be cut. In the case of special and tropical products, the question is identifying the specific products which would fall into each of these baskets. Here, too, the progress is rather advanced. At the end of the day, each and every one of these issues will need to be addressed for a final deal to be sealed.
