Yet another World Trade Organisation Ministerial is scheduled for mid-December (13-18) at Hong Kong, the sixth in the series. What does a Ministerial do or tend to achieve?
Does it try to foster a consensus on policies to promote free and fair trade, or perpetuate asymmetry in the policies to retard growth, especially for the developing and needy countries?
The past experiences of Ministerials broadly indicate more of the latter scenario. Singapore, Seattle, Cancun, all proved to have failed in their respective mandates.
Hong Kong, starting in December 13, 2005, barely a few weeks away, intends to conclude successfully the Doha round of negotiations, but is witnessing a virtual no-consensus on all major issues.
Disagreement seems to be the current state of play in the on-going WTO negotiations that have taken place so far at Dalian, China, Bhurban, Pakistan, London and Geneva. Proposals on significant issues are meeting a deadlock. The deadline is coming closer and a breakthrough is hardly in sight.
If failure is perceived to be a part of the WTO folklore, let us analyse if Hong Kong will be the latest in that series. What can really cause its failure? A series of unresolved issues till date. Prominent among them is agriculture.
The negotiations on agriculture, visualised to be the make-or-break of any Ministerial and also of this one, are currently witnessing an unmanageable proportion of differences in relation to market access, domestic subsidy and export promotion.
The imbroglio still persists because neither the EU nor the US has come forward with a credible market access proposal or a "trade distorting" domestic subsidy reduction commitment proposal, respectively, as were agreed upon during the Framework of July 2004.
Further, the proposal of geographical indicators(GIs) recently introduced by the EU is facing stiff opposition from developing countries as they feel the EU will use them as non-tariff barriers on their agricultural products.
Similar differences are also noticed in the areas of NAMA (non-agricultural market access) and services, two major important sectors after agriculture. Developed countries' consistent demand for higher tariff reductions by imposing the Swiss formula and the recent initiative of minimum "benchmarking" by EU on services are creating further division in the negotiations.
While negotiations on NAMA, with lots of persuasion, are showing some convergence in respect of the approach to tariff cuts, the later suggestion of elimination of tariffs in select sectors by a definite date is causing anxiety among developing countries. Such a self-imposed clause at the last minute may just destroy the possibility of striking a deal on NAMA at Hong Kong.
The sector that poses great promise is services. Today, many emerging developing economies' core strength lies in services and its contribution to GDP is overwhelming -- 58 per cent in India.
India has already propelled the services negotiations by submitting an issue paper to WTO. These countries are showing keen interest in greater liberalisation of services sector provided developed countries make meaningful commitments on mode 1 and 4 (cross-border and movement of natural people).
But this sudden proposal of minimum "benchmarking" is a cause for serious worry for developing countries as it aims at liberalising the services trade in the form of numerical targets and indicators, and is purposefully put on the fast track of negotiations so that commitments can be made faster.
To this developing countries are in fact wary of, as it will force them to make commitments for which they may not be capable of.
Broad disagreement on major sectors only suggests that a consensus is difficult to come by. However, at the same time, going by the sheer logic of negotiations in a pseudo-open democratic world, the opposite is also feasible.
Hong Kong may try hard to forge a consensus, not because it impartially intends to, but out of sheer political pressure that is going to be exerted by the US as the fast track authority of US president expires in mid 2006, and the agreements have to be sent to Congress by early 2007.
But this is unlikely to work. As G-20 and G-33, the major negotiators in WTO have so far been able to hold onto their unity and opposed these self-imposed policies and deadlines.
They fully understand that trade negotiations in WTO are mercantilist par excellence and, therefore, they will hold back their best negotiating positions until they know what is coming in return.
Another reason why the WTO finds it difficult to arrive at a consensus or make progress is that on paper, it is an open democratic system unlike its predecessor, the GATT, where manipulation was perhaps possible because of green room procedure and functioning was more of oligarchic in nature.
In WTO, a small country like Botswana can stall the process because of its veto power. So, it's a system where more than half participating members are developing and least developed countries and are well versed with their basic rights of food security and livelihood, and will not give in easily. Switching sides looks improbable. Hong Kong may go down the Cancun way.
The author is with the Indian Institute of Foreign Trade. Views expressed are personal.
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