The good ship Doha: Salvage or repair?

Stuart Harbinson 28 May 2011

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The good ship Doha is well and truly stuck on the rocks. Let’s make no mistake – the rocks are substantial and there is no magic solution that will instantaneously get us off them. The choice now facing us is to salvage what we can and abandon ship, or to patch up the holes, wait for a high tide, and sail on.

While the agenda is 10 years old and showing its age in some respects, few are currently advocating its abandonment. This is because the issues at the heart of the Round still matter – namely, market access and rules for trade in agriculture, industrial products, and services. The critical test for deciding on immediate next steps should be whether they would facilitate or complicate ultimate resolution of these difficult issues.

Salvage and re-launch new negotiations: An option that won’t work

With a ministerial conference coming up in December, attention has turned to what some call “salvage”. A salvage operation implies that the vessel is no longer seaworthy; we should just grab what we can and leave the ship to smash itself to pieces on the rocks. We would then have to look for another ship. One of the problems with this scenario is that it would take quite a while to design and construct a new vessel suitable for WTO negotiations. Even then, the new ship will have to negotiate its way around many of the same rocks. The problems we face in agricultural and industrial market access, for example, will not simply disappear.

It’s tempting to think that we can simply salvage a few things, forget about Doha, and start all over again with a better chance of success. The reality would surely prove to be quite different.

Repair and carry on

This leaves us with the option of repair-and-carry-on (though not necessarily in the same way as in the past). We would thereby acknowledge, as Ujal Bhatia Singh eloquently put it recently, that we are “lashed to the mast of Doha” (Bhatia 2011). This, however, should not be interpreted to mean that the WTO as an institution is locked in a death embrace with the Doha Round.

“Deliverables” for the ministerial conference could constitute a patch to keep the ship afloat until the high tide comes. In this analogy the “high tide” would be a change in the global economic and political seascape, enabling the major trading economies to settle their differences and bring the ship safely into harbour.

Admittedly there is an element of hope in this, but on balance it does not seem likely that the present, highly inimical environment (recession, unemployment, exchange rate issues, major domestic policy preoccupations, etc.) will persist indefinitely. Furthermore, as a result of intensive work in recent months, key members are now much clearer about the remaining gaps and what it would take to bridge them – a very useful position from which to restart at the right time.

The Doha Round is durable for a reason

That the Doha Round persists after the vicissitudes of over nine years of negotiations is testimony to its robustness. The widely held view that it was launched off-the-cuff in reaction to the tragic events of 9/11 without substantive business or political backing is not borne out by the historical record, nor does it tally with my own experience as Chairman of the General Council at the time.

In the first place, it is inconceivable that such a complex undertaking could have been agreed in the space of two months. Efforts to launch a round in fact began well before the ill-fated Seattle Ministerial Conference in 1999. These efforts received considerable reinforcement from the failure of the Uruguay Round “built-in agenda” negotiations on agriculture and services to deliver results. Recall that the Agreement on Agriculture refers to the “Continuation of the Reform Process”, a process to which many governments and industries were – and still are – strongly committed. Many services industries, stimulated by the WTO’s successes in moving forward in financial services and basic telecommunications in the late 1990s, were similarly champing at the bit. While it is true that there was also some opposition, the history of the preparatory process in 2001 shows clearly that, well before 9/11, the working hypothesis for the Doha Ministerial Conference was the launch of a new round.

As the first chairman of the Doha agriculture negotiations commencing in 2002, I can also testify personally to the intense business and political interest at that time. If such interest has subsided, this could be ascribed to the apparent lack of movement in the negotiations and the changing political and economic dynamics since the Round was launched.

Deliverables would be welcome – as long as expectations are reasonable

Given the extremely strong commitment displayed by WTO members both in launching the Round and resolutely pushing it forward over an extended period, as well as the high-level political commitment restated only six months ago, a concerted effort to identify a decent number of “deliverables” for the eighth ministerial conference in December would certainly be welcome.

Nevertheless it might be prudent not to invest too much expectation in this process. There is a danger that such an exercise would involve multiple “shopping lists” which would prove in a number of instances to be irreconcilable. The last thing the WTO needs at present is to have a lengthy and acrimonious discussion about “deliverables” culminating in a paltry agreement or, worse still, no agreement at all.

Possible deliverables

The emphasis on “deliverables” should be on the rules elements of the Round since market access remains highly contentious and linkages make it unlikely that partial results could be delivered. Even within rules, few issues come without caveats attached. Among the candidates (concentrating on Doha issues, in no particular order) appear to be the following:

  • Trade facilitation is most often mentioned, although substantive issues remain to be resolved, including technical assistance.

It is questionable if an agreement should be rushed into if it involves too many compromises. However, if it can be delivered, this would be a major boost.

  • An agreement on the export competition pillar in the agriculture negotiations would also be a very substantive contribution.

Whether the political will exists to settle this in advance of the remainder of the agriculture package is a question that will need to be answered.

  • Domestic regulation in services may be considered as another significant possibility.

However this item is linked with market access and the stumbling block of the “necessity test” issue remains, so the chances may not be great.

  • Non-tariff barriers: There should be a trawl through the negotiating issues in an attempt to identify possible “deliverables”.

Realistically, an agreement on transparency may be the most likely.

  • The least-developed country waiver in services is more feasible though its utility is limited without services commitments.
  • Progress building on the “duty-free-quota-free” (DFQF) market access commitments for least-developed country agreed at the Sixth Ministerial Conference would be highly desirable.

However, there are political issues to be overcome. Reviews of Generalised System of Preferences (GSP) schemes in the US and EU may be a complication, and duty-free-quota-free raise the tricky issue of rules of origin; there is a very real issue to be resolved here and concerns over circumvention must be addressed.

  • Cotton also falls into the highly desirable category.

Political realities in the US may still prove to be an insuperable obstacle in 2011, although it may be possible to grapple with these at a later date with a new US Farm Bill and especially if the Round as a whole is concluded.

  • Agreement on a monitoring mechanism for “special and differential treatment” would be useful.

Though perhaps not in itself a major achievement, this would constitute a welcome confirmation that the development component of the Round is not sliding off the deck.

  • Definitive implementation of the transparency/monitoring mechanism on regional trade agreements.

This would be a strong signal that the WTO is developing its surveillance functions in this area.

  • Considerable difficulties persist in the negotiations on fisheries subsidies.

It seems highly unlikely that these could be resolved in time to deliver an agreement in December. One possibility may be to aim for a “standstill” arrangement so that existing levels of subsidies would not be increased pending an agreement.

  • On trade and the environment, it should be possible to deliver on paragraphs 31(i) and (ii) of the Doha Ministerial Declaration – the relationship between WTO rules and Multilateral Environmental Agreements including information exchange between the WTO and the Multilateral Environmental Agreements such as the Montreal Protocol.

Desirable as it is, any agreement on reducing barriers to trade in environmental goods and services seems unlikely, since this is closely linked with negotiations on market access for industrial products.

  • In trade-related aspects of intellectual property rights (TRIPS), the register of Geographical Indications for wines and spirits might be doable in isolation but linkages to the extension of additional protection to other Geographical Indications and to agriculture may prove to be a major complication.

Overall, there is a reasonable prospect of constructing a respectable package, especially if trade facilitation and export competition can be included.

What to call the deliverables and what to do with the rest

Whether WTO members should have the gall to characterise any such agreements as “early harvest” is another question. In any case, the idea would be to activate the mechanism foreseen in the second sentence of paragraph 47 of the Doha Ministerial Declaration . Even if the eventual list were modest, it would be a positive contribution and a sign that Doha has not sunk.

As regards the remaining issues – the great bulk of the Doha negotiations – members should once again recommit themselves to completion of the agenda as soon as possible. Iin practice, that is likely to be when the global economic and political climate is more conducive. While this might provoke yawns in some quarters, it is preferable to other alternatives such as formal suspension or attempting a fundamental reconfiguration, which could result in a complete unravelling. One might recall Winston Churchill’s frequently uttered response to repeated adversity – “we must just keep buggering on” (which he often shortened to the acronym “KBO”).

Moving the WTO forward while Doha is waiting for a high tide

Over the coming weeks and months, in my view, the WTO should not stop with a repair-and-wait strategy. While the non-negotiating functions of the WTO – usually described as dispute settlement and monitoring/surveillance – are in reasonably good shape, they are not sufficient in current circumstances, especially given the state of the Round, to convince sceptical outsiders that the organisation is as functional as it should be.

If in 2012 (and possibly 2013) Doha is going to assume a lower profile, the opportunity should be taken to exploit some of the other strengths of the WTO that have fallen out of the limelight in recent years. Members could, for example, agree to reinvigorate and give higher priority to the deliberations of the regular councils and committees. These bodies were relatively vibrant in the period 1995 to 2000. Some still are, but others are no longer being as fully exploited.

This might also offer an avenue to answer, to some extent, critics who argue that the WTO is locked in an outdated agenda and not addressing new areas of concern.

Why should some of these “new” issues not be discussed in the regular (non-negotiating) machinery? This is already beginning to happen to some extent – for example the recent discussion in the working group on trade, debt and finance on the relationship between trade and exchange rates, and the agriculture committee’s discussions of food security. There are numerous other candidates for similar treatment, some controversial perhaps but others less so. Could relevant WTO bodies discuss some of the supply-chain issues frequently mentioned by businessmen? That might offer a welcome means of reconnecting the WTO with the business community. The Trade Policies Review Mechanism might also be overhauled. What has happened to the work programme on e-commerce?

Discussion of current issues in the regular machinery might in some cases lead nowhere. In others, it could lead to some strategic thinking about the future shape of the multilateral trading system and prepare the ground for further developments.

Conclusion

To summarise, it does not seem to be necessary to abandon the good ship Doha in order to start moving forward into as yet uncharted waters.

References

Singh Bhatia, Ujal (2011), “Salvaging Doha”, VoxEU.org, 10 May.

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Topics:  International trade

Tags:  WTO, Doha Round, Next Steps Doha

Senior Trade Policy Adviser, Sidley Austin LLP

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