WTO talks go round in circles

Senior officials of the G4 - Brazil, the European Union, India and the United States - are meeting in Paris, Monday to Wednesday (2-4 April), in a renewed attempt to better understand one another's positions.

Two more rounds of G4 talks are also planned for April, according to a trade diplomat, but whether they will be at the level of Ministers or officials is not known.

The US Trade Representative Susan Schwab is scheduled to meet Indian Commerce Minister Kamal Nath around 11 April in New Delhi, so a G4 meeting at that time could be possible.

For the past several weeks, bilateral meetings have been held in different combinations among the G4 members. In contrast, the Paris meeting will be among all the four players.

From the scarce reports emanating from the recent bilateral meetings, there has yet to be real progress, let alone a breakthrough.

According to trade diplomats, the major stumbling block remains the refusal or inability of the US to commit to a better offer to reduce the maximum limit of its agricultural domestic support. The October 2005 offer of the United States, that the allowable or bound level of total trade-distorting support (TDS) would be reduced to $22.7 billion was not credible since in 2005, the actual level was $19.7 billion, or $3 billion lower.

The failure of the US to provide a lower figure is widely accepted as the main factor causing the suspension of the Doha negotiations in July 2006. The talks have gradually resumed since February, but reportedly the US has not yet made a fresh offer on domestic support. So, the discussions, both at the G4 bilateral level, and at the levels of informal and formal meetings at the WTO, have been going around in circles.

Several diplomats see it as a chicken-and-egg problem. The US insists that it cannot make a new commitment on agriculture unless it is satisfied that others make prior commitments to open up their agricultural and industrial sectors to produce "real trade flows" (code for drastic cuts in applied tariffs so that new US exports penetrate the markets of countries).

Other WTO members say that they cannot make further commitments until the US proves its sincerity by substantially cutting its allowable total domestic support to well below the actual present level. Figures of $12-15 billion as a credible new offer have been mentioned.

This Saturday, US President George W Bush and Brazilian President Luiz Inacio Lula da Silva will meet at Camp David in the US, and Lula is expected to press Bush to initiate a breakthrough. Schwab and Brazilian Foreign Minister Celso Amorim will have their own talks first on Friday, then join the two leaders. No doubt the results of the Brazil-US meetings will input significantly into the Paris G4 meeting.

The other major new factor will be the outcome of the attempts by American Democrat Congress members to reach a deal with the US administration for Congress to approve the bilateral trade agreements of the US with Colombia, Panama and Peru, within the period of the present fast track legislation, which expires end-June.

The Democrats have sought to revise the agreements by strengthening clauses on workers' rights and the environment, and to amend some intellectual property provisions so that the developing country partners can more easily supply generic drugs. At press time, it is still unclear whether the issues can be cleared up in time to meet the deadline for catching the fast track, i. e. 31 March or 90 days before the end-June expiry of the trade promotion authority (TPA).

How the Bush administration will accommodate the conditions placed by the Democrats is seen by some observers as a test on whether similar terms could be the basis for an extension of the TPA, which in turn would have important implications whether the WTO's Doha negotiations continue or stall, and whether the US can conclude or start other bilateral trade deals.

However, some Democrats in Congress have clarified that the deal and the conditions that are being thrashed out would only apply to the bilateral agreements that have already been signed, and are not meant to be for an extended or renewed TPA.

On 28 March, Bush urged Congress to renew the TPA saying that the only way that the WTO talks can be completed is for Congress to extend the TPA. He said that no other country will negotiate with the US if the president lacks the fast track authority.

In the WTO talks, the US and also WTO officials like Director-General Pascal Lamy have been arguing that the other WTO members, particularly the developing countries, have to make new significant offers now to open their markets, so that the US negotiators can convince Congress to renew the TPA.

But most developing-country officials feel that the TPA expiry is an artificial deadline and that they should not make sacrificial lambs of their economies in order to appease the US or its Congress, especially since there is still no sight of the much-anticipated US offer to cut its domestic farm subsidies.

India's WTO Ambassador, Ujal Singh Bhatia, told the SUNS that in the upcoming G4 talks, the focus cannot be to meet deadlines established by the TPA imperatives, or to meet the demands of any one country because it has to satisfy its Congress.

He added that if there is to be a breakthrough, it would have to be based on the content of the issues, and not because there is a need to meet the requirements of the TPA deadlines or its extension.

Ambassador Bhatia said the priority is for the Doha negotiations to be true to their mandate, and that all constituencies (of the WTO) have to be satisfied. India would propose a package in which its positions on all issues (NAMA, services, rules, etc) would be clarified.

Meanwhile, the WTO members that are not part of the G4 have been increasingly frustrated that the "real negotiations" are taking place among only four members, that there is little information on what is happening there, and that meanwhile they are kept waiting, with little opportunity to participate or make decisions.

Lack of transparency and lack of participation especially by developing countries, which are age-old problems under the old GATT and the present WTO, have re-emerged as major sources of unhappiness and grumbling.

The developing countries' biggest fear is that the G4 will somehow strike an agreement, and then all other members will be asked to immediately endorse it (in order to meet US fast-track deadlines) with hardly any room for members to deviate.

Those who resist will be cajoled to go along for the sake of consensus. Those who persist in differing may have blame heaped on them for attempting to wreck the Round and even the multilateral trading system.

This, anyway, is how the system used to work until recently, to get everyone to fall into line, once the major players had agreed among themselves. The configuration may have changed, with a new "Quad" in which two large developing countries are members. But there is huge resentment among the large majority of developing countries that they are kept out of the loop and that they may be expected to just rubber-stamp any G4 outcome.

Several developing-country diplomats say that this expectation is naive because many of the developing countries, big or medium or small, are no longer willing to be passive, have organized themselves in their respective groupings, and will not just take anything that is presented to them on a platter.

Diplomats point out, for example, that the G33 Ministerial meeting held last week in Jakarta reaffirmed the unity and solidarity of the group of more than 40 developing countries, and that they had stood firm on their principles on special products and special safeguard mechanism to promote food security and small farmers' livelihoods.

The refinement of the list of indicators for special products was seen by the group as demonstrating its constructive contribution to reviving the Doha negotiations, without its giving up its principles or substantive positions.

At the WTO itself, the chair of the agriculture negotiations, New Zealand's Ambassador Crawford Falconer, has continued convening "fireside chats" among some 20 members, with periodic so-called transparency exercises. After the last such exercise, noting that nothing new had been heard, Falconer said that some members had invoked Harry Potter (fictional schoolboy wizard hero of an eponymous series of children's books)!

Consultations on both agriculture and NAMA are also being held, including this past week, with members giving their views and a few new papers being tabled and discussed.

However, the mood in the WTO is predominantly one of waiting, for some signal of a breakthrough, among the G4 members, or among whichever countries are embarking on new political initiatives. There is little movement in substance at the WTO.

The bilateral, quad and multilateral processes are going on in parallel tracks, but so far without any signs of a real breakthrough. The chicken-and-egg problem remains. The question is who if anyone will move first, and if so will it be enough. And if there is no breakthrough, each country hopes it can avoid carrying the blame.