Supachai Panitchpakdi explains why agreement on multilateral trade rules remains some way off, despite the benefits for all.
It is now a year and half since trade ministers meeting in the Qatari capital agreed to launch the Doha Development Agenda. By any accurate assessment it is clear that these negotiations – so crucial to poverty alleviation, economic growth and international cooperation - are facing difficulties.
The negotiations, scheduled to conclude at the end of 2004, began well. Delegations in Geneva quickly agreed on the structure for these complex talks establishing eight negotiating groups to be overseen by the Trade Negotiations Committee and the World Trade Organisation's (WTO) general council.
Among the issues on the negotiating table are agriculture, services, reducing industrial tariffs, environment and WTO rules. Governments also agreed on a date and venue for the fifth Ministerial Conference in Cancún, Mexico, in September.
But as this conference draws nearer, much of the early goodwill and optimism has been replaced by frustration and pessimism. This is unsurprising given the fact that the agenda has shifted from the development of process to the substantive mode where governments must confront difficult political decisions. From the start, negotiators have known that these issues would be difficult to resolve, but that has not offset the frustration many feel at the lack of progress that has been made in some critical areas of the negotiations.
Cancún will provide ministers with the chance to review the mid-term progress of the Doha negotiations. Ministers must also decide whether the Doha mandate should be extended to include negotiations on a broader list including environmental issues and on the "Singapore" issues of investment, competition, trade facilitation and transparency in government procurement.
Slow progress
If this meeting were to be held tomorrow, ministers would have no option but to grade progress in the negotiating round as insufficient. Moreover, there would be no consensus among them to begin negotiations on the Singapore issues or additional environmental matters like eco-labelling.
This is not to say that Cancún will be unsuccessful. Nor is it to suggest that things have deteriorated to such an extent that the talks cannot get back on track. Good progress has been made in some areas of the negotiations. In the area of industrial tariff cutting, governments are working hard at developing the overall framework for greater liberalisation in manufacturing trade.
The services negotiations are going well with over 30 governments (counting the EU as one) having made requests and with the talks kicking into a higher gear this month as governments extend offers to their trading partners.
Negotiations aimed at ensuring consistency between WTO rules and those of Multilateral Environmental Agreements are going better than anyone expected. Even in the contentious area of reforming WTO rules such as anti-dumping and subsidies, progress is being made.
There are indications from some governments that they are prepared to make the difficult political decisions required to reach agreement. Reaching agreement is not possible when there is a lack of trust among negotiating partners and there is a pre-occupation with blaming others for an admittedly frustrating couple of months. Only when parties begin to honestly address their partners' political concerns by searching for compromise solutions can gaps be narrowed and agreement reached.
Imminent gridlock
This stage remains a way off and recent meetings of negotiators in Geneva have given no indication that it is getting any closer. Rather, the reality is imminent gridlock. Time is not an ally at the moment and the number of intermediate deadlines that have been missed is proliferating – each missed deadline increasing the likelihood that the next will, in turn, be missed.
The problems began in earnest in December when governments failed to agree on how to extend "special and differential" treatment to developing countries and on a formula that would ensure access to medicines for people in developing countries lacking production capacity for these drugs while at the same time protecting the patents so vital to continuing investment in research and development.
Because of its importance in humanitarian terms, the failure to reach agreement has cast a cloud over work in other areas. Some African ministers have said they will have trouble instilling confidence in the global trading system among their people if the WTO cannot deliver on this matter.
The deadlines for reaching agreement on special and differential treatment and the access to medicines question were each extended until February when they were missed again. Since then deadlines have been missed for resolving the issue of implementation, which deals largely with the difficulties that many developing countries have in putting existing WTO rules into place.
There is a sense among the developing countries that the development-related issues, which make up the core of these negotiations, have not been adequately addressed.
Tough talking
The missed deadlines together with the lack of progress on agreeing to a framework for the agricultural negotiations have caused frustration in the developing world. Among the advanced countries, however, there is a sense that developing countries have sought an all or nothing approach to the negotiations on special and differential treatment. Reaching simultaneous agreement on 85 special and differential treatment proposals and 24 proposals for the implementation talks is, say developed countries, near impossible.
When everything is made the priority, the developed countries have argued, then nothing is the priority and reaching agreement becomes more difficult. But it would be simplistic to say that the difficulties confronting negotiators spring from a developing versus developed country divide. In many cases, like agriculture for example, developed and developing countries share similar positions. This is also true in negotiations involving services and rules.
Trade has become an ever more complex issue from an economic, political and commercial point of view. National interests do not always conform to a developing country or developed country box. Every government harbours, on the one hand, a desire to see greater trade liberalisation in certain sectors while it simultaneously worries about the domestic political forces which resist liberalisation in other sectors. This is a major reason why the talks are so difficult.
But negotiators have faced such difficulties in the past and have been successful in reaching agreement. Setting aside deep divisions was necessary even to launch these negotiations. Yet ministers in Doha concluded that negotiations leading to trade liberalisation and new trade rules were needed to address economic and geopolitical uncertainty.
Of course, it is even more difficult to conclude such complex talks than to commence them. But that is what governments must do, because the rewards of an agreement are so considerable and the potential fall-out of failure so dire.
The World Bank estimates that the elimination of import barriers to agricultural, manufacturing and services exports could raise output in the developing world by $376bn a year – a figure many times higher than the official government aid extended to these countries. Even reductions of one-third in these barriers could raise income in the developing world by $120bn, the Bank estimates.
Such gains would represent a powerful weapon in the fight against poverty and would enhance stability in many of the world's most volatile regions.
Gains to the industrial world, though proportionately less, would still be significant. The Bank estimates that income there would rise by $171bn a year through a reduction in trade barriers. At a time of economic slowdown and rising joblessness such economic expansion would be welcome.
A successful conclusion to the Doha Development Agenda would represent a substantial boost to the multilateral trading system at a time of growing economic uncertainty. It would reinforce the supremacy of the global system at a time when many governments and corporations find regional and bilateral trading arrangements an attractive alternative to multilateralism. Such deals can often be beneficial to the parties involved and can complement the international trading system. But they cannot replace it.
Multilateral thinking
Regional arrangements often exclude economic sectors and they rarely incorporate the poorest nations. Moreover, they can distract governments – most of which are resource-constrained – from the central focus of the global system. Global problems require multilateral solutions and the problem of inequity in the multilateral trading system can only be addressed through a consensus of the 145 member governments of the WTO.
If the gains of such an agreement are plain, so too are the consequences of failure. Resentment in the developing world is growing. Frustration at economic inequity fuels instability in the developing world which in turn makes economic, social and political reform more difficult to implement.
Reaching agreement requires politicians to stand up to the entrenched interests protected by the status quo. Such decisions will require vision and courage.
Supachai Panitchpakdi is director general of the World Trade Organisation and chairs the WTO's Trade Negotiations Committee
