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Article Excerpt
[The latest round of multilateral trade negotiations--the Doha Round--initiated a comprehensive negotiating round set out in a complex structure. At the same time, this Round focused attention on a 'development agenda', all as part of a 'single undertaking' with an ambitious three year deadline. The negotiations were troubled from the start and there are not many signs that agreement will be reached anytime soon. Given the long standing impasse, the time is now ripe to begin evaluating and understanding how the Doha Round negotiations became a seemingly endless charade and why the possibility of a substantial and workable agreement continues to elude WTO Members. This commentary attempts to address these questions by providing the background and timeline to the Doha Round before briefly discussing some of the differing negotiating positions and preferred outcomes of the major Members and negotiating coalitions. While the negotiating positions differ widely on a number of issues, this commentary concludes that more systematic institutional impediments exist, which not only hinder the successful conclusion of the Doha Round, but also prevent effective long-term institutional governance and vision.]
CONTENTS I Introduction II The Doha Round Negotiations: A Brief Overview III The WTO and Its Institutional Impediments A Highly Visible and Politicised Consensus-Based Decision-Making Processes B Expanded Mandate, Diversity of Views C Regional Free Trade Agreements D Ineffective Governance Combined with Binding and Enforceable Dispute Settlement IV Analysis
I INTRODUCTION
In a spirit of cooperation in the wake of the September 11 terrorist attacks, the World Trade Organization met in the Qatari city of Doha and launched its latest round of trade negotiations ('Doha Round'). The Doha Round initiated a comprehensive 'negotiating round', which set out a structure of eight negotiating groups comprising 21 subjects. At the same time, attention was also focused on a 'development agenda'. This was all part of a 'single undertaking' with an ambitious three year deadline. (1) While many initially believed that the goodwill and conciliatory tone created in Doha would continue throughout the Round, in reality both quickly disappeared soon after negotiating began in earnest and certainly once the negotiations reached an impasse. (2) This should not have been an entirely unexpected development. The three year timeframe was always unrealistic, (3) given the history of the General Agreement on Tariffs and Trade ('GATT 1947') (4) and WTO negotiations; (5) the use of unfavourable negotiating strategies such as holding back substantial offers until the last possible moment; and the sheer number of contentious negotiating topics included in the Doha Round's mandate. (6)
Almost five years after the launch of the Doha Round, and with Members making little progress on a number of critical issues, WTO Director-General Pascal Lamy officially 'suspended' the Round. (7) Given the long standing impasse, the time is now ripe to begin evaluating and understanding how the Doha Round negotiations became a seemingly endless charade and why the possibility of a substantial and workable agreement continues to elude WTO Members.
This commentary attempts to address these questions by providing the background and timeline to the Doha Round before briefly discussing some of the differing negotiating positions and preferred outcomes of the major Member and negotiating coalitions. While the negotiating positions differ widely on a number of issues, this commentary concludes that more systemic institutional impediments exist, which not only hinder the successful conclusion of the Doha Round, but also prevent effective long-term institutional governance and vision. The first impediment is consensus-based decision-making--where every Member must essentially agree on each issue before an agreement can be reached. This means that any Member, no matter how small, can block agreement in an increasingly politicised and highly visible organisation. The second impediment is the broadened mandate of the negotiations, coupled with the diversity of viewpoints in an expanding multilateral trading system. The third impediment is the lack of oversight of bilateral and regional free trade agreements--collectively termed preferential trade agreements ('PTAs')--within the multilateral trading system. The final impediment analysed in this commentary is the combination of ineffective governance and the effectiveness of the dispute settlement system. The result of this combination is that WTO Members are increasingly less willing to reach agreement on an issue and more likely to allow the matter to be resolved by the dispute settlement system. The commentary concludes with a brief analysis of the effects of the failure in the Doha Round and suggests ways in which the WTO can progress and remain a thriving and vital centrepiece of the international trading system.
II THE DOHA ROUND NEGOTIATIONS: A BRIEF OVERVIEW
Launched only seven years after the conclusion of the watershed Uruguay Round, the Doha Round again attempted to substantially revise the international trading system with an ambitious agenda including: a 'market access' component, a 'regulatory' component and an 'implementation' component (encompassing issues including special and differential treatment and preference erosion). (8) With such a large mandate, including many contentious topics and issues, the negotiations quickly deteriorated. By the time of the Cancun Ministerial in September 2003, the only noteworthy success was the agreement relating to the issuing of compulsory licences and the importation of pharmaceuticals to countries with no or insufficient manufacturing capabilities. (9) Far from building on that success, the Cancun Ministerial saw the Doha Round take several steps backward when the week collapsed without agreement. (10)
While many journalists reported that the Cancun debacle would be the downfall of the WTO, the Doha Round again gained momentum, in large part due to the dedication and tireless work of the trade ministers, senior governmental officials and the WTO Secretariat. Even though some of the difficult issues were left unresolved, the Members were again at the table and productively communicating, discussing and negotiating. (11) In fact, Members reached preliminary agreement in several important areas, most notably their decision to streamline the Doha Round, (12) as well as the framework agreement on agricultural modalities (template agreements) (13) and a preliminary decision to eliminate agricultural export subsidies and trade-distorting export support. (14)
Following on from the post-Cancun clean-up, the Hong Kong Ministerial in December 2005 accomplished its limited goals of furthering and continuing the Doha Round by reaching preliminary agreement on a number of key issues. (15) This Ministerial saw Members preliminarily agree to: end agricultural export subsidies by the end of 2013; (16) eliminate tariffs and quotas on 97 per cent of the tariff lines exports by least developed countries ('LDCs') by 2008; (17) eliminate export subsidies in cotton by the end of 2006; remove all tariffs and quotas restricting LDC cotton exports by 2008; extend the implementation period for LDCs (allowing them to maintain measures inconsistent with the Agreement on Trade-Related Investment Measures ('TRIMS') (18) for at least seven years and potentially until 2020); and extend the moratorium on e-commerce tariffs until at least the next Ministerial. (19) On other issues, Members essentially committed themselves to agree on further particulars at a later stage. (20)
Members failed to build on the achievements of the (limited) Hong Kong Ministerial. By mid-2006 it was clear that the negotiations had reached a stalemate. (21) For this reason, Director-General Pascal Lamy 'suspended' the Round after more than five years of much discussion, little progress and no consensus on any major negotiating subject. The Director-General did not set a deadline for the resumption of the negotiations, but on 7 February 2007, he declared 'we have resumed negotiations fully across the board'. (22) Despite this declaration, negotiating positions have not shifted and there is still much left to achieve before the Doha Round can successfully conclude. (23)
The disintegration of the negotiations and continued inability of the Members to reach agreement is worrying, as the creation of the WTO has been of great benefit to many nations. Its continued credibility and importance is prefaced upon it being able to function effectively to improve trading conditions and opportunities. The WTO has proved its importance through significantly expanding trading opportunities while at the same time creating an unprecedented, binding international dispute settlement mechanism to effectively enforce obligations and increase certainty and predictability to international traders and Members. (24) Further, liberalised trade through membership of the WTO has brought tangible benefits to many developing countries and the completion of the Doha Round is expected to deliver substantial benefits and assistance in economic development to the vast majority of developing nations and LDCs. (25) The inability of Members to conclude the Doha Round risks the Organization becoming marginalised as alternative arrangements--such as PTAs--are sought out. (26) Such marginalisation should not be celebrated.
The recent decline of the Doha Round negotiations is often viewed merely as a result of the major negotiating parties' failure to agree on the issues, particularly further modalities for agricultural trade. (27) Such an assessment is, of course, correct to a point. Developed Members such as the United States and the European Community, who are in virtual agreement on a number of issues, such as deepening the level of commitments in the services sector (28) as well as non-agricultural market access, (29) have deep-seated disagreements on numerous other contentious issues. Most importantly, their respective positions on agriculture are incongruous, with the US requesting deep tariff reductions while attempting to maintain some form of its own agricultural subsidies/support and insisting on strong reform of the EC Common Agricultural Policy ('CAP') and opposing most forms of 'sensitive' product exclusions. (30) The EC, for its part, is resisting deep tariff cuts in agriculture while also maintaining a strong preference for unlimited or soft regulations on 'sensitive' product exclusions. (31) The US is also looking to curb oversight of domestic trade remedy decisions while at the same time demanding increased market access for its products. (32) The EC strongly supported the inclusion of the Singapore issues and only belatedly agreed to unilaterally drop its demands when other Members made it clear that they would not trade meaningful agricultural reform in exchange for the Singapore issues. (33) Both of these Members, meanwhile, are also looking to maintain escalating tariffs on textile and manufactured products. (34)
Large and powerful developing countries such as Brazil, China, South Africa and India--and, more generally the entire G-20 (35)--are demanding increased market access to developed country markets while at the same time resisting demands to liberalise their own markets. (36) This is particularly the case with agricultural and industrial tariffs. (37) On other issues, such as services and trade remedies, the interests of these countries diverge. Another negotiating coalition, a group of developed nations including Japan, Switzerland and Norway (the G-10) (38)--has maintained a negative and defensive approach to the negotiations on agriculture and, due to their lack of competitiveness internationally, resisted most reforms while at the same time insisting on almost uncontrolled exclusions for 'sensitive' products. Finally, a group of mainly lower-income developing countries and LDCs with slow or stagnating growth have increasingly become significant players in the WTO negotiations. These nations, often referred to as the G-33, (39) generally consist of countries within Sub-Saharan Africa, the Caribbean, the Middle East and West Asia. The G-33 are net food importers and primarily concerned with three issues: special and differential treatment (including broadly defined and loosely regulated 'special product' exemptions); (40) increased market access to developed country markets (mainly but not exclusively for agricultural products); (41) and preference erosion. (42) In the main, the G-33 has engaged in negative negotiating by making numerous demands and rejecting proposals without offering substantive counter-proposals. (43)
However, blaming the failure of the Doha Round entirely on the negotiating member states overlooks the underlying causes of their disagreements and unwillingness to compromise. While 'blame' can certainly be laid against the major players, the Organization itself and its institutional impediments must also bear some culpability.
III THE WTO AND ITS INSTITUTIONAL IMPEDIMENTS
Several institutional impediments exist which interfere with the fundamental operations of the WTO. These impediments go to the heart of the Organization, and, left unmodified, risk plummeting the WTO into irrelevance. These institutional impediments have as much, if not more, responsibility for bringing the Doha Round to a virtual standstill than the WTO Members themselves. This section focuses on some of the more important institutional impediments that have contributed to the lack of progress in the Doha Round and to the growing frustration with the multilateral trading system. The first impediment analysed is consensus-based decision-making in an increasingly politicised and highly visible WTO. The second impediment considered is the increased mandate of the negotiations coupled with the diversity of viewpoints associated with an expanding multilateral trading system. The third impediment discussed is the lack of oversight regarding the validity of regional free trade agreements with the multilateral rules. The final impediment assessed is the effectiveness of the dispute settlement system, the success of which has resulted in Members being less willing to reach agreement on an issue and more likely to allow the matter to be resolved by the dispute settlement system.
A Highly Visible and Politicised Consensus-Based Decision-Making Processes
For as long as one can remember, trade policy has been the exclusive purview of the few; a select group of diplomats who carried on their business behind closed doors and out of view of everyday society. (44) Not many individuals outside this group have paid much attention to the rules, commitments and exclusions coming from the negotiations, and those who did had a hard time convincing others of their importance. (45) The creation of the WTO has sparked interest in the happenings and goings-on of the multilateral trading system. (46) For whatever reason, trade policy and law have become 'sexy'. Perhaps this shift resulted from increased, faster and cheaper international communications and transportation, or maybe it was due to the increased level of coverage and commitments made during the Uruguay Round or perhaps it was simply because the name 'World Trade Organization' conjured up more feelings and angst than did the 'General Agreement on Tariffs and Trade'. (47) Whatever the reason, it is clear that the Uruguay Round not only created the WTO, but it also awakened the latent interest of 'civil society'. (48)
Since 1995, individuals and non-state actors representing all sides of the political and economic spectrum have demanded increased access to the internal workings of international organisations. (49) In the context of the WTO, non-governmental organisations have demanded access to the drafting, interpretation, revision and dispute settlement phases of the process. (50) Well-financed NGOs have formed in almost every member state to monitor one aspect or another of the WTO and, if nothing else, these highly visible groups have succeeded in getting first the media, then governments and finally the WTO to take notice. (51)
As a result, every high level meeting, from a WTO Ministerial Conference to a mere informal meeting of several trade representatives, attracts
the attention of the media spotlight. (52) In this context, every statement by anyone acting in an official manner is analysed and debated by journalists, academics and activists alike. Such a system resembles the United Nations General Assembly floor and is a far cry from the traditional GATT negotiations. (53) The low key and cordial diplomatic negotiations of the past have now been replaced by public spectacles fuelled by the public's increasing appetite for knowledge of and even participation in the decision-making process.
The nature of the negotiations has changed, and the pace of progress within the Organization has slowed, (54) as a result of heightened interest in trade negotiations, coupled with the fact that the GATT began with 23 signatories and the WTO has, in a space of only a decade, grown from 123 to 150 Members (55) representing all levels of development. Increasingly, trade representatives, government officials and parliamentarians are making public statements which feed into public sentiment and increase tensions at the negotiating table. Razeen Sally has explained the situation by stating that these officials have become, 'distracted by rhetoric and political grandstanding'. (56) Sally is fearful that if the trend towards the 'UN-isation' of the WTO--where officials are more interested in 'windbag speechifying', 'political point-scoring', 'procedural circles' and political 'appointments made according to informal developing country quotas and not on merit' than in actually progressing the trade agenda--continues the WTO's functional capabilities will be decreased and the Organization would become nothing more than a 'marginalised talking shop'. (57)
While Sally may be taking the argument a bit too far, the broader point that the nature of the Organization is shifting from one based on negotiation and action to one based on public statements and political advantage is valid. To some degree, grandstanding and showmanship have replaced useful bargaining, thus contributing to the shift of meaningful progress from the WTO to another forum--a disparate collection of regional and bilateral PTAs.
Such grandiose politicisation of the process can be seen at every Ministerial Conference of the WTO. In his book, A World without Walls, former Director-General Mike Moore recounts several examples of ministers or governmental representatives at both the Seattle and Doha Rounds openly criticising the Organization (particularly the process) in public, while at the same time engaging in meaningful negotiations and influencing the process behind closed doors. (58) More recently, at the Hong Kong Ministerial in December 2005, trade ministers and governmental officials also used the public spotlight to issue divisive and inflammatory...
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