Beware cost of failure in the Doha talks

By Peter Sutherland, Financial Times
FT.com site; Jul 08, 2004

As chairman of the director-general's consultative board preparing recommendations on the future of the World Trade Organisation, I would like to express my concern that the next four weeks could be decisive for that body. Our report may be relegated to a historical footnote.

Why such concern? Because I am not confident that the institution and, indeed, multilateralism in international trade relations will survive unharmed a failure to relaunch the Doha trade negotiations that foundered in Canc™n last year.

Negotiators in Geneva and trade and agriculture ministers around the world are working against time to put a deal in place by the end of this month. The political calendar is such that the chances of continuing meaningful talks after that point are virtually nil.

Let us be clear. This is not an effort to conclude the Doha round - the end-2004 deadline imposed in 2001 has long been unreal. What is being sought in the coming weeks is a series of frameworks that will take us on from the original Doha Declaration, refine the agenda, provide a sense of ambition and set the stage for the real bargaining that should take place in 2005-07.

Above all, the terms for negotiating on agricultural reform need to be clarified. If accommodation can be reached on farm trade, other dossiers - on non-agricultural market access, for instance - will need to be fleshed out in the same way. At present we are not so far from a good result - but there is still every chance the effort will fail.

The risks are clear. Without the prospect of a worthwhile trade liberalisation package through the Doha round, will the US Congress again grant "fast track" negotiating authority to the administration next summer? It will be a very hard sell and probably a futile one. If the US steps back from multilateral engagement in trade negotiations, will other parties be able to provide the necessary leadership? I would not place money on it.

In any event, failure this month would mean we had not moved one jot from the Doha Declaration. The Doha round would, in effect, be dead. When meaningful negotiation is again possible in the WTO - say, in a year from now - we will be looking at a complete relaunch. It might take several years to achieve consensus on a new agenda.

In the meantime, what would we have lost? For a start we would have lost the remarkable prospect of the elimination of export subsidies and other unfair elements of export support in agriculture. We would also lose the chance of taking a large bite out of trade-damaging domestic support for farmers and opening up some markets for agricultural commodities.

The chance of a valuable agreement on trade facilitation - from which, properly negotiated, developing countries as well as international business have much to gain - would recede into a pipedream. So would boosting trade and investment by multilaterally lowering barriers to trade in industrial goods and services.

There are other costs to failure. Without a credible multilateral system of rules, can we cope in an orderly fashion with the relentless competitive impact of China in the global economy? And what of the WTO's crown jewels: the dispute settlement system? Tens of thousands of companies around the world have, mostly unknowingly, benefited from the timely handling of disputes in the WTO. Yet can the system continue to achieve such results if the institution within which it is embedded - and on whose rules its judgments are based - ceases to command the respect of governments and businesses?

In the next week the chairman of the agricultural negotiations will have to put on the table a proposal. Clearly, it will not be a perfect answer to all the fears and aspirations of nearly 150 participating countries. For some it will mean the prospect of reforms they would prefer not to envisage. For others it will signal that we are not going to reach a state of nirvana in agriculture this time round - or, probably, next. In particular, market access results may be useful but modest. That should not detract from the value of taming export support and seriously winding back domestic support. These would be great advances.

In other words, all parties must think very seriously indeed before rejecting the chairman's proposal. He will not get a second chance within the time available. And if the agricultural framework cannot command a consensus - albeit a reluctant consensus - no other dossier will move.

Unless countries are prepared to compromise, failure will be the result. And failure carries costs that no participant should be prepared to bear.

The writer is a former director-general of the WTO

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