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T S Vishwanath: New trade winds

Member countries show a collective desire to re-engage at the WTO

T S Vishwanath 

World Trade Organisation (WTO) Director General Pascal Lamy is an optimist who wants to ensure that WTO remains relevant. This is evident when one looks at his statement to the General Council of WTO a few days ago when he said that discussions among ministers, negotiators, and other stakeholders confirmed a “collective desire to re-engage”.

However, it is important to note that he is a cautious optimist. Pointing at the impasse that the Doha Round of negotiations of WTO have faced in the last one year, Lamy referred to the re-emerging desire to negotiate by cautioning that, “I am neither under any illusion that the factors that have shaped the impasse which we face have changed substantively, nor do I harbour any dream about achieving grand designs or comprehensive deals.”

But reports from Geneva suggest that Lamy’s optimism is not unfounded. Countries, reports indicate, are showing some cautious optimism to new proposals that are now coming to the table for negotiations.

One such proposal that Lamy alluded to in his address to the General Council was the current position on trade facilitation where some countries are of the view that there is a need to move ahead if consensus can be arrived on this specific agreement. However, in the General Council meeting in July several countries had, while stressing the significance of trade facilitation, noted that they did not at this stage consider this area as self-balancing.

Several member countries had stressed the importance of transparency, inclusiveness and multilateralism in any processes ahead, including in agreeing on early harvest candidates within the Doha Round. A number of other countries had also emphasised the importance of respecting the development mandate of the Round.

In his address, Lamy cautioned that the members were now faced with a global economy that is confronted by increasingly strong headwinds. “Slowing global output growth has led us to downgrade our 2012 forecast for world trade expansion to 2.5 per cent from 3.7 per cent in April and to scale back estimates for 2013 to 4.5 per cent from 5.6 per cent. The trade slowdown in the first half of 2012 was driven by an even stronger deceleration in imports of developed countries and by a corresponding weakness in the exports of developing economies. Past experience has shown that in an increasingly interdependent world, economic shocks in one region quickly spread to others - no one is immune. In other words, and I think we all agree this is becoming increasingly obvious, the only way to effectively face up to this crisis is through global collective action.”

One area that needs collective action is taming export competition in agriculture. The G20 group on agriculture has come up with a proposal that seeks an update on the information available with WTO secretariat on export subsidies, export credits, state trading enterprises, and food aid that together constitute export competition.

The G20 has also asked for more details on tariff rate quotas that are used by countries to charge high tariffs on products after the initial quotas are over. It is without doubt that to keep the Doha Agenda development oriented, it will be important to seek higher access for agricultural products from developed country markets that have maintained tariff and non-tariff barriers on these products. There is also a need to look beyond tariffs and identify other barriers like the sanitary and phyto sanitary conditions that are imposed on goods coming into developed country markets from developing and least-developed countries.

Reports emanating from the recent public forum held in Geneva also show that there is a new-found interest developing in the Doha Round. But then it will be important to ensure that the interest that has remained at low ebb for some time is now not just renewed but sustained through some action from members, especially countries like the US that will be critical to the success of the Round.

The Bali Ministerial meeting slated for December 2013 provides negotiators with enough time to come up with some proposals that can help revive the Doha Agenda and bring the WTO back on track. But for that it will be important for all countries to look at proposals that have the greatest possibility of creating a strong consensus on some critical areas like agriculture and industrial goods.


The writer is Principal Adviser at APJ-SLG Law Offices

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First Published: Thu, October 11 2012. 00:58 IST