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The Post-Hong Kong Blues

The Doha Round 2006 on the Home Stretch?

Whereas in the NGO community Seattle was seen as the watershed of a new global movement and Cancún was an occasion for celebration, frustration spread after the Hong Kong meeting. It was a “bad deal”, many observers say, delivering only few concessions to the developing countries, but saving the Doha Round from collapse (>>> What Happened in Hong Kong?). However, Hong Kong did not bring us much more than a new timeframe in which the crucial details still have to be clarified. Whether the developing countries are better or worse off after the Doha Round will depend on the negotiations of the coming months. By Rainer Falk.

The participants in the mini-ministerial on the sidelines of this year’s World Economic Forum at the end of January rushed to emphasize the new deadline for negotiating the “full modalities” by the end of April 2006. They also promised to accelerate negotiations accordingly. However, simultaneously a survey by the Institute for International Business, Economics, and Law of the University of Adelaide showed that only 2% of the permanent representatives to the WTO in Geneva and those responsible for trade in the capitals believe that this new deadline can be met.

* Persisting differences
There is also a similar contradiction between the public declarations of what WTO director-general Pascal Lamy calls “a change in mindset” among the negotiating partners and their continuing substantive differences. Already shortly after the mini-ministerial was concluded, US Trade Representative Rob Portman, EU Trade Commissioner Peter Mandelson and Brazilian foreign minister Celso Amorin put their grave differences on the record as to the importance they attached to reducing agricultural tariffs within the entire negotiating framework. Even after the EU conceded an end to agricultural export subsidies by 2013 in Hong Kong, there is by no means consensus that the future “balanced” progress in the agriculture, industrial goods (NAMA) and services sectors ought to be pursued the way the EU Directorate-General for Trade—closely linked to European export interests—would like so much.

Given the persistence of differences, support has been gathering for the proposal to elevate the Doha Round to the highest level of heads of state and government in order to obtain a significant breakthrough. At first a proposal by the Brazilian president Lula for such a trade policy summit was disregarded. However, there are already plans for such scenarios. Hence Colin Bradford and Johannes F. Linn of the Brookings Institution in Washington, DC, proposed that an L-20 summit be summoned as soon as possible using the current G-20 finance minister model. (The G-20, in contrast to the G-8, also includes the economically most important developing countries and in contrast to the G20 in WTO, led by Brazil and India, it includes the industrialised countries.) Gerry Helleiner, who advises the G-24 in the IMF, adds that two representatives should be included from the LDCs since they play an important role in the WTO as the G-90 and could lend needed legitimacy to the new summit structure.

* Derailing strategy failed
Even if the major conflicts remain unsolved and the new governance ideas have to be implemented in whatever form it takes, the WTO needs another representation model than the “green room” negotiations accepted with reluctance in Hong Kong. The current discussion also shows that none of the participants wants the Doha Round to fail. Even the concept popular among NGOs to let the WTO to derail has none of the necessary support at governmental level. Hopes for Hong Kong placed in the Hugo Chavez and Fidel Castro governments yielded no more than expression (largely without consequences) of diplomatic reservations against one section of the declaration (on services).

* Deceleration and alternatives
What could be more obvious than to openly admit the failure of the derailing strategy? So far, the protagonists, however, have refused to do so. Nevertheless, it is about time to realise that long and intensive negotiations are ahead and again to push substantive and conceptual alternatives to the trade policy mainstream:

+ As far as the timeframe is concerned, no one should feel pushed by the alleged compulsion to satisfy the fast-track authority that expires in mid-2007. The Doha Round—like previous rounds—has exceeded deadlines frequently and the more often it has, the stronger the South’s bargaining power has become. This was apparent again in the merger of the G-20 and G-90 into the G-110 in Hong Kong (>>> South Forms Grand Coalition in Hong Kong). In a Doha Round, which is both stretched and decelerated, the North could be frustrated into conceding the “policy space” the South so urgently needs.

+ As far as the discussion of alternatives is concerned, we are by no means just at the beginning. This can be seen in the numerous proposals also documented here repeatedly (>>> here). Shortly before the Hong Kong conference, a new book was published (see reference) in which economics Nobel laureate Joseph Stiglitz and Andrew Charlton of the London School of Economics proposed a paradigm shift in the Doha Round: Market access should be organised in a manner differentiated to utilise the benefits of South-South trade without forcing the developing countries to open their markets at the same time to economically more powerful countries. Charlton and Stiglitz write, “All WTO members should commit themselves to providing free market access in all goods to all developing countries poorer and smaller than themselves.” The richer a country is, the more it should reduce its tariffs with respect to poorer countries, whereby no developing country should be obliged to open its markets for the richer and stronger.

* Humanising globalisation?
The proposal is not unproblematic since it measures a country’s wealth in terms of per capita income and its economic strength. This would lead to smaller countries with relatively high per capita income not having to liberalise toward China and India where the average income is even lower—hence the latter would scarcely agree. But the idea is much more extensive and serious in terms of a genuine development round when compared to the concept of “humanising globalisation” recently propagated by Pascal Lamy during a visit to Chile. With this the WTO director-general wants to forge a new “Geneva Consensus”. In fact it is merely a policy of cushioning the adjustment costs of the WTO’s across-the-board market liberalisation through somewhat more development aid (aid for trade). Nonetheless, Lamy’s new rhetoric shows that the top WTO official has at least some idea that after Hong Kong not everything is “back on track” (Lamy) again.

Reference:
* Joseph E. Stiglitz/Andrew Charlton, Fair Trade for All. How Trade Can Promote Development, 315 pp., Oxford University Press: Oxford-New York 2005.

Rainer Falk is the publisher of World Economy & Development.

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Pilot Issue / Development Under the Grand Coalition in Berlin

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