Lamy: Concluding Round In 2007 Not Out Of Reach Yet

20 December 2006

Concluding the Doha Round negotiations in 2007 is still possible, WTO Director-General Pascal Lamy told Members on 14 December, but only if countries come forward with concrete new concessions early in the new year.

"New flexibilities have been announced by major players in general terms," he said to the year-end session of the General Council, referring to the hints by some governments that they would be willing to soften their bargaining positions. "The challenge remains to translate this political will and these flexibilities signals into substantive changes in position, which are necessary in order to unblock the process."

If this does not happen, the WTO chief warned the institution's top permanent decision-making body that the talks risked total collapse. "Failure could be just around the corner, but we need not turn that corner." He told reporters later that 2007 would be a "defining year for the organisation."

In his report to delegations on the state of the Doha Round, Lamy pointed to the various gatherings convened by the chairs of the different negotiating groups since mid-November, when he authorised a 'soft relaunch' of the talks following their July suspension over differences on farm trade (see BRIDGES Weekly, 22 November 2006). "While no real changes in numbers, notably in agriculture domestic support or tariff protection have shown up in these discussions so far," he acknowledged, "an increasing level of engagement is starting to appear." He took this to mean that Members are now more willing than before "to enter into discussions on substance."

Lamy has already indicated that 'fully-fledged' negotiations, including those at the ministerial level, can only truly restart once governments explicitly offer deeper subsidy or tariff cuts, and moderate what they want in exchange. Nevertheless, he told delegates that in order to be properly prepared for this, they will need to increase the pace of informal work after the end-of-year break "in order to exploit the window of opportunity that remains ahead of us in the first quarter of next year." He urged Members to each play "their part" in ensuring the success of the round, reminding them that the costs of failure would be substantial.

The limited 'window of opportunity' arises from the looming end-June expiry of the US presidential administration's 'trade promotion authority' (TPA), and with it, the ability to negotiate trade deals and submit them to Congress for a yes-or-no vote without the possibility of amendment. Countries are reluctant to sign trade deals with Washington in the absence of TPA, since this would leave Congress free to make changes to the negotiated package. Like senior trade officials from many countries, Lamy believes that sufficient progress in the negotiations in early 2007 might help the Bush administration win Congressional support for extending TPA.

Delegations call for progress

Several delegations intervened to express satisfaction that the talks had resumed, though most deplored the lack of concrete progress. As is typical in such meetings, they stressed their commitment to the round, often highlighting a handful of their respective priorities.

Some, such as Argentina, Chile, and Japan, warned that that the total collapse of the negotiations was a real possibility. A failure, they contended, would threaten the credibility of the multilateral trading system and risk giving rise to a wave of protectionism. Mexico said that countries have not revealed their true cards, and could go further than they had been suggesting in the recent informal discussions.

India claimed that in spite of the absence of a breakthrough on agriculture, Members had been making a sincere attempt to better understand each others' positions. However, Brazil noted that technical discussions had limits. Speaking for the G-20, it said that developed countries would have to give some sort of a signal -- implying concessions -- to determine how the talks would proceed.

On behalf of the G-33 group, Indonesia stressed the need for developing countries to receive flexibilities to shield certain products from the full force of tariff reduction, and to protect farmers from the effects of import surges. The extent to which Members, both developed and developing, will be able to shelter products from liberalisation has been an extremely contentious issue in the negotiations. Australia, speaking for the Cairns Group of farm exporters, a bloc that includes both G-33 members and countries firmly opposed to the G-33's demands, said that the group it leads had been working to refine views on these flexibilities.

Benin, representing the African Group, reminded Members that any Doha Round deal would have to address the needs of net food-importing developing countries and the beneficiaries of longstanding trade preferences that stand to be hurt by multilateral liberalisation. It also stressed that any deal must include strong special and differential treatment rules, in additional to robust provisions for technical assistance and financial support. South Africa, on behalf of the NAMA-11 group, noted that development issues, though they were supposed to be the primary focus of the negotiations, had been left behind by the focus on agriculture and industrial tariffs.

How can Members offer new concessions together?

Key Member countries have said that they are willing to be flexible in order to break the deadlock on the negotiations -- so long as their trading partners are, too. The question, Lamy pointed out at a press conference on 15 December, is "who moves first?"

The WTO chief acknowledged that "no one" is going to simply come forward and specify numbers detailing how much more they are willing to offer and how much less they are willing to accept in return.

Instead, Lamy described the ongoing process of informal technical analyses, and explained how he hoped it would give countries the confidence to table new bargaining positions. He said that since "there is a tradeoff between ambition and flexibility" -- in other words, the deeper the overall tariff and subsidy cuts, the more flexibilities Members will demand to shelter specific products from reforms -- trade officials can "play" with different pairs of numbers to examine potential compromises. Countries would also have to test these different scenarios with influential domestic constituencies, to assess what they could tolerate.

These exchanges, Lamy went on, need to produce a series of well investigated "options, tests, and sensitivities." This way, countries will be able to develop "reasonable confidence that [any new concessions] are not going to be pocketed immediately and not reciprocated," as well as some assurance that their offers have at least a substantial overlap with other countries' moderated demands.

He concluded that "hopefully all this will result in a stage where people feel comfortable enough to come back to the negotiating table with something more than what was there in July," with the added benefit that potential concessions would have been 'pre-tested.'

Such discussions have been taking place "on a much more precise basis" than when ministers met in July, Lamy said, approvingly noting that bilateral exchanges among key Members such as the EU, the US, India, Brazil and Japan were occurring more frequently. He conceded that the 'pre-testing' process would take a great deal of time. Nevertheless, he said, "it's cooking."

Lamy nonetheless downplayed expectations for the 'mini-ministerial' meeting scheduled to take place in late January on the sidelines of the World Economic Forum in Davos. Describing the gathering as a 'Swiss tradition' for officials who would have been at the summit anyway, he said that he did not "foresee that people will come to the table to negotiate numbers." Top officials from some major Members are expected to meet bilaterally early next year.

Lamy not planning to propose compromise text

In response to questions about whether he was considering the 'nuclear option' of international trade negotiations -- trying to break the deadlock by going over the heads of negotiators to produce a potential compromise text of his own -- the head of the WTO maintained that he had no plans to do so. "I haven't changed my position on this," he said. "A text by the [director-general] is a last resort option."

The precedent for this comes from 1991, when the then-Director-General of the GATT, Arthur Dunkel, drafted a comprehensive agreement text in an eventually successful attempt to break a deadlock in the Uruguay Round negotiations. Though roundly pilloried at the time, especially in developing countries, the 'Dunkel draft' eventually provided much of the basis for the final agreement concluded three years later.

Lamy insisted that such a maneouvre would be "very risky," and would sit uneasily with the 'bottom-up' principles of the WTO. "I'm not going to spend my Christmas break drafting a compromise text," he said.

ICTSD reporting.  

This article is published under
20 December 2006
In a speech to WTO Members on aid for trade, Director-General Pascal Lamy highlighted the importance of monitoring and evaluation to ensuring that trade-related assistance efforts are effective. The...
17 January 2007
BUSINESS SERVICES, TRADE, AND COSTS (OECD Trade Policy Working Paper No. 46). By Molly Lesher & Hildegunn Nordås. Organisation for Economic Cooperation and Development, 13 December 2006. This...