[WTO Talks Doha Round] ...is key to fair trade but reform is crucial

from The Times Online

European Briefing by Carl Mortishead

EVERY meeting at the World Trade Organisation is an eleventh-hour cliff-hanger, a make-or-break and a do-or-die. Since the Doha round of trade talks was convened in November 2001, there have been two failed ministerial summits — in Cancún, Mexico, in 2003, and in Hong Kong, in 2005.

Countless deadlines for agreement on a skeleton framework for reductions in tariffs and subsidies in agricultural trade have been breached, but the talks continue, officials fly to and fro and the recriminations mount.

Yet this week looks different. There is genuine fear that the European Union, America and the leading emerging market nations will fall at the first hurdle. The question is: does it matter? In the short term, it means nothing. American law is providing a much-needed deadline as President Bush’s mandate from Congress to negotiate a trade agreement expires in July 2007. Even with broad agreement on a trade deal in the next few weeks — a mammoth task — it will take at least a year to negotiate a full treaty and get it through Congress.

Trade will continue — unfairly, say the world’s development charities — but trade has always been about imbalance and, contrary to what you have been told, the main argument in the Doha talks is not between the very poor and very rich. It is between the rich and those who are getting rich.

The Doha round was promised as a “development round” focused on securing better access by farmers in poorer nations to the fat produce markets in America and Europe. Early in the talks, that was achieved in large measure for the poorest, the least-developed countries, who secured tariff-free access to EU and US markets for 97 per cent of exports. The marginal 3 per cent that remains contains some big items, but the US and the EU have made large concessions, notably in cotton and sugar.

What is at risk if Doha fails is a free-for-all in which trade negotiations revert to a bipolar world where the rich and powerful distribute favours and sweetheart deals amid a whiff of corruption. Doha has been different to previous trade rounds because a group of formerly poor nations have turned over the tables.

Called the G20, the group includes Brazil, India, China and South Africa, rapidly expanding and industrialising economies of enormous potential. It is their demands and their resistance that is setting the Doha agenda. The argument is about whether Tesco can open a superstore in Bombay in return for the EU opening its doors fully to Indian produce. The row is over the big gains and losses for billions of urban-dwellers, not the plight of a few poor farmers in Mali and Burkina Faso.

Without a formal trade round, the G20 and its billions of consumers and workers would struggle to punch at even half their weight. Without Doha, Washington and Brussels will carve up global trade into preference agreements. For Barbados, Brussels can offer a deal on bananas; for Mauritius, special terms for cane sugar. Meanwhile, Washington will grant Colombia, Ecuador and Honduras unlimited trade access on condition that a cold shoulder is shown to President Chávez of Venezuela.

The corrupt world of my gang, your gang beckons. It was apparent in the veiled threat contained in a letter last week to Mr Bush. Signed by 57 senators, it expressed “deep concern about the direction of talks on agriculture”. There are to be no more cuts in US farm subsidies without big concessions from America’s trading partners, say the senators.

Such a world would not last long — the disruptive element has already asserted itself. China and India would not be passive participants in a bipolar world and would quickly establish their own regional trading organisations to assert power on their own terms. There is also Russia, currently seeking admission to the WTO but frustrated by American resistance. It is already pushing its own agenda with energy as the principal lever, and its refusal to adopt the EU’s Energy Charter is its main bargaining chip.

After the Seattle street battles in 1999, Pascal Lamy, the current WTO Director-General, famously derided the organisation as medieval, its tortuous negotiations as archaic. He is right, and if Doha fails, the members should revisit the rules, notably the requirement of unanimity, that every member state must dot every “i” and cross every “t”.

The WTO needs reform because the alternative would be disastrous. Those who trade know that the real barriers to access are not tariffs and subsidies but corruption, graft and bureaucratic delay. Without the WTO’s levelling efforts, the world will quickly fragment, not into two trading blocs but many trading fiefdoms with rules imposed by despots and guarded by corrupt officials. We can then truly say goodbye to fair trade.