Doha and the crisis in global trade

World Trade

We should be in no doubt; the new world trading system – which means the World Trade Organisation – is facing the biggest crisis of its young life. In less than three months, trade ministers from more than 140 countries will meet in Doha, Qatar, to try to accomplish what they failed to do two years ago in Seattle: launch a new multilateral trade negotiation. The consequences of a second failure could be disastrous.

What is at stake in Doha is whether governments still have the will to maintain and strengthen the necessary rule-based trade and investment environment in which growth, development, poverty eradication, a better environment, new jobs and, yes, improved labour, social and political conditions can be encouraged.

I say encouraged. I do not say guaranteed. The WTO is a facilitator, not a cure-all. It is part of the answer to many of the challenges facing the world, rich and poor, at the beginning of the 21st century. Yet in some ways, the difference between the foolish activists on the streets who seek to destroy the institution and those supposedly responsible political leaders who are prepared to stand on the sidelines and allow the WTO to become moribund is slight. Without a fully operational and fully relevant trading system, economic recovery will take a longer time coming, solutions for the problems of the world’s poorest countries will be frustrated and the many benefits global trade can bring will be denied.

That is the big picture. But looking at the preparatory process for the Doha meeting it would be easy to imagine the stakes are altogether less urgent or less significant. Despite claims to the contrary, agreement on an agenda for a new trade round appears little further forward than was the case at this stage before Seattle. The problem is that while one failed ministerial meeting could be regarded as an accident, a second would be a true disaster and perhaps fatal for the WTO’s credibility. It is not even clear that the successful dispute settlement system could be sustained indefinitely if political support for multi-lateralism among WTO members is shown to be too weak even to make the compromises necessary to launch a reasonably broad negotiation.

The fall-back – in some minds at least – seems to be to make the final political decision on China’s entry to the WTO the focus of attention at Doha. That decision would be a huge step forward for the system and for China. But China’s imminent entry to the WTO, if not accompanied by a much broader advance by the membership as a whole, will seem a hollow achievement.

What is to be done? First we have to recognise that there are now more active players in the game then ever before. The efforts being made by Pascal Lamy for the European Union and Robert Zoellick for the US to forge a transatlantic position are welcome. But, as both trade officials point out, it will take far more to secure a consensus to launch a round. Japan has to show leadership, as do some of the advanced developing countries.

I do not subscribe to the notion that developing countries got nothing out of the Uruguay Round – the record and the statistics simply do not bear out that claim, even if it has become unchallenged doctrine in some quarters. Bear in mind that the WTO offers opportunities: it cannot deliver where other conditions – economic, structural, even political – are not appropriate to encouraging trade and investment in the first place.

But this is not to say the WTO cannot be improved in favour of poorer nations. I find it scandalous that two years after a solid programme of nearly 100 elements was tabled by developing countries in Geneva, almost nothing tangible – bar some welcome market access benefits for the poorest among them – has been agreed in response. It is just not good enough for industrialised nations to proclaim a “development round” when they have responded so woefully to the issues that developing countries want addressed right now – before they accept a further large negotiation and the inevitable new commitments that will ensue.

Let us be clear: some of what is being demanded can be resolved only as part of wider negotiations and some may be unrealistic. That said, the quad countries – the EU, US, Canada and Japan – together with other industrialised nations must deliver a worthwhile package of “implementation” concessions in September or we can start to write off prospects for Doha. Endless soothing words about a “development round” have no credibility if the promoters cannot demonstrate good faith up front; governments in poor nations can recognise empty political spin.

My second point is that those countries that are dragging their feet on defining the nature and objectives of the mainstream agricultural dossier in a new round must now engage seriously in Geneva.

There are many WTO members for whom a valid negotiation on farm trade is the only justification for participating in a new global negotiation. Signals from Brussels, Tokyo, Seoul and Bern that the name of the game must be more flexibility in farm policies, not less, just will not do. The current regime is quite adequate to meet any justified public health or environmental agenda.

Finally, let us be realistic about the breadth of the menu for a new round. If most developing countries remain sceptical or opposed to the full inclusion of investment and competition policy as negotiating issues, it is pointless and patronising for Brussels to continue to insist that such agreements would be in the interests of the poor. If that is so, and it probably is, developing countries will surely come to the same conclusion.

These three elements seem to me likely to make the difference between success and failure in Doha. It is to be hoped that policymakers in important capitals will now make the necessary adjustments to their positions and get back to Geneva quickly and in good shape to contribute to achieving a consensus on the agenda for a round. To do otherwise will be to hand the smashers of the system a new victory on a plate.

The writer is a former director-general of the WTO

This article was first published as a Private View in The Financial Times