Question 1: Assessing the Uruguay Round

What do you see as the major contributions of the Uruguay Round and, with the benefit of hindsight, are there any features that you think should have been addressed differently?

1. I have no hesitation or embarrassment in stating that the Uruguay Round and the World Trade Organization that it created have been huge successes. I have no embarrassment since my role was to conclude the negotiations when 95% of the deal was already in place. The real graft was done by Arthur Dunkel, a great and good man whom sadly we lost last year.

2. Certainly, the dispute settlement procedure was, and is, the jewel in the crown. But the Uruguay Round generated a complete reformation of the global trading system which had been failing seriously in the early 1980s. Governments were worried, and they were right to be. In the end they did the right thing – after trying almost everything else – and signed up to a body of new disciplines and obligations that made the World Trade Organizaion the one economic institution designed and created for the new age of globalization. Everybody signed up to everything – even if there were some long transition periods before full implementation. That also was the right thing and has – in my view – helped to drive economic liberalization, broadly across the globe, ever since.

3. But the Uruguay Round was not just a rule-making round. It also brought with it very significant market opening, notably for industrial goods. If we did not actually remove many trade and investment barriers in services, then it was generally recognized that merely putting in place a framework of rules – together with binding scheduled commitments – amounted to a revolution. It was a starting point that reflected the huge role that services were to play in the globalization process. And if we did not actually liberalize trade in agriculture, we certainly put the brakes on the outlandish subsidy excesses in that politically powerful sector. More important, without the framework for liberalization that was set out in the Agreement on Agriculture, without tariffication and without the “box” system of domestic subsidy classification, we would have no basis to be talking about real liberalization – and the end of export subsidies – today in the Doha Round.

4. But, of course we got a few things wrong. Rather, there may have been some things we might have done better given more time and the right political environment. Along with Jagdish – and a few others in this room – I had the opportunity to consider some of the WTO’s institutional shortcomings as chairman of the Director-General’s Advisory Group which reported a year ago. I might just add that it would not be out of place to get that report out of the cupboard again; its prescriptions remain absolutely valid, and it is about time they were taken seriously. Anyway I will spare you all the analysis and make just a few points.

5. Arguably we should have devoted more time at the end of the Uruguay Round to establishing the right decision-making and consultative structures. Those we were left with reflect largely the negotiating structure of the Uruguay Round itself. There was logic in that. Moreover, had we started trying to redesign the internal structures we may well have run out of time and put the entire round at risk. Nevertheless, in retrospect, what we have is not optimal. It is not efficient, nor business-like. The Doha Round has demonstrated absolutely that nothing gets done unless small groups of key members roll up their sleeves and negotiate among themselves at least the basis for wider deals. We should recognize the fact. I see no reason for embarrassment, nor any reason why more selective structures should not formally be part of the WTO. Inclusivity is all very well; but business has to be done.

6. A second point concerns the development perspective of the Uruguay Round. I do not accept that developing countries were left out. In fact, precisely the same developing countries that made most of the running in that negotiation are doing so now in the Doha Round. And Arthur Dunkel and I went to great lengths to ensure all other developing members had some ownership.

7. What we failed to recognize was the difficulties many poorer members would face in implementing the very many and very demanding agreements of the Uruguay Round. Even with long transition periods, it was a hard path for many to travel. We did not have the technical assistance necessary in place. Remember, at the time our entire technical assistance budget was well south of $1 million a year. We had not even heard of “capacity building”. Thankfully, that has changed.

8. But if you ask me, was the single undertaking wrong? Was the very limited special and differential treatment provided developing countries a mistake? I would say, no. Burdens there were; but I do not believe any developing country is worse off today for having had to implement all the obligations of the Uruguay Round.

Question 2: Current Challenges facing the Doha Round and the International Trading System

Please help us think about the current round of negotiations. What needs to be achieved to bring the Doha Development Agenda to a successful conclusion? How important is it that these talks succeed and what actions need to be taken in core areas by both the developed and developing countries to conclude? If the negotiations falter, what do you see as the consequences to the international trading system?

1. I was not one of the enthusiasts for a new comprehensive trade round. But we are where we are; the Doha Round cannot be allowed to fail. I am not sure we will end up with a hugely ambitious result, but we are now in a situation where the downside of failure may be very damaging indeed.

2. What do we need to do to get a result in the limited time available? There is no easy answer to that. The conventional wisdom seems to be that the Europeans must give more on agricultural market access, the US on domestic support to farmers and India and Brazil something meaningful on industrial market access and services. It sounds neat; but it hides a multitude of difficulties. More important, it would only provide the very beginning of a full Doha deal. That is the real problem, the media – pushed, I have to say, by politicians – see simple equations. The reality is a mass of legal detail and particular interests among a full membership of nearly 150 sovereign states. We have not even begun to look at legal texts.

3. It strikes me that one trap we have fallen into in this Round is in seeking to agree formulaic approaches to everything. In essence we have been arguing about formulas for three years – on agricultural market access, domestic support and industrial market access: the three elements that will mean most to our ambition to boost world trade and development. The problem is that, generally, applicable formulas ride roughshod over particular interests – in a sense, that is what they are intended to do. But it is also why negotiators are in their present mess.

4. One solution, therefore, would be to stop the process quickly (preferably at the end of April) and settle essentially for what is on the table now – or a little bit more. Then say, get back to the negotiating table and seek the additional advantages or exceptions that you must have to make a deal acceptable back home. That is what GATT negotiations used to be about, and services still is, request-and-offer bartering between parties with clearly identified national priorities.

5. I understand this is a tricky concept for today’s generation of negotiators who want absolute predictability. However, if what I am hearing about a certain acquiescence in the idea that the real deadline for the famous “full modalities” is end-July then I think we have to say, “snap out of it guys”. Based in what we have seen over the past few years, you cannot conclude the round in early 2007 based on a modalities deal only in July. Sorry, but it is dreamland.

6. Which brings me to the other part of the question: essentially, does it matter? Yes, it does matter. We can neither fail outright, nor allow the round to linger on and die through neglect. Like it or not, the stakes are now high.

7. First, the supposed alternative to the multilateral system, bilateral free-trade agreements, is a poison that needs an antidote. Most are “free-trade” in name only and too many owe their existence to political, not commercial, motivations. They are too often hedged with non-trade conditions. They distort global trade and investment and they also create Jagdish’s famous spaghetti bowl confusion for companies. Remember, big global companies do not want these deals. However, if they must do so, major firms will always find the means of working with them. It is much more difficult for smaller companies in developing and transition economies – and it is these I thought we were supposed to be helping.

8. Second, we must not assume that in the absence of success in the Doha Round, the status quo will reign in the World Trade Organization. On the contrary, if the WTO cannot demonstrate that multilateralism can deliver then its credibility will fall through the floor. Think about the message that will send to Russia and Vietnam and other nations trying to gain membership of the WTO. Think about the many governments seeking to pursue economic reform using World Trade Organization obligations as the peg. Above all, think about China. China is an enormous opportunity for the whole world. But we know its integration and eventual, and unavoidable, dominance in the global economy must be managed through rules. Perhaps someone can enlighten me on what rules there are out there, other than the WTO.

9. Third, and to finish on an especially gloomy thought. We can be reasonably confident that the WTO’s dispute settlement system can stand the shock of a Doha Round failure. But it is not a prediction that should command complacency. We cannot leave rule making to dispute settlement panels or the appellate body. Yes, the system can serve that role, and should do so in a limited manner. But fundamentally World Trade Organization obligations are for WTO members to negotiate. There is no alternative but for Doha Round negotiators to prove that.