Decision time Divisions between members of the WTO are threatening efforts to launch a new round of talks, says Guy de Jonquieres Published: July 29 2001 18:56GMT | Last Updated: July 29 2001 21:32GMT
Mike Moore, director-general of the World Trade Organisation, plans to deliver a stark warning to its 142 members on Monday. He is expected to say that unless they buckle down to the task of launching a world trade round this year, they risk relegating the six-year-old body to the sidelines of global policymaking.
When Mr Moore revived plans for a trade round in January - saying it would be a tonic for a weakening world economy - he called for agreement by the end of this month on an outline negotiating agenda, to be endorsed at the WTO's ministerial meeting in Doha, Qatar, in mid-November.
However, despite increasing uncertainty about the economic outlook, WTO members remain deeply divided. As a result, this week's two-day meeting is shaping up mainly as a stocktaking session that will do little to unblock the logjam. Some trade officials fear it could simply draw attention to how little progress has been achieved.
With 50 scheduled working days left until ministers gather in Doha, concern is growing that unless the pace accelerates sharply, the event could turn into a re-run of the WTO's disastrous late 1999 meeting in Seattle, which failed to launch a new round. "Anyone who thinks the decisions we need can all be left to ministers in Doha is dreaming," says one trade official.
The US and European Union are trying hard to inject momentum. Urged on by Brussels, Washington has thrown its weight behind a round. The two powers are now striving to contain bilateral trade disputes and synchronise their positions in the WTO. They hope that showing joint leadership and determination will persuade others that, as an EU official puts it, "the train is leaving the station and they should jump on board".
Pascal Lamy, EU trade commissioner, and Robert Zoellick, US trade representative, are repeating that message to ministers around the world - and there are signs that it may be getting through. Some developing countries, including Brazil, Mexico and South Africa, favour a round, as does China, which is poised to enter the WTO. Even India, which has long led the opposition to new global negotiations, seems to be wavering.
But while the US-EU push may be improving the political mood music in national capitals, it has yet to energise proceedings at the WTO's Geneva headquarters, where most of the practical spadework must be done. "There is a lot of frantic consultation going on here but almost no substantive negotiation. People are still not really connecting on the issues," says a senior WTO ambassador.
Furthermore, although the US and EU say they want to be flexible - and claim to be narrowing some of their differences - both face constraints. Mr Zoellick must balance any concessions he makes against the risk of antagonising powerful domestic business lobbies and the US Congress, from which he is seeking the trade negotiating authority needed to participate in a round.
Mr Lamy, meanwhile, is bound by an ambitious negotiating mandate agreed by the EU before Seattle. If he backtracked too much, he could divide member states, placing the EU's hard-fought unity in jeopardy. These political limitations matter, not just for the two powers' bilateral relations but because they must also make intricate trade-offs with other countries if a common agenda is to be agreed.
North-south tensions in the WTO make that task even harder. Although developing countries account for the vast majority of its membership, many say they have benefited little from freer trade. Their resentment has grown since Seattle, where they say they were not properly consulted.
Their calls for a better deal have translated into a long list of grievances over so-called implementation issues. They range from demands for relief from WTO obligations in areas such as intellectual property rules and investment disciplines, to complaints that rich nations have not lived up to promises to open their markets. "It's terribly complex and very difficult," Mr Lamy told the Financial Times recently.
Inevitably, poor countries are looking chiefly to the US and EU for satisfaction. However, US domestic politics leave Mr Zoellick little room for manoeuvre on some of their central demands, such as curbs on US anti-dumping policy and cuts in its high textiles and clothing tariffs.
The EU has a different problem. In addition to facing strong pressure to liberalise agriculture, it is waging an uphill struggle to include on the Doha agenda negotiations on "non-trade" issues. These include rules on competition policy, investment and the environment, as well as a formula for dealing with trade and labour rights.
Most of the EU's demands - which it says are essential to make further liberalisation palatable to European electorates - face scepticism or hostility. None more so than its proposal for environmental rules, which both developing and farm exporting nations suspect are a pretext to legitimise trade protection. Brussels' recent proposals for labelling rules for genetically modified foods have sharpened those concerns, particularly in the US.
Rachel Thompson of Apco, a government affairs consultancy, believes wide differences between members about the WTO's fundamental purpose are stalling progress. "Is it a mechanism for encouraging economic development, a way to meet popular concerns about globalisation - or just the old General Agreement on Tariffs and Trade, with periodic rounds and a system for managing disputes?" she asks.
Others think, nonetheless, that skilful drafting can still bridge the gaps, provided WTO members start showing some more give and take. Mr Lamy says it is up to farm exporting nations to budge. They - and some other countries - say prospects depend on the EU yielding ground.
Mr Lamy, who has campaigned for a round longer and harder than anyone else, has a big stake in success at Doha. However, his enthusiasm is not shared by his native France, which wants to avoid talk of liberalising European agriculture before next year's presidential election.
Some observers think the EU commissioner will need all his diplomatic skills to keep France on board. "Lamy's nightmare is getting close to a deal in Doha and then receiving a late-night call from the Elysee Palace ordering him to call it off," says an EU government official.
Developments in the US could also sink the endeavour, if Mr Zoellick were forced to compromise with the Democratic majority in the Senate to secure trade negotiating authority. The result could be legislation festooned with demands for labour and environment provisions in trade agreements that would incense poor countries. An even worse outcome would be for President George W. Bush to try to secure the authority before Doha and fail, as Bill Clinton, his predecessor, did four years ago.
For the moment, supporters of a new trade round have no choice but to keep pushing ahead because abandoning their efforts now would torpedo any chance of success. Some argue that as Doha draws nearer, collective fear of repeating the catastrophe in Seattle will concentrate minds. Others worry that there may not be enough time to line up all the pieces properly in what one trade diplomat calls a giant multi-dimensional chess game. Some are already starting to talk of possible fall-back positions. Among the options would be for ministers to announce that they backed new trade negotiations in principle but were deferring until their next meeting a decision on when to launch them.
However, some veteran negotiators think the sheer complexity of the discussions, combined with the toll of many sleepless nights, may produce an even more confusing fudge. "As things stand, my guess is that the ministers may end the meeting without knowing if they have launched a round or not," says one official.