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Doha mandate key to solution

By Li Enheng (China Daily) Updated: 2011-05-09 07:58

Genuine political will to solve the problem by members, developed countries in particular, will make the difference

After a decade of arduous work by WTO Members, the Doha Round of multilateral trade negotiations is confronted with a crisis. The issue that sparked this crisis, as mentioned by WTO Director-General Pascal Lamy, is the "political gap" between WTO members on tariff cuts for products in certain specific industrial sectors, referred to as "sectorials", in the non-agricultural market access (NAMA) negotiations.

The United States, supported by the European Union and Japan, demand that Brazil, China and India (BCI) must participate in zero or close-to-zero tariff efforts in the chemical, industrial machinery, electronics and electrical products sectors, so as to equalize, or at least harmonize, their tariff levels in these sectors with those of the developed members. BCI, on the other hand, firmly believe that meeting this demand would fundamentally undermine their development objectives and that they are entitled to participate in sectorials on a non-mandatory basis as per the specific mandate agreed by all WTO members at the 6th Ministerial Conference in Hong Kong in 2005. NAMA negotiations have thus reached an impasse and are regarded as blocking progress in other areas.

However, according to the US ambassador to the WTO, while agreeing to the assessment of Lamy with regard to sectorials, the US "also believes the same is true of agriculture and services". This means that the sectorial issue will not be the only hard nut to crack in the Doha Round of negotiations.

Take agriculture for example, imbalance still exists between the offer by the US on trade-distorting domestic subsidies and its ambition for market access in developing member countries. Imbalances also exist between the considerable flexibilities provided to EU, Japan and some other developed members on market access, with no commitment made by Japan to tariff capping, on the one hand, and the insufficient, as well as difficult-to-be-used, flexibilities to be provided to developing members for their poor farmers and rural development on the other.

Whatever efforts the members or Lamy make, they should focus on the key to the problems. The key is the demonstration of a genuine political will by members, particularly the major developed members, to resolve the issues. Otherwise, these efforts will be in vain.

The political will should be reflected in a rational level of ambition for the negotiations, so as to accommodate the political sensitivities and economic interests of all parties, particularly the development concerns of developing members, and in full compliance with the agreed Doha mandate, with regard to both general development and in the negotiations on specific issues or in specific areas. Without such a will from all WTO members, the talks will achieve little.

The crux of the matter is that the US, with the support of the EU and Japan on different issues, has been over-ambitious in asking for market-access offers from developing members that are beyond the latter's economic capabilities for development.

At the same time, the offers made by developed members to developing members in all these areas are disproportionate to their economic capacities and their requests put to developing members. Besides, the demand by the US, EU and Japan for emerging economies to participate in sectorial liberalization for NAMA and the demand by the US that certain emerging economies must give up their entitlement to flexibilities in the field of agriculture are totally inconsistent with the agreed Doha mandate and have seriously damaged the rule-based system of the WTO.

Increased exports by BCI over the past decade have been used as an excuse by the US and others for over-ambitious market access demands of BCI and for their reneging on their agreed commitment to the Doha mandate. The developed members have dominated the multilateral trading system for nearly 60 years and have benefited more from it than the emerging economies, both from the regulatory and market access perspectives. The developed members should offer more in this round of negotiations in order to redress the imbalances embodied in the system with a bias against the interests of the developing members.

BCI, together with other developing members, have spared no effort in their attempts to make the negotiations a success, including further opening up their markets. The positions and principles upheld by BCI with regard to the above-mentioned demands of the US and others are perfectly justified.

The developed members should be realistic about their ambitions for further market access in developing members and show respect to the agreed Doha mandate. This is essential if the members are to bridge the gaps between them on the outstanding issues and the only way to achieve a successful deal at an early date.

The author is vice-chairman of the China Society for WTO Studies and senior adviser to the Shanghai WTO Affairs Consultation Centre.

(China Daily 05/09/2011 page8)