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WTO on last legs… again

WTO ambassadors held an informal Trade Negotiations committee meeting this week where the U.S. reportedly “dealt a heavy blow to struggling global trade talks.” The committee, chaired by WTO Director-General Pascal Lamy, assessed gaps in negotiating positions of WTO member countries, which are working on a new draft text in time for Easter. Michael Punke, U.S. ambassador to the WTO, told the committee, “Texts are an important tool, but if we don’t quickly solve some of the problems we are encountering in our work, we will have to reassess whether tabling new texts in late April risks more harm than good.” Another U.S. delegate told Reuters there’s little chance of completing the long-stalled Doha round this year, as G20 countries had hoped, and that “It will be about how failure is framed.”

In his address to the committee, Lamy said that overall, “there have been elements of progress. But, in truth, far from enough.” He said the “bilateral and plurilateral discussions on the market access leg have reached an impasse. The outstanding substantive gaps which existed three weeks ago persist today.”

Reuters said that China and the U.S. in particular are still miles apart: “The US repeated demands for zero tariffs on certain industrial good imports. China said such a move would cover more than half its imports in that sector and ‘goes beyond the capacity of a developing nation,’ delegates said.”

But Lamy added in his speech, “this is not the only market access related problem area. There are other issues whether in agriculture or to a larger extent in services – which have not been resolved either. As G-20 Leaders agreed at Seoul, what is needed overall is a spirit of ‘give and take’ and we need this across all areas.”

Starting April 4, Lamy will be holding consultations with individual WTO members with a view to understanding the gaps, and then make a recommendation on next steps. He concluded with a warning about WTO failure:

Now is the time for all of you, and in particular those among you who bear the largest responsibility in the system, to reflect on the consequences of failure. To reflect on the costs of the non-Round to the world economy as well as to the development prospects of Members, in particular the smaller and least-developed which are more dependent on an improved set of global trade rules. And above, it is time to think about the consequences of the non-Round to the multilateral trading system which we have so patiently built over the last 70 years.

Lamy’s words may ring hollow today for developed and developing countries alike. Despite their stated allegiance in G20 communiques to multilateralism and a successful conclusion for the 2001 Doha Round, many countries are pursuing their own preferential bilateral trade deals. So-called emerging powers Brazil, India, South Korea and China are signing free trade deals with each other, and with the EU and U.S. Canada and the EU likely won’t mourn a WTO failure. It will only embolden their own mega-project: the Comprehensive Economic and Trade Agreement.

Both the EU and Canada hope CETA will set a new bar for globalization by significantly reducing regulatory and tariff protections for local industries, farmers and public services. CETA moves well beyond the WTO in intellectual property, procurement commitments, and coverage for services that will be more extensive perhaps than either country’s GATS commitments. The Canada-EU deal is so imposing we may end up missing the relatively more democratic and balanced WTO if the Doha round does fail this year. Depressing but true.