The Evian Group Eleventh Hour Appeal for the Hong Kong WTO
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Evian Group Eleventh Hour Appeal for Hong Kong October 2005 The Evian Group Eleventh Hour Appeal For the Hong Kong WTO December Ministerial Meeting – “Learn from Cancún” Michael Garrett, Valérie Engammare & Jean-Pierre Lehmann* Summary In August 2003 The Evian Group issued an “Eleventh Hour Appeal for Cancún”. We gave a number of prescriptions and priorities, including the one that the Singapore issues should not be used as bargaining chips and that they should, at the very least, be unbundled. We also argued that agriculture was the absolute priority. It is clear that in a “development” round this is the sector that counts the most and it is also the area in which the greatest anomalies and injustices stand out. The purpose of a “development round” is not to transform the WTO into a development institution; however impediments (of which there are many) to developing countries accessing industrialised countries’ markets should be removed; and developing countries should be given a leg-up (aid for trade, trade facilitation, special and differential treatment, as circumstances may require). As the business leaders of the Evian Group have repeatedly stressed, we need an economically growing developing world, not simply for reasons of humanity, but also because this is where future markets and opportunities lie. A richer developing world is to the benefit of, not at the expense of, the rich nations. However, following the Doha Declaration of 14 November 2001, not only has the agenda not moved forward, but protectionist practices of two decades ago have been resurrected: for example, in the VERs (“voluntary” export restraints) proposed in the EU-China textiles kafuffle, which made the trade policy system look its anaemic and hypocritical worse. Above all, there has been overwhelming attention given to often seemingly trivial technical details of the negotiations, while losing sight of the bigger picture, the major challenges and the spirit of the Doha Declaration. The US, EU and Japan are, justifiably, accused of gross hypocrisy. It is crucial that all the technical issues should be resolved well before Hong Kong, so that ministers can address an ambitious agenda focused on the real issues and, in the process, act ministerially! The WTO Cancún meeting was a dismal failure and an unseemly spectacle. All efforts must be made to avoid the Hong Kong meeting repeating the errors of Cancún. This is important not only for reasons of substance, but also for the legitimacy and respectability of the WTO. The throngs of bureaucrats and hangers-on in Cancún were neither necessary, nor edifying. Trade ministers should be accompanied by a limited number of delegates, whose presence and participation is necessary, in order to prevent intra-delegation negotiations from overshadowing the real negotiations. This will ensure greater decorum, greater seriousness and more actual inter-action between the ministers. If the Hong Kong Ministerial fails, multilateral trade liberalisation is unlikely in the foreseeable future to retrieve the impetus that enabled the launch of the Doha Round. Such a failure would be detrimental to the very existence of the global multilateral rules-based trading system, and consequently to global prosperity, stability and security. There is a very great deal to lose. *Michael Garrett is Chairman of The Evian Group, Valérie Engammare is Associate Fellow of The Evian Group, and Jean-Pierre Lehmann is Founding Director of The Evian Group. Evian Group Eleventh Hour Appeal for Hong Kong October 2005 I. Introduction The history of the Doha Round has been one of great hopes, followed by equally great disappointments. Launched shortly after “9/11”, the ideals underlying the new Round were reconciliation, cohesion and solidarity; it seemed especially important that the shambles of Seattle should be relegated to history and a definite page turned. It was recognised that the multilateral trading system had it in its power to create opportunities and that developing countries should be put in a position to benefit much more fully from these opportunities. Two years later, in September 2003, after a series of missed deadlines and failed consensus, talks collapsed at the WTO Cancún Ministerial. An overloaded agenda, a lack of commitment from the part of industrialised countries, the increase in the number of member states, the content of the Doha mandate, the inclusion of the controversial Singapore issues, and the functioning of the multilateral system itself were deemed responsible for the failure. Cancún killed the hopes that the world was moving towards a more open, dynamic, sane, robust and equitable global trading environment. It was clear that the driving force, especially among the industrialised countries, was unbridled mercantilism dominated by the power of generally quite small, but entrenched, sectoral interests – for example, American cotton plantation owners. A new impulse was given to the Round in July 2004 with the adoption of the “July Package” that set priorities in order to move forward with liberalisation. However, over the last year, trade negotiators failed to give substance to the Package and at the end of July 2005, the overall conclusion was that it would be a Herculean – if not impossible – task to make a success of the Hong Kong Ministerial in December 2005. Prospects for the Cancún Ministerial were far from encouraging. However, the fact that the 2003 Ministerial was only a mid-term review and the argument that, consequently, a failure in Cancún did not imply a failure of the Round, provided some comfort. The situation is clearly different today. If the Hong Kong Ministerial fails to deliver substantial results, chances for the Round to succeed will become more remote. Cancún was marked by the absence of trust, dialogue and coherence between the member states and a quite blatant disregard of the principles of the global trading system in general and of the Doha Declaration in particular. Unless these elements are restored, no substantial, development-oriented, long-term and forward-looking trade liberalisation will be possible. The discussions of the past months have focused on technical details, notably concerning agriculture. It is high time to get serious about the development orientation of the Round, to remember the broader context in which the Round is taking place and, keeping this in mind, to move negotiations forward on substantive issues. A successful and development-oriented Doha Round would bring significant benefits to developing countries, not only by generating revenue, but also by enabling them to seize the opportunities provided by global economic integration. However, industrialised countries have so far failed to bring words into action and often conceive of development in terms of aid, as opposed to trade. Sharing opportunities is not a matter of altruism: OECD economies are stagnating and their populations are aging. Protecting their markets from products, services and human resources from developing countries will prove no more than a very short-term solution, and could instead have long-term quite negative repercussions. According to the United Nations, today 95% of population growth takes place in the developing world. Creating welfare for the people in developing countries is the only long-term solution for the global economy as a whole. For the industrialised world, a genuinely development oriented trade policy is a matter of enlightened self-interest. In this context, priorities in the perspective of the Hong Kong Ministerial in December 2005 must be the following: 1. Negotiations must get to the point. Since the beginning of the Doha Round, too much time has been lost on peripheral issues while core questions remained unanswered. Structure, frameworks, formulas are indeed important and necessary to take further commitments. But when technical issues outweigh substantive issues, broader objectives tend to be forgotten 2 Evian Group Eleventh Hour Appeal for Hong Kong October 2005 and the result is counterproductive and inequitable. It also makes it impossible to have a clear view of where negotiations are going. The July 2004 Package prevented the WTO agenda to widen by setting a certain number of priorities. It must now be ensured that the agenda deepens, i.e. that concrete progress is achieved on the priority issues. 2. A clear commitment to agricultural liberalisation must be made well ahead of the Ministerial Meeting. This is NOT a matter to be left for negotiating in Hong Kong; it will then be too late, as Cancún definitely demonstrated. Agriculture is the Gordian knot of the Doha Round, and therefore substantial results in terms of market access and domestic support must be achieved beforehand if negotiations on other issues are to be successful. 3. Most substantive issues must be solved before the Hong Kong Ministerial. This is an important lesson that trade officials and ministers must learn from the failure in Cancún. The role of the Ministerial is to finalise the agreements that have been worked beforehand in Geneva. A couple of days are not enough to solve all substantive issues. Thus, the preparatory work that must be done in the coming months is of utmost importance. 4. The Hong Kong Ministerial must retrieve gravitas that was totally lacking in Cancún. With ministers of trade in most cases accompanied by other ministers and huge delegations, Cancún gave every appearance of a circus. The fact that it failed is not surprising, and though there were many reasons, the too many cooks spoil the broth syndrome applied. Hong Kong must be a maximalist meeting on substance and a minimalist meeting in terms of people and rhetoric (ie the opposite of Cancún). Hong Kong is TOO late for detailed technicalities. The size of delegations should be limited, so that “intra-delegation” negotiations do not overshadow – and as a result impede – real negotiations between WTO members. 5. Multilateral trade liberalisation must be given more prominence at the domestic policy making level.