After nine grueling days of negotiations, trade ministers meeting in Geneva July 21-30 admitted defeat in their attempts to reach a new global trade deal, but promised to regroup at a later date.
World Trade Organization Director-General Pascal Lamy told a formal meeting of heads of delegations on July 30 that there was no escaping the fact that the latest effort to secure a deal on agriculture and non-agricultural market access (NAMA) had failed.
Despite the setback, Lamy insisted that the progress made in agriculture, non-agricultural market access (NAMA), services and other subjects should be preserved.
“This represents thousands of hours of negotiation and serious investment by all the members of the WTO. This should not be wasted,” he stated.
Most members agreed that the talks should continue at a later time, but outside the meeting room emotions were running high with a number of key countries quick to point the blame at one another for the collapse.
India’s trade minister, Kamal Nath, accused the United States of putting its commercial interests ahead of the livelihoods of a billion of the world’s poorest farmers.
"The most important thing was the livelihood and security, the vulnerability of poor farmers, which could not be traded off against the commercial interests of the developed countries,” he told reporters.
The US trade representative, Susan Schwab, countered by accusing India of being the only country that showed no flexibility during the negotiations and of reneging on a framework agreement reached July 25.
Meanwhile, Argentina’s foreign minister Jorge Taiana complained that the cuts to industrial tariffs demanded by developed countries were unfair and contrary to the development mandate of the talks.
“We have been saying for a long time that several aspects in the drafts were unbalanced and that developed countries were showing little inclination to make concessions on trade, while at the same time they were being too ambitious demanding benefits for themselves,” he said.
While Lamy claimed the collapse in the talks would hurt poor countries the most, anti-poverty campaigners insisted that developing countries should be glad that the deal that had been taking shape was rejected.
Aftab Alam Khan of ActionAid argued that no deal is batter than a bad deal.
"What was being proposed was just another example of the intransigence and insensitivity of rich countries, who aren't interested in the survival of small farmers, workers and jobs in developing countries," he said.
Trade in services subject of one-day conference
While agricultural and NAMA issues dominated the discussions, services were also put on the agenda with a one-day “signaling” conference. Ministers from about 30 countries took part in the conference where they indicated in what service sectors they will be prepared to make further trade concessions and in what areas they are looking for commitments from others.
Lamy reported to the heads of delegations meeting that all service sectors were discussed, including education services. Lamy’s report notes that “a few participants indicated readiness to undertake new commitments in private education services and to remove a number of existing limitations, which discriminate against foreign education providers.”
The focus of the discussion was on private primary, secondary and higher education services as well as language training and vocational education.
While Lamy’s report does not name specific countries, EI’s trade consultant David Robinson, who was in Geneva during the ministerial, heard from several delegations that Australia, New Zealand, Japan and Mexico were among those who intervened in the discussion on education services.
Robinson says that Australia and New Zealand were pushing other members to open up their education sector to private offshore competition.
“The so-called barriers to trade in education services that these countries want to see eliminated or loosened include policies like local hiring requirements or restrictions on the number of overseas schools that can operate,” Robinson noted. “These policies may restrict trade and commerce, but they are also used to promote national development goals and public education objectives.”
Prior to the ministerial meeting, the chair of the services negotiations, Fernando de Mateo of Mexico, released a controversial draft note intended to guide future negotiations. The note called on members, where possible, to ensure that their service offers matched the same level of ambition as in agriculture and NAMA and to consider locking-in their existing levels of liberalization.
Many members saw that as contrary to the mandate that had been agreed to at the Hong Kong Ministerial in 2006 where such a bench-marking of offers had been resoundingly rejected.
At a heated meeting of delegations on July 22, four countries – Bolivia, Cuba, Nicaragua and Venezuela – refused to endorse de Mateo’s report and formally objected. Bolivia also proposed an amendment to the report that would provide a general carve-out for all public and essential services, including education.
In his report to the heads of delegations at the end of the ministerial meeting, de Mateo was forced to note that there was no consensus amongst members and that discussions would have to continue, including discussions over the new text proposed by Bolivia.
“There is no consensus on a new text on services,” de Mateo reported. “Various delegations consider that there is no mandate to agree on elements that go beyond the points agreed by all Members in the Hong Kong Ministerial Declaration and that there is no obligation to make commitments at the highest possible level.”
In his report, de Mateo listed October 15 as the date for members to submit their revised offers on services, and December 1 as the deadline for draft schedules of commitments. However, these dates are now likely to change if the Doha Round is not revived this year.
After the collapse: what next for the WTO?
The ministerial meeting was called by Lamy in what was described as a last ditch effort to rescue the troubled Doha Round of trade talks, now in their seventh year. It was a big political gamble, and it is unclear now what the future holds.
Some analysts suggest there may be an attempt to salvage the talks in September if informal consultations over the month of August indicate some compromise can be made on the outstanding issues. Lamy has announced that the chairs of the agriculture and NAMA negotiations will release status reports of the negotiations reflecting recent developments and where differences remain. These reports could then be used to guide continued negotiations.
Others, however, say that political constraints make a quick resumption of the talks unlikely. In particular, there seems little chance of the talks resuming before the looming U.S. presidential election. Some ministers suggested there may be as much as a two-year lapse in talks.
Some officials, however, are suggesting that members consider an alternative approach to the negotiations by considering “early harvest” agreements. In contrast to the “single-undertaking” of the Doha talks where members have to agree to a whole package before an agreement in one area is finalized, the early harvest approach would allow members to conclude deals in some areas before others. This might mean that a deal could be reached in services, for instance, before an agreement in agriculture.
EI’s Robinson says that no matter what is decided in the coming weeks, negotiations will inevitably continue on services both inside and outside the WTO.
“The services talks were initiated prior to Doha as part of a built-in work program,” he explained. “The talks were later tied into the single-undertaking process, but the mandate is still there despite the collapse -- even if the political will to negotiate services may not be forthcoming until the issues in agriculture and NAMA are addressed.”
Robinson adds that following the collapse, more countries will likely turn their focus toward more bilateral trade and investment agreements, a prospect that raises a number of challenges for EI and its affiliates.
“It’s much more difficult to monitor these bilateral initiatives and, by WTO rules, they have to include levels of liberalization that go beyond what a country has agreed to in the GATS,” notes Robinson. “There is also a real power imbalance at play when developing countries are negotiating bilateral deals with developed nations. We’ve already seen in a number of recent bilaterals where significant concessions have been made in education services.”
“While Doha has collapsed for now, we have to recognize that the struggle to keep education services out of commercial trade agreements may only be entering another and potentially more challenging phase,” Robinson adds.