Unravelling the Doha puzzle

Published : Nov 24, 2001 00:00 IST

Although developing countries showed unusual unity at the ministerial meeting of the World Trade Organisation in Doha, developed countries succeeded in pushing through a version of their agenda.

THE Doha Ministerial Meeting of the World Trade Organisation (WTO) ended with a set of declarations which signal agreement among its 144 members over a 'work programme' that amounts to a new round of trade negotiations, irrespective of what it is actually called. While this end result is clear, the manner in which the agreement was arrived at and is finally phrased has raised a number of questions that remain unanswered. Some among these relate to the specific implications of the opaque manner in which the declarations have been worded, as part of the power-play and diplomacy that went into forcing out a decision from the highly contentious negotiations. Others relate to the degree to which developing countries, led it appears by India, were able to redress existing inequalities and stall the imposition of fresh burdens through a new round of negotiations. Yet others relate to the degree to which the promise of greater transparency made after the fiasco at Seattle in 1999 had been delivered at Doha.

And, finally there is the all important question as to why, despite its own domestic record of resorting to accelerated liberalisation and defending the benefits of freer trade, the National Democratic Alliance (NDA) government, through its representative, Commerce Minister Murasoli Maran, articulated and stuck to a hardline position against a new round, which it gave up only when it was clear that it had been completely isolated by the manoeuvres of the Quad countries, particularly the United States and the European Union members.

The three declarations that have come out of Doha are the 'Doha Development Agenda' for what is in essence a new round of trade talks; the declaration on a set of implementation issues raised by the developing countries; and a 'political statement' on patents and public health. An examination of the three declarations indicate that the developing countries have been able to manage a partial holding operation and even register some gains at the end of the Doha meet.

The principal gain is of course embodied in the political statement dealing with patents and public health. Spurred by the victories won by some African countries by way of clearance to obtain cheap imports of drugs for Acquired Immune Deficiency Syndrome (AIDS), from countries like India which do not as yet recognise product patents and by the expressed willingness of sections in the U.S. to resort to similar imports or compulsorily license the production of ciproflaxcin in the event of an Anthrax emergency, developing countries and a number of non-governmental organisations (NGOs) have been demanding more clearly specified and enhanced flexibility in ignoring clauses of the Trade Related Intellectual Property Rights (TRIPS) agreement and overriding patents for public health reasons. The developed countries have wanted such flexibility to be provided for only in the event of a public health "emergency", such as an AIDS pandemic.

As opposed to this, Brazil, India, the countries of sub-Saharan Africa and some NGOs have been demanding greater autonomy for countries in deciding the public health grounds on which they should be able to resort to such measures. The political statement does go part of the way in providing for such autonomy, besides making special concessions to the least developed countries. Although this does not constitute a formal amendment of the Uruguay Round Agreement, inasmuch as such ministerial-level political statements are taken account of by dispute settlement panels when deciding on complaints of treaty violations, the developing countries have indeed won themselves a victory vis-a-vis the developed countries and the drug multinationals with their headquarters there.

The second, extremely minimal victory for the developing countries is their ability to get the Ministerial Meet to deliberate on and issue a declaration about the more than 40 issues relating to the implementation of the Uruguay Round that had been raised by them over time. All of these focus on the need to modify or reinterpret specific clauses of the Uruguay Round agreement because of its failure to deliver on its promises in terms of benefits to developing countries. However, not much should be made of this 'victory' since, because barring some agreement on the imposition of anti-dumping duties by the advanced countries, most crucial implementation problems such as those relating to domestic support for agriculture in the U.S. and E.U. and to the trade in textiles have been just accepted as issues that are in need of negotiation as part of a new enlarged round. That is, going against the grain of demands from the developing countries, including India, in the run-up to Doha, that implementation issues need to be sorted out before any new round of talks is initiated, almost all of those issues have been included in the agenda of the new round.

Third, after much hard bargaining the developing countries have managed to obtain a small concession in the area of agricultural support in the developed countries. The E.U. had, after much stonewalling, agreed to reduce, "with a view to phasing out", agricultural export subsidies. This is only a small advance, since no date has been set for the phase-out and since the real issue, which is the reduction in the use of "permitted" green- and blue-box subsidies by the developed countries to subsidise their farming community, has been left to be renegotiated in the course of the new round. This despite the evidence that many of those subsidies not only affect the volume of world production and trade, but in the final analysis world prices as well.

Finally, India has won a symbolic victory inasmuch as the immediate agenda for the new round includes, besides implementation issues and the already mandated negotiations on agriculture and services, only industrial tariffs, anti-dumping duties and certain aspects of trade and the environment. Core labour standards have just been referred to and the work of the International Labour Organisation (ILO) in this area taken note of. And negotiations on the so-called Singapore issues, such as foreign investment, competition policies, public procurement and trade felicitation, though not altogether dropped, are to be taken up as part of the new round only after reconsidering the matter and generating an explicit consensus on negotiations on them at the time of the fifth Ministerial Meet to be held in 2003. While agreeing to postpone a final decision on these issues, the developed countries have also put in a mandate for completion of negotiations by 2005.

ALTOGETHER, this does look to be a long list of victories for a group of countries that lost out substantially at the end of the Uruguay Round, which largely proved to be an exchange of concessions among the developed. But most of these are mere statements of intent to discuss, and in areas such as agriculture and textiles where early concession were needed and expected, little has come out of Doha.

Doha also made clear the distance developing countries as a group have to travel if they are to make any real difference to the unequal international trading order. The most disconcerting was the innumerable ways in which the developed countries conspire to divide the developing countries and win major concessions for themselves. The scenario as it evolved was indeed quite instructive. To start with, the U.S. set itself up as a reasonable negotiator demanding some liberalisation of agricultural trade plus inclusion of issues such as industrial tariffs and anti-dumping duties in the agenda for a new round of trade negotiations. The E.U., on the other hand, remains intransigent on agricultural protection and subsidies, but puts on the table a range of new issues varying from the environment to investment and competition policies. This almost predetermines the compromise that is to come: the E.U. gives in a bit on agricultural trade, the developed camp as a whole agrees to discuss implementation, but they get in return a new round which at the minimum has the issues raised by the U.S. on the agenda and at the maximum includes all the issues raised by the E.U. The actual outcome included a new round that had on its agenda a combination of issues lying somewhere between the minimal demands of the U.S. and the maximal demands of the E.U.

THE surprise that Doha sprang was not in this outcome, but in three other areas. First, in the unusual unity within the developing country camp, even if for a short period of time, and the strong resistance by the Indian delegation in general and Commerce Minister Murasoli Maran in particular, that helped keep the implementation issues on the agenda as well as allowed developing countries to garner the limited gains listed earlier. Second, in the extent to which the developed countries went to split the developing-country camp and push through a version of their agenda. Despite claims of having learnt their lessons at Seattle and promises of abjuring non-transparent procedures, when the chips were down the WTO leadership and developed-country representatives returned to their earlier modes of functioning. Through pre-Doha meetings and "green-room" consultations with a select group of developing countries, through offers of aid to the African, Caribbean and Pacific (ACP) bloc, through pressure tactics such as locking in representatives without aides for hours together so as to badger them into agreement, through attempts at labelling delegates as isolationist and through what amounted to sheer verbal abuse and public admonition, the developed countries did manage finally to break the unity of the developing as well as come through with an agreement even if only after an unscheduled sixth day of negotiations.

Finally, Doha was a surprise because despite all this the developing countries went home with little to show for themselves other than promises of going part of the way to meet their concerns. Most important, in critical areas like the trade in textiles and domestic support to agriculture, the developed countries have given nothing at all.

Domestically, the issue of interest is the reason why unlike the last time this time around the Indian delegation and its leader chose to stick it out with a hardline position till the very end, even if it did not yield much by way of results. While personalities do matter here, it must be realised that Minister Maran had obtained Cabinet sanction for his tough negotiating stance before he left for Doha. One explanation for the stance cleared at the Cabinet could be that the NDA government has realised that its decision to opt for accelerated liberalisation was proving counterproductive given the unequal nature of the trading system put in place by the Uruguay Round. Redressing that inequality would then be seen as a prerequisite for bailing out the reform strategy. But if this was the motivation, one should expect that the failure to achieve much at Doha should make the government cautious about proceeding with its reform agenda. The reaction has in fact been just the opposite. Addressing a press conference immediately after his return from Doha, Maran emphasised the need to deepen economic reforms so that economic units within the country restructure themselves over the next two years to face up to the likely intensification of international competition. "If there is one lesson from Doha, it is (that) we should reform fast," he is reported to have said.

The second explanation could be that having faced substantial domestic criticism in the past, including from within segments of the ruling coalition, the NDA government decided to change tack in international negotiations and take a more nationalist stance. But whatever benefits are likely to accrue from such a public display of national sentiment outside the country would be more than neutralised by the obvious willingness of the government to offer major economic concessions to the developed countries in the domestic market in the wake of the Pokhran blasts of 1998.

The third likely explanation is that the government knew that international circumstances were such that it would finally be left with little support for its hardline stance. This, it may have surmised, would allow it to give in or compromise in the final analysis. That would mean that while the results from Doha would broadly be in keeping with what the developed-country camp wanted, India would be seen as having fought hard and not caved in, but as having, out of sheer lack of support and a need for reasonableness at an international forum, had to let the 'majority' view prevail.

The slight friction that this generated vis-a-vis the developed countries would be a small and temporary price to pay, in return for the benefit that strong resistance would yield in terms of winning international NGO praise and neutralising domestic criticism about its reform programme. The lack of correspondence between India's domestic and international positions on the role of markets and freer trade, as well as the fact that despite its opposition India withdrew without gaining much more than what had been won by the sixth day, suggest that this is in all probability the most plausible explanation for India's initial, unusually strong resistance.

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