Post-Mortem : A Change in World Trade Process
This is a follow up story and I'll just cover this briefly for those who followed the news on the collapse of global trade talks after 7 years of negotiations since the Doha round in 2001.
GENEVA: 1st August 2008 - Some blamed soybeans. Others blamed cotton, while many believe U.S. election year politics to be the real culprit. Whatever the truth, the collapse of global trade talks has left diplomats asking why Washington, which often made concessions to lubricate previous deals, refused to budge this time.
On Wednesday, the autopsy of what went wrong began amid bitter recrimination. But there was a growing consensus on one point: that global trade negotiations cannot go on like this.
Without going into the whole blame game and pointing fingers, many are questioning whether the real reason behind the failure of the talks was because many countries try to push on an issue to a head while letting other problems remained unsolved.
The system of all-or-nothing had Pascal Lamy, the director general of WTO to reflect back on how the method of negotiations played a key role in the collapse of the talk. The defence put forward was that:
During the marathon talks, Lamy tried his best to accommodate the array of interests that needed to be satisfied. WTO rules stipulate that every country has a veto and nothing is agreed until everything is agreed.
The idea Lamy says was to architect a forum that includes China, India and Brazil in a 7 strong group of countries that brockered a draft text.
But this style of negotiation contracted a major kink in the gear when instead of a group of 7 countries agreeing it developed a dispute between the 4 major continents fighting for different settlements.
This traditional negotiating alliances were fractured: India, China and Indonesia were on one side, Brazil, Argentina and Paraguay another. The United States won no support from Europe. Developed and developing nations were at odds.
Question is, why were the issues negotiated as if they were of "one big deal" instead of settling on a smaller scale, allowing agreements in individual trade sectors which could definitely avoid an issue to be blocked by one or 2 disagreeing countries.
This would involve a change to the WTO's fundamental principle, the so-called single undertaking, in which a deal is negotiated as a package and everything must be accepted by all 153 members.
Lamy proposed (in which I agree but with some doubts) that WTO should consider the ideas of groups of countries negotiating in blocs.
In addition, the proposals tendered would be drafted by neutral experts rather than by countries (which inevitably had resulted in them drawing up plan to suit their own national trading interests).
Joe Guinan, a trade expert with the German Marshall Fund, a public policy group, said the failure of the talks illustrated an unavoidable need for change.
"The fact that such an arcane issue could bring seven years of negotiation to an end shows that this is a straightjacket that needs to be loosened," he said.
Joe, I couldn't have said it better.
(Previous story on collapse of WTO talk can be found here)