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An assessment of the WTO Doha Round July–December 2008 collapse

Published online by Cambridge University Press:  17 September 2009

FAIZEL ISMAIL
FAIZEL ISMAIL*
Affiliation:
Head of South African Delegation to the World Trade Organization, Geneva, Switzerland
*
*Email: faizel.ismail@ties.itu.int
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Type
From the trenches
Information
World Trade Review , Volume 8 , Issue 4 , October 2009 , pp. 579 - 605
Copyright
Copyright © Faizel Ismail 2009

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References

1 The WTO has formal Ministerial Conferences that are required to take place at least once in two years. Since its formation at the Marrakech Ministerial Meeting, the WTO has held five Ministerial Conferences, with the last being the 6th Ministerial Conference held in Hong Kong, in December 2005. However, there are other informal ministerial gatherings of the WTO that have taken different forms, including so-called mini-ministerial meetings that were held to discuss the launch of the Doha Round, small groups of ministers meeting among themselves (G4, G5, and G6), and larger groups of ministers (approximately 30) convened by the DG to negotiate breakthroughs in the negotiations, sometimes referred to as the ‘Green Room’. These smaller informal ministerial meetings have no legal status and any ‘breakthroughs’ arrived at in these must be taken to the broader membership for decision.

2 ‘Modalities’ are not clearly defined in the WTO. The concept refers to the technical formulas that are utilized to develop a schedule of commitments (on tariff reductions or subsidy reductions) that members have to finally agree to. A ‘Framework Agreement’ falls short of this objective and develops the architecture for the modalities agreement without fully agreeing the technical formulas that will be used to determine the legal commitments of members.

3 See WTO doc, ‘Informal TNC Meeting at the Level of Head of Delegation’, Job (07)/105, 22 June 2007.

4 R. Wilkinson, The WTO: Crisis and Governance of Global Trade (Routledge, 2006). See also Finger, M., ‘Implementation and the imbalance: dealing with hangover from the Uruguay Round’, Oxford Review of Economic Policy, 23(3) (2007): 440–460.CrossRefGoogle Scholar

5 See Wilkinson, R., ‘The WTO in Hong Kong: What it Really Means for the Doha Development Agenda’, New Political Economy, 11(2) (June 2006).CrossRefGoogle Scholar

6 For a discussion of the Cancun Ministerial Meetings, see Ismail, F., ‘Agricultural Trade Liberalisation and the Poor: A Development Perspective on Cancun’, BRIDGES (January 2004): 4–5.Google Scholar

7 Wilkinson, R. and Scott, J., ‘Developing Country Participation in the GATT: A Re-assessment’, World Trade Review, 3 (July 2008): 1–18.Google Scholar

8 WTO doc, letters by Kamal Nath, Minister of Commerce of India, to the WTO Director-General, Pascal Lamy, dated 24 September 2008 and 17 October 2008, Office of the WTO Director-General.

9 See WTO doc, ‘Chairman's Introduction to the Draft NAMA Modalities’, Negotiating Group on Market Access, Job (07)/126, 17 July 2007. There are several instances where the Chair reveals his own preference. On page one he states, ‘If I have been invited to propose the modalities it is because Members have been unable to bridge their positions themselves’ … ‘it is almost certain you will be disappointed with my proposed modalities since, by definition they cannot fully reflect any Member's position but rather a compromise between their positions’. On page 2, after recognizing the different views on the definition of ‘less than full reciprocity’, he states, ‘I am confident that my proposed modalities satisfy the requirement for less than full reciprocity in reduction commitments.’ He goes on to recognize that there is a strong link between the level of ambition in agriculture with NAMA but nevertheless states, ‘I have proposed a range of ambitions in market access in NAMA that I believe could be consistent with the outcome of the agriculture negotiations which remain a moving target’, and then admits, ‘Of course, some members will disagree and will judge the offer on the agriculture side insufficient.’ Thus the chair decided to set the level of ambition of the negotiations himself.

10 The NAMA 11 was constituted in the period before the Hong Kong Ministerial Conference in December 2005 and included the following members: Argentina, Brazil, Egypt, India, Indonesia, the Philippines, Tunisia, Namibia, South Africa, and Venezuela. Although the group is called the NAMA 11, there are only ten members of the group.

11 Tallberg, J., ‘The Power of the Chair: Formal Leadership in International Cooperation’, International Studies Quarterly (forthcoming).Google Scholar

12 Odell, J., ‘Chairing a WTO Negotiation’, Journal of International Economic Law, 8(2): 425–448.CrossRefGoogle Scholar

13 See also Ismail, F., ‘The Role of the Chair in the WTO Negotiations: From the Potsdam Collapse in June 2007 to July 2008’, Journal of World Trade, 43(5) (2009, forthcoming).Google Scholar

14 The SSM is a mechanism that was agreed in Hong Kong for poor farmers in developing countries to protect their domestic markets from import surges (particularly from highly subsidized US and other developed country exports).

15 Washington Trade Daily, 31 July 2008.

16 See Washington Trade Daily, 28 July 2008.

17 See A. Kaushik, R. Kaukab, and P. Kumar, A Brief Analysis of the July 2008 Lamy Package, CUTS International.

18 The Lamy Package adopted the proposed middle ground of the NAMA chairs 10 July 2008 Draft Text.

19 The depth of tariff reductions was to be determined with the use of the so-called ‘Swiss formula’: Z=AX/(A + X) ; where

X=

initial tariff rate

A=

coefficient and maximum tariff rate

Z=

resulting lower tariff rate (end of period)

A lower coefficient implies deeper cuts. A co-efficient of 8 brought down all tariffs to below 8%.

20 The swiss formula of 20 applied to developing country tariffs would bring all tariffs below 20.

21 The tariff reduction method agreed to allow developing countries a percentage of tariffs less than formula cuts (about 50% of the formula). For those developing countries that chose a coefficient of 22, 10% of tariff lines could be granted these flexibilities. Brazil chose a deeper coefficient of 20 so that it could obtain more flexibilities (than 10%) to cover its tariff lines and trade volume.

22 This was an EU and US proposal to prevent all the tariff lines in a particular sector from being excluded from tariff cuts.

23 See Washington Trade Daily, 4 August 2008.

24 See WTO doc, ‘Report by the Chairman, Ambassador Don Stephenson to the Trade Negotiations Committee’, Negotiating Group on Market Access, Job (08)/96, 12 August 2008.

25 WTO doc, ‘Report to the Trade Negotiations Committee by the Chairman of the Special Session of the Committee on Agriculture, Ambassador Crawford Falconer’, Committee on Agriculture Special Session, Job (08)/95, 12 August 2008.

26 WTO doc, ‘Report by the Chairman, Ambassador Don Stephenson to the Trade Negotiations Committee’, Negotiating Group on Market Access, Job (08)/96, 12 August 2008.

27 See ‘The G20 Summit Declaration’, 16 November 2008, www.sofiaecho.com/article/the-g20-summit.

28 WTO doc, ‘Information to Delegations’, Fax from Pascal Lamy to all Heads of Delegations, 1 December 2008.

29 Washington Trade Daily, 9 December 2008.

30 WTO doc, ‘Fourth Revision of Draft Modalities for Non-Agricultural Market Access’, Negotiating Group on Market Access, TN/MA/W/103/Rev.3, 6 December 2008. See also ‘Revised Draft Modalities for Agriculture’, Committee on Agriculture Special Session, TN/AG/W/4/Rev.4, 6 December 2008.

31 See WTO doc, ‘Revised Draft Modalities for Agriculture – Sensitive Products: Designation’, Committee on Agriculture Special Session, TN/AG/W/5, 6 December 2008. ‘Revised Draft Modalities for Agriculture. Sensitive Products: Tariff Quota Creation’, Committee on Agriculture Special Session, TN/AG/W/6, 6 December 2008. ‘Revised Draft Modalities for Agriculture: Special Safeguard Mechanism’, Committee on Agriculture Special Session, TN/AG/W/7, 6 December 2008.

32 See Washington Trade Daily, 12 December 2008.

33 See Washington Trade Daily, 15 December 2008.

34 A report by the Washington Trade Daily (WTD 07/08/208) states that India and China wanted a trigger of 110, whilst the US demanded 155 and Australia 165. The report states that Lamy's first proposal put forward on Thursday night proposed a figure of 120% of imports, but on Friday morning the Lamy Package changed this figure to 140%. This prompted Kamal Nath to state that he would not be party to the Package and he threatened to walk out of the talks. However, the DG left the figure of 140 in the text, which was then presented to the Green Room for consideration on Friday night.

35 Washington Trade Daily, 30 July 2008 and WTO Reporter, ‘Negotiations, Doha Talks Collapse Over US–India Dispute on Ag Safeguards: Future of Round in Doubt’, 30 July 2008.

36 WTO doc, ‘Background Document’, High Level Symposium on Trade and Development, Geneva, 17–18 March 1999.

37 R. Wilkinson, The WTO: Crisis and Governance of Global Trade (Routledge, 2006).

38 Ibid.

39 The increasing use of Section 301 of the 1974 Trade Act which sanctioned unilateral action against unfair trade practices by foreign trade partners. See S. Ostry, The Post-Cold War Trading System: Whose on First? (London and Chicago: University of Chicago Press, 1997).

40 See J. Croome, Reshaping the World Trading System: A History of the Uruguay Round (Second and Revised Edition, The Hague, London, and Boston: Kluwer Law International, 1999). Blair House was the name of the US Presidents Guest House in Washington for foreign dignitaries.

41 Ibid., p. 321.

42 ibid., p. 325.

43 Finger, M., ‘Implementation and the Imbalance: Dealing with the Hangover from the Uruguay Round’, Oxford Review of Economic Policy, 23(3) (2007): 440–460.CrossRefGoogle Scholar

44 See Wilkinson, R., ‘The WTO in Hong Kong: What it Really Means for the Doha Development Agenda’, Commentary, New Political Economy, 11(2) (June 2006).CrossRefGoogle Scholar

45 R. Wilkinson, The WTO: Crisis and Governance of Global Trade (Routledge, 2006).

46 See Statement by South Africa to the 55th session of the Committee on Trade and Development on behalf of Argentina, Brazil, India, Indonesia, Namibia, the Philippines, and Venezuela, 28 November, 2005.

47 Washington Trade Daily, DDA, ‘Do-able – USTR Schwab’, 17 July 2008.

48 See letter to the Chairman of the 6th Ministerial Conference, Hong Kong, 13 December 2005, contained in ‘Twenty Months of the NAMA 11: Striving for Fair, Balanced and Development Friendly Outcomes in the Doha Round’, South African Permanent Mission to the WTO (August 2007).

49 See WT/MIN (05)/DEC, para. 24 of the ‘Ministerial Declaration’, Doha Work Programme, 22 December 2005.

50 Washington Trade Daily, 22 June 2007.

51 See WTO doc, ‘Report of the Chair’, Services Special Session, Job (08)/5, 12 February 2008. The EC and the US developed a larger group that supported their views. This group consists of Australia, Canada, EC, Japan, Korea, New Zealand, Norway, the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, Switzerland, and the USA.

52 See WTO doc, CTESS Job (07)/193, 3 December 2007.

53 WTO doc, communication by Canada, the European Communities, Iceland, Japan, New Zealand, Norway, Switzerland, and the United States, titled ‘Joint Paper on Revised Draft Modalities for Non-Agricultural Market Access’, 5 December 2007.

54 This proposal called for a prohibition of more than half of six digit subheadings to be excluded from any four digit sub-heading that was subject to a full formula cut or any combination of six-digit sub-headings (under a four digit) representing more than 50% of the total value of imports.

55 P. Messerlin, ‘How Much Further Can the WTO Go? Developed Countries Issues’, Trade Policy Monitoring Centre (CEPR and Kiel Institute), mimeo, available at http://gem.sciences-po.fr.

56 C. F. Bergsten, ‘World Trade at Risk’, Peterson Institute for International Economics, May 2008.

57 Financial Times, ‘Obama Aims to Calm Fears over Free Trade’, 27 June 2008.

58 Golman Sachs, Brics and Beyond (Goldman Sachs Global Economics Group, 2007).

59 Reuters, EU's Mandelson points at US after WTO collapse.

60 Washington Trade Daily, 15/18 August 2008.

61 Letter addressed to President Bush from the Congress of the United States, signed by Charles Rangel, Chairman, Committee on Ways and Means; Max Baucus, Chairman, Committee on Finance; Jim McCrery, Ranking Member, Committee on Ways and Means; Charles Grassley, Ranking Member Committee on Finance.

62 Washington Trade Daily, 15 December 2008.

63 The Warwick Commission, The Multilateral Trading Regime: Which Way Forward? (The University of Warwick, December 2007).

64 The Future of the WTO: Addressing Institutional Challenges in the New Millennium, Report by the Consultative Board to the Director-General Supachai Panitchpakdi (WTO, 2004).

65 See F. Jawara, and A. Kwa, Behind the Scenes at the WTO: The Real World of International Trade Negotiations (Zed Books, 2003).

66 Such as Czechoslovakia, Turkey, Lebanon, Iraq, El Salvador, Venezuela, and Mexico.

67 R. Wilkinson and J. Scott, ‘Developing Country Participation in the GATT: A Re-assessment’, World Trade Review, 3 (July 2008): 1–18.

68 Pascal Lamy, after the collapse of the WTO Cancun Ministerial meeting in 2003 blamed this on the ‘medieval process’ of the negotiations.

69 Press Statement issued by the Deputy Prime Minister and Minister for Trade of Kenya, 30 July 2008.

70 See Washington Trade Daily, 15 September, 2008.

71 See letters by Kamal Nath, Minister of Commerce of India, to the WTO Director-General, Pascal Lamy, dated 24 September 2008 and 17 October 2008.

72 Pascal Lamy's ‘to do list’ included the issues that were not in the Lamy Package, and included the issue of cotton, bananas, DFQFMA, preference erosion, etc.

73 Tallberg, J., ‘The Power of the Chair: Formal Leadership in International Cooperation’, International Studies Quarterly (forthcoming).Google Scholar

74 Ibid.

75 Odell, J., ‘Chairing a WTO Negotiation’, Journal of International Economic Law, 8(2): 425–448.CrossRefGoogle Scholar

76 F. Ismail, ‘The Role of the Chair in the WTO Negotiations: From the Potsdam Collapse in June 2007 to July 2008’, unpublished paper.

77 WTO doc, ‘South African Statement to the WTO TNC’, 22 July 2008.

78 See WTO doc, ‘Statement of Argentina to the TNC’, 26 July 2008.

79 See WTO doc, ‘Statement by Minister Celso Amorim to the Informal TNC’, 21 July 2008, As delivered.

80 See also ‘G20 Statement on the State of Play’, 20 June 2008 and ‘G20 Statement to the WTO Committee on Agriculture – Special Session’, Open-Ended Informal Meeting, 26 May 2008, in G20, Five Years of Activities of the G20: Moving Forward the Doha Round, July 2008, Brazilian Permanent Mission to the UN and WTO.

81 South Africa represents the NAMA 11 in the WTO and Brazil is the co-ordinator of the G20. Whilst the Ministers made the above statements in their own country names, their views largely reflect the views of the NAMA 11 and the G20 respectively.

82 P. Lamy, ‘The Moment of Truth’, International Herald Tribune, 3 July 2008.

83 WTO doc, ‘G20 TNC Statement’, 17 December 2008.

84 See WTO doc, ‘Market Access for Non-Agricultural Products: Sectoral Negotiations’, Communication from the NAMA 11 Group of Developing Countries, TN/MA/W/108/Rev.1, 12 November 2008.

85 See Wilkinson, R., ‘The WTO in Hong Kong: What it Really Means for the Doha Development Agenda’, Commentary, New Political Economy, 11(2) (June 2006).CrossRefGoogle Scholar

86 See WTO doc, TNC, ‘Statement by the Chairman’, Job (08)/94, 30 July 2008.