Beyond Doha: In Search of the Multilateral Trading System
WTO Public Forum
Report on AITIC Session
10.00 – 11.30, 26 September 2006, Room E, Centre William Rappard

I. Introduction

1. The AITIC Session, organised within the WTO Annual Public Forum, focused on the challenges faced by the multilateral trading system in the light of the suspension of the negotiations under the Doha Work Programme (DWP). Three speakers, a developed country diplomat, an independent consultant and a least-developed and landlocked country representative, presented their perspectives on possible ways forward for the WTO in general and the negotiations in particular.

II. Introductory Remarks: The Setting: Liberalisation and Rule-Making in Uncertain Times — Dr Esperanza Durán, Executive Director, AITIC

2. In her opening address, Dr Durán presented her assessment of the current state of play in the DWP negotiations. Though the benefits of improving the rules for international trade at the multilateral level are generally recognised, WTO members remain entrenched in their positions on the key elements of a possible DWP package. The WTO Director-General, Mr Pascal Lamy, has identified a triangle of issues on which progress is crucial for moving the rest of the subjects under negotiations. The triangle consists of: agricultural market access; domestic support; and non-agricultural market access (NAMA). Given that members are far from agreement on a range of other aspects of the DWP, in Dr Durán’s view, prospects for a swift and ambitious conclusion are not bright. Moreover, the fast track authority, which enables the US president to pass trade agreements through the US Congress without amendments, will expire in July 2007 and important elections are due in the next eighteen months in some influential WTO member countries.

3. International trade has grown rapidly as a consequence of trade liberalisation driven by eight rounds of negotiations since the creation of the General Agreement on Tariffs and Trade (GATT) in 1947. The share of developing countries in world trade has been on the rise over the past 20 years. The Uruguay Round was a particular achievement in that it significantly opened world markets and set multilateral rules in areas not previously covered by GATT disciplines, such as agriculture, services and textiles and clothing. However, the benefits have not been distributed evenly; some developing countries have not been able to effectively expand their trade and use it as an engine of economic growth and development.

4. In light of the current situation Dr Durán put several questions to the audience which would be touched upon by the presenters invited by AITIC: Are the most influential members of the WTO turning away from multilateralism, opting for bilateral or regional trade agreements? If a functioning multilateral trading system is the first best option, what role do developing countries need to play? How will the less-advantaged countries fare in a situation where multilateralism ceases to be the first choice? Is the way forward to overcome the impasse that has eroded the credibility of the multilateral trading system to reduce the level of ambition in the Doha negotiations?  

III. The WTO at the Crossroads: Lessons from Doha — HE Mr Carlo Trojan, Ambassador, Permanent Representative of the EC to the WTO, Geneva

5. Ambassador Trojan began his presentation stating that a renewed political drive on the part of the key players of the WTO was necessary to revive the DWP negotiations. In his view, lack of ambition of the offers tabled by the main players was not at the origin of the current setback. A possible compromise discussed before the suspension of the negotiations would have been significantly more ambitious than the final package of the Uruguay Round. The source of the problem lies rather in a disagreement between the key players over the “exchange rate” at which concessions are traded within the triangle of agricultural market access, domestic support and non-agricultural market access.

6. Ambassador Trojan emphasised, however, that once the negotiations resume, work beyond this triangle of issues must not be neglected. In particular, he recommended focusing on trade in services, trade facilitation and rules. He added that LDCs and developing countries would be hit hardest by a failure of the negotiations, intended to address their specific needs. Regardless of what happens, however, the EC is determined to push the development aspects of the DWP forward with a view to achieving an early harvest on elements such as the enhanced Integrated Framework (IF), Aid for Trade and duty-free and quota-free market access for LDCs.

7. The speaker said that he found it somewhat problematic that the DWP has remained unchanged since it was launched in 2001. He suggested that the current time out could be used as a window of opportunity to redefine the DWP and turn it into an “open-oriented rule-book” so that it better takes into account:

i) the changes caused by the emergence of new global players such as Brazil, China and India;
ii) new environmental concerns;
iii) previously abandoned matters such as the Singapore issues; and
iv) formerly untouched issues falling in the realm of trade (i.e. labour).

8. He concluded his statement noting that for the WTO to prepare for the future it will need to engage in substantial institutional reforms, for example regarding its decision-making processes, and to co-operate more coherently and systematically with other institutions involved in the work on establishing an effective system of global governance.

IV. What Role for Developing Countries in Shaping the Future WTO? — Mr Constantine Michalopoulos, Consultant

9. Mr Michalopoulos stated that in his view the relevance and viability of the WTO depended on its capacity to respond to the needs of developing countries which today constitute the majority of WTO members. He identified three groups of developing countries: i) countries such as those belonging to the Group of 20 (G-20), that are well integrated in the multilateral trading system and have the capacity to implement WTO commitments (also referred to as “advanced developing countries”); ii) the LDCs at the margins of the world economy and with little capacity to implement WTO commitments, however benefiting from a range of special and differential treatment (S&D); and iii) roughly 40-50 smaller or low-income economies with similar constraints as the LDCs but without access to the special treatment for LDCs. Furthermore, Mr Michalopoulos explained that the WTO performs four functions, i.e. i) trade negotiations; ii) rule-making; iii) trade policy review; and iv) adjudicating the implementation of the rules. He then explained some of the changes to the system he considered necessary for the different groups of countries to pursue their interests effectively.

10. To ensure a more equitable outcome in the trade negotiations, Mr Michalopoulos, recommended separating talks on trade liberalisation from those on changing the rules. It would involve giving up the principle of the single undertaking and would enable developing countries to better cope with the complexity of issues under negotiation. Also, it would no longer be possible to hold one aspect of negotiations hostage to the others where progress is being made, as occurred in the suspension of the entire DWP negotiations because of disagreement in agriculture and non-agricultural market access. Most importantly, the meaningful participation of developing countries lacking human and institutional capacities must be reinforced. Mr Michalopoulos felt that the WTO Secretariat should carry out more analytical work in support of developing country delegations, for example on implications of proposed liberalisation scenarios.

11. With respect to rule-making, Mr Michalopoulos reflected on a fundamental reform of S&D granted to developing countries. At present, meaningful S&D is only extended to the poorest countries, the LDCs. He suggested that per capita income and/or share of world trade indicators should be introduced to differentiate developing countries in terms of transition periods, range of commitments, and access to technical assistance. Such S&D should be made available to all developing countries, except the more advanced ones with a larger degree of integration into the world economy and more institutional and human capacity.

12. Finally, Mr Michalopoulos recommended substantially strengthening the WTO’s Trade Policy Review (TPR) and Dispute Settlement Mechanism. He said the Trade Policy Review would need to be transformed into a more serious monitoring and evaluation exercise with concrete recommendations for policy improvements. Developed and advanced developing countries’ policies should be scrutinised in terms of their effects on others and the trading system as a whole, while the TPR for developing countries should focus on development impacts of policies and assistance needs. On Dispute Settlement, he proposed to change the countermeasures used against offending parties failing to comply with a ruling. Limits to imports cause more damage to a developing country imposing such a measure than on an offending developed country. One solution to this problem would be to replace such limits with compensatory payments. Concluding his statement, Mr Michalopoulos emphasised the urgency of such changes to the system, especially given the uncertain fate of the DWP negotiations.

V. The Views from a Least-Developed Country: What is at Stake for the Poorest? — HE Ms Rosalie Koudougueret, Minister of Commerce, Industry and Small and Medium Enterprises, Central African Republic

13. HE Ms Rosalie Koudougueret emphasised that the launch of the Doha Round had given rise to a number of expectations in the developing countries and in the LDCs in particular. Although some progress has been made on some parts addressing the needs of poorer countries, HE Ms Koudougueret was very concerned about the current state of play. She felt that developing countries and LDCs would suffer most from the shift to bilateralism and regionalism which was to be expected, if the DWP breaks down. The WTO is so important to them, because it has replaced the rule of force with a multilateral framework through which international trade can be used as an instrument for reducing world poverty.  

14. The LDCs urgently need assistance in strengthening their participation in the multilateral trading system through human, institutional, infrastructural and productive capacity-building. HE Ms Koudougueret added that her country was also pursuing this objective in the negotiations with the European Union on Economic Partnership Agreements (EPAs).

15. The speaker called for renewed efforts to revive the DWP negotiations with a focus on the development aspects and continue the work on Aid for Trade aiming to overcome the constraints of developing countries. Irrespective of the outcome of the DWP negotiations, the Central African Republic attaches particular importance to the enhanced IF for LDCs and to the creation of a new multilateral fund for assistance, including for supporting adjustment to trade liberalisation. In conclusion, HE Ms Koudougueret referred to an African fable to illustrate how the fate of people living on earth is interlinked and how unity and solidarity can come to benefit rich and poor alike.