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“Moving the Doha Development Agenda Forward”

Pascal Lamy
EU Trade Commissioner

European American Business Council (EABC)

Washington
, D.C.
26 February 2004

Introduction

Many thanks, Robert, and also to Michael Maibach of the EABC for welcoming me here. Once again, let me say how good it is to be back in Washington, and good to be back at the EABC, where I recall I made my first US speech as Trade Commissioner back in October 1999. I actually looked up my remarks on that occasion. I discovered that I said to you then that I had a reputation as some kind of latter day technocratic ascetic, who works 20 hours a day, and who regards lunch as for wimps. Well, after four and a half years on the road, let me tell you that I have changed. I now do sometimes have lunch.

I also discovered that I said back in 1999 that the priority was the upcoming Seattle meeting, that it was sure to be a success in launching the new Round, and that we should aim for a three year round in Seattle. So that makes implementation of the Round a sure bet, let me see, for late 2002. If I had been right, I sometimes wonder what the hell I would be doing with my time now. But clearly, another thing I learned over the years is “never make predictions”.

Because here we are in early 2004, with the Round officially coming out of its post-Cancun swoon. And this time round, the prediction that I keep hearing is that it is completely hopeless to try to make progress in 2004, because, they all tell me, the US never moves on trade in an election year. Well let me tell you, I find these kind of statements pretty annoying. And I imagine that Bob Zoellick does too. Because if that it is true, both of us have wasted the best part of two months flying just about everywhere to push the case for the Doha Development Agenda, and we aren't alone in that.

Received wisdom is easy and it's fun, but rarely wise. Apart from anything else, try to pick a moment when the US is not coming towards a Presidential election or a mid-term. So that's my first message. Do not assume that 2004 is a year for the dogs on the Doha Round. It is evident that we are in an era of what I have called generalised “trade fatigue”, an era where the constant pressures and challenges of globalisation have the capacity to “wear down” decision-making by governments. But at the same time, there are a lot of Ministers out there who are very committed to moving forward. Indeed, since Cancun, we have come a long way. We have all had our internal reflection processes. And more importantly, all WTO members also collectively expressed their commitment in December and followed this up by taking a decision at the WTO GC in February on the chairs of the different negotiating groups. So there is also progress on the practical steps necessary to get the negotiation machinery going again in Geneva. Geneva is back to work.

And I wanted to use my speech today to flag up the key areas where we can and must make progress in the Doha Development Agenda. Doubtless there are many journalists dying to ask about our bilateral trade disputes – it wouldn't be a lunch speech in Washington without a question on FSC, after all ! But let me focus today on the priority for the European Union, namely the Doha Round.

What's the target for 2004? Significant progress

So onto my second message on Doha: what can we achieve in 2004? Answer: significant progress across the board. Sort of between half and two thirds of the way to the end of the Round. That, in my views, is worth having. And so what are we doing about it? For my part, I have had talks with the G-20 (followed up by detailed consultations in Geneva at senior official level only a couple of weeks ago), with the G-90 (both in Bangladesh and Kenya) and ASEAN countries (in Jakarta, again only a few weeks ago). And of course, I have as ever had plenty of time with Bob Zoellick to talk all this through – last week in Paris and again tomorrow.

Everywhere I go, the message is the same: very positive. The tonality, the body language of all the different participants is unrecognisable from the dark days at the end of Cancun. I think a lot of Ministers are now ready to admit, at least in private, that we all made a mistake in Cancun. As they say, in any deal, you should never leave money on the table. Even more ridiculous, as in Cancun, for us to have collectively walked away from the table before the money was put down.

But frankly speaking, that's the easy bit. Making commitments that we want to move forward is like saying: I am ready to climb a mountain. It's necessary, but it isn't sufficient. We now need to actually make progress. We must translate the generalised political will into real negotiations and solutions in Geneva – on specific points. And we don't have a lot of time because we effectively have a brief window of opportunity from now to the end of August. Why ? Because although it is perfectly fair to expect the US to play a full part in the course of the year, we shouldn't expect much movement after Labour Day, in the high season of US political campaigning.

And after 1 November, the current European Commission comes to an end of its mandate, and the odds are that both individuals and/or portfolios might change for the next five year period. So we need to be ready to move rapidly to secure what we have called the “modalities” for the rest of the negotiation, the framework that we hoped to achieve in Cancun. That can and should be done in the next couple of months – and then we should look to see if we can go beyond that if possible. All we have to fear is fear itself. And all we have to lose is the European summer holidays.

Progress on what ?

I think it is time to focus on essentials. The key issues or groups of issues are the following, and I want to spend a little time going through them with you today. Agriculture, industrial tariffs, Singapore issues and Development. These are the four make or break questions on which decisions are needed. Once we have solutions for these four core issues, the rest of the decisions for DDA will fall into place, if not immediately, then at least relatively easily.

I therefore today want to present the EU's concrete proposals to move things forward on substance. We have a lot of negotiating flexibility based on the position we tabled in December, which is itself the result of movement throughout 2003 on the different topics.

Agriculture

We recognise the crucial importance of agriculture in these negotiations and to the EU as well as other WTO members. We are ready to engage across the board. For example, we have proposed to eliminate export subsidies on a list of products of interest to DCs. The curious thing is, in the year since we made this proposal, that no-one has come forward with the products they want to eliminate. This is not rocket science, after all. It is as if countries fear there is a trap here: as if countries are hooked on the media's standard view that the Europeans always have a secret agenda on agriculture, usually involving sugar. Well we don't. We don't propose any a priori exclusions. And to take sugar again, the only question is perhaps the timeframe because clearly we can't eliminate immediately until our internal reform has worked its magic. And of course the only other important piece of conditionality is that the US and others need to be ready to take equally comprehensive commitments on their own export support programmes, such as on surplus disposal disguised as food aid, export credits, single desk arrangements or the like.

Or again, let me turn to agricultural market access. Here we would have preferred a Uruguay Round formula, for obvious reasons, not least the fact that it provides already for different flexibilities. But we have accepted the concept of a blended formula. We have sensitivities, but that is not a secret to anybody and nor are we alone in this. Indeed developing countries themselves have sensitivities – India, for example, is understandably concerned about the plight of its 600 million subsistence farmers. Others are worried about losing their preferential access to developed country markets, and notably EU markets.

And finally on agricultural domestic support, we can and will make new commitments to reduce, as long as there is agreement in working within the existing framework, with the different boxes: amber, blue and green. I . We can commit within this structure. We can accept a very very big reduction in the amber box. We can agree to disciplines on the blue box and we can also agree to changes in the structure of the blue box, although we don't need such changes, which the US have asked for. We are ready to agree that the amber and blue box combined would be less than the present support for these boxes. And I don't need to remind you that cotton needs to be addressed as a key part of the agriculture negotiations. But clearly we will only get out of this negotiation by all of us, the heavy subsidisers, making real reductions in the most trade distorting forms of support.

Industrial tariffs

Let me now turn to non-industrial tariffs because in this area too, I don't think we have so far to go to agree on framework modalities. What we need is a basic understanding of the nature of contributions that WTO members must make, corresponding to their capacity, size of market and level of development. It is clear that we should not ask for much tariff reduction from Sub-Saharan Africa, and more generally from the least developed countries and small developing countries. There is a clear need here for protection of both markets and indeed revenue. But it equally clear that other DCs such as Brazil and India can and should make a real contribution. China, of course, having just acceded to the WTO, is something of a special case, but she, too, must do her part.

So the tough question is where you draw the line between weaker and stronger developing countries – but that does not need to be decided now. We must find a solution to the question of preference erosion problem in this area too. But as in agriculture, we need to be wary of contorted non-market based compensation schemes, and should focus on the opening up of new markets to compensate for reduction of preferences – mainly by opening up markets in large DCs. It is high time that preferences from both industrialised countries and the bigger DCs, such as those the EU grants under its Everything But Arms scheme should be granted and locked into WTO commitments. This will be key to delivering the development dimension for LDCs in the DDA. The interesting development is that big developing countries like Brazil have been going in this direction, and in doing so, we may be able to shake off the notion that this is really a north-south collision. Much can and should be done to bolster south-south trade in this negotiation because a lot of the future growth in trade is going to be in the South.

Singapore issues

This remains a difficult part of the negotiation, although I am not sure Bob Zoellick was right to call these issues a “distraction”. I hope he does not have the same vision about anti-dumping which is of course a pre-Singapore issue!

But, what we have now is consensus among WTO members on one point: that we have to treat each issue on its own merits. It is now the time to put meat on the bone on that concept and decide what to do. Our view is clear. There is no reason why Trade Facilitation and Transparency in Government Procurement should not remain part of the DDA Single Undertaking. Support for these issues is widespread.

And I also disagree with Bob when he says that procurement can drop out of the Single Undertaking too. No issue more closely represents the interface between government and business. At the same time, of course I understand and am ready to address anxieties that this will simply lead to a market access negotiation on procurement.

But what about Investment and Competition? Clearly there is less support here in the WTO. We are nothing if not observant. It is an enormous pity if these issues have to come out of the Single Undertaking because they are so relevant for the trade system.

But the reality is that there is insufficient support for the time being to pursue these issues within the single undertaking. Given that, one option is to allow those members that are interested in elaborating rules on these issues to forge ahead with this. We should not accept that progress is dictated by the slowest ship in the convoy. The process would have to be transparent and open to all and should anchor these agreements firmly within WTO.

By the same token, many countries have expressed the view that they do not want to be part of such a process. Consequently, no member should be forced to participate in the negotiation process nor to subscribe to the results. We are absolutely ready to accept that. The flip-side of this coin is however that no-one should block others from moving forward, if they want to do so.

Development

And last but not least, development. This remains crucial for the overall balance of the Round. One aspect is the integration of the development dimension across the board of the issues in the DDA. Development questions cannot be segregated off – they also need to be at the heart of our discussion on industrial tariffs and agriculture.

But we are ready to go further. On the specific questions raised by developing countries in the context of special and differential treatment we are ready to show increased flexibility on the substance of these issues, and to go along with the idea of a specific negotiating group on this. We also need to recognise that we should be creative in finding solutions to the different problems of developing countries. Their needs are not identical. The smaller and weaker members - that is the LDCs, landlocked countries and small economies/small island developing states – have particular development problems and on that basis seek and deserve more flexibilities, derogations etc. So both we the EU and you here in the US need to be ready to do more here to address the needs of these countries, which means showing some real flexibility.

Process

But finally, before closing, back to process. It wouldn't be a Round without focusing on process. Here, I see the issues rather clearly. The EU and US need to be ready to work together, but not only together. We both have to build bridges with the G20, the G90 and others. Not always in full view of the world's press, because no negotiation was ever cooked effectively under arc lights. Some parts never get cooked at all, and others get burned.

And most of all, we need to be ready in capitals to instruct our Geneva ambassadors and our senior officials to translate this political will into negotiating texts. It is very easy to dine out on assaulting Geneva, to point out – as I have – that no Geneva ambassador was ever sacked for saying “no”, while there are plenty who have found themselves looking for work after saying “yes”. But we all know what diplomatic instructions are, and we should stop hiding behind our Ambassadors. If the fun and games continue in Geneva, the buck stops back home.

Finally, what's the target? I think we should aim at the WTO General Council in May as the latest point at which we aim to secure “Cancun-like” outcomes on modalities. I think that is really achievable, and we should push hard to get there.

Conclusion

So let me stop there. I recognise that I have rather ground you into the detail here this lunchtime. Partly that's my style. But partly because I think we have done the pretty part of re-committing to this negotiation. We now have to move to the specifics of this negotiation. Further generalities, expressions of good will, will not suffice. Of course it is tricky trying to negotiate something this complex with 148 increasingly active players. And of course the stakes are high in an MFN system. But so, of course, are the benefits – for the EU, for the US, for all.

There is no point stressing out about which particular point we can get to during the course of this year. The answer, boringly, is “quite a long way”. But because this negotiation is going to be a lot of hard work right to the end, we owe it to the system, and indeed those who might inherit the system, to get as far as possible this year, as quickly as possible.

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