David S. Christy, Jr.: Geneva’s Winners & Losers, A View from the Dugout

By David S. Christy Jr.

[This post is an update on Mr. Christy’s article published in the summer 2008 issue of World Policy Journal.]

If there were trading cards for the Doha Development Round participants, I’d save Falconer’s. The agriculture negotiations chairman, Ambassador Crawford Falconer is my candidate for MVP—it is a shame he is stepping down later this year; he will be missed. Falconer consistently works to strip away the nonsense, politics, and disinformation that dogs these types of negotiations. His reports read like a stern uncle reining in a bunch of wayward nephews—they are direct, utterly sensible, and beyond cavil. There is not a scintilla of wishful thinking. (This, by the way, accords with my personal experience with Falconer, who chaired a World Trade Organization panel proceeding in which I participated.)

Falconer dishes his latest dose of reality in a terse, 4.5-page report dated August 11. He responds directly to the canard that the July mini-ministerial in Geneva fell apart over technical issues regarding the special safeguard measure (SSM)—which allows protection where a surge in imports threatens domestic agriculture producers. Falconer stresses that the U.S.-India disagreement over the SSM is “not some purely ‘technical’ matter,” but rather is political. He then drives the point home by noting the many other difficult issues that the negotiators did not resolve, including cotton from least-developed countries, new tariff quotas for sensitive products, and tariff simplification. He also notes that the members as a whole had not yet vetted the issues where progress was made. His report has been widely accepted as an accurate account.

WTO Director-General Pascal Lamy’s comments on the progress of the talks and the report of Canadian Ambassador Don Stephenson, chair of the negotiations on market access for non-agricultural products (NAMA), have not been so well received. In the view of some members, Lamy’s comments do not accurately present the splits among the members, reporting agreement where none existed. This may be due in part to the fact that Lamy is nearing the end of his term and this may be his last chance to move the talks forward. Certainly, the members have reasons to back away from concessions given the overall failure of the negotiations, but Lamy’s account is overly rosy. As for Stephenson, the United States has attacked his report for mischaracterizing the state of play on sectoral negotiations, which would eradicate tariffs on specified goods (e.g., chemicals). More importantly, Argentina rejected the July 25 compromise draft on NAMA—which serves as the basis of all claims of progress. Because the WTO operates by consensus, Argentina’s rejection of the package suggests that the widely reported progress is illusory. What to make of all of this?

First, the negotiators accomplished more than most observers (including me) thought they would, but not as much as was reported. Possibly, they will be able to lock in some progress. Unfortunately, though, they almost certainly will not be able to pick up where they left off, resolving SSM and moving on to other issues.

Second, the SSM impasse deserves more and perhaps different scrutiny than it has received. I agree with Falconer that the impasse indicates fundamental political differences and won’t be resolved by wordsmithing. But beyond this, I’m suspicious. I wonder if India insisted on the 110 percent SSM trigger (which would have allowed India to raise agriculture tariffs when imports increased by as little as 10 percent) in order to halt the negotiations at a place that would play well at home. The message of Prime Minister Manmohan Singh and Commerce Minister Kamal Nath is, “we are protecting India’s subsistence (and other) farmers and, if that means the negotiations fail, so be it.” Left unsaid is, “after all, we’ve got an election coming up in 2009 and the Indian National Congress Party is looking weak in the polls.” Protecting farm interests is completely legitimate, of course, but the timing and the precise nature of the impasse caught my attention. If the talks pick up in September, we’ll soon get a sense of whether this is the case (perhaps I’m just paranoid).

Third, to try to preserve some momentum, Lamy is engaging in shuttle diplomacy with India and the United States to resolve SSM. The leaders of the major nations involved in the dispute—U.S. President George Bush, Brazil’s President Luiz Inácio “Lula” da Silva, and India’s Prime Minister Singh—reportedly have talked, with Lula offering to host a September meeting to jump start the negotiations. United States Trade Representative Ambassador Sue Schwab may be on board. On August 20, she proposed a September meeting among a “small group” of senior officials. By small group she presumably is referring to the G-7 nations, or a subset. The primary obstacle to such a meeting is that the United States and India have signaled they have offered all that they can and now expect their counterpart to be flexible, i.e., to cave on SSM.

Fourth, even if some of Geneva’s momentum is preserved, apart from all of the technical and structural issues, the various external impediments to agreement remain—the upcoming U.S. election and lack of Trade Promotion Authority (which allows for fast-track congressional approval of trade agreements), India’s forthcoming election, transition in the European Community, and the changing of the guard among the negotiating group chairmen (Stephenson and now Falconer), to name a few. This last point is more important than one might think. The Members respect Stephenson and Falconer, and the incoming chairs will have to get up to speed and earn the trust of the members, which will take some time.

Last, but not least, China, India, and Brazil are playing a larger role in the negotiations than previously. More important, they are not in lock step. Negotiators report that China, beginning Wednesday, July 23, became very (surprisingly) vocal in the negotiations, having been relatively passive until then. The United States blames India for torpedoing the talks by insisting on a low trigger for the SSM. China says, “no, it’s the fault of the United States.” Brazil disagrees, placing the blame squarely on India. Brazil, China, and India will continue to play a larger role and inevitably will disagree when it comes to agriculture, where Brazil’s interests primarily are offensive, and China’s and India’s defensive. But for Brazil to side with the United States in a dispute against a fellow developing country and publicly take India to task for the failure of the talks is a significant development. In the long run, this may end up being the most important outcome of the July mini-ministerial in Geneva.

****

****

David S. Christy, Jr. is a member of the International Group of Miller & Chevalier Chartered, a law firm based in Washington, DC. Since the formation of the World Trade Organization in 1995, he has represented industries and member governments—including Argentina, Brazil, Canada, Indonesia, Japan, South Korea, Poland, St. Lucia, and Saudi Arabia—in negotiations and dispute settlement proceedings.

Related posts