The WTO after Hong Kong

Progress in, and Prospects for, the Doha Development Agenda

Donna Lee, Rorden Wilkinson

• Publisher: Routledge
• Year: 2007
• Print ISBN: 9780415431941
• eBook ISBN: 9781134082841
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Political Economy
• Index: Politics & International Relations

After the World Trade Organization's (WTO) critical December 2005 Hong Kong ministerial meeting, negotiations to implement the Doha Development Agenda (DDA) broke down completely in the summer of 2006. This book offers a detailed and critical evaluation of how and why the negotiations arrived at this point and what the future holds for the WTO.

It brings together leading scholars in the field of trade from across the social sciences who address the key issues at stake, the principal players in the negotiations, the role of fairness and legitimacy in the Doha Round, and the prospects for the DDA's conclusion.

The WTO after Hong Kong is the most comprehensive account of the current state of the World Trade Organization and will be of enormous interest to students of trade politics, international organizations, development and international political economy.

Part I

Setting the scene

1 The WTO after Hong Kong¹

Setting the scene for understanding the Round

Rorden Wilkinson and Donna Lee

In mid-December 2005 the World Trade Organisation’s (WTO) primary decision-making body – the ministerial conference – met for only the sixth time since the organisation’s creation just a decade earlier. The venue for this biennial meeting was Hong Kong; and the task at hand to inject energy into an increasingly delayed and periodically fractious Round of trade negotiations – the so-called Doha Development Agenda (DDA). Hong Kong was to be the first time trade ministers had gathered for a full conference since the collapse of the Cancún meeting a little over two years earlier; indeed, prior to the ministerial, two out of the WTO’s first five ministerial conferences had broken down and, in the current Round, only the conference launching the DDA (in Doha in November 2001) had ended successfully. Given this backdrop it was understandable that many approached Hong Kong with some trepidation. Few relished a repeat of the heightened political contestation that caused the breakdown of the Seattle (1999) and Cancún meetings and the consequences that a collapse in Hong Kong might have on the DDA.

For all of the speculation, Hong Kong did not result in the breakdown feared by some (see Bergsten, 2005; Hills, 2005; Financial Times, 6 September 2005). It nevertheless failed to make sufficient progress to halt the Round’s collapse seven months later (in July 2006). Indeed, despite the modest progress made in Hong Kong, signs that the negotiations were at serious risk of collapse were evident almost as the ink dried on the ministerial declaration. Bickering broke out between the US and EU over precisely which of them was at fault for the relative lack of progress in the Round ahead of the January 2006 Davos meeting of the World Economic Forum (WEF). A global trade opinion poll of 100 Geneva and capital-based negotiators, policymakers, and experts from developed and developing countries conducted in January 2006 by the University of Adelaide’s Institute for International Business, Economics and Law (IIBE&L) reported that 63 per cent of respondents, and none of those based in Geneva, thought it likely that the Round would be concluded in 2006; and only 2 per cent all respondents thought that the April 2006 target for the agreement of modalities in agriculture would be met (IIBE&L, 2006a). Neither the Geneva preparatory meeting preceding nor the actual meeting of the Group of 6 (G6)² in London in March 2006 managed to bring members closer to agreement on agriculture or non-agricultural market access (NAMA) (Bridges, 15 March 2006; Elliott, 2006). The April 2006 deadline for the completion of full negotiating modalities (the means by which commitments to market openings are translated into actual liberalisation – usually in the form of formulas and other agreements) set at the Hong Kong meeting was missed as member states remained in their entrenched positions (despite near-universal rhetoric that all were willing to move). By June 2006 the number of respondents expressing pessimism about the capacity of members to conclude the round by the end of the year recorded by a second IIBE&L poll had risen 8 points to 71 per cent (IIBE&L, 2006b). And despite the furious efforts of the WTO Director-General (DG), Pascal Lamy, high-level caucusing among key member states during the 2006 St Petersburg Summit of the Group of 8 (G8), and intensive Geneva-based negotiations towards the end of July 2006, little progress was made in forging a consensus. The result was a breakdown in the negotiations and a resumption of EU/US finger-pointing (see Mandelson, 2006b, 2006c; USTR, 2006).

The collapse of the negotiations prompted Kamal Nath, India’s Minister of Commerce, to comment that the Round is now somewhere between ‘intensive care and the crematorium’ (quoted in Bridges, 26 July 2006). While a complete breakdown of a Round is without historical precedent, and such an occurrence is unlikely given the amount of time and effort already expended in the negotiations as well as the potential gains on offer, little prospect now exists for serious negotiations to resume ahead of crucial presidential elections in France (2007) and the US (2008) or for the Round to be concluded much before the end of the decade. This book offers a detailed and critical evaluation of how and why the negotiations arrived at this point. It brings together leading scholars in the field of trade from across the social sciences in pursuit of a comprehensive account for the sources of contestation that have emerged during the Round and the likely shape of the bargain struck should the Round be concluded. In pursuit of its aims, the book focuses on four themes: (1) the key issues at stake, (2) the principal players in the negotiations, (3) the role of fairness and legitimacy in the Round, and (4) the prospects for the DDA’s conclusion. These broad themes organise the remainder of the book. They exist, however, only for convenience of mind. Key issues and primary themes run throughout the book. We signal these issues and themes in the remainder of this chapter by setting out what happened in the run-up to and during the Hong Kong Ministerial. We then offer a survey of the contributions that follow, focusing on their place in the overall analysis provided here.

The run-up to Hong Kong

To understand why Hong Kong unfolded in the way it did as well as why it failed to make significant progress to halt a collapse of the negotiations in July 2006 we need to return briefly to the breakdown of the preceding Cancún Ministerial meeting. The collapse of the Cancún meeting revealed deep-seated tensions among WTO members over the shape and direction of the DDA. These tensions had been evident since attempts to launch a new round of trade negotiations first emerged in the mid- to late 1990s and had originally resulted in the collapse of the Seattle Ministerial meeting. However, the post-Seattle rehabilitation process, coupled with a conscious effort to show political unity among members of the international community in the wake of the 11 September 2001 terrorist attacks, proved sufficient to secure agreement to launch the DDA at the 2001 Doha Ministerial (see Wilkinson, 2002). Disagreements nevertheless remained.

The lack of an absolute consensus on the content of the DDA, however, had important ramifications for the Cancún meeting. A provision to begin negotiations should an explicit consensus be forthcoming on the contentious Singapore issues (investment, government procurement, trade facilitation, and competition policy) at the Cancún meeting pitted the industrial states against their developing counter-parts. This combined with existing tensions over the liberalisation of agriculture, NAMA, the extension of geographical indicators under the Agreement on Trade-Related Intellectual Property Rights (TRIPs), the service negotiations, issues relating to the implementation of the Uruguay Round accords, and special and differential treatment for the least developed to produce an inflammatory situation.

The content of the DDA was not, however, the full extent of the problem. Tensions were exacerbated further by the way in which the negotiations were organised. Of particular concern was the continued use of Green Room meetings comprising 15–25 ‘key’ states as the principal decision-making fora; the holding of meetings concurrently, thereby disadvantaging delegations (largely from the least developed) with limited numbers of personnel; the use of bilateral meetings between ‘facilitators’ (persons appointed by the Chair of the meeting to oversee negotiations in a particular area) and individual delegations to reveal the latter’s bottom line (known as ‘confessionals’); the introduction of draft texts as the basis upon which members negotiate but which were not widely agreed upon; the manner in which facilitators were selected and their (occasional) partisan behaviour; and the use of forum-plus tactics to cajole states into agreement such as placing telephone calls to capitals (thereby circumscribing and undermining delegations), or threatening to withdraw financial/humanitarian/military assistance, bilateral trade deals, or debt relief. It was unsurprising that the meeting collapsed.

The Cancún meeting was followed by a process of institutional and political readjustment (what has elsewhere been called a ‘post-crisis politics’ – see Wilkinson, 2006a) that resulted in the negotiation of an agreement during the July 2004 meeting of the WTO’s General Council (GC) that took the negotiations forward (the so-called ‘July Package’, albeit it was actually concluded on 1 August). The package saw members agree to a framework agreement in agriculture and NAMA; movement forward in the service negotiations; a commitment to continue the consultation process on the extension of the TRIPs agreement; the commencement of negotiations on one of the Singapore issues (trade facilitation) and the ejection of the remaining three; and an extension in the timeframe of the overall negotiations with a view to their conclusion sometime after the Hong Kong meeting (WTO, 2004).

Importantly, the July 2004 package was brokered not by the Quad (the four leading industrial states of the US, EU, Japan and Canada), as was the established norm, but by a group comprising India, Brazil, and Australia as well as the US and EU (collectively known as the Five Interested Parties – FIP). This reflected both an acknowledgement of the significance of India and Brazil as leading developing countries and Australia as the most prominent industrialised agricultural producer outside of Europe and North America, and the need to bring into the fold leading members (in this case India and Brazil) of the most significant developing country coalition that emerged during the Cancún meeting – the Group of 20 (G20).³

Yet while the July package was sufficient to bring about a return to the negotiating table, it was far from a solution. Tensions among members remained much in evidence and progress in the negotiations thereafter proved frustratingly slow. In the agricultural talks concerns were raised by the Group of 10 net food-importing countries (G10)⁴ and various least developed countries that the FIP were dominating proceedings and acting in just the same way as the Quad; significant divergences emerged in the way in which members interpreted the content of the July agreement on agriculture; least developed countries expressed anxiety about the potential for existing trade preferences to be eroded by commitments made in the DDA; the G10 and the EU expressed concerns about overly ambitious moves to reduce levels of agricultural domestic support; the agricultural negotiations were repeatedly deadlocked over a formula for converting specific duties into percentage base ad valorem equivalents (that is, moving from duties based on the volume of imports to ones based on their value); and the deadline of July 2005 for agreeing outline modalities for negotiations in agriculture was missed.

Beyond agriculture, matters appeared little better. A December 2004 Africa Group proposal amending the August 2003 decision on TRIPs and public health seeking to loosen the constraints placed upon members importing generic pharmaceuticals in times of national health crises was not well received, with particular opposition coming from Australia, Canada, the EU, Hong Kong, Japan, Korea, New Zealand, Norway, Switzerland, Taiwan, Turkey, and the US. By March 2005 – two years after the original deadline – offers were still outstanding in the services negotiations from more than 40 members (principally, though not exclsively, developing countries). The NAMA negotiations appeared in perpetual deadlock; members clashed on the structure of the discussions, the relative merits of pursuing single-sector (rather than cross-sector) negotiations, the tariff-cutting formula to be deployed (with the majority of the industrial states favouring the simple ‘Swiss’ formula – a method of cutting tariff levels across all sectors – while most developing countries pushed for ‘less than reciprocity’), and the July 2005 deadline for agreement on the basic structure of the NAMA negotiations was missed.

Deadlines were also consistently missed in the Committee on Trade and Development (CTD) for proposing ‘clear recommendations’ to the GC on special and differential treatment. Little beyond a tacit acceptance that movement would be forthcoming only in the closing stages of the DDA occurred in negotiations on anti-dumping rules. Members divided on how to deal with the issue of fisheries subsidies. Little progress was made in the services negotiations; pressure by Australia, the EU, and the US to establish mandatory minimum market access commitments (so-called benchmarks) to increase the level of ambition in the services negotiations was strongly opposed by the majority of developing countries (with the notable exception of India); an Indian-led developing country push for improvements in industrial member commitments to the ‘natural movement of persons’ across state boundaries as service providers under ‘mode 4’ of the General Agreement on Trade in Services (GATS) yielded little; progress in all areas was hindered by a widespread reluctance to engage in meaningful negotiations without first knowing at least the outline of a deal in agriculture; and a statement by nine developing countries released just before the meeting sought to refocus attention on the Round’s core purposes (i.e. development) and warned of the divide and rule tactics of ‘some major developed countries’ (G9 Developing Countries, 2005).

The run-up to the Hong Kong Ministerial was, nevertheless, qualitatively different from that which had preceded Seattle and Cancún. A willingness to keep moving forward with negotiations despite the persistence of significant differences was in evidence. In November 2005 the TRIPs negotiations saw members agree to exempt least developed countries (LDCs) from obligations to apply rules protecting patents, copyrights, and other intellectual property until 2012; and a 6 December 2005 decision saw members agree to a permanent solution to the issue of TRIPs and public health. In agriculture a formula for ad valorem conversion agreed at the 4 May 2005 Paris mini-ministerial (ad hoc gatherings of approximately 25–30 ministers deemed most important in caucusing agreement) was accepted by members as an acceptable way forward. Likewise, a G20 proposal on agricultural market access was agreed at the July 2005 Dalian mini-ministerial meeting as the basis for further discussions. In addition to market access commitments, on 10 October 2005 the US offered to make significant cuts in its domestic agricultural support regime contingent on EU and Japanese reciprocation. The EU made a counter-offer shortly thereafter and submitted a further ‘new and improved’ proposal on 28 October 2005. Proposals were also forthcoming from the G10, G20 and African, Caribbean, and Pacific (ACP) Group.

Crucially, when it became clear that members would be unable to bridge remaining differences ahead of the Hong Kong meeting and agree on full negotiating modalities at the ministerial, they agreed to scale back expectations, reflect upon the progress that had been made in the draft declaration, continue negotiations in the wake of Hong Kong with a view to agreeing full modalities in the early part of 2006, and shift the focus of the negotiations to reaching agreement on a package to assist the least developed. This package was to comprise, in addition to reaching a solution on the TRIPs and public health issue, duty-free and quotafree access for all products originating in LDCs; amendments to existing special and differential provisions in WTO agreements; and a strong Aid for Trade package designed to enable LDCs to take advantage of market-opening opportunities. The lowering of expectations and the focus on a development package proved instrumental in ensuring the ministerial’s success.

The meeting itself

Inevitably, agriculture proved to be the principal fault line among members (and was seen as the key to the meeting’s success), with development, NAMA, and services also figuring prominently. Despite efforts to emphasise that the drafting and redrafting of texts was a ‘bottom-up’ (that is, member-led) process, the DG, Secretariat, and the facilitators⁵ again came in for criticism for their role in shaping discussions. The pursuit of negotiating leverage encouraged grand coalition building as existing groups sought to bolster their strength by combining with others (as was the case with the coming together of the G20, the Group of 33 (G33), and the Group of 90 (G90) to form a self-styled but largely unconvincing Group of 110 – G110).⁶ Ad hoc groupings of members emerged on specific issues, most notably the ‘friends of ambition’ and the NAMA 11 in the industrial goods negotiations.⁷ And politics and grandstanding between key protagonists were played out during press briefings.

The negotiations followed a familiar pattern. Discussions began with intensity only on the third and fourth days and were concluded after the obligatory around-the-clock meetings. Green Room meetings continued to form the basis of negotiations – albeit that they were renamed gatherings of the ‘chairman’s consultative group’. The smallest and most vulnerable members continued to populate their delegations with fo...

Table of contents

• Cover
• Title
• Copyright
• Contents
• List of illustrations
• Notes on contributors
• Acknowledgements
• List of Abbreviations
• PART I. Setting the scene
• PART II. Key issues
• PART III. Principal players
• PART IV. Fairness and legitimacy
• PART V. Concluding the Round
• Index