Doha Development Round - Entering a Critical Phase

Mike Moore  (former Prime Minister of New Zealand and former Director-General of the World Trade Organisation)

In December, trade ministers will assemble in Hong Kong for a critical meeting that should advance the negotiations to conclude the Doha Development Round of trade talks. We launched the Doha Round when I was director-general of the World Trade Organisation, and it was to be an ambitious agenda with development issues at its core.

Since then, deadlines have been missed and a ministerial meeting in Cancun, Mexico, fell apart in an unseemly manner. Headlines always rage "Trade talks in danger", saying that multilateralism is becoming irrelevant. This is normal: no trade round has ever come in on time and none has totally failed.

However, the Doha negotiations are now at a critical phase. If the Hong Kong meeting were successful, it could provide the confidence and momentum necessary to conclude the round next year.

Next year would be several years late, but if the deal is not done, other unpredictable political factors could come into play. The US president negotiates under legislative authority from Congress, which will expire. Then there are elections in France, where right-wing candidates are trying to outflank the leftists to position themselves as the most nationalistic foes of globalisation.

Major players will be talking again this week. Unless they can move closer towards an understanding, it is hard to see how much substantial progress can be made before ministers assemble in Hong Kong.

There is now a new group, the Group of 20, lead by Brazil, India, China and South Africa. If they can bury and accommodate their many differences, they could form a useful, disciplined position. And so, with the European Union, the United States, Japan, the G20 and sometimes Australia, we would have a core group that, when agreement is close, could fan out and sell the agenda to others.

The short-term future of the round is being held hostage to those who have vastly different views of what the EU should be. The French are leading the charge against agricultural reform, and hiding behind them are other farm subsidisers. This round will go nowhere, nor should it, if reform is not advanced in that area.

American, European and Japanese consumers are robbed blind by subsidies that make food dearer and reduce choice. Rich countries spend over US$1 billion a day in subsidies. These policies are bad for rich-country consumers and poor-country producers. Agreement on agriculture will be a deal breaker or a deal maker.

At the WTO, they say nothing is agreed until everything is agreed. Therefore, look for pressure to advance issues such as geographic indicators, where Europeans want to own the rights to the names of some wines, cheeses and hams as a trade-off.

We stopped a clause calling for special treatment for sensitive products during the Uruguay Round, but now it has reappeared. This has the potential to be a show-stopping loophole.

Look for pressure on developing countries to make some openings in service-sector areas such as investment, communications and rules on facilitating trade. Carefully constructed, this could widen the agenda and allow the EU to demonstrate to its members that there is enough in this for everyone.

More than multilateralism is at stake; more than an open trading system that has given the world its most sustained and successful period of global growth is at risk. The alternatives are dangerous.

Last week I was cautiously optimistic; this week I am cautiously pessimistic.

(Originally appeared in the October 25, 2005 issue of South China Morning Post in Hong Kong, reproduced here with permission.)