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What Happened at Doha?

What Happened at Doha?

India has been singularly successful in achieving its objectives in Doha - in securing primacy for implementation problems, in bringing the anti-dumping agreement to the negotiating table, in getting a waiver from the agreement on TRIPS in times of public health emergencies and creating the opportunity for protection of geographical indications and traditional knowledge, in ensuring exemption for integrated textile products from anti-dumping action and the negotiation of textile tariff peaks, in keeping core labour standards out of the purview of WTO and in postponing negotiations on the four Singapore issues. The only area where it had to compromise to some extent was in respect of trade and environment.

The WTO’s fourth ministerial meeting at Doha in Qatar, compared with the previous one, was more orderly and fruitful. It was orderly because the hooligans in the streets were not allowed to disrupt its deliberations. It was fruitful because it succeeded in launching, at least formally, global negotiations on world trade in accordance with its mandate. Otherwise the meeting proceeded in the traditional fashion of the WTO. There was a wide gap in the positions of the main participants to begin with. The members made formal presentations of national aspirations and positions, mostly for public consumption. Simultaneously, interested groups got together on the margins to reconcile divergent views. Slowly, with mutual give and take, most of the differences were resolved until a hard core of outstanding issues defied solutions. This was the situation at Doha from November 9 to 13. Then a small number of relevant countries engaged themselves behind closed doors on November 14 in a battle of attrition. There was no agreement in sight and India was holding out all by itself. The participants employed the ancient modalities of negotiations. They used trade-offs, carrots and sticks, and blatant bullying and arm-twisting to produce a compromise solution 18 hours after the deadline. Only the wise men, whose sole experience is bargaining over the price of brinjals with street hawkers, tend to imagine that multilateral negotiations with its panoply of sinister tricks could take place for the sake of transparency in the full glare of international publicity.

The ministers approved at Doha what they called “a broad and balanced” work programme. It consists of commitments to start negotiations in the services sector and for liberalisation of agricultural trade as well as on issues related to the implementation of certain Uruguay Round agreements. In addition, the work programme envisages future negotiations on trade and investments, trade and competition policy, transparency in government procurement and trade facilitation. There would also be narrowly defined negotiations on trade and environment.

The GATT had earlier used the phrase ‘work programme’ in 1982. The United States had pushed at that time for wide-ranging negotiations on a number of subjects that were unknown in the GATT. Its members baulked at giving the green signal for beginning negotiations in these unfamiliar areas. Instead, the ministers in the 1982 Declaration agreed on a work programme of detailed examination of several issues. This examination eventually prepared the ground for the launch of the Uruguay Round. It would not be quite appropriate to designate the Doha Declaration as the beginning of a new round. The negotiations on agriculture and services were already provided for in the concerned agreements of the Uruguay Round. That is why these two items are described as the ‘built-in agenda’. Similarly, the negotiations on the implementation issues are likely to involve some strengthening and further elaboration of the Uruguay Round agreements. The consideration of the new subjects has been pushed into the future, after a positive decision by the next ministerial meeting two years hence.

There was wide disagreement among the WTO members on the agenda for negotiations from the beginning. The EU had a selfish interest in packing it with as many items as possible. It knew that it would be under pressure to reform its Common Agriculture Policy and dismantle its protectionist edifice. Failure to do so might lead to the collapse of the negotiations. A broader agenda would be of help in spreading the blame for failure on others facing difficulties in non-agriculture sectors. With a broader agenda, it might also gain some benefits elsewhere to compensate for the losses in agriculture. The United States initially did not favour a comprehensive agenda but it veered round to the EU in order to maintain solidarity among the industrialised countries. The developing countries, on the other hand, had always argued in favour of essential negotiations limited to an agenda consisting of the built-in items, the implementation issues and further reduction of industrial tariffs. India had strongly pushed this approach, which is largely reflected in the Doha output.

The results of the Doha meeting are contained in two declarations and a decision. The main declaration contains the objectives and parameters of the subjects for immediate and future negotiations. The second declaration permits the member countries to override corporate patents during public health emergencies. The decision specifies certain aspects of implementation of particular agreements that need urgent attention.

 

Doha Declaration

The Doha Declaration (if the main one can be so described for the sake of convenience) in listing the subjects for negotiations provides pride of place to the implementation issues as demanded by India and other developing countries from the outset. These issues, mostly of interest to the developing countries, are detailed in the decision. Among the principal implementation aspects, the decision recognises that the terms for invocation of safeguards under Article XVIII of the GATT by the developing countries should be less onerous than the corresponding ones under Article XII for safeguarding balance of payments. It urges restraint in challenging the measures of domestic support in the agriculture sector notified by the developing countries for promoting rural development and food security. The decision also interprets and suggests further actions on several provisions contained in the Agreement on Sanitary and Phytosanitary Measures and Agreement on Technical Barriers to Trade. It further suggests, among other things, extension of the transitional period for the developing countries for implementing the agreements on trade-related investment measures, on customs valuation and on subsidies.

India achieved a major success in getting the anti-dumping agreement on the negotiating table in the face of intense American opposition. This agreement was meant to deal with unfair trade in goods that are dumped at prices below their cost of production. The United States had reopened the negotiated text of this agreement at the eleventh hour in the Uruguay Round and had insisted on diluting its disciplines. Since then the Americans as well as the Europeans have persistently misused it as a ‘tool of naked protection’. The EU, for example, having terminated an investigation for want of evidence of dumping, restarted the process after two days and proceeded to levy provisional duties. After some months the duties were removed when no evidence of dumping was found but the investigations were started again after four days. The Doha decision prescribes that investigations cannot be restarted after negative findings within a year unless the circumstances have changed. Thus a major type of trade harassment would be substantially curbed. It further directs the concerned WTO body to take precise steps for implementing the mandatory provision of special regard for developing countries, to specify a time frame for determining the volume of dumped imports, and to improve the annual reviews of the working of the agreement. The Doha Declaration also endorses the conduct of negotiations for clarifying and improving disciplines of the agreement.

Another principal concern of the developing countries was the implementation of the textile agreement, which provided for the elimination of quotas by integration of textile products into GATT. The restraining countries have postponed the integration and removal of the bulk of the quotas to the last day of the agreement. The developing countries have been urging for an early and more evenly spaced programme of integration. It was, however, known that, given the political power of the textile lobbies in the major importing countries, there was hardly any chance of modifying the integration programmes at this time. The developing countries, nevertheless, managed to wrest a commitment in the Doha Decision that anti-dumping investigations will not be started for two years following the integration of the restrained products. This would be of significant advantage because the major importing countries are already resorting to anti-dumping actions even for the products that are restrained by quotas. There is also the possibility of securing some procedural and methodological improvements in the working of the textile agreement.

Of the two built-in agenda items, the negotiation on services was never controversial. The General Agreement on Trade in Services, negotiated in the Uruguay Round, contained a direction to begin negotiations within five years of its entry into force for further liberalisation of services trade. The concerned WTO Council has prepared the guidelines and procedures for the negotiations. It has also collected a number of proposals for liberalisation from the member countries. The Doha Declaration gives the go-ahead for the commencement of the process and requires the participants to submit specific proposals by the middle of 2002.

The agriculture sector is fairly well protected in most of the countries, not only in Europe and the United States but also in Japan and Korea. The EU in its Common Agriculture Policy (CAP), however, has constructed the most extensive and formidable protective system. It encourages maximisation of production. It buys the surplus production at inflated prices and creates mountains of beef and butter and lakes of wine and olive oil. It unloads the surplus with heavy subsidies on international market at less than world prices. It protects its own market with high tariffs topped by a unique type of variable levies. It creates the maximum distortions in the world market. EU has consistently opposed all attempts at liberalisation of agriculture trade. The Tokyo Round of the 1970s was to deal with this sector but the EC declared that its CAP was not negotiable and the agriculture negotiating group did not meet at all. The EU continued to stall in the Uruguay Round also but at least a beginning was made in the agriculture agreement for limiting domestic support and export subsidies. That agreement also provided for the negotiation of further liberalisation after the initial period of six years. The Cairns Group, consisting of the United States and other leading agriculture exporters from among the developed as well as developing countries, has been agitating for greater movement towards the dismantling of the protective system. They have suffered for decades by the distortions created by EU in the world market. The Doha Declaration prescribes “comprehensive negotiations aimed at substantial improvements in market access; reduction of, with a view to their phasing out, all forms of export subsidies; and substantial reductions in trade-distorting domestic support”. The international community obtained this mandate at a cost. The EU, under French inspiration, secured a trade-off for agreeing to reduction of farm subsidies with negotiations on trade and environment. It also won a commitment on future negotiations on foreign investments.

Reduction of industrial tariffs has been the traditional field for negotiations in the GATT since its very inception in 1947. Through successive rounds of bargaining, the average tariff for industrial products in the developed countries has been brought down from 40 per cent in 1947 to slightly less than 4 per cent at the end of the Uruguay Round. This low average, however, conceals high tariff profiles and several peaks, mostly in sectors of interest to the trade of the developing countries. The average tariff for textiles, for example, in all the developed countries is 12 per cent, three times the average of 4 per cent for industrial products. The average for the clothing segment is even higher than this. The tariff peaks are a speciality of the United States and they are mostly found in the textile sector. Pullovers of man-made fibres, for example, attract an abnormally high duty of 32 per cent while most of the woollen goods have tariffs of 25 per cent or more. The Doha Declaration rightly stresses the objective of reduction or elimination of tariff peaks, high tariffs and tariff escalations on products of export interest to the developing countries.

 

TRIPS and Health Emergencies

Perhaps the most important and the most radical result of the Doha meeting was its declaration on intellectual property rights and their relationship with public health problems. The developing countries, particularly India, have never been happy with TRIPS and its application to pharmaceutical patents. They always feared that this agreement would raise the price of medicines in their countries and they will be at the mercy of the giant drug-producing enterprises. Their agitation has now paid off even though arrayed against them were the United States, Britain, Germany and Switzerland. The Doha Declaration permits overriding corporate patents to provide cheap drugs to deal with AIDS, tuberculosis, malaria and other epidemics. The developing countries were helped to some extent by the softening of the opposition from the United States when it felt the need to disregard the patent to deal with the threat from anthrax. The declaration also provides for negotiations to extend protection of geographical indication to products other than wine and liquors. This is of particular importance to India in protecting its special variety of Basmati rice, Darjeeling tea and other such products. Another area of Indian interest is the protection of traditional knowledge and folklore because several American firms have been engaged in the piracy of patents for age-old products like neem, turmeric, etc.

The subject of trade and environment has been a matter of controversy in the WTO almost from its beginning. There is a genuine fear among the developing countries that the linking of trade with protection of environment was intended for imposing sanctions on competitive suppliers. The rich countries have damaged the environment beyond repair during the past century of industrial development. And now they are proposing stringent standards with the intention of visiting failures in their observance by trade sanctions. The developing countries at Doha have been opposing substantive work on this issue in the WTO. The situation changed dramatically when the EU agreed to lift their veto on the reduction of farm subsidies provided the WTO takes up environment. The Americans who were opposed to any negotiations on the relationship between the environmental agreements and the WTO fell in line in a gesture of flexibility to the EU. India also had its trade-off on the side because it viewed the declaration on public health as more important.

Both India and the United States took a hand in circumscribing the scope of the negotiations in the Doha Declaration. They would be limited to the relationship of actual trade obligations in the specific environmental agreements to existing WTO rules and would not cover measures that are not provided in those agreements. Moreover, the results of the negotiations would apply only to those members of the WTO who are signatories of the environmental agreements as well. The declaration directs the existing WTO committee to pursue its work under the current terms of reference, paying particular attention to the impact on market access, relevance of TRIPS, and labelling requirements and report to the next ministerial session. This is indeed a very narrowly defined agenda, which should not allow the use of environmental concerns for protectionism purposes. Nevertheless it is the thin end of the wedge that could cause mischief in future.

With progressive liberalisation of trade policy and minimisation of the possibility of misusing trade laws for purposes of protectionism, the rich countries have been seriously engaged in devising and evolving new methods. The use of trade sanctions for the protection of environment was one possibility. The use of trade sanctions for the non-observance of core labour standards was another. The intention in both these concepts was to augment the cost of production in the developing countries by imposing stringent standards so as to erode their comparative advantage. The argument of the developed countries was that inadequate labour standards permit ‘social dumping’ against which they should be protected. The counter argument was that the observance of minimum labour standards is certainly desirable and should be pursued in the ILO, which is the proper institution for the purpose. The WTO should not be converted into a superbody to monitor and enforce the implementation of diverse regulations. The first ministerial meeting held at Singapore in 1996 had “rejected the use of labour standards for protectionist purposes” and had left the enforcement of the standards to the ILO. In spite of this categorical decision, this issue crops up perennially. The Doha Declaration reaffirms the Singapore decision at the instance of India and other developing countries.

The Doha Declaration contains dubious decisions on the four so-called Singapore issues. In the first ministerial meeting of 1996, the WTO had established four working groups to examine the relationship between trade and investment; to study interaction between trade and competition policy; to study transparency in government procurement practices; and to undertake exploratory and analytical work on the simplification of trade procedures. The developed countries insisted on a decision at Doha to begin negotiations on these issues. This was stoutly opposed by India, which held up the adoption of the Doha Declarations for 10 hours. Finally an ambiguous text was accepted that provides for negotiations after the fifth ministerial meeting “on the basis of a decision to be taken, by explicit consensus”, on the modalities of negotiations. It seems to be a compromise between no negotiations and actual negotiations at a later date. A literal interpretation of the convoluted language in simple terms would mean that participants have agreed at Doha to begin negotiations on the four issues after the fifth session where an explicit decision would be necessary on modalities of negotiations. India succeeded in obtaining a statement from the conference chairman clarifying that “a decision would indeed need to be taken by explicit consensus before negotiations on Singapore issues could proceed”. The chairman emphasised that his statement was made on behalf of the WTO and did not represent a personal statement. The Indian commerce minister stressed that this statement ensures no negotiations will start on the Singapore issues until India agrees but that the WTO may continue to study the issues.

The Doha session has also agreed to establish two new working groups to examine firstly, the relationship between trade, debt and finance and secondly, the relationship between trade and transfer of technology.

 

Admirable Performance

The Doha declaration has set an ambitious target of completing the negotiations by January 1, 2005. It would largely depend upon the American administration’s success in persuading the Congress to grant fast track authority. Without such an authority, no country would be prepared to sit on the negotiating table with the United States. In the past even after the formal launching of the Tokyo Round, negotiations were considerably delayed as the Congress held back the authority until Nixon resigned. Similarly, in the midst of the Uruguay Round during the time of the elder Bush, the negotiations were suspended until the administration secured the renewal of the authority from the Congress. Presently, there are powerful lobbies of steel and textile interests in the Congress, which are unhappy with the Doha deal on anti-dumping. The Congressional honeymoon with the Texan upstart seems to be waning as evident from the slender majority in favour of the authority in the lower House. There could be problems for the bill in the Senate where the Democrats have a majority.

India has been singularly successful in achieving its objectives in Doha. It has secured primacy of position for the implementation problems that it has been stressing in the negotiations. It has succeeded in bringing the anti-dumping agreement to the negotiating table against powerful opposition. It has managed to get not only a waiver from the TRIPS for cheap medicines overriding patents in times of public health emergencies but also created the opportunity to deal with its other concerns of geographical indications and the protection of its traditional knowledge. It has ensured the exemption for integrated textile products from anti-dumping actions and the negotiation of textile tariff peaks. It has kept the core labour standards out of the purview of the WTO. It has successfully postponed the negotiations on the four Singapore issues, which cannot be started without its explicit consent. The only area where it had to compromise to some extent from its original premise was in respect of trade and environment. It has achieved all this almost single-handedly. The other developing countries usually combine with India in the hope of benefiting from its intransigence to secure bilateral deals before deserting. It was the same this time; India was left by itself in the closing stages to protect its own interests and those of the developing countries. Among them, India is the only one that has the stature and strength to stand alone.

This admirable performance was made possible by the combination of talents at the official and political levels. India has always fielded teams of extremely competent officials to prepare the ground. Ambassadors Bhagirath Lal Das and Bal Kishen Zutshi in the past and S Narayanan at present have earned the esteem and respect of their compeers for their knowledge of the negotiating subjects and skills in commercial diplomacy. The weakness was at the political level. This time commerce minister Maran, unlike his white-capped predecessors, had fully mastered his brief, was forcefully articulate in presentation and had the guts to stick to his position. Such a defence of national interests should have earned him encomiums anywhere. But in India he was criticised by the press, the political parties and various NGOs. We are congenitally incapable of being united in protecting national interest. This has been the unvaried pattern from the time of Alexander’s invasion before Christ to the terrorist attack on parliament a week ago.

 

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