International Trade Law

MULTILATERAL TRADE NEGOTIATIONS

TOPIC: MULTILATERAL TRADE NEGOTIATIONS

Submitted to: Mr. BISHWANAND DUBEY

Submitted by:SHUBHANGI PANDEY 17GSOL101027 17101027 LLB HONS. 5TH SEM

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MULTILATERAL TRADE NEGOTIATIONS

TABLE OF CONTENTS ACKNOWLEDGEMENT 1. INTRODUCTION.....................................................................................................1 2. MULTILATERAL TRADE NEGOTIATIONS – NEED AND IMPORTANCE........................................................................................................3 a. PURPOSE OF TRADE NEGOTIATIONS 3. URUGUAY ROUND OF TRADE NEGOTIATIONS.......................................................5 a. HISTORY b. ACHIEVEMENTS c. CRITICISM d. IMPLICATION ON DEVELOPING

NATIONS

4. DOHA ROUND OF TRADE NEGOTIATIONS.............................................................9 a. BEFORE DOHA b. DOHA, 2001 c. CANCUN, 2003 d. GENEVA, 2004 e. PARIS, 2005 f. HONG KONG, 2005 g. GENEVA, 2006 h. GENEVA, 2006 i. ISSUES i. AGRICULTURE ii. PATENTED MEDICINES iii. DIFFERENTIAL TREATMENT iv. IMPLEMENTATION ISSUES j. BENEFITS 5. CONCLUSION......................................................................................................16

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BIBLIOGRAPHY

INTRODUCTION

The World Trade Organization (WTO) and its predecessor, the General Agreement on Tariffs and Trade (GATT), have been the pillars of the multilateral trading system for the last half century. Based on liberal economic theories that assert a connection between open trade and economic growth, the WTO has sought to promote the liberalization of world trade, has enforced a set of commonly agreed trade rules and regulations and has served as a forum to settle international trade disputes. In order to promote the dismantling of trade barriers, the WTO has relied on successive rounds of multilateral trade negotiations and a set of firm principles, like the “Most Favored Nation” principle, that outlaw discrimination between trading partners. This system has allowed all WTO members to benefit from an across-theboard reduction in trade barriers, has prevented great power competition for market shares, and has sought to provide less developed countries with a fairer negotiation position. However, with the seeming failure of the last round of trade negotiations and a move by its largest members – the European Union and the United States – towards bilateral trade negotiations, the multilateral trading system seem increasingly challenged. Today’s multilateral trading system was originally conceived at the 1944 Bretton Woods Conference as an antidote to the trade protectionism policies that contributed to the Great Depression of the 1930s. Its first expression was the General Agreement on Tariffs and Trade (GATT), which was adopted in 1947 by twenty-three founding members. The GATT’s stated aims were to increase international trade by promoting lower trade barriers and providing a framework for international trade negotiations. Between 1947 and 1994, the GATT initiated a total of eight rounds of tariff reductions, leading to a substantial liberalization of world trade. The last round of trade negotiations – the so- called Uruguay Round, which lasted from 198694 – established the World Trade Organization (WTO), which now consists of 149 member states and enforces a wide set of rules governing international trade relations. Successive rounds of multilateral trade negotiations have led to the present trading system that combines low global tariffs on manufactured goods with considerable tariff barriers on most agricultural goods and services.

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MULTILATERAL TRADE NEGOTIATIONS

In the course of the Uruguay Round, GATT member states made a first step to liberalize trade in non-manufactured goods. This included agreements on trade in agricultural goods, trade in services, special agreements on textile and clothing and agreements on several nontariff impediments to trade, such as trade-related aspects of international property rights (TRIPS). In addition, a new dispute settlement mechanism was created to govern trade disputes between WTO member states. For all its successes, the outcome of the Uruguay Round proved unsatisfactory to many of the less developed countries (LDCs). Many LDCs had hoped that the Uruguay Round would finally lead to greater tariff concessions on agricultural products and a reduction of non-tariff barriers. During the Uruguay Round, however, these countries were too divided amongst themselves to make their demands heard. As a result, they failed to achieve their bargaining objectives and many primary commodities and processed materials remained subject to tariff restrictions. The most they were able to obtain was the promise of a future review of the current arrangements. Opening a new round of multilateral trade negotiations after the success of the Uruguay Round did not prove easy. The EU, the US, Japan, and agricultural exporters from the Cairns Group1 were divided on issues of export subsidies and import restrictions on agricultural products. The first attempt to open a new round of trade negotiations was made at the November 1999 WTO Seattle Summit. In the end, the Seattle Summit failed amidst violent street protests and the reluctance of developing countries to accept a US proposal that would have made any further trade access conditional on the observation of international labour standards. The failure of the WTO ministerial conference in Seattle indicated for the first time a shift in the established balance away from an EU-US dominated trading system. After Seattle, the divisions between WTO members continued to deepen. Nevertheless, the opening of a new round of multilateral trade negotiations at Doha in November 2001 was made possible by two new factors, both sparked by the terrorist attacks of 9/11. First, following the September 11 attacks, the industrialized countries of the West became increasingly worried about an emerging nexus of terrorism and underdevelopment, and sought a new ‘development round’ as a panacea. Second, developing countries feared a turn towards protectionism and hoped that the new geopolitical climate would prove more fortuitous for negotiations.

The Cairns Group is an interest group of 18 agricultural exporting countries, composed of Argentina, Australia , Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Guatemala, Indonesia, Malaysia, New Zealand, Pakistan, Paraguay, the Philippines, South Africa, Thailand, and Uruguay 1

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MULTILATERAL TRADE NEGOTIATIONS NEED AND IMPORTANCE The Multilateral Trade Negotiations (MTNs) were launched under the auspices of the General Agreement on Tariffs and Trade (GATT) in September 1973 at a ministerial meeting held in Tokyo, where the well known Tokyo Declaration was adopted, setting out the objectives and areas of the negotiations. The negotiations aimed at achieving the expansion and ever greater liberalisation of world trade through the progressive dismantling of obstacles to trade and the improvement of the international framework for the conduct of world trade. One of the commitments of the Tokyo Declaration was to secure additional benefit for the international trade of developing countries so as to achieve a substantial increase in their foreign exchange earnings, the diversification of their exports, the acceleration of the rate of growth of their trade, taking into account their development needs, an improvement in the possibilities for these countries to participate in the expansion of world trade, and a better balance as between developed and developing countries in the sharing of the advantage resulting from this expansion. The Tokyo Declaration further embodied a recognition of the importance of applying special and more favour able treatment to developing countries where feasible and appropriate. The MTNs constitute a comprehensive and massive undertaking, cover a multiplicity of extremely complex legal and technical issues, involve a large number of governments with divergent interests, and have produced several codes, agreements and exchanges of concessions in tariff and non-tariff fields. Since the end of the Second World War, successive rounds of multilateral trade negotiations have succeeded in reducing global tariff barriers and helped to establish the foundations of today’s interconnected, global economy. Indeed, the rapid growth of trade and prosperity the world has experienced over the last half century would have been unthinkable without broad international support for the rules of this system. However, with the collapse of the latest round of multilateral trade negotiations – the Doha Development Round – in July 2006, and the turn of both the United States and the European Union towards bilateral rather than multilateral trading arrangements, the future of the global trading systems appears to be challenged. This brief will assess the underlying reasons for the collapse of the Doha 5|

MULTILATERAL TRADE NEGOTIATIONS

Development Round and speculate on the future impact its collapse might have on the multilateral trading system

PURPOSE OF TRADE NEGOTIATIONS Some economists believe that it is difficult to make economic sense of trade negotiations. Krugman, for example, writes: “If economists ruled the world, there would be no need for a World Trade Organization. The economist's case for free trade is essentially a unilateral case - that is, it says that a country serves its own interests by pursuing free trade regardless of what other countries may do.” Other economists, however, reject this view. One idea is that trade negotiations help countries escape a terms-of-trade driven prisoner’s dilemma. Recall that the optimal import tariff of a large country is positive, since the terms-of-trade gain dominates the deadweight loss for a sufficiently small tariff. Recall also that one country’s terms-of-trade gain is the other country’s terms-of-trade loss so that the optimal tariff is a beggar-thy-neighbour policy. Consider now two symmetric countries and two symmetric industries. Trade flows in one direction in one of the industries and in the other direction in the other industry. Both countries have an incentive to impose an optimal tariff in their respective importcompeting industry in order to gain at the other country’s expense. Both countries are worse off as a result of this since the terms-of-trade gains cancel across industries so that the optimal tariffs only result in deadweight losses. Both countries could benefit from reciprocal trade negotiations. This can be stated rigorously in terms of game theory. Imposing an optimal tariff is a dominant strategy for each country so that both countries do so in the Nash equilibrium. However, this Nash equilibrium is inefficient so that both countries are trapped in a prisoner’s dilemma. This inefficiency then creates incentives for cooperative tariff setting. Harvard and Princeton economists Elhanan Helpman and Gene Grossman have shown that this argument is robust to including political economy considerations: the non-cooperative equilibrium remains inefficient since tariffs entail a terms-of-trade externality. Stanford economists Kyle Bagwell and Robert Staiger have shown that it is also consistent with the ATT’s institutional design: the principles of reciprocity and non discrimination help countries internalize the terms of-trade externality.

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THE URUGUAY ROUND OF TRADE NEGOTIATIONS

The Uruguay Round was the 8th round of multilateral trade negotiations (MTN) conducted within the framework of the General Agreement on Tariffs and Trade (GATT), spanning from 1986 to 1994 and embracing 123 countries as ‘contracting parties’. The Round led to the creation of the World Trade Organization, with GATT remaining as an integral part of the WTO agreements. The broad mandate of the Round had been to extend GATT trade rules to areas previously exempted as too difficult to liberalize (agriculture, textiles) and increasingly important

new

areas

previously

not

included

(trade

in services, intellectual

property, investment policy trade distortions)2. The Round came into effect in 1995 with deadlines ending in 2000 (2004 in the case of developing country contracting parties) under the administrative direction of the newly created World Trade Organization (WTO). The Doha Development Round was the next trade round, beginning in 2001 and still unresolved after missing its official deadline of 2005.

HISTORY The round was launched in Punta del Este, Uruguay in September 1986, followed by negotiations in Geneva, Brussels, Washington, D.C., and Tokyo, with the 20 agreements finally being signed in Marrakesh—the Marrakesh Agreement—in April 1994. The 1982 Ministerial Declaration identified problems including structural deficiencies, spillover impacts of certain countries' policies on world trade GATT could not manage. To address these issues, the eighth GATT round (known as the Uruguay Round) was launched in September 1986, in Punta del Este, Uruguay3. It was the biggest negotiating mandate on trade ever agreed: the talks were going to extend the trading system into several new areas, notably trade in services and intellectual property, and to reform trade in the sensitive sectors of agriculture and textiles; all the original GATT articles were up for review4. Cline, William (January 1995). "Evaluating the Uruguay Round". The World Economy 18 P. Gallagher, The First Ten Years of the WTO, 4 4 UNDERSTANDING THE WTO: THE DOHA AGENDA". World Trade Organization. Retrieved 8 April 2013 2 3

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The round was supposed to end in December 1990, but the US and EU disagreed on how to reform agricultural trade and decided to extend the talks 5. Finally, In November 1992, the US and EU settled most of their differences in a deal known informally as "the Blair House accord", and on April 15, 1994, the deal was signed by ministers from most of the 123 participating governments at a meeting in Marrakesh, Morocco6. The agreement established the World Trade Organization, which came into being upon its entry into force on January 1, 1995, to replace the GATT system. It is widely regarded as the most profound institutional reform of the world trading system since the GATT's establishment7.

ACHIEVEMENTS The GATT still exists as the WTO's umbrella treaty for trade in goods, updated as a result of the Uruguay Round negotiations (a distinction is made between GATT 1994, the updated parts of GATT, and GATT 1947, the original agreement which is still the heart of GATT 1994)8. The GATT 1994 is not, however, the only legally binding agreement included in the Final Act; a long list of about 60 agreements, annexes, decisions and understandings was adopted. In fact, the agreements fall into a simple structure with six main parts: a. An umbrella agreement (the Agreement Establishing the WTO); b. Goods and investment (the Multilateral Agreements on Trade in Goods including the

GATT 1994 and the Trade Related Investment Measures (TRIMS)); c. Services (General Agreement on Trade in Services (GATS)); d. Intellectual property (Agreement on Trade-Related Aspects of Intellectual Property

Rights (TRIPS)); e. Dispute settlement (DSU); f. Reviews of governments' trade policies (TPRM). The agreements for the two largest areas under the WTO, goods and services, share a threepart outline:

A. Bredimas, International Economic Law, 16 Even after agreement was reached in December 1993, and the Final Act was signed, the effort almost foundered in the US Congress, and the member states engaged in a quarrel for close to a year about who would be the first Director General of the WTO (A.F. Lowenfeld, Preface, ix). 7 Kay, Adrian and Ackrill, Robert (2009) Institutional Change in the International Governance of Agriculture: A Revised Account, Governance 22.3: 483–506 8 P. Gallagher, The First Ten Years of the WTO, 4 * The Uruguay Round, World Trade Organization 5 6

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MULTILATERAL TRADE NEGOTIATIONS a. Broad principles (such as the General Agreement on Tariffs and Trade and General

Agreement on Trade in Services); b. Extra agreements and annexes; c. Lengthy schedules (lists) of commitments made by individual countries. One of the achievements of the Uruguay round would be the Uruguay Round Agreement on Agriculture, administered by the WTO, which brings agricultural trade more fully under the GATT. Prior to the Uruguay Round, conditions for agricultural trade were deteriorating with increasing use of subsidies, build-up of stocks, declining world prices and escalating costs of support9. It provides for converting quantitative restrictions to tariffs and for a phased reduction of tariffs. The agreement also imposes rules and disciplines on agricultural export subsidies, domestic subsidies, and sanitary and phytosanitary (SPS) measures through the Agreement on the Application of Sanitary and Phytosanitary Measures

CRITICISM Groups such as Oxfam have criticized the Uruguay Round for paying insufficient attention to the special needs of developing countries. One aspect of this criticism is that figures very close to rich country industries—such as former Cargill executive Dan Amstutz—had a major role in the drafting of Uruguay Round language on agriculture and other matters. As with the WTO in general, non-governmental organizations (NGOs) such as Health Gap and Global Trade Watch also criticize what was negotiated in the Round onintellectual property and industrial tariffs as setting up too many constraints on policy-making and human needs. An article asserts that the developing countries’ lack of experience in WTO negotiations and lack of knowledge of how the developing economies would be affected by what the industrial countries wanted in the WTO new areas; the intensified mercantilist attitude of the GATT/WTO’s major power, the US.; the structure of the WTO that made the GATT tradition of decision by consensus ineffective, so that a country would not preserve the status quo, were the reasons for this imbalance10.

Tanner, Carolyn (April 1996). "AGRICULTURAL TRADE LIBERALISATION AND THE URUGUAY ROUND". Australian Journal of Agricultural and Resource Economics 40 (1): 1. doi:10.1111/j.14678489.1996.tb00726.x. Retrieved 8 April 2013. 10 Finger, J. Michae; Julio J. Nogués (March 2002). "The Unbalanced Uruguay Round Outcome: The New Areas in Future WTO Negotiations". The World Economy 25 (3): 321. doi:10.1111/1467-9701.00435. Retrieved 8 April 2013. 9

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IMPLICATIONS ON DEVELOPING COUNTRIES The Uruguay Round that preceded the present Doha Round was the eighth round of the trade negotiations. This was one of the longest rounds of trade talks so far in the history of trading regime. It was even suggested that this round would end all the rounds by bringing in even all the original GATT articles to review. The Uruguay Round began in 1 986 at Punta del Este, Uruguay, and ended in 1 994 at Marrakesh. Besides the traditional issues, this round for the first time took up new issues- Services, TRIPS and TRIMS- for negotiations. Also, this round witnessed one of the most comprehensive discussions on many important issues, which had dogged the world community for quite long time - textiles and agriculture. These two issues have been eluding the international community for quite long time due to various reasons; and specifically because of the apathetic attitude of the developed countries. While agriculture was dogged by protectionist measures, textiles trade was conducted under peculiar arrangement called Multi Fibre Agreement, which was in contravention of the GATT principle. In any case, a whole of series of these items came on the board for phasing out the distortions in trade. Still important, this round gave the final legal sanction for the creation of the World Trade Organization replacing the ad hoc body, GATT. One important dimension of this round was that for the first time the developing countries projected their position with more of aggression than in the previous rounds. The three important actors like the U.S., EEC and Japan were no way calling the shots all the while, as the developing countries worked in compact with respect to various issues. As Denton and Laite suggested, " The way various groups, such as the Cairns Group11, and the Group of Ten12, were forcing their perspectives into the negotiating process suggested that the developing countries have graduated themselves from the status of bystanders to activists in the trading regime. As this author mentioned elsewhere, "Specifically, at the agenda-setting and rule-making stage, developing countries have played a very notable role in the Uruguay Round of negotiations.13"

Cairns Group is a coalition of fourteen agricultural exporting countries from both developed and developing countries. It consists of Argentina, Australia, Brazil, Canada, Chile, Colombia, Fiji, Hungary, Indonesia, Malaysia, New Zealand, the Philippines, Thailand, and Uruguay. 12 The Group of Ten was originally identified as "hard liner" countries. Argentina, Brazil, Cuba, Egypt, India, Nicaragua, Nigeria, Peru, Tanzania and Yugoslavia. However, Argentina withdrew from the group as negotiations progressed; while Yugoslavia was facing a bloody civil war. 13 dia and the GATT, op. cit. P.1 16. 11

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DOHA ROUND OF TRADE NEGOTIATIONS

The Doha Development Round or Doha Development Agenda (DDA) is the latest tradenegotiation round of the World Trade Organization (WTO) which commenced in November 2001 under

then

director-general Mike

Moore.

Its

objective

was

to

lower trade

barriers around the world, and thus facilitate increased global trade. Progress in negotiations stalled after the breakdown of the July 2008 negotiations over disagreements concerning agriculture, industrial tariffs and non-tariff barriers, services, and trade remedies14. The most significant differences are between developed nations led by the European Union (EU), the United States (USA), and Japan and the major developing countries led and represented mainly by India, Brazil, China, and South Africa. There is also considerable contention against and between the EU and the USA over their maintenance of agricultural subsidies—seen to operate effectively as trade barriers15. Since the breakdown of negotiations in 2008, there have been repeated attempts to revive the talks, so far without success. Intense negotiations, mostly between the USA, China, and India, were held at the end of 2008 seeking agreement on negotiation modalities, an impasse which was not resolved. In April 2011, then director-general Pascal Lamy "asked members to think hard about 'the consequences of throwing away ten years of solid multilateral work'." A report to the WTO General Council by Lamy in May 2012 advocated "small steps, gradually moving forward the parts of the Doha Round which were mature, and re-thinking those where greater differences remained." Adoption of the Bali Ministerial Declaration on 7 December 2013 for the first time successfully addressed bureaucratic barriers to commerce—a small part of the Doha Round agenda. However, as of January 2014, the future of the Doha Round remains uncertain.

BEFORE DOHA Before the Doha ministerial, negotiations had already been under way on trade in agriculture and trade in services. These ongoing negotiations had been required under the last round of multilateral trade negotiations (the Uruguay Round, 1986–1994). However, some Fergusson ps, Ian F. (18 January 2008). "World Trade Organization Negotiations: The Doha Development Agenda" (PDF). Congressional Research Service. Retrieved 26 July 2008. 15 Hanrahan, Charles; Randy Schnepf (22 January 2007). "WTO Doha Round: The Agricultural Negotiations" (PDF). Congressional Research Service. Retrieved 20 July2008. 14

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countries, including the United States, wanted to expand the agriculture and services talks to allow trade-offs and thus achieve greater trade liberalization. The first WTO ministerial conference, which was held in Singapore in 1996, established permanent working groups on four issues: transparency in government procurement,trade facilitation (customs issues), trade and investment, and trade and competition. These became known as the Singapore issues. These issues were pushed at successive ministerials by the European Union, Japan and Korea, and opposed by most developing countries. Since no agreement was reached, the developed nations pushed that any new trade negotiations must include the mentioned issues. The negotiations were intended to start at the ministerial conference of 1999 in Seattle, USA, and be called the Millennium Round but, due to several different events including protest activity outside the conference (the so-called "Battle of Seattle"), the negotiations were never started. Due to the failure of the Millennium Round, it was decided that negotiations would not start again until the next ministerial conference in 2001 in Doha, Qatar.

DOHA, 2001 The Doha round officially began in November 2001, committing all countries to negotiations opening agricultural and manufacturing markets, as well as trade-in-services (GATS) negotiations and expanded intellectual property regulation (TRIPS). The intent of the round, according

to

its

proponents, was

to make

trade

rules

fairer

for developing

countries. However, by 2008, critics were charging that the round would expand a system of trade rules that were bad for development and interfered excessively with countries' domestic "policy space"16.

CANCÚN, 2003 The Cancún ministerial collapsed for several reasons. First, differences over the Singapore issues seemed incapable of resolution. The EU had retreated on some of its demands, but several developing countries refused any consideration of these issues at all. Second, it was questioned whether some countries had come to Cancún with a serious intention to negotiate. In the view of some observers, a few countries showed no flexibility in their positions and only repeated their demands rather than talk about trade-offs. Third, the wide difference Statement By Civil Society Organisations on the WTO Negotiating Situation, and on Food And Financial Crises Accra, 2008 16

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between developing and developed countries across virtually all topics was a major obstacle. The U.S.-EU agricultural proposal and that of the G20 developing nations, for example, show strikingly different approaches to special and differential treatment. Fourth, there was some criticism of procedure. Some claimed the agenda was too complicated. Also, Cancún ministerial chairman, Mexico’s Foreign Minister Luis Ernesto Derbez, was faulted for ending the meeting when he did, instead of trying to move the talks into areas where some progress could have been made. The collapse seemed like a victory for the developing countries 17. The failure to advance the round resulted in a serious loss of momentum and brought into question whether the 1 January 2005 deadline would be met. The North-South divide was most prominent on issues of agriculture. Developed countries’ farm subsidies (both the EU’s Common Agricultural Policy and the U.S. government agro-subsidies) became a major sticking point. The developing countries were seen as finally having the confidence to reject a deal that they viewed as unfavorable. This is reflected by the new trade bloc of developing and industrialized nations: the G20. Since its creation, the G20 has had fluctuating membership, but is spearheaded by the G4 (the People's Republic of China, India, Brazil, and South Africa). While the G20 presumes to negotiate on behalf of all of the developing world, many of the poorest nations continue to have little influence over the emerging WTO proposals.

GENEVA, 2004 The negotiators in Geneva were able to concentrate on moving forward with the Doha Round. After intense negotiations in late July 2004, WTO members reached what has become known as the Framework Agreement (sometimes called the July Package), which provides broad guidelines for completing the Doha round negotiations. The agreement contains a 4page declaration, with four annexes (A-D) covering agriculture, non-agricultural market access, services, and trade facilitation, respectively. In addition, the agreement acknowledges the activities of other negotiating groups (such as those on rules, dispute settlement, and intellectual property) and exhorts them to fulfill their Doha round negotiating objectives. The agreement also abandoned the 1 January 2005 deadline for the negotiations and set December 2005 as the date for the 6th ministerial to be held in Hong Kong.

17

"The Cancún challenge". The Economist. 4 September 2003. Retrieved 3 August 2008.

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PARIS, 2005 Trade negotiators wanted to make tangible progress before the December 2005 WTO meeting in Hong Kong, and held a session of negotiations in Paris in May 2005. Paris talks were hanging over a few issues: France protested moves to cut subsidies to farmers, while the U.S., Australia, the EU, Brazil and India failed to agree on issues relating to chicken, beef and rice. Most of the sticking points were small technical issues, making trade negotiators fear that agreement on large politically risky issues will be substantially harder.

HONG KONG, 2005 The Hong Kong Convention Center, which was the site of the Sixth WTO Ministerial Conference. The Sixth WTO Ministerial Conference took place in Hong Kong, 13 to 18 December 2005. Although a flurry of negotiations took place in the fall of 2005, WTO director-general Pascal Lamy announced in November 2005 that a comprehensive agreement on modalities would not be forthcoming in Hong Kong, and that the talks would “take stock” of the negotiations and would try to reach agreements in negotiating sectors where convergence was reported. Trade ministers representing most of the world's governments reached a deal that sets a deadline for eliminating subsidies of agricultural exports by 2013. The final declaration from the talks, which resolved several issues that have stood in the way of a global trade agreement, also requires industrialized countries to open their markets to goods from the world's poorest nations, a goal of the United Nations for many years. The declaration gave fresh impetus for negotiators to try to finish a comprehensive set of global free trade rules by the end of 2006. Director-general Pascal Lamy said, "I now believe it is possible, which I did not a month ago."

GENEVA, 2006 The July 2006 talks in Geneva failed to reach an agreement about reducing farming subsidies and lowering import taxes, and negotiations took months to resume. A successful outcome of the Doha round became increasingly unlikely, because the broad trade authority granted under the Trade Act of 2002 to U.S. president George W. Bush was due to expire in 2007. Any trade pact would then have to be approved by the U.S. Congress with the possibility of amendments, which would hinder the U.S. negotiators and decrease the willingness of other 14 |

MULTILATERAL TRADE NEGOTIATIONS

countries to participate. Hong Kong offered to mediate the collapsed trade liberalisation talks. Director-general of Trade and Industry, Raymond Young, says the territory, which hosted the last round of Doha negotiations, has a "moral high-ground" on free trade that allows it to play the role of "honest broker".

GENEVA, 2008 On 21 July 2008, negotiations started again at the WTO's HQ in Geneva on the Doha round but stalled after nine days of negotiations over the refusal to compromise over the special safeguard mechanism. "Developing country members receive special and differential treatment with respect to other members' safeguard measures, in the form of a de minimis import volume exemption. As users of safeguards, developing country members receive special and differential treatment with respect to applying their own such measures, with regard to permitted duration of extensions, and with respect to re-application of measures. The negotiations collapsed on 29 July over issues of agricultural trade between the United States, India, and China18. In particular, there was insoluble disagreement between India and the United States over the special safeguard mechanism (SSM), a measure designed to protect poor farmers by allowing countries to impose a special tariff on certain agricultural goods in the event of an import surge or price fall19.

ISSUES Agriculture has become the lynchpin of the agenda for both developing and developed countries. Three other issues have been important. The first, now resolved, pertained to compulsory licensing of medicines and patent protection. A second deals with a review of provisions giving special and differential treatment to developing countries; a third addresses problems that developing countries are having in implementing current trade obligations. a. AGRICULTURE Agriculture has become the most important and controversial issue. Agriculture is particularly important for developing countries, because around 75% of the population in developing countries live in rural areas, and the vast majority are dependent on agriculture for 18 19

Dickson, David M. (30 July 2008). "Farm tariffs sink world trade talks". Washington Times. Alan, Beattie; Frances William (29 July 2008). "Doha trade talks collapse".Financial Times. 

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their livelihoods. The first proposal in Qatar, in 2001, called for the end agreement to commit to substantial improvements in market access; reductions (and ultimate elimination) of all forms of export subsidies; and substantial reductions in trade-distorting support.” b. ACCESS TO PATENTED MEDICINES A major topic at the Doha ministerial regarded the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The issue involves the balance of interests between the pharmaceutical companies in developed countries that held patents on medicines and the public health needs in developing countries. Another issue concerns the protection of traditional medecinal knowledge and practices. Before the Doha meeting, the United States claimed that the current language in TRIPS was flexible enough to address public health emergencies, but other countries insisted on new language. c. SPECIAL AND DIFFERENTIAL TREATMENT In the Doha Ministerial Declaration, the trade ministers reaffirmed special and differential (S&D) treatment for developing countries and agreed that all S&D treatment provisions “...be reviewed with a view to strengthening them and making them more precise, effective and operational.” d. IMPLEMENTATION ISSUES Developing countries claim that they have had problems with the implementation of the agreements reached in the earlier Uruguay Round because of limited capacity or lack of technical assistance. They also claim that they have not realized certain benefits that they expected from the Round, such as increased access for their textiles and apparel in developed-country markets. They seek a clarification of language relating to their interests in existing agreements. Before the Doha ministerial, WTO members resolved a small number of these implementation issues. At the Doha meeting, the Ministerial Declaration directed a twopath approach for the large number of remaining issues: a. where a specific negotiating mandate is provided, the relevant implementation issues will be addressed under that mandate; and b. the other outstanding implementation issues will be addressed as a matter of priority by the relevant WTO bodies.

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Outstanding implementation issues are found in the area of market access, investment measures, safeguards, rules of origin, and subsidies and countervailing measures, among others.

BENEFITS Most countries participating in the negotiations believe that there is some economic benefit in adopting the agreement; however, there is considerable disagreement of how much benefit the agreement would actually produce. A study by the University of Michigan found that if all trade barriers in agriculture, services, and manufactures were reduced by 33% as a result of the Doha Development Agenda, there would be an increase in global welfare of $574.0 billion. A 2008 study by World Bank Lead Economist Kym Anderson found that global income could increase by more than $3000 billion per year, $2500 billion of which would go to the developing world20. Others had been predicting more modest outcomes, e.g. world net welfare gains ranging from $84 billion to $287 billion by the year 2015. Pascal Lamy has conservatively estimated that the deal will bring an increase of $130 billion. Several think tanks and public organizations assess that the conclusion of the trade round will result in a net gain . However, the restructuring and adjustment costs required to prevent the collapse of local industries, particularly in developing countries, is a global concern. For example, a late 2009 study by the Carnegie Endowment for International Peace, the United Nations Economic Commission for Africa (UNECA), the United Nations Development Programme and the Kenyan Institute for Research and Policy Analysis found that Kenya would see gains in its exports of flowers, tea, coffee and oil seeds. It would concurrently lose in the tobacco and grains markets, as well as manufacturing of textiles and footwear, machinery and equipment.

20

World trade contracted 12 percent in 2009: WTO's Lamy". Reuters

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CONCLUSION

The Multilateral Trade Negotiations (MTNs) were launched under the auspices of the General Agreement on Tariffs and Trade (GATT) in September 1973 at a ministerial meeting held in Tokyo, where the well known Tokyo Declaration was adopted, setting out the objectives and areas of the negotiations. The negotiations aimed at achieving the expansion and ever greater liberalisation of world trade through the progressive dismantling of obstacles to trade and the improvement of the international framework for the conduct of world trade. One of the commitments of the Tokyo Declaration was to secure additional benefit for the international trade of developing countries so as to achieve a substantial increase in their foreign exchange earnings, the diversification of their exports, the acceleration of the rate of growth of their trade, taking into account their development needs, an improvement in the possibilities for these countries to participate in the expansion of world trade, and a better balance as between developed and developing countries in the sharing of the advantage resulting from this expansion. The Tokyo Declaration further embodied a recognition of the importance of applying special and more favour able treatment to developing countries where feasible and appropriate. The MTNs constitute a comprehensive and massive undertaking, cover a multiplicity of extremely complex legal and technical issues, involve a large number of governments with divergent interests, and have produced several codes, agreements and exchanges of concessions in tariff and non-tariff fields. The Uruguay Round was the 8th round of multilateral trade negotiations (MTN) conducted within the framework of the General Agreement on Tariffs and Trade (GATT), spanning from 1986 to 1994 and embracing 123 countries as ‘contracting parties’. The Round led to the creation of the World Trade Organization, with GATT remaining as an integral part of the WTO agreements. The broad mandate of the Round had been to extend GATT trade rules to areas previously exempted as too difficult to liberalize (agriculture, textiles) and increasingly important

new

areas

previously

not

included

(trade

in services, intellectual

property, investment policy trade distortions). The Round came into effect in 1995 with deadlines ending in 2000 (2004 in the case of developing country contracting parties) under the administrative direction of the newly created World Trade Organization (WTO). The Doha Development Round was the next trade round, beginning in 2001 and still

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unresolved after missing its official deadline of 2005. The Doha Development Round or Doha Development Agenda (DDA) is the latest trade-negotiation round of the World Trade Organization (WTO) which commenced in November 2001 under then director-general Mike Moore. Its objective was to lower trade barriers around the world, and thus facilitate increased global trade. Progress in negotiations stalled after the breakdown of the July 2008. The discussion on the topic ‘Multilateral Trade Negotiations’ drive home the point that the multilateral trading system has come a long way. It has been evolving and keeping pace with the changing needs of the time. Especially, the efforts of the developing countries to make it broad- based and effective to cater to their needs seem to be gaining ground. There is no doubt that in none of the rounds the developing country has upper hand in setting up the rules. The developing country perspectives that have been evolving over the years, however, seem to have its impact since the beginning. The rich countries may have gained out of the multilateral system. The real gain for them has been even beyond this structure that has been there since the Bretton Woods days. In fact, it is for the developing countries that are now integrating their economies with the global economy, an effective trading regime is highly important. It is another matter if some countries extract concessions from the rich countries through bilateral arrangements. A multilateral trading regime, however, is an essential element in the present multi-polar economic system. The Doha Round may have started with a bang, with a lot of promise for the developing countries by adopting it as "Development Round." Although since the beginning some developing countries have been exerting the world body to incorporate the development dimension as one of the objectives of the trading system. There were many half-hearted attempts to do so. This time, however, with the increasing force of globalisation and liberalisation of almost all developing countries the Doha Round seemed to be befittingly adopting development as the key element. The progress of the talks, however, seems to move in the direction that is beyond the original mandate. This supervenes the earlier positions of the contracting parties of the WTO. The outcome does not seem to be too well for the developing countries. As one study suggested, "The round began with vows to enable poorer nations to develop their economies. The deal taking shape now offers limited economic gains for the developing world, and many countries end up worse off, according to recent economic projections. Hidden behind those 19 |

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modest benefits are costs that should give negotiations pause. Tariff losses and other "adjustment costs" may be prohibitively high, some countries will experience a loss in national production after opening their manufacturing and service sectors to rich-country competition, and all face the loss of autonomy to pursue the kind of national development policies that have proven effective in the past. " The crux of the matter is that development as such has been undergoing a paradigm shift. The development dimension has been changing. Now international trade has been accepted as an engine of growth. There is also shift from assets based on commodity to assets based on knowledge. With globalisation and liberalisation, the developing countries have been adopting newer strategies for economic development. The earlier inward oriented strategy for economic development has been bidden good-bye. Now the developing countries have been keen to do international trade. There is decisive shift in the focus in the macro economic policies. The new economic policies may be too daunting; but there is no other go but to integrate with the world economy, which in other words, means to be part of the multilateral trading arrangement. The initial costs may be higher. In the long run, these economies will cope up with the loss and hopefully develop keeping pace with developments in the world economy. In this context, the Doha Round is a pointer in the direction.

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REFERENCES 1. Blackhurst, Richard [1988]: 'Strengthening GATT Surveillance of Trade-Related Policies', to be published in Meinhard Hilf and Ernst-Ulrich Petersmann (ed): The New GATT Round of Multilateral Trade Negotiations: Legal and Economic Aspects. Kluwer, Deventer. 2. Chishti, Sumitra [1985]: 'World Economic Environment, Developing Countries and the New Round of Multilateral Trade Negotiatioins', Foreign Trade Review, 20(3), 94-122. 3. General agreement on tariffs and trade: Ministerial declaration on the Uruguay round of multilateral trade negotiations, International Legal Materials, Vol. 25, No. 6 (NOVEMBER 1986), pp. 1623-1627, American Society of International Law 4. India and the Uruguay Round, Ashok V. Desai Source: Economic and Political Weekly, Vol. 23, No. 45/47, Special Number (Nov., 1988), pp. 2371-2375+23772379+2381-2384, Economic and Political Weekly 5. India, the Developing Countries and the Uruguay Round' paper presented at the Rockefeller Conference on Trade Policy, Bellagio, September 5-8, 1987, published in Brian Brogan (ed): The Asia- Pacific Region in the Uruguay Round, Cambridge University Press, Sydney. [1988a]: 'Foreign Direct Investment in India 6. Modwel, Suman Kumar [1985a]: 'Protectionism and the Bilateral Option: Shadows on the New Multilateral Trade Round', Foreign rade Review, 20(3), 70-87. - [1985b] 7. THE DOHA ROUND OF WORLD TRADE NEGOTIATIONS : A PREVIEW AND PERSPECTIVE (A developing country analysis), Jagadish K. Patnaik and Jagdish K. Patnaik, The Indian Journal of Political Science, Vol. 68, No. 3 (JULY - SEPT., 2007), pp. 547-560, Indian Political Science Association 8. The Uruguay Round of Multilateral Trade Negotiations: Developments and Prospects, Luis Abugattas, The University of Miami Inter-American Law Review, Vol. 22, No. 2/3 (Spring - Summer, 1991), pp. 353-375, University of Miami Inter- American Law Review 9. Uruguay Round of Trade Negotiations: An Assessment and Overview, Prem Kumar, Economic and Political Weekly, Vol. 28, No. 49 (Dec. 4, 1993), pp. 2636-2639

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