From Seattle to Hong Kong

Jagdish Bhagwati

From Foreign Affairs, December 2005 -- WTO Special Edition

Summary:  There have been eight rounds of multilateral trade negotiations prior to Doha. Although they all ended well, it is important to remember that few went smoothly. Negotiators in Hong Kong now face real obstacles, but there is reason for hope -- if, that is, they have the will and courage to do what is necessary to succeed.

JAGDISH BHAGWATI is Senior Fellow in International Economics at the Council on Foreign Relations and University Professor in Economics and Law at Columbia University. He was Economic Policy Adviser to the director-general of the GATT and a member of the expert group that recently reported on the future of the WTO. His latest book is In Defense of Globalization.

FREEING TRADE SO FAR

There were eight successful rounds of multilateral trade negotiations (MTN) under the auspices of the General Agreement on Tariffs and Trade (GATT). The first round of talks were held in Geneva, Switzerland, in 1947 and the last was launched in Punta del Este, Uruguay, in 1986. This last round was concluded in 1994 in Marrakesh, Morocco, and led to the creation of the GATT's successor, the World Trade Organization (WTO).

Although they might seem like successes in retrospect, it is important to recall that few of these MTNs went smoothly. Moreover, with each successive round, the negotiators' task has grown more complex, even as their ability to close trade deals has increasingly been impaired by the greater visibility of the process and the growing involvement of a variety of lobbies and stakeholders. The issues have also become more complicated, thanks to the proliferation of non-trade barriers and to sectors such as agriculture that had earlier been shunted aside by waivers. So it is hardly surprising that the Uruguay Round of talks took nearly eight years to complete and suffered midway breakdowns and cascading crises of confidence, whereas the preceding Tokyo Round took five years and the previous rounds took much less.

The current talks -- the Doha Round -- are the first to be conducted under the WTO. Like the recent GATT rounds, this one has been a roller coaster, full of near breakthroughs followed by near breakdowns. Indeed, controversy has beset the talks since their very beginning. Officials had hoped to start the round in November 1999, during the WTO ministerial talks in Seattle, Washington. But that meeting collapsed in the face of unruly street demonstrations, and it was not until the next ministerial meeting, held in Doha, Qatar, in November 2001, that the round was launched. By then, of course, the attacks of September 11 had dramatically changed the international climate, and the negotiators used this tragedy to affirm the importance of democracy and openness to the world economy.

But the controversy persisted. When negotiators next met -- in Cancún, Mexico, in September 2003 -- the anti-globalization protesters were back but were not the problem: their numbers had diminished and their passions were not as disruptive as they had been in Seattle, where they had resulted in tear gas and vandalized storefronts. Still, the Cancún ministerial meeting ended without an agreement, largely thanks to dissension among the member nations. The end of Doha seemed close at hand. Fortunately, the WTO's 148 members returned to the drawing board. Now, after missing several deadlines, the Hong Kong meeting has arrived with no agreement in sight. Nonetheless, there are high hopes for a breakthrough so that the round can conclude before President George W. Bush's fast-track trade negotiating authority expires on June 30, 2007.

Are such expectations justified? Might the WTO's step forward turn into a stumble? No one knows for sure; but there are grounds for cautious optimism about the future of Doha.

DOHA'S HISTORY OF SUCCESS

Although nothing is guaranteed for Doha, all MTN rounds thus far have succeeded in the end. And if one considers the short, four-year history of Doha so far, one can find progress in many directions.

Recall, for example, that before the Cancún meeting, one major bone of contention had been the insistence by the EU and Japan that the four so-called Singapore issues -- on investment, competition policy, transparency, and trade facilitation -- be part of the final accord. Pascal Lamy, who was then the EU's trade commissioner and is now director-general of the WTO, was deeply committed to including the issues, hoping that doing so would provide "reciprocity" for the EU when the union, which has no comparative advantage in agriculture, made concessions. Lamy seemed unmoved by arguments that the time was not yet ripe to include the Singapore issues in a final agreement. But at Cancún, he yielded, and only the innocuous issue of trade facilitation (which largely relates to rationalizing cumbersome administrative customs procedures handicapping trade) was kept on the agenda. Of course, the EU did not give up something for nothing, as Lamy hoped to match agricultural concessions with liberalization in manufactured goods and services, where the EU does have a comparative advantage. But the fact remains that a serious obstacle was overcome.

Then there was the question of intellectual-property protection, and the TRIPS (Trade-Related Aspects of Intellectual Property Rights) agreement -- another potential obstacle. Intellectual property does not belong in the WTO, since protecting it is simply a matter of royalty collection. But the matter was forced onto the WTO's agenda during the Uruguay Round by the pharmaceutical and software industries, even though this risked turning the WTO into a glorified collection agency. The move gave multilateral legitimacy to the use of trade sanctions to replace unilateral means of collecting royalties from developing countries, embodied in the tariff-retaliation provisions of the "special 301" legislation in the 1988 Omnibus Trade and Competitiveness Act. Tough restrictions were enacted under the TRIPS agreement on the manufacture of generic drugs and their sales to poor countries.