Correcting Misperceptions

Peter D. Sutherland

From Foreign Affairs, December 2005 -- WTO Special Edition

Summary:  If trade talks were founded on a rational analysis of economic interests, they would be much easier to conduct and conclude. But most are not, and the Doha Round is no different. The key to ensuring that something worthwhile does emerge from it is to distinguish narrow political agendas from the broader public interest.

PETER D. SUTHERLAND is Chairman of BP p.l.c. and of the Advisory Board on the Future of the World Trade Organization. He was Director-General of the General Agreement on Tariffs and Trade from 1993 to 1995 and the founding Director-General of the WTO.

WINDING UP, WINDING DOWN

Concluding multilateral trade negotiations has never been easy (I still bear the scars from the end of the Uruguay Round), and the Doha Round will be no different. Much depends on the compatibility among negotiators, between the dossiers they negotiate and their real commercial interests, and among an ever-widening circle of stakeholders. Separating politics from true economic interest is nearly impossible, and yet it must be done if Doha is to achieve something worthwhile and especially its development goals.

Perhaps the Doha Development Agenda was launched at the wrong time, with the wrong agenda, and partly for the wrong reasons. That question is for the history books. In the meantime, the ministerial conference of the World Trade Organization in December will determine whether something valuable can be secured from the initiative. I believe such an outcome is possible, but to achieve it many governments will have to display an uncommon measure of will and foresight.

One trusts that WTO members will finally do the right thing because they know that a failure of the Doha Round would do much damage. That such failure would hinder growth and development is self-evident, but it would also do long-term damage to the notion of multilateralism. There is also a more down-to-earth cause for hope: the changing geopolitics of international trade negotiations. More than two years ago, the WTO ministerial conference in Cancún failed, not only because of differences over substance but also because of inadequate negotiating structures and poor chemistry among participants. Just prior to that meeting and since, new groups better suited to multilateral negotiations have emerged informally within the WTO.

Furthermore, for many months now, government ministers have taken the lead in the negotiations. This is an appropriate development as the talks have moved away from preparatory phases to actual deal-making. It is especially appropriate since the process is designed to extract from states new commitments that will require significant domestic reform. These will have to be defended in national legislatures.

Yet, although the geopolitics may be changing, a vision supporting an ambitious result to the Doha Round is still lacking. In particular, there is no credible consensus view of how trade reform can inspire development.

THE OLD GUARD

Despite some recent changes in the balance of international economic power, the transatlantic relationship remains crucial to the WTO's progress. There have been calls throughout the Doha Round for the United States and the EU to lead, despite contradictory fears that the two elephants of world trade might present a tightly drawn agreement on a take-it-or-leave-it basis.

Sensibly, Washington and Brussels have carried on talking to each other but seldom seek to broach their differences directly, or at least not in public. They have put a ring fence around disputes pending before the WTO's dispute-settlement system. Any one of their high-profile disagreements over, for example, subsidies to Airbus and Boeing, the EU's rules on genetically modified organisms and beef hormones, or U.S. corporate tax breaks could easily poison the environment for the Doha Round. Fortunately, these disputes have been quarantined.

Nevertheless, there is considerable misunderstanding on both sides of the Atlantic about the political structures, traditions, and habits that influence negotiating mandates in the Doha Round. Europeans have trouble understanding the way Washington works, especially when it comes to trade policy. Congress writes trade laws and sets the limits for U.S. negotiators in Geneva. Sometimes, the system veers dangerously toward protectionism. Yet for the most part, the Bush administration and its free-trade allies in Congress seem able to do business. Occasionally, too, Washington stuns everyone, as it did in mid-October, when it tabled a remarkably forthcoming offer on agriculture.