2 The World Trade Organization
3.2 Functions of the WTO
3.2.2 Negotiations on New Trade Rules
A second function of the WTO is to provide a forum for negotiations amongst WTO Members on new trade rules. The WTO provides ‘the’ forum for negotiations on matters already covered by the WTO, and the WTO is ‘a’ forum among others with regard to negotiations on matters not yet addressed. To date, WTO Members have negotiated and concluded, in the framework of the WTO, trade agreements providing, inter alia, for: (1) further market access commitments for specific services and service suppliers (on financial services,41 on basic telecommunications services,42 and on the movement of natural persons43); (2) the liberalisation of trade in information technology products;44 (3) the amendment of the TRIPS Agreement regarding the rules on compulsory licensing to ensure access for developing countries to pharmaceutical products;45 (4) the amendment of the Agreement on Government Procurement to set the basis for expanded coverage of and disciplines under this Agreement;46 and (5) the accession of thirty countries to the WTO.47 Furthermore, negotiations within the WTO have resulted in a number of decisions by WTO bodies, such as the 2001 Ministerial Decision on implementation-related issues and concerns,48 and the 2011 Decision of the SPS Committee on SPS-related private standards.49
Before the establishment of the WTO, multilateral trade negotiations under the GATT were primarily conducted in specially convened, ‘time-limited’ rounds of negotiations covering a wide range of issues.50 The WTO provides for a permanent forum for negotiations in which each trade matter can be negotiated separately and on its own merits. It was initially thought that consequently there would be no need anymore for specially convened rounds of negotiations. However, soon after the establishment of the WTO, its Members considered that, to negotiate successfully on further trade liberalisation at the multilateral level, they needed the political momentum, and the opportunity for package deals, brought by the old GATT-type round of negotiations. Therefore, WTO Members decided at the Doha Ministerial Conference in November 2001 to start such a round of multilateral trade negotiations.51 This round is commonly referred to as the ‘Doha Round’.52 Pursuant to the Doha Ministerial Declaration, the Doha Round negotiations should have been concluded no later than 1 January 2005. However, this and subsequent deadlines were not met and the negotiations are currently still ongoing.
The Doha Ministerial Declaration provided for an ambitious agenda for negotiations. These negotiations include matters on which WTO Members had already agreed in the WTO Agreement to continue negotiations, such as: (1) trade in agricultural products;53 and (2) trade in services.54 In fact, negotiations on these matters had already started in early 2000. Furthermore, the Doha Round negotiations include negotiations on: (1) problems of developing-country Members with the implementation of the existing WTO agreements (the so-called ‘implementation issues’); (2) market access for non-agricultural products (NAMA); (3) TRIPS issues such as access for developing countries to essential medicines and the protection of geographical indications; (4) rules on relating to dumping, subsidies and regional trade agreements; (5) dispute settlement; and (6) special and differential treatment for developing- country Members and least-developed-country Members.55 The stated ambition of the Doha Round negotiations was, and still is, to place economic development and poverty alleviation at the heart of the multilateral trading system.56
In view of many distinct matters on the agenda of the Doha Round negotiations, it is important to note that the Doha Ministerial Declaration stated that ‘the conduct, conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking’.57 Under this ‘single undertaking’ approach to the negotiations, there is no agreement on anything until there is an agreement on everything.58
Some WTO Members, and in particular the then European Communities, wanted an even broader agenda for the Doha Round.
They also wanted the WTO to start negotiations on, for example, the relationship between trade and investment, the relationship between trade and competition law and the relationship between trade and core labour standards. There was, however, strong opposition, especially among developing-country Members, to the inclusion of some or all of these matters on the agenda of the Round. At the Doha Ministerial Conference, WTO Members decided that there would be no negotiations, within the context of the WTO, on the relationship between trade and core labour standards.59 However, with respect to what is commonly referred to as the
‘Singapore issues’60 – namely: (1) the relationship between trade and investment; (2) the relationship between trade and competition law; (3) transparency in government procurement, and (4) trade facilitation61 – the WTO Members decided in Doha that negotiations would start after they had agreed, by ‘explicit consensus’, on the modalities of these negotiations.62 This agreement on the modalities of the negotiations on the Singapore issues was to be reached at the next session of the Ministerial Conference in Cancún in September 2003. However, at this session, no such agreement was reached. Developing-country Members were unwilling to consent to the request of the European Communities and others to start negotiations on the Singapore issues. Moreover, at the Cancún Ministerial Conference, it became clear that little progress had been achieved on most of the issues on which Members had been negotiating since the start of the negotiations in February 2002. As was the case during the Uruguay Round negotiations, agricultural subsidies and market access for agricultural products were again the most contentious issues on the negotiating table.63 The Cancún Ministerial Conference turned out to be a dismal failure, with nothing agreed upon.64 In diplomatic language masking the deep sense of failure and disappointment, the Ministerial Statement adopted at the close of the Conference on 14 September 2003 read:
All participants have worked hard and constructively to make progress as required under the Doha mandates. We have, indeed, made considerable progress. However, more work needs to be done in some key areas to enable us to proceed towards the conclusion of the negotiations in fulfilment of the commitments we took at Doha.65
The deadlock in the negotiations after the Cancún Ministerial Conference was only overcome during the summer of 2004 when, following weeks of intense discussions, a new Doha Work Programme was adopted by the General Council on 1 August 2004.66 In its Decision of 1 August, the General Council called on all Members ‘to redouble their efforts towards the conclusion of a balanced overall outcome of the Doha Development Agenda’.67 A key element of the Decision of the General Council was not to start negotiations on the Singapore issues with the exception of the issue of trade facilitation.68 The ‘redoubling of efforts’ did not, however, have the results hoped for. At the Hong Kong Ministerial Conference in December 2005, agreement was reached on the elimination of agricultural export subsidies by 2013.69 This was in itself a significant achievement but of little value if no agreement was also reached on all other major issues on the negotiating table, such as market access for agricultural products, domestic support for agricultural production, market access for non-agricultural products (NAMA), and the liberalisation of trade in services. With regard to these other issues, Members were unfortunately only able to agree to disagree and to put forward the summer of 2006 as a new deadline for agreement on the broad lines of an overall deal on NAMA. When that deadline was missed, WTO Director-General Lamy decided at the end of July 2006 to suspend the negotiations. In February 2007, the negotiations were resumed. In the summer of 2008, a breakthrough in the negotiations seemed within reach but failed to materialise. The mini-ministerial meeting in July 2008 in Geneva failed over the inability to reach agreement on a special safeguard mechanism (SSM) for the protection of poor farmers in developing-country Members. However, Ambassador Servansing from Mauritius, the Coordinator and Chief Negotiator of the ACP Group in Geneva, noted:
The SSM was only the immediate trigger that precipitated the failure. The real causes were more fundamental … The underlying reason was the growing development deficit that slowly crept into the negotiations and emptied the development ambition of the DDA [Doha Development Agenda] mandate. There was a clear feeling among the developing countries that the imbalances that the DDA was meant to correct were not being addressed and the outcome was being skewed more in their disfavour. While in agriculture, higher ambition, which served a developmental objective, was being consistently diluted through multiple flexibilities for developed countries, in NAMA the developmental concerns of protecting industrial development and employment in developing countries were being denied by a predatory mercantilist approach of seeking higher market access in developing countries.70
For a detailed and technical account of the negotiations, refer to the regular reports of the Chair of the Trade Negotiations Committee to the General Council, which are an excellent, and sobering, public source of information.71 Many reasons have been advanced to explain why the Doha Round negotiations have been, and are, so difficult, including: (1) the increase in the WTO membership and its diversity, and the emergence of developing-country Members as full participants in the negotiations;72 (2) the difficulties arising from the fact that the decision on the ultimate result of the negotiations, but also the decisions on all intermediate steps in the negotiations, must be adopted by consensus;73 (3) the fact that the decision to launch the Doha Round was ill-prepared and not based on a consensus regarding necessary economic reforms;74 (4) the fact that the ‘easy’ steps in the process of trade liberalisation have all been taken in previous negotiations and that what is now ‘left’ includes primarily trade barriers or distortions fiercely defended by strong domestic interests; (5) the ambitious agenda of the negotiations and the ‘single undertaking’ approach;75 (6) the fact that Members are unwilling to agree to new rights and obligations formulated in ambiguous wording (a technique much used in other international negotiations to overcome deadlock) because such ambiguously worded rights and obligations may later be
‘clarified’ in the context of the WTO’s binding dispute settlement system in a manner inconsistent with their interests;76 and finally (7) a general questioning of economic globalisation and a reduced enthusiasm for further trade liberalisation, in particular since the outbreak of the global economic and financial crisis in the summer of 2007.
In April 2011, Director-General Lamy, in his capacity as Chair of the Trade Negotiations Committee,77 presented to the Members the so-called ‘Easter Package’, a document reflecting the work done so far.78 For the first time since the start of the negotiations almost ten years earlier, Members had ‘the opportunity to consider the entire Doha package in all market access and regulatory areas’.79 This document showed that in many areas progress had been made, but it also made clear that Members had still to come to an agreement on many core issues, in particular on NAMA. The issue of market access for industrial products, a ‘classic mercantilist issue’ which had been ‘the bread and butter’ of the negotiations since the start, divided Members as no other issue.80 Chapter 6 of this book discusses this issue in greater detail.81 Director-General Lamy reported to the Members that it appeared that the ‘political gap’ which separated Members was ‘not bridgeable’ at that time.82 The Members, concurring with Lamy's assessment, subsequently made an effort to agree by the next Ministerial Conference in December 2011, on a smaller ‘package’ of issues. These issues related primarily to issues of particular interest to the least-developed-country Members (such as duty-free and quota-free market access and associated rules of origin; cotton subsidies; and a waiver of the GATS MFN treatment obligation). However, such narrow focus was not acceptable to all Members. Director-General Lamy thus presented a non-exhaustive list of other issues, such as trade facilitation, export competition and fisheries subsidies (‘LDC plus’ issues), which could be part of the smaller package to be agreed on by December 2011. In July 2011 it was clear, however, that Members would not be able to agree on a ‘LDC plus’ package.
The Doha Round negotiations were in a deep crisis. Even an intermediate agreement on a smaller package of issues, a so-called
‘Doha Lite’, was not possible. At the Geneva Ministerial Conference in December 2011, the Chair of the Ministerial Conference said in his Concluding Statement:
Ministers deeply regret that, despite full engagement and intensified efforts to conclude the Doha Development Agenda single undertaking since the last Ministerial Conference, the negotiations are at an impasse.
Ministers acknowledge that there are significantly different perspectives on the possible results that Members can achieve in certain areas of the single undertaking. In this context, it is unlikely that all elements of the Doha Development Round could be concluded simultaneously in the near future.83
Members did, however, express their willingness to continue with the Doha Round negotiations. As reflected in the Chair's Concluding Statement, Members recognised:
[the] need to more fully explore different negotiating approaches while respecting the principles of transparency and inclusiveness.84
Members declared themselves willing to abandon the ‘single undertaking’ approach.85 They agreed to advance negotiations on issues where progress can be achieved with the aim of reaping an ‘early harvest’, i.e. concluding provisional or definitive agreements before the full conclusion of the single undertaking.86 Finally, Members stressed that:
they will intensify their efforts to look into ways that may allow Members to overcome the most critical and fundamental stalemates in the areas where multilateral convergence has proven to be especially challenging.87
Half a year later, in July 2012, Director-General Lamy reported to the General Council as follows:
[P]rogress and activity have been mixed, to use diplomatic language … [W]e have to recognize that prolonged and dogmatic discussions about whether or not to deliver on everything or a few things or nothing at all have not and will not take us very far.
The only thing we know is that an ‘all’ or ‘nothing’ does not work. A ‘my way or the highway’ is the best way to ensure paralysis … [T]he guidance from Ministers is clear … [U]ltimately the ball lies in your court. You, the negotiators, have to achieve the needed substantive and balanced progress across all areas of our negotiations that you all say you desire.88
However, this call on Geneva-based negotiators to show flexibility and creativity should not be misunderstood as implying that the impasse in the negotiations is mainly due to disagreement on technical trade issues. The impasse is primarily political and must be addressed at the (highest) political level.89 However, regional trade agreements, which are negotiated and concluded in ever- increasing number,90 have diverted, and continue to divert, political attention (and negotiating resources) away from the Doha Round negotiations. Also, the agenda of the Doha Round, agreed upon more than a decade ago, may have become in view of the rapidly changing reality of international trade, outdated, i.e. insufficiently focused on more pressing problems faced by the multilateral trading system today (such as export restrictions and trade-related energy and investment issues).91 Finally, the rapidly increasing importance of emerging economies in the global economy, their growing assertiveness within the WTO, and the divergence of their interests (with those of developed countries but also inter se) make the successful conclusion of multilateral trade negotiations, such as the Doha Round negotiations, an ever more formidable challenge. In December 2012, it was reported that in 2012 the Doha Round negotiations on topics such as trade facilitation, agriculture, special and differential treatment, least-developed-country issues, and dispute settlement had advanced to at least some extent, while the negotiations on topics such as services had barely moved at all, and were unlikely to move forward in the near future.92
A possible indication of things to come are the current talks – outside the Doha Round negotiations – among a group of about twenty developed- and developing-country Members on a Trade in Services Agreement (TISA), a plurilateral agreement on an ambitious liberalisation of trade in services, building upon but going far beyond the existing GATS. Tellingly, this group of Members, referred to as the ‘Real Good Friends of Services’ (RGF), includes the European Union and the United States but not Brazil, China or India. The latter Members have warned of the consequences for the multilateral trading system of adopting a plurilateral approach to negotiations on trade liberalisation in reaction to the impasse in the Doha Round negotiations.93
Contrary to some alarmist commentary in the media, the impasse in the Doha Round negotiations does not herald the imminent demise of the WTO. As discussed above and below, the WTO fulfils, besides the function of negotiating new trade rules, also other important functions, and does so quite successfully.94 However, failure to update and add to the current WTO rules in order to keep
these rules adapted to the ever-changing reality of international trade and the needs of WTO Members will, over time, weaken the rules-based multilateral trading system and result in a ‘creeping return of the law of the jungle’.95
Questions and Assignments 2.5
Has the WTO thus far been successful as a forum for the negotiation of new multilateral trade agreements? What is on the agenda of the Doha Round? What is not on the agenda? Find out exactly what the Doha Ministerial Declaration of November 2001 says about the relationship between trade and core labour standards. What, in your opinion, are the main reasons for the failure of Members to conclude the Doha Round negotiations? Should Members proceed with the Doha Round negotiations and, if so, how? Are plurilateral negotiations on trade liberalisation a ‘useful’ alternative to the Doha Round negotiations? Does the impasse in the Doha Round negotiations herald the imminent demise of the WTO?