Following the failure of ministers to reach an agreement on issues in the Doha Development Agenda round of World Trade Organisation negotiations at their meeting in Geneva in July, Pascal Lamy, the Director General of the World Trade Organisation, has called for another period of “serious reflection”. Such calls provide the only way out of an impasse, short of calling negotiations to a halt. And they may indeed lead to new thinking and progress. The collapse in 2006 was also followed by a period of reflection, which helped delegations to realise what they would miss from not completing the round. The talks continued for another two years, reaching the point on July 29 when an agreement seems to have been reached on many of the issues on which it would not have been possible in 2006.
Many WTO members don’t seem to want the talks to conclude unsuccessfully, having got so far this time. The Financial Times reports Popane Lebesa, trade minister of Lesotho, speaking on behalf of the group of least developed countries, as saying that “the Doha talks should be relaunched at the earliest opportunity,” and Uhuru Kenyatta, Kenya's trade minister, calling for the negotiations “to pick up from where they left off.”
Pascal Lamy’s call for reflection was backed by a reminder of “the value of what is on the table, not only in agriculture and non-agricultural market access, but across the whole range of the agenda, whether in services, the fastest growing and most dynamic sector in most economies, or in trade facilitation.” He had earlier said, “What members have let slip through their fingers is a package worth more than $130 billion in tariff saving annually by the end of the implementation period, with $35 billion saving in agriculture and $95 billion in industrial goods.” What he could have added is the often quoted figure on trade facilitation from the study by Walkenhorst and Yasui in 2003 of global gains of $40 billion from just a 1% reduction in trade transaction costs, or $78 billion from a 1.5% reduction, according to another study at the same time.
Trade facilitation is not a divisive subject in the WTO. True, it was not part of the original Doha round, being added only in 2004. But this negotiation has been widely recognised as bringing benefits to every country, and particularly developing countries. Reform of customs and other border procedures affecting international trade is higher on governments’ agendas than in the past. Some of this is undoubtedly due to the profile the issue has gained from being part of the current trade talks. Trade ministers have a closer interest in an area that would otherwise be left to revenue authorities. That said, the implementation plans that countries are now developing won’t be abandoned just because the Doha round returns to a period of reflection.
What would be missing are binding commitments. These are often misportrayed as requirements of rich countries being imposed on poorer countries, but in the area of trade facilitation such comitments would be useful between developing countries. Take the position of landlocked countries, which rely on transit across neighbouring countries to access sea ports. Such countries risk being held hostage to their territorial boundaries in the absence of fair, transparent and non-discriminatory rules providing for rights of transit. Binding rules would allow those rights to be enforced. Why multilateral? Because the alternative is a myriad of time-consuming and diverse bilateral or regional transit agreements. A multilateral approach creates consistency and a level playing field.
A second missing ingredient is the support for implementation that would be offered through the WTO secretariat and other agencies. One of the trickier issues for the trade facilitation talks has been how to link binding commitments with “technical assistance” – a euphemism used to refer to funding or aid in kind from donor countries and organisations to help meet the needs of developing countries that would otherwise not be in a position to implement certain commitments. While some funding may come from aid programmes, a WTO agreement would provide a framework that would enable funding to be monitored to minimise the risks of duplication or gaps.
The frequently-mentioned alternatives to a multilateral agreement are bilateral or regional trade agreements. But while these may have their place when goods are being exchanged, it is more difficult to appreciate how preferential trade facilitation agreements could work. When a country modernises its customs procedures, it doesn’t create a two-tier clearance process depending upon whether goods come from preferential trading partners. Fast track clearance depends upon whether the declaring trader can be trusted, and the existence of a preferential trade agreement is irrelevant to the management of risks on which modern customs regimes are based. While bilateral trade agreements could cover transit or sharing of confidential customs information, and regional approaches could ensure common implementation and sharing of limited resource particularly amongst small developing countries, a multilateral solution would unquestionably deliver the greatest benefits in terms of trade facilitation.
Like others, SITPRO deeply regrets the failure of the Ministerial to reach agreement on all the issues it tackled. Like others, we hope the areas of agreement and offers made will be preserved and that, after suitable reflection, the round can once again be taken forward from the point it reached on July 29.
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