We’re at an Impasse…

Mar 08

Faizel Ismail is the head of the delegation to the World Trade Organization of South Africa's Permanent Mission in Geneva. He has served as chairman of the Committee on Trade and Development of the WTO's Trade Negotiations Committee. A key player in the Group of 20 and in the Non-Agricultural Market Access (NAMA) negotiations, he is regarded as one of the most articulate defenders of the positions of developing country governments in the WTO negotiations. He talked to Bello at the sidelines of the Global Network's "Global Dialogue for a Fair Globalization" held in Lima, Peru, Sept. 21-24, 2007.


Walden: So, let's cut to the chase: what is the state of the negotiations?

Ismail: We are at an impasse now and have been since July 2006. There can be no fresh impetus without a change in the attitude of the developed countries. For instance, in the negotiations on NAMA (Non-Agricultural Market Access), the developing countries are being asked to cut their bound tariffs by 70 per cent, while the developed countries are willing to cut theirs by only 25-30 per cent. This is the opposite of the principle of "less than full reciprocity." At the Group of Four meeting in June of this year, the US and the European Union wanted India and Brazil to make commitments to cut their industrial tariffs before the US would even put its offers on the table!

Walden: When you say "impasse," you mean nothing is moving?

Ismail: Well, people are talking. There's some progress, but it's on technical issues, not on the core political issues like industrial tariffs or agricultural subsidies. There's no political dynamic, and that can only come if the United States and the European Union make significant offers, which they have not.

Walden: If nothing happens this October or November, what happens then?

Ismail: The director general has to make the call. He can suspend negotiations, like he did on October 2006, or he can draft a compromise text based on what he perceives to be points of possible compromise, like the Dunkel Draft at the end of the Uruguay Round. But this can only happen with significant support from members governments. A third option is he can extend the term of the negotiations, keeping the different negotiating bodies talking, waiting for the appropriate political moment to get the members to "relaunch" the process. This amounts to waiting for the political energy to emerge.

Walden: What about the question of the US president's lack of Trade Promotion Authority (TPA)?

Ismail: The TPA expired, but the discussion of the second draft and final drafts of the texts are continuing. Members are negotiating in good faith. But they also know that what they agree can be unraveled by the US Congress. So the negotiations are proceeding but without much traction. The absence of a TPA affects the ability of the US administration to make offers that are seen as credible. Any agreement will need the support of the US Congress, and it is the political difficulties related to Congress that is keeping the US administration from putting on the table a proposal that would move things forward.

Walden: So is the Doha Round dead?

Ismail: No. Just before the summer break, when the developing countries met to consider their stand on the two texts-agriculture and NAMA (Non-Agricultural Market Access)-we called upon the developed countries to live up to the mandate of the Round, which was a development mandate. I'm talking about a call coming from over 100 countries-the G 20, NAMA 11, the Africa Group, the LDC Group and the ACP (African ,Caribbean and Pacific) countries, etc.

For the Round to succeed in its remit, we said that the developed countries must make deep cuts in trade-distorting subsidies, open their markets to agricultural products, and agree to rebalancing unbalanced agreements coming out of the Uruguay Round, like TRIPs (Trade Related Intellectual Property Rights) and TRIMs (Trade-Related Investment Measures), which eliminated measures that promoted industrialization in developing countries. We asked them to address tariff escalation that impacts on our industries, like the 48 per cent tariff on leather footwear in the US. In services, we wanted the developed countries to show flexibility when it came to Mode 4 (the movement of people): a large number of developing countries are competitive when it comes to skilled and semi-skilled labor. We were talking about shifting the balance in the multilateral rules-based system towards developing countries, which is to say to right existing imbalances.

Walden: And do you expect them to make those concessions?

Ismail: The developing countries are willing to make their contribution to the Round. The LDC's (least developed countries) are willing to bind their tariffs and make the process predictable and transparent. Even small and vulnerable economies-not just the larger ones like China and South Africa-are willing to make concessions. But these concessions can only be made if the developed countries make good on their own promises. We are not asking them to eliminate their trade-distorting subsidies. We are only asking them to cut them substantially, and they've not been willing to do this so far. If the developed countries make good on their promises and provide leadership and set ambitious goals, they will find that developing countries will be willing to make concessions. If this demand is not met, the Round will not succeed. What is at issue is the fairness of the trading system.

Walden: The NAMA text is a key bone of contention, isn't it?

Ismail: Well, developing country governments were being asked to accept a NAMA text that was unfair, and we simply refused to do that. The developing countries are organized and technically competent and we have a strong alliance that will not accept a deal against our interests. Besides, our NGO's and trade unions would simply reject the deal and our governments would be compromised for agreeing to such a patently unfair arrangement that will also deepen inequalities. Who would agree to a deal that makes us commit to obligations even before the developed countries are willing to indicate their commitments?

Walden: In many accounts, it is the US, with its refusal to substantially bring down its domestic support for agriculture, that is largely blamed for the impasse. What about the European Union?

Ismail: Despite the fact that the focus is on the US, in fact, the European Union (EU) does not seem to have sufficient support to comply with its own promises under the Doha mandate. [EU Trade Commissioner Peter] Mandelson has been under enormous pressure from the French and the southern countries, including Spain, Portugal, and Greece, that are resisting acceleration of CAP (Common Agricultural Policy) reform. There is no agreement among EU members on what was agreed in Hong Kong. But what was agreed in Hong Kong was that substantial cuts in export subsidies would be made in the early part of the period leading up to 2013, when they will be completely eliminated. As for market access, it is not certain that the EU will comply with the Doha mandate of substantially cutting its tariffs. In fact, there is no certainty of negotiations moving ahead at this stage since the EU says it will only make an offer if the developing countries first commit to making substantial cuts in their tariffs!

Walden: Hasn't the US stand on Special Products also stymied the negotiations?

Ismail: Yes, during the Hong Kong Ministerial, countries agreed to recognize the category of Special Products that would be exempted from deeper liberalization. The Group of 33 said that up to 20 per cent of agricultural products could be designated as Special Products. The US's count is that only five tariff lines could qualify as Special Products! The G 33 said that this would jeopardize the food security of the people. They will not give in to this demand to open their markets without regard for the impact of trade distorting subsidies.

Walden: Is there anything you wish to add?

Ismail: Yes, as far as we're concerned, the Doha Development Round is not dead. They, the developed countries, just have to make good on their promises.

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