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Navigating the obstacles and harvesting the fruit
SGS Fellow Jeffrey Schott presents his WTO Recovery Plan
Jeffrey Schott speaking at the Salzburg Global Seminar session on The Future of the Multilateral Trading System and the World Trade Organization
By: Louise Hallman
Four-time Salzburg Seminar Fellow and faculty member Jeffrey Schott concluded the Salzburg Global Seminar session on The Future of the Multilateral Trading System and the World Trade Organization on a positive, optimistic note on Tuesday 21 May.
In the final session, Schott, Senior Fellow at the Peterson Institute for International Economics, USA, praised the concept of Doha, but admitted that so far it had failed. However, that didn’t mean that all is lost.
“We shouldn’t discard the fruits of that decade-long effort, even if some of the produce has become mouldy,” Schott encouragingly declared to his fellow participants.
Following on from the discussions held over the three-day session, Schott presented what he saw as the way forward for the much beleaguered WTO: “essentially a WTO recovery plan”. Summarizing from his joint publication with Peterson Institute colleague Gary Clyde Hufbauer, Schott outlined the “five easy pieces” which could be most easily solved as the beginning of an “ambitious” ‘grand bargain’ between the members of the WTO.
These ‘pieces’ cover: trade facilitation – cutting the unnecessary documentation that cause delays in trade; duty free, quota free – an offer previously made by industrialized countries in 2005 which would allow tariff-free market access to all goods from the least-developed economies; agriculture export subsidies – the agreement to phase out of agriculture export subsidies was early success of Doha, and one that should be “locked in” for at least three years whilst Doha talks continue and before the EU reviews its Common Agriculture Policy in 2013; food expert controls – commitment to not impose export controls, exempt World Food Program imports and remove “buy national” requirements; and dispute settlement system – as part of a larger reform of the system, encourage faster decisions, more control for countries to settle more control by countries to settle without going to final judgment, and more transparency of hearings.
Once these ‘easy pieces’ – which Schott admits are not necessarily that easy – have been settled, only then can the “harder patches” be “harvested”.
The full ‘WTO Recovery Plan’ can be downloaded as a PDF on the Peterson Institute’s website via this link: http://www.piie.com/publications/interstitial.cfm?ResearchID=2105
After the end of the session, SGS editor Louise Hallman met with Jeffrey Schott to discuss his proposals further.
SGS: You said today in the conclusion of the session that it was possible there could be some sort of conclusion to Doha, or at least on some particular aspects. What points do you think there could be movement on?
JS: I don’t think there can be a conclusion to Doha; I think that a lot of the work and progress that has been made in the Doha Round can be harvested in the broader WTO initiative, that would comprehend both aspects of the negotiations of the Doha Round with new initiatives that focus on some of the key issues that are of high importance to international commerce in the 21st century...
In order to be able to harvest some of the important results from the Doha Round negotiations, it’s important to build a bigger package so that there are more results, more important results, a bigger result and a more balanced result, so that the benefits arrive at both developed countries and developing countries. Unless you do that – and that was one of the main failings of the decade-long Doha talks – there won’t be political support for changing policies in the major industrial countries. And if you don’t change policies, you’re not going to get the types of agreements that were being sought in the Doha Round.
So the challenge is: how do you make WTO agenda more relevant for international commerce in the current era? How do you deal with the problem of international trade in services, which is important not only for the export of services, but for improving productivity and growth in developing and developed economies? How do you deal with many new issues on the international agenda, while still providing a basis for undertaking reforms of traditional trade barriers in agriculture and manufacturing that are such high priorities for developing countries? That’s a challenge that governments weren’t prepared to do in the very narrow confines of the Doha Round mandate, and developing countries did not want to break that mandate or expand it for fear that their issues would get short shrift in an expanded negotiation...
So the challenge for trade officials is to put together a big enough package with incentives to do both; to harvest the traditional reforms of benefit to the developing countries (and perhaps even sooner than later), along with a commitment to begin the work of developing a new world trade rulebook that covers services, disciplines of state-owned enterprises, and a variety other important issues.
SGS: So do you believe that Doha should be abandoned in pursuit of a new initiative?
JS: No. ‘Abandoned’ is the wrong word. I think that what one has to do is expand what was done in the Doha Round into a broader, new WTO initiative. The Doha Round achieved quite a bit but it has a lot of baggage. I think one has to look at this as a broader effort, one designed to yield a bigger result and importantly, one designed to redress a lot of the damage that’s already been done to the multilateral trading system because of the fits and starts and failures of the Doha Round.
SGS: How much support so far exists for this broader initiative, given that at the moment, as Peter Sutherland said, there is a lack of political will to deal with Doha?
JS: I think among the major trading nations, there’s still a lot of work to be done. If you talk to constituencies, the business community, and a number of other officials, they’ll say ‘Yes, this all makes sense if we can do it.’ But the near term politics – whether it be the US election in November, or the European financial crisis – have distracted so much attention of political leaders away from the trade negotiations that Geneva is off the radar screen for them for the very near future. But that doesn’t mean that ministers and their senior trade negotiators can’t begin to do the ground work, preparing the options of what a new, improved multilateral trade negotiation should be, for consideration towards the end of this year, or early next year. That is something where, as we found out in the discussions this week, informal discussions are beginning to evolve among Geneva trade ambassadors that have a surprisingly similar approach to the one that is put forward in the proposals that Gary Hufbauer [senior fellow at the Peterson Institute for International Economics ] and I have made in our Peterson Institute proposal.
SGS: Ultimately, how optimistic are you for a positive future of the WTO? Do you see it as being “perilous” or “enduring”?
JS: I think the WTO is in extreme difficulty; I was at an extremely high-level meeting at the White House last week to talk about trade policy, and the WTO was barely mentioned. So being relatively optimistic among people at this meeting is a very low standard of optimism. But I see the opportunity; I see a feasible approach that would address the concerns that have been raised over the last ten years of negotiations, and that would yield significant economic benefits, and do so in a way that is politically sustainable over time in both developed and developing countries. But it takes a little incentive for the officials to move forward. Eventually political leaders will have to invest some political capital in reviving the negotiating process, in the WTO, and I think if you look at their overall philosophical approach, they’re supportive of that, in both developed and developing countries, but they’re very cautious because of the experience of the past decade where they wasted a lot of time and effort and got nothing in return. That type of failure leads political leaders and business leaders to say, ‘This not something we want to invest in if we’re not going to get a result.’
So you have to put forward a proposal that has a reasonable chance of success and provides a bountiful reward if you are successful... I think the board outline of the [Peterson Institute] proposal does the trick and it can be massaged, it can be revised, things can be dropped, some things can be added, but I think it provides a substantial foundation for a new initiative to succeed in the WTO...
People will say I’m pie-in-the-sky, but the difference is, Peter [Sutherland] is looking at the current situation, and on that, he’s right to be very, very pessimistic, and he’s extrapolating off of the previous few years when the political leaders said things and did nothing, and so he is right to be cynical based on that experience. What I’m doing is trying to project a change in that scenario, going forward but over a period of time that allows one to circumvent some of the near-term political road blocks that Peter sees as obvious stops, to an agreement in the next year or two. And I agree with him on that, but I think there is also a way to navigate around those obstacles to find a result over the medium-term.
Related to Salzburg Global Seminar Session:The Future of the Multilateral Trading System and the World Trade Organization - May 2012
posted on: 30 May, 2012
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