«ARTICLES Mitsuo Matsushita, Export Control of Natural Resources: WTO Panel Ruling on the Chinese Export Restrictions of Natural Resources Diane ...»
Trade, Law and Development
Vol. III, No. 2
ARTICLES Mitsuo Matsushita, Export Control of Natural Resources:
WTO Panel Ruling on the Chinese Export Restrictions of
Diane Desierto, Development as an International Right:
Investment in the new Trade-Based IIAs
Patrick Wieland, Why the Amicus Curia Institution is Ill-
suited to address Indigenous Peoples’ Rights before Investor-
State Arbitration Tribunals: Glamis Gold and the Right of Intervention NOTES AND Petros C. Mavroidis, Doha, Dohalf or Dohaha? The WTO COMMENTS Licks its Wounds Claus D. Zimmermann, Toleration of Temporary Non- Compliance: The Systemic Safety Valve of WTO Dispute Settlement Revisited Melissa Blue Sky, Developing Countries and Intellectual Property Enforcement Measures: Improving Access to Medicines through WTO Dispute Settlement ISSN : 0976 - 2329 eISSN : 0975 - 3346 Trade, Law and Development Vol. 3, No. 2 2011
PATRONJustice N. N. Mathur FACULTY-IN-CHARGE Yogesh Pai EDITORS-IN-CHIEF Prateek Bhattacharya Jayant Raghu Ram
EDITORS(MANAGING) (SENIOR CONTENT) Lakshmi Neelakantan Shreya Munoth Aman Bhattacharya
ASSOCIATE EDITORSMeghana Chandra Prianka Mohan Neha Reddy
CONSULTING EDITORSShashank P. Kumar Gopalakrishnan R. Meghana Sharafudeen
BOARD OF ADVISORSRaj Bhala Glenn Wiser Jagdish Bhagwati Daniel Magraw B. S. Chimni M. Sornarajah Ricardo Ramírez Hernández Vaughan Lowe W. Michael Reisman Published by The Registrar, National Law University, Jodhpur
The most flattering statement regarding the Doha Round is that there is a lot of uncertainty surrounding its fate. The Doha Round, as originally designed and understood, is not an option anymore. Although a formula has been found to keep the ball rolling, at this stage it is impossible to predict what direction it will take. There exists a lack of leadership to conclude the round and it suffers from inherent birth defects. This absence of a conclusion might send the wrong message at a moment when the WTO is emerging as the only genuine forum of multilateral cooperation. Though this is not the first trade round in the history of the multilateral trading system and definitely not the only one that is taking longer than planned to complete, it is the first time that the round risks being ditched altogether. In all previous rounds, which were essentially ‘business’ deals, trading nations managed to come up with an agreement in the end. This is the first time that they have announced ‘we do it for development’, and they now risk delivering nothing. Something has got to give at this stage, and we are running out of time as far as options regarding ‘deliverables’ are concerned. The accent has correctly been placed on priority issues for the bottom billion. The WTO, even if this effort succeeds, will have to face some tough tests in the near future arising from issues which were not at all addressed during the Doha Round.
TABLE OF CONTENTSI. FIRST, THE BAD NEWS II. THE ORIGINAL SIN: A ‘DEVELOPMENT’ ROUND A. History Helps (but who cares about it?) B. GSP: Is the Candle worth the Flame?
C. DDA: Aid for Trade (next to GSP) D. Preference Erosion E. Developing Countries and PTAs F. Bottom Line: No Hard Questions asked
III. WHY WE SHOULD KEEP THE BALL ROLLINGA. Fast (but almost Empty) Track B. Between Now and Eternity: The Middle Lane C. Take a Rain Cheque for all remaining issues D. The Real Trichotomy
IV. THE WTO AND TRADE ROUNDSA. Should the WTO be pro-active?
B. Where do we go from here?
I. FIRST, THE BAD NEWS
On May 31, 2011 the Director General (DG) of the World Trade Organization (WTO) Pascal Lamy announced before the Trade Negotiating Committee (TNC) of the WTO that the Doha round as we knew it, is dead.1 It remains to be seen if something can still be saved by the definite deadline of December 2011. Lamy repeated that no one wants to drop the Doha mandate (nor the single undertakingapproach2).3 However this statement looks more and more like an empty shell and reflects that the Doha mandate continues to live on as an objective but not as tangible reality.
Chairman’s opening remarks, Trade Negotiations Committee: Informal Meeting, 1 WTO: 2011 News Items (May 31, 2011) available at: http://www.wto.org/english/news_e/ news11_e/tnc_infstat_31may11_e.htm (last visited Sept. 30, 2011) (hereinafter Lamy). The May 31, 2011 TNC meeting was supposed to take a snap shot on what could be done to salvage the Doha Round since, in the absence of an agreement so far, it is becoming increasingly obvious that its conclusion should not be taken for granted. It did not produce any meaningful results other than an informal commitment to re-discuss the issue at the Ministerial Conference to be held in December 2011, see WTO Doc. JOB/TN/11 of May 31, 2011. No luck at the follow up meetings so far, the last being held on July 26, 2011, WTO Doc. JOB/TN/14.
2 “Virtually every item of the negotiation is part of a whole and indivisible package and
cannot be agreed separately”, Principles, How the negotiations are organized, available at:
http://www.wto.org/english/tratop_e/dda_e/work_organi_e.htm (last visited Sept. 30, 2011).
3 Lamy, supra note 1.
Fall, 2011] Doha, Dohalf or Dohaha? 369 In order to address the delay in the determination of the substantive issues under the Doha mandate, Lamy divided the issues on the table into three lists – ‘fast track’, ‘medium track’ and ‘slow track’ based on the possibility of the negotiations materializing by December 2011. This provides the hope that something can still transcend the veil of intangibility and become part and parcel of the future multilateral arsenal, as of December 2011 (the ‘fast lane’). This will be the subject matter of the LDC (least developed countries) list in Lamy’s announcement, which has a (more or less) definite content and comprises DutyFree Quota-Free (DFQF) market access for goods originating in LDCs (including rules of origin), the LDC Services Waiver (a waiver for allowing preferential market access in the service sectors in which LDCs may be given some preferential treatment when offers on this will be made at some later date), and a step forward (to be determined) on cotton.4 The rest of the trichotomy is as follows: an LDC+ list with issues (to be defined) with a significant development component by December 2011 (the ‘middle lane’);5 market access in NAMA (non-agricultural market access), agriculture and services, trade remedies, and TRIPs (trade related intellectual property rights) should be left for later (as they could not be seen as candidates resulting in outcomes this year) in what Lamy himself called the ‘slow lane’.6 How much later? That’s anybody’s guess.
This note discusses how we ended up here in relation to the Doha mandate.
In Section 2, I explain why, in my view, the round was ill-conceived from day one.
In Section 3, I discuss the options available to the trading nations following the TNC meeting of May 2011. Section 4, instead of conclusions, offers some thoughts on the role of the WTO in the negotiating game.
II. THE ORIGINAL SIN: A ‘DEVELOPMENT’ ROUND
A number of voices have argued that calling the Doha round a development round was not suitable.7 Srinivasan should be credited with providing the most comprehensive and persuasive critique of the agreed agenda in Doha, back in November 2001.8 He argues that trade is just one of the tools in the development
Lamy, supra note 1.
process; that there are many other tools that influence development and are probably more important than trade, and hence, the WTO has no mandate to negotiate on the matter. Thus, one would risk giving the wrong impressions, or, at the very least, raising the expectations too high, by calling this ‘a development round’.9 Moreover, failure could be costly, not simply for the participants but for the institution as well.10 Perhaps, it would have been more warranted to simply prioritize the positioning of developing countries in the WTO within the overall agenda and leave it there. Some people though, thought big time. Even so, when the name was chosen to denote the nature of the round, there were some obvious questions that
trading nations should have first addressed:
a. Trade liberalization was supposed to be the multilateral trading system’s contribution to development. Is such a trade liberalization model, as condoned in the various agreements, inappropriate for developing countries?
b. Since the WTO already contains provisions for developing countries, was the Doha Development Agenda (DDA) designed to evaluate the existing rules, and if need be, negotiate new ones?
c. What should be done about the tension between preferences and MFNliberalization?11 Preference erosion has occurred as a result of the latter, and numerous studies point to this effect.12 d. Even though developing countries have a seat in all negotiations owing to consensus, they do not seem to participate effectively in the WTO.13 How can this change?
Item (d) was not discussed at all and the first three items were discussed in an oblique manner. Trading nations fell short of addressing the root causes of the current situation. Let us first turn briefly to history to see how we ended up in the current mess.
treated better than WTO Members with respect to measures affecting trade.
12 Most recently, Harry Flamand & Håkan Nordstrøm, Gravity Estimation of the Intensive and Extensive Margins of Trade: An Alternative Procedure with Alternative Data, (CESifo Working Paper Series No. 3387, 2011).
13See Håkan Nordström, Patricipation of Developing Countries in the WTO–New Evidence
A. History Helps (but who cares about it?) When the GATT asked whether the developing countries were disadvantaged by the existing rules of trade liberalization, it commissioned a study by Gottfried Harberler on the GSP (generalized system of preferences) to examine the validity of these claims by the less developed trading partners He concluded that similar claims were not entirely unjustified.14 In his report, he examined both the shortand the long-term trends in commodity prices and the factors influencing them.
The report concluded, inter alia, that existing protectionist policies in the farm sector by developed (industrialized) nations, as well as tariff escalation practices by many developed nations were contributing factors to the lack of growth in developing countries.15 It is worth recounting in this respect, that the US had obtained a waiver in 1955, which allowed it to grossly subsidize its farm production over the subsequent years and essentially shield domestic producers from the challenges of international competition.16 The Haberler report made a series of recommendations to address the issue and suggested that the existing protectionism be reduced. More importantly, it sensitized the trading partners to the fact that not everyone gains alike from the existing regime and that something ought to be done to address the concerns of those who were being left behind (essentially the producers of labour-intensive goods).17 Haberler’s report was not the only game in town. Hans Singer, a German Professor of Economics at Cambridge, and Raoul Prebisch, an Argentine economist, were advocating for industrialization through import substitution policies as the safest way to development.18 The argument for import substitution
14 GATT (1958), Trends in International Trade, Geneva. Gottfried Haberler, of Harvard University, was one of the best trade economists of his time.
16See DOUGLAS A. IRWIN, FREE TRADE UNDER FIRE (Princeton Univ. Press, 2d ed.
2005) (hereinafter IRWIN).
18 For a comprehensive discussion of this issue, see PETROS C. MAVROIDIS, GEORGE
A. BERMANN & MARK WU, THE LAW OF THE WORLD TRADE ORGANIZATION (WTO):
DOCUMENTS, CASES, & ANALYSIS 191ff (Thomson/West 2010). For a critique of the Singer-Prebisch thesis, see how Viner [quoted in JOHAN VAN OVERTVELDT, THE CHICAGO