Europe, China, India must lead trade multilateralism

SCMP November 17, 2003


Most of the world is searching for ways to reinforce a badly bruised multilateralism. The trade agenda provides an ideal and immediate starting point, an opportunity for a show of leadership by Europe and by the emerging players, China, India and Brazil.
It is immediate because there is a December 15 deadline to get the Doha round of trade negotiations back on track after its derailment in Cancun. It would show that big nations are capable of looking beyond current spats over steel tariffs and currency values to longer-term mutual interest. It is ideal because it is the one area of global affairs on which the United States has not, so far, wavered in its commitment to multilateralism. Indeed, prior to Cancun, it showed considerable flexibility, for example, on Aids drugs for poor countries.

Unless the opportunity is seized, developing countries may miss out on the first and, perhaps, last global trade round from which they have more to gain than the rich nations. The US commitment to multilateral trade may quickly erode under pressure from its trade deficit and a desire to reward international political allies, such as Australia, with bilateral deals. And Europe's pretensions to be a guardian of multilateralism will have been revealed as empty rhetoric.

The lead must come from the top, and from the major capital cities. It cannot come from ambassadors in Geneva, with their obsession with procedures and mercantilist horse-trading, or even from trade ministers and negotiators. The sulky post-Cancun remarks of European Union negotiator Pascal Lamy and America's Robert Zoellick suggest they blame procedures, rather than the lack of political commitment, for failure.

There is no reason to expect a lead from the US, given the presidential election next year, and the current upsurge in protectionist pressures. Nor should one be expected. The EU and the developing world need to do more to encourage US multilateral instincts by showing some vision of their own, being prepared to forego short-term interests for longer-term goals. The most that should be expected from the US now is to impose a moratorium on bilateral deals and at least be as flexible as the EU on agriculture.

The biggest onus now falls on French President Jacques Chirac. Not only is he supposedly the major champion of multilateralism, he is also the only leader who can move Europe on the issue at the core of Doha and the one which killed Cancun: agriculture. In its own economic, as well as political, self-interest, Europe has to recognise and act on the fact that the past exclusion of agriculture from World Trade Organisation rules has created an unfair world, and there cannot be a "balance of concessions" from those hurt by its exclusion.

It is debatable whether agriculture should be treated as a single issue, or priority given to a couple of commodities, notably cotton (where the main culprit is the US) and sugar (where Europe is primarily to blame), for which export subsidies are particularly damaging to some very poor countries. Emphasis on a few fits badly with WTO "package-deal" procedures, but it could do much to restore poor countries' faith in the organisation and the principles of free trade. Likewise, the leading developing countries need to show that they can move beyond solidarity in resisting EU-US dictation of the trade rules, to offer joint flexibility, giving ground on some issues. China, India, Brazil and South Africa all have far more to lose from not getting a Doha deal than by standing on supposed "principles".

Developing-country flexibility would also help to undermine the fragile EU-US pact, which probably owed as much to the need to patch up transatlantic relations in the wake of the Iraq war as it did to trade interests.

A political initiative now may not necessarily be enough to get the Doha round completed by its late 2005 deadline. But without such a programme, the WTO process will limp into limbo, in which case the trade agenda will be taken over by unilateral actions, currency wars and bilateral pacts. The US president may also lose "fast track" - a deal where Congress can only accept or reject, but not amend, trade agreements - which is up for review in early 2005. And the non-US powers will have lost the opportunity to show America the benefits of multilateralism.




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