[Ip-health] World Trade Organisation head questions value of two US-led regional trade initiatives

Thiru Balasubramaniam thiru at keionline.org
Fri Jul 26 05:09:38 PDT 2013

This was originally published in the Financial Times.



BY SHAWN DONNAN, JULY 19 2013, 05:41

GENEVA — Outgoing World Trade Organisation (WTO) head Pascal Lamy has
questioned the "coherence" and value of two major US-led regional trade
initiatives, questioning whether they would succeed and their contribution
to global trade liberalisation efforts.

The launch this month of trade negotiations between the European Union (EU)
and US and the now five-year-old 11-country talks towards a Trans-Pacific
Partnership (TPP), which Japan will join next week, have been seen by some
as a major challenge to the WTO-shepherded Doha liberalisation round.

Defenders of the regional pushes argue that the US and its partners are
injecting a new dynamism into the global trade negotiating agenda after a
long period of paralysis due to the stalling of the Doha round. Together
with other regional initiatives, they could eventually form the building
blocks of a global agreement, supporters say.

But in an interview just weeks before he leaves office after eight years as
director-general of the Geneva-based WTO, Mr Lamy was quietly critical of
the EU-US and TPP efforts. "The reality is that the jury is still out" on
whether they will succeed or not, the former European trade commissioner

He said it was unclear whether officials in Washington, Brussels and Tokyo
had thought through how a transatlantic agreement would fit with a
trans-Pacific one and other regional negotiating efforts such as the
10-member Association of Southeast Asian Nations’ bid to unify its
bilateral deals with countries such as China, Australia and Japan into a
single regional framework.

Past experience showed bilateral and regional deals could be "stepping
stones" for big multilateral deals. But the growing importance of nontariff
barriers such as food safety standards and vehicle emissions rules to trade
meant that stitching together such agreements could be more difficult in
the future.

Agreeing to regulatory standards at a bilateral or regional level could
lead to "deeper" regional integration, he said. But it could also
complicate the process of achieving a much more global agreement with
"regulatory coherence" and potentially raise new barriers to trade.

"This issue is for the moment unanswered. We don’t know if that’s the
ambition. We don’t know who the coherence makers will be," he said. "When I
raise this question in Brussels they tell me ‘don’t you worry Mr DG
(director-general), we will make it coherent’. When I go to Washington and
ask this question they say ‘don’t worry, we will make it coherent’. And
when I go to Tokyo I say ‘Who is going to make it coherent?’ the Japanese
say ‘We don’t know’.

"The real question at the end of the day is whether this will lead to
multilateral convergence or not."

Such regional agreements also seemed intent on assembling a "coalition of
the willing" to avoid difficult issues such as agricultural subsidies, Mr
Lamy said.

"None of these bilateral, plurilateral, mini or mega (negotiations) will
ever lead to an agreement to reduce trade-distorting agricultural
subsidies," he said. "We’ve heard a lot about this EU-US (negotiation
towards a trade agreement). But nobody ever said that these two elephants
would put on their menu the reduction of their trade-distorting subsidies.
And they still have quite a lot of them. And it is probably the same
between the EU and Japan or even Switzerland and Japan."

Mr Lamy defended the Doha round’s relevance after 12 years of agonising
negotiations. "Intellectually, I can understand why people are fed up.… But
the politics are that you cannot negate this mandate (to level the playing
field)." The momentum towards a Big Bang agreement may not be there for now
but there was a good chance of reaching a meaningful deal in Bali later
this year on reducing customs barriers to trade, he said. The
"administrative thickness" of borders now added roughly 10% to the cost of
global trade and reducing this via a "trade facilitation" deal would mean
substantial savings for businesses. Especially as the average cost of
tariffs globally was now just 5%, he said.

Trade experts and key negotiators have nominated December’s ministerial
meeting in Bali as a "do or die" moment for the Doha round. Besides the
trade facilitation package, negotiators are also working on food security
measures pushed for by developing economies such as India that would allow
them to buy grains from subsistence farmers and stockpile them.

*Financial Times*

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