How Doha died: A ringsider’s view

23 August 2008
Regarded as one of the leading experts on Philippine trade and agriculture issues, Riza Bernabe was interviewed by Walden Bello on the latest collapse of the WTO "Doha Round" trade negotiations.
The Doha Round of trade negotiations of the World Trade Organization (WTO) collapsed in Geneva nearly 14 days ago. This event has tremendous significance for both the Philippine economy and the world economy. To understand what happened and to gain an insider’s view of the negotiating process, I sought out and interviewed Riza Bernabe, a volunteer consultant to the Philippine delegation at the WTO “Ministerial Meeting.” Regarded as one of the leading experts on Philippine trade and agriculture issues, Riza Bernabe was for a long time a researcher at the Philippine Peasant Institute [now Centro Saka Institute] and currently consults for various organizations. In lieu of my regular commentary, I am reproducing this interview. The agricultural subsidies issue Question: You have varying reports on how much agreement there was before the Doha Round talks collapsed on July 29. Some press reports said that countries had agreed on 90-95 percent of the issues. Some said that only the Special Safeguard Mechanism (SSM) stood between failure and success. What do you think? Answer: Well, let me speak only on the agriculture negotiations. I don’t think that the subsidy issue was resolved. Sure, the US offered to cap its domestic subsidies at $15 billion. But Brazil and other countries said that while that was good starting offer, it needed to be improved on. So the $15 billion offer of the US is not viewed by members as the final figure. Q: What did you think of the US offer? A: Well, it seemed like the US was conceding a great deal in coming down to $15 billion from what it was prepared to offer in Potsdam in June 2007. It seemed that it was serious about meeting [WTO Director General Pascal] Lamy’s proposal to have a cap on domestic subsidies that would range from $13 billion to $16 billion. But, in fact, its notifications on the size of the domestic support were much lower than $15 billion during each of the last three years. So, if it was actually shelling out much less in subsidies than $15 billion, there was room for more reduction, as the other countries pointed out. But, you have to grant it to the US negotiators: by announcing the $15 billion cap at the very beginning of the talks, they made the US look good and put other countries on the defensive. Image is as important as substance in the WTO talks: No one wants to be seen as being responsible for the collapse of negotiations. Why the US did not press SPs Q: I was surprised that the US did not make an issue of Special Products (SPs) this time around when it was partly on SPs that the G4 meeting in Potsdam foundered last year. A: The maximum flexibility allowed under SP is exemption from tariff reduction. I am sure the US knows that, when it comes to SPs, developing countries are more concerned about the issue of preserving policy space, and that some of them use low applied tariffs even if they have high bound rates. So in a sense, Special Products do not really block trade as the US has always argued. I think the US used its position on SPs more as a bargaining chip rather than as a real negotiating point in the trade talks. It is definitely more concerned about the SSM [Special Safeguard Mechanism] because this has the potential of allowing developing countries to increase tariffs beyond the bound rates. The US does not want developing countries to have full access to SSM even though this will only be used during times of import surges or price declines. SSM: The breaking point Q: Let’s move to the issue on which the Mini-ministerial broke down, the SSM. Who do you think was at fault? A: Clearly, the US. As I mentioned earlier, the US wanted to emasculate the effectiveness of the SSM for developing countries. It wants to limit the opportunities when developing countries can increase tariffs beyond the pre-Doha bound rate in cases of import surges. The G33 has always insisted that remedies or additional tariffs should exceed the pre-Doha bound rate if SSMs are to be genuinely useful to developing countries, especially those with low tariff bindings. The US insisted that a 150 percent trigger should be breached before this maximum remedy can be used. This means that imports would have to surge by 50 percent before a developing country is allowed to increase tariffs beyond the UR [Uruguay Round] bound rates [also referred to as Pre-Doha bound rates]. The G33 had earlier rejected the Lamy text, which set this trigger at 140 percent, so the US proposal was clearly unacceptable. Their proposals (both the US and Lamy’s) meant that local farming industries in developing countries would already be dead before they could sufficiently increase tariffs to protect their local farmers! The US also insisted on the “crosscheck,” which essentially requires developing countries to show that once imports breach a volume trigger, it should also have an impact on prices, and conversely, once imports breach price triggers, it should also have an impact on volume. It is a roundabout way of saying that developing countries should have two sets of triggers—both price and volume—for SSM. This is a clear revisionist view of the Hong Kong Ministerial Declaration, which requires developing countries to meet either price or volume trigger for SSM. Q: What about on the level of protective tariffs that could be imposed, what were the disagreements here? A: Well, even before the Mini-ministerial the G33 had already gotten the concession that countries could raise tariffs by at least five percentage points beyond the Uruguay Round bound rates. Coming into the latest negotiations, Indonesia wanted no cap on the tariff hike. Some in the G33 wanted a cap of 50-70 percent. The Philippines proposed capping tariff hikes at 30 percent. The US knew that it had already lost the debate on whether or not remedies should exceed the pre-Doha bound rate, so its strategy was to limit developing countries’ access to these remedies by insisting on a 150 percent trigger. The G33 and the Philippines Q: The 30 percent cap the Philippines proposed, how was that arrived at? A: That was based on simulations conducted by the Department of Agriculture. Q: We have it on good authority that there were a number of countries that were disappointed with this position, including Indonesia. Is this true? A: I understand that there are differences in position regarding the extent to which remedies should go beyond the bound rate. Some members of the G33 maintain that there should be no cap on remedies, But the G33’s main basis of unity—that remedies should exceed the UR bound rate—remains and it was able to win this debate in the trade talks. Q: There are some who say that the Philippines is no longer a part of the political core group of the G33. I thought we were seen as one of the leaders of the G33? A: The Philippines was indeed regarded as one of the key leaders of G33 especially during the Cancun and Hong Kong Ministerial Meetings. I know that it is still a very active part of its technical core group. However, after the “Walk in the Woods” [the crucial meeting called by Agriculture Committee Chairman Crawford Falconer on July 22, 2008, to iron out the differences between the US and the G33], in which the Philippines was not able to participate, I am not sure if it is still seen as part of the coalition’s political core. Q: Was the Philippines invited? A: As far as I know, yes. Q: Do you think we did not attend so we would not have to bear the burden of carrying the G33 position of high protective tariff rates while our position was only 30 percent? A: During a meeting with Philippine civil society groups in Geneva, Ambassador [Manuel] Teehankee, when asked by NGOs why the Philippines was not part of the Walk in the Woods, explained that the Mission decided to negotiate through the G33 and G20 rather than participate directly in the Walk in the Woods, What I can say though is that Indonesia’s position on SPs and SSMs, especially insisting that there should be no caps on remedies was an indication that it took seriously its position as the leader of the G33. Q: We also heard that there was some friction between the delegation from Manila and our Geneva-based negotiators—that is, that the Manila delegation was more circumspect and was willing to sign on to an agreement only if our interests were not clearly compromised and the Geneva people placed more emphasis on a successful conclusion to the negotiations. Is this true? A: It was precisely to better coordinate our negotiating strategy that Secretary of Agriculture [Arthur] Yap wrote up a memo specifying our bottom line in the negotiations before the Mini-Ministerial. But in the case of many developing countries, people have noted that there is this constant tension between the capital and the negotiators. It is said that pressure from the capital is constantly needed to ensure your Geneva people do not agree to a bad deal. There is a diplomatic culture in Geneva that emphasizes compromise, for that is what diplomats do: to work out compromises. With its resources, the US does not face this problem, since the capital closely coordinates every move by its Geneva-based negotiators. Q: Do you think the Doha talks will resume soon? A: I doubt this. I don’t think it can resume until after the US elections. People are, in fact, talking about a freeze in the negotiations of at least two years. Copyright 2008
Walden Bello, a fellow of the Transnational Institute, is professor of sociology at the University of the Philippines , president of the Freedom from Debt Coalition and senior analyst at Focus on the Global South.