Jose M. de Areilza
July 9, 2006
The Director General of the World Trade Organization (WTO) has some tough weeks ahead. He will spend all of his time engaged in shuttle diplomacy and mediation, in order to come up with a solution acceptable to the 149 WTO participants in the Doha round of trade negotiations. Well, Pascal Lamy has great experience acting as a broker on behalf of the European Commission, both as former Commissioner and chief of staff of Jacques Delors. May be his time to shine has come, in the same way that Arthur Dunkel saved the Uruguay round when it was about to collapse.
First thing Mr. Lamy has to do is create a sense of urgency. This round should finish before the end of 2006 and in any case before June 2007, when President Bush looses fast track authority to sign such a deal. The coming days and weeks might be crucial to forge a political compromise, that requires detailed and complex development in the form of “modalities” and “schedules” of lowering trade barriers.
Second thing Pascal Lamy must do is offer a broader picture of the negotiation potential gains to the top political leaders, so they can distance themselves from special interests. The most difficult political issue remains cuts in tariffs and agricultural subsidies in exchange for market access for industrial goods, a “chicken and egg” problem we have been suffering from in the last years of trade negotiations. (A US negotiator asked me recently, why does WTO always start with the most difficult problems first, unlike other rounds of multiple-issues negotiation? No good answer came to my mind.) It really does not make sense to let these special interests condition the whole the process, as if normal citizens or developing countries did not have a high stake in enhancing prosperity through fair trade. Joseph Stiglitz in his recent book “Fair Trade for All” offers a powerful suggestion for economic collective governance: all countries in the world would give completely trade acces to all the economies that were poorer per head than themselves. A bold liberalizing idea, based on the sound democratic principle of decision making under the veil of ignorance.
Finally, Pascal Lamy has to let President President Bush, the top European leaders and the Indian and Brazil presidents that they are not doing enough to save the Doha round. In the late June meetings in Geneva, the European Union and the US negotiators acted as if they did not have real mandates to accept further cuts in agricultural subsidies. EU commissioner Peter Mandelsson is continuously warned and contradicted by the French government, who does not want to weaken the EU deal on Common Agricultural Policy until 2013, so favorable for the Paris government. President Barroso should invest some of his political capital –in coalition with Chancellor Merkel and Prime Minister Blair- to push forward the WTO negotiations, even at the risk of further distance with France, which in any case is likely to be in political disarray until next years’ presidential elections.
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