WTO’s Lamy Sees Paralysis in Global Trade Talks

The head of the World Trade Organization castigated its 153 members on Tuesday for failing to agree a watered-down global trade deal by December and called for “an adult conversation” over what to do next.

“What we are seeing today is the paralysis in the negotiating function of the WTO, whether it is on market access or on the rule-making,” Lamy told the WTO’s Trade Negotiations Committee, according to a transcript of his remarks.

WTO members have been trying to salvage a deal from a decade of fruitless talks on the Doha Development Agenda, which was billed as the next leap forward in global trade liberalization but which collapsed earlier this year.

They had hoped to work out a smaller deal in time for a ministerial meeting in December, partly to liberalize trade but also just to prove that such a deal could be done.

The bottom line for a smaller deal was a trade package which would benefit the least developed countries (LDCs). But the WTO members could not even agree on that because many countries, including the United States and China, wanted an “LDC-plus” deal, with some extra elements thrown in.

Agreeing on what those extra elements should be eventually proved too difficult.

“I have to share with all of you what I sense is a collective assessment that the LDC-plus package as we framed it in May is not taking shape as we would have wished,” Lamy said.

U.S. Ambassador Michael Punke said the only way a deal could have been done was if “all major players” were ready to make “meaningful contributions”.

“As we feared, participants have proven much more comfortable in talking about what others can give than in talking about what they can contribute themselves,” he told the meeting, according to a transcript of his remarks.

“I understand instinctively the temptation to say ‘Let’s keep trying’. We would certainly be ready to do that if we saw some prospect that entrenched positions would change – but we do not.”

Trade experts say one consequence of Doha’s failure is a splintering of efforts to liberalize world trade, with countries increasingly striking bilateral and regional free trade agreements (FTAs) instead of pushing for one global deal.

“All countries are going to turn to bilateral agreements which are far from perfect and second best to a Doha deal. More and more businesses and business federations such as ours will also look at FTAs as the way forward,” said Adrian van den Hoven, director for international affairs at BusinessEurope, Europe’s largest employers’ group.

“The problem with bilateral agreements is that trade is not necessarily bilateral anymore. Parts needed in any given good may come from different places. It’s simpler for manufacturing companies if the rules are harmonized on a global level.”

Lamy said he the most practical and realistic way forward was to concentrate on tackling non-Doha issues at the ministerial meeting and to have a broader discussion about where the Doha negotiations would go next. That meant abandoning the LDC deal, which would “suck oxygen” out of the other efforts.

“I would urge you to use the summer break to reflect and come prepared to fully engage in an ‘adult conversation’ over ‘what next’,” Lamy told the WTO delegates. “Moving, so to say, from the ‘negative list’ of what you cannot do to a ‘positive’ list of what you intend to do.”

The European Union’s ambassador, Angelos Pangratis, agreed it would be good to examine what had gone wrong, but he warned against getting bogged down in that analysis, since “a prolonged void in the negotiating agenda” would prompt members to bypass the WTO and strike bilateral deals instead.

Lamy did not apportion or accept blame, but WTO members decried the failure of the deal, and many said they still wanted to see at least a basic LDC deal by December.

“Only as a second step should we be considering the feasibility of the ‘plus’ components of the LDC plus package,” Pangratis told the meeting.

China’s WTO ambassador Yi Xiaozhun said the organization’s credibility would be compromised if the WTO failed to reach any kind of LDC deal by December, according to an official who was present in the meeting.

(Additional reporting by Juliane von Reppert-Bismarck in Brussels; Editing by Andrew Heavens)