December 14, 2005

Not your grandfather's WTO

Well, I know most of you don't come here looking for WTO news, but I'm in Hong Kong now so WTO news is what yer gonna get! Sorry to the ghosts for this, but this stuff is too interesting, I can't hold back.

I spent the morning hanging out with a group of Least Developed Country delegates. It didn't take long to realize the dynamics have changed dramatically for them since the last WTO Ministerial Conference in Cancun two years ago. What's remarkable is that you don't hear any more complaints about process from the LDCs. This is definitely new. In Cancun, the poorest countries were furious about the process: the Mexican organizers presented drafts for agreement at the last minute, texts negotiated behind closed doors by the big trade powers that uniformly ignored LDC concerns and bore no relation to what had been negotiating in the months before the conference. The bad blood this "forced consensus" tactic generated had a lot to do with the collapse of Cancun. India, Kenya and Brazil refused to play along and just walked out. It was a fiasco.

The contrast this time around is startling. The Bangladeshi Trade Minister spoke glowingly of the "bottom-up" approach now in place - the texts presented for agreement this week are the same ones they have been negotiating since July 2004. The question is no longer whether to substantially liberalize agriculture at all, but how much, and how fast. "Trade for aid" has received a lot of attention in the first two days - with the US, the EU and Japan all offering substantial new sums of money to help LDCs take advantage of the new market opportunities an agreement would offer.

This doesn't mean the LDCs are thrilled about the way the negotiations are going: there are still very wide differences with the rich countries on basically all the issues, and some LDCs are suspicious that the trade for aid stuff is just an attempt to buy them off. But it does mean that LDCs no longer feel railroaded into signing stuff they've barely read. This is a lot different from the situation two years ago.

One sign of the improved atmosphere is the relatively small scale of the demonstrations outside. While there have been some protests, and a couple of fairly rowdy ones, the city itself feels normal. Certainly there's been nothing like the disruptions in Cancun or the utter chaos in Seattle. As the Zambian trade minister said, a big reason for this is that, this time around, most of the pro-south NGOs are inside the negotiating hall lobbying delegates rather than outside protesting - a shift that's both substantive and symbolic.

Most of the credit for this goes to Pascal Lamy - the former EU Trade Commissioner who's now the Director General of WTO. Lamy is one smooth operator, obviously way more competent than his predecesors. The conference is teeming with NGOs big and small, north and south. A lot of LDC ministers seem to genuinely appreciate the way he's handled the issue.

Unfortunately, Lamy tiene razon pero va preso. Trouble is, as soon as you stop trying to "manufacture consensus" you're left with the uncomfortable fact that there isn't really an underlying consensus - Europe and Japan are just not willing to liberalize their agricultural market to anything like the extent developing countries want to see, and developing countries are not willing to re-edit their mistakes from the last round, when they made specific commitments to liberalize manufacturing trade before securing specific commitments on agriculture.

Cancun showed that forced consensus is just not acceptable to developing countries anymore. Lamy deserves credit for understanding that much - but that doesn't magically shift the negotiating positions closer together somehow. The paradoxical result is that at the same time that LDCs praise the new, more transparent process, there's universal gloom about the prospects of signing anything meaningful this week - and a real sense that the Doha Round as a whole could fail. The alternative to forced consensus is not genuine consensus - it's deadlock.

Lamy, the sneaky frog, is determined to avoid a repeat of the embarrassment in Cancun. Counting the mess in Seattle back in 1999, a collapse this week would be the third WTO fiasco out of the last four ministerials. There's real concern that the WTO system would not recover from yet another P.R. disaster on that scale, so Lamy's watchword is "recalibrating expectations" - meaning he wants everyone to agree on something, even if it's not the "full modalities" they were originally supposed to hammer out in Hong Kong. ("Full modalities" is WTOese for "an outline agreement that resolves all the really difficult issues.") Given Lamy's near rock-star status around here, I bet he'll get his way. Come Sunday, you'll probably see ministers lining up to sign a piece of paper. It won't be the piece of paper they came here to sign, but it'll be something.