Carnegie Endowment for International Peace
Trade, Environment, and Development
Issue 1
May 2002

Kamal Malhotra, United Nations Development Programme

The New World Trade Organization negotiations launched in November 2001 have been widely heralded as a "development round," but a closer look at the results of the Doha Ministerial reveals a less optimistic picture. While developing countries scored a major political victory on intellectual property rights and public health, they still fact major uphill battles against industrialized countries on issues such as governance and transparency, market access in agriculture, anti-dumping, implementation of Uruguay Round commitments on textiles and on the inclusion of additional issues of which they are not demandeurs. In fact, the most important phenomenon to emerge at Doha is not to be found in the ministerial declaration but in the effective arguments and negotiation strategies brought to bear by organized and mobilized groups of developing countries. Only by increasing the effectiveness of such strategies and further strengthening their collective resolve will developing countries secure negotiated outcomes that really address their development needs.

After a final deadlock of almost 24 hours, the Fourth World Trade Organization Ministerial, held in Doha, Qatar, concluded on November 14, 2001. The failure of the Seattle Ministerial two years earlier meant that the Doha negotiations would be important, but in the aftermath of the September 11 attacks on the United States and the rapidly accelerating global economic downturn, the outcome took on even greater significance.

Despite rhetoric to the contrary, the Doha Ministerial Declaration does not adequately reflect the needs and aspirations of developing countries. The following is an analysis of the main issues that were discussed at the ministerial from both a developing country and a development perspective. While developing country perspectives and interests within the multilateral trading system cannot be described in monolithic terms, based on their stated positions, there were a number of issues on which the majority of them had similar views.

It is possible to identify several common, important themes which relate to the intersection of trade and development policy.

• The current trading regime is based largely on negotiations over market access and mutual reciprocity, with outcomes that cover both trade and nontrade issues. Unlike the predecessor General Agreement on Tariffs and Trade (GATT), the WTO regime is not just about cross-border trade issues but also about sovereign domestic regulatory and legislative matters not directly related to trade. Moreover, new negotiation issues--services and trade-related aspects of intellectual property rights (TRIPS)--introduced as part of what the University of Toronto's Sylvia Ostry calls the "Grand Bargain" of the Uruguay Round have real benefits and costs, as well as clear winners and losers.
• A mercantilist market access system is not necessarily consistent with development. By constraining certain development-policy choices, putting a premium on others that may have real opportunity costs, and increasing the costs of more appropriate strategies, it can reduce a country's development policy autonomy and its range of economic options.
• The significant asymmetries in the development levels, capacities, resource endowments, and power of WTO member countries are understated because of the preeminent principle of mutual reciprocity. This is clearly one of the most serious and enduring problems of the multilateral trading regime.

Any attempt to implement a market access paradigm among unequal actors highlights the importance of Special and Differential Treatment (S&DT) and of translating the "best endeavor" provisions accepted by industrialized countries in the Uruguay Round into concrete and binding agreements. No one set of rules, standards, or institutions will fit all countries, especially those that have not yet developed national institutions and capacities necessary to compete in global markets. As a result, S&DT should be recognized not as concessions or favors but as logical, just, and essential in light of the asymmetries among WTO members. Such an understanding of S&DT is necessary if trade is to be regarded seriously as a means to development, not as merely an end in itself. The "best endeavor" technology-transfer, technical-assistance, and capacity-development commitments made by countries in the Doha Ministerial Declaration must also be converted into binding commitments on the more advanced WTO members.

From a development perspective, it is possible to identify both broad and specific concerns regarding the negotiating and governance processes in Doha, and the specific agreements reached there.

Central to any negotiated outcome is the process responsible for forging consensus. Developing-country delegations had voiced numerous procedural concerns even before they arrived in Doha. They had objected in Geneva to the draft ministerial text, which had been presented as a clean, nonbracketed text by the chairman of the WTO General Council, despite the fact that many developing countries had contested parts of it. The transmittal of this text to ministers in Doha, despite their protestations, set an unfavorable tone. This was compounded by the appointment of six "Friends of the Chair" to aid in the negotiations. A number of developing-country delegations questioned the selection process on procedural grounds, but their concerns were brushed aside. Even though half of the "Friends" were from developing countries, most delegations felt that those selected were too sympathetic to the views of the Quad countries (the United States, the European Union [EU], Canada, and Japan) and the WTO leadership. The Friends of the Chair were also criticized for using their discretion to decide whether the consultation process would be bilateral, plurilateral, or open-ended. Finally, many delegations did not know when and where meetings were taking place and faced language difficulties because of inadequate translation.

On the positive side, certain segments of the Friends of the Chair process were open to any interested member, a vast improvement over the notorious invitation-only "green rooms" of earlier ministerials. The periodic reports back from the Friends of the Chair to heads of delegations and the Committee of the Whole were also helpful. Therefore, on balance, and despite enormous room for improvement, the Doha process was not as heavily criticized as the Seattle process.

For agricultural and food-exporting developing countries, the main negotiation objectives were to have the European Union agree to phase out all export subsidies; for Japan, the EU, and the United States to dismantle their trade-distorting domestic support measures, tariff escalation, and tariff peaks; and for wealthy countries to provide greater market access.

For developing countries heavily dependent on agriculture, food security was a crucial concern as well. To that end, a stronger S&DT provision, recognizing the right of all peoples to have access to safe and nutritious food, became a major objective. Others sought agreement on a Development Box, which, emphasizing food security, would allow developing countries to have flexibility and policy autonomy to pursue agricultural policies serving their broader development needs.

From a development perspective, all of these concerns are equally important. The opportunity costs of trade revenue lost because of forgone exports by countries such as Argentina continues to be high, especially in times of crisis, and the social, political, and development costs of reduced food security and lost farmer livelihoods in countries like Egypt and India can be catastrophic.

Prior to Doha, there was substantial consensus among members on some agricultural issues. Developing countries had managed to get, in principle, an agreement in Geneva on a strengthened S&DT clause more sensitive to their food-security concerns, together with a commitment to its implementation after Doha. However, differing views on the draft agricultural text in Doha, seemingly surmountable, became almost intractable, making negotiations on agriculture pivotal to achieving the goal of overall agreement. The EU remained staunchly opposed to the phaseout of export subsidies, while the Cairns Group of 18 agricultural exporting countries insisted on significant movement on this issue. The United States attempted to justify its own domestic income support to farmers--which the EU and many developing countries oppose as trade distorting--yet was supportive of the Cairns Group, whose members were adamant that EU subsidies be phased out.

A number of developing-country members were unhappy with the process first initiated by Singapore, which chaired the negotiations, because it appeared partial to the EU position. Export subsidies came close to being a deal breaker for the EU, which refused to budge until the last day of negotiations. Only the overriding desire for an agreement in Doha finally led the EU to agree to "reductions, with a view to phasing out all forms of subsidies." The intent of the EU is unclear because the commitment they made was "without prejudging the outcome of the negotiations"--in other words, the ultimate deal is far from preordained. Moreover, the EU made its concession only in exchange for stronger language on environment, investment, and competition policy. The triangle of agriculture, environment, and "Singapore issues"--especially investment and competition policy--thus became the most important nexus for trade negotiation and bargaining in the final hours at Doha. Indeed, it was cross-bargaining and compromise by different WTO members in these three areas that determined the final outcome.

Among the contentious issues going into Doha, TRIPS and its relationship to public health clearly had the highest profile. There were two options for a separate statement to be included with the main ministerial declaration, one organized by developing countries like Brazil, India, and members of the Africa Group, and the other supported by the United States, Switzerland, Japan, Canada, and Australia. Developing countries emphasized the public health provisions of the TRIPS Agreement in their text, while the second, being more restrictive, was limited to access to medicines for pandemics such as HIV/AIDS, tuberculosis, and malaria.

Despite the pressure, the coalition of developing countries remained firm in its position, while most countries supporting the second option indicated a willingness to shift positions when pressured. The anthrax scare in the United States, during which Canada threatened to violate the patent on the antibiotic Cipro, weakened the rigid positions of the United States and Canada. A working group chaired by Mexico came up with an alternative draft of the most contentious and crucial paragraph, paragraph 4, which was similar to the developing countries' stance. While the United States continued to resist a negotiated settlement until the end, the final language adopted in a separate statement by the ministers was the first success of Doha and arguably the only one clearly favoring both developing countries and human development outcomes. While the statement is a political one, it increases the flexibility for legal interpretation in cases of dispute. As such, it was an important victory for development and developing countries.

The EU was the main demandeur on the environment, invoking food safety and hygiene concerns. The United States was concerned about the EU position on genetically modified (GM) food, fearful that negotiations would result in further restrictions on U.S. exports of these foods to Europe. Countries like Japan and Chile were open to negotiations but were not demandeurs. On the other hand, many developing countries were opposed to any negotiations in this area, suspicious of the protectionist intent.

Chile was the "Friend of the Chair." When it became clear on November 13 that the EU was not likely to get what it wanted on agriculture, investment, and competition policy, it increased its insistence on its environmental demands. Appealing for a face-saving agreement to counter-balance the agriculture language on phasing out subsidies, the EU got a commitment to start limited negotiations without prejudice to the outcomes, as in the case of agriculture. This was focused on clarifying the relationship between WTO rules and trade obligations in multilateral environment agreements (MEAs); procedures for information exchange between MEA secretariats and relevant WTO committees; and the reduction or elimination of tariff and nontariff barriers to environmental goods and services. The WTO was also asked to continue its work on the effect of environmental measures on market access, relevant TRIPS provisions, and eco-labeling, although these are not areas for negotiations. Of all of these subjects, only the market access and TRIPS provisions are issues that the majority of developing countries have requested.

Like TRIPS and public health, implementation of commitments from the Uruguay Round was among the most disputed issues going into Seattle. Prior to Doha, developing countries wanted to address the plethora of outstanding implementation issues before agreeing to a new round, and argued that these should be resolved prior to any new negotiations. This request was rejected by industrialized countries, who insisted that all issues be addressed only in the context of new negotiations. Switzerland chaired the negotiations on implementation and adopted the EU and U.S. position linking implementation negotiations to the broader agenda. Negotiations produced a modest gain for developing countries; the parties agreed that all implementation issues must be resolved by the end of 2002.

While linking implementation issues to the outcome of the entire negotiations requires that developing countries "pay twice" for problems caused by the Uruguay Round, it could increase developed countries' attention to such concerns, which is crucial. Enhances textile access, for instance--one of the most important implementation issues--was rejected out of hand by the United States, opposed by Canada, and found difficult by the EU. In fact, the final text makes no real commitment on textiles, simply referring the proposal to the relevant committee in Geneva. The only comfort to developing countries is that the textile proposal remains in the agreed Ministerial Implementation text.

As mentioned earlier, the Singapore issues were clearly among the most fractious and high-stakes matters at Doha. While almost 100 developing countries wanted to continue studying these issues until at least the next ministerial in 2003, as was agreed at Singapore in 1996, the EU pressed for immediate negotiations, with support from the United States, Canada, and Japan. For market access reasons, the United States has been particularly interested in government procurement, though it agreed in Singapore that the steady process in this area would be limited to transparency.

Canada chaired this working group. The penultimate draft declaration on November 13 proposed continuing the study process on investment and competition policy until 2003, with a view to making a decision on whether to negotiate then, and suggested immediate negotiations on transparency in government procurement and trade facilitation. Many delegations expressed their unhappiness with this.

The Singapore issues appear to have been actively used by the EU, with support from other Quad members, for horse trading (together with environmental issues) in exchange for the language on agricultural export subsidies. India firmly resisted inclusion of these issues, and a final compromise was postponement of negotiations on all four Singapore issues until after the next ministerial, but only if there is explicit consensus then. The modalities of such negotiations will be worked out during the next two years. This was a potential deal breaker for India and a number of other developing countries, as well as for the EU. Differing interpretations remain, but the conference chair's clarification at the final session of the ministerial suggests that negotiations will not automatically happen without an explicit consensus. At a December 12 conference at the Carnegie Endowment for International Peace, Deputy U.S. Trade Representative Peter Allgeier concurred with this assessment.

Quad countries want lower industrial tariffs from developing countries, while developing countries demand that tariff peaks and escalations on their agricultural and industrial export be removed immediately. The LDC (least developed countries) group was against negotiations and wanted studies to continue because empirical evidence indicates that falling tariffs have stymied industrialization in many developing countries. A number of developing countries supported these LDC demands, arguing in addition for the removal of tariff peaks and escalations. Reducing industrial tariffs is the one "new issue," other than the environment, on which the final ministerial declaration calls for immediate negotiations. However, many question whether this is a new issue, since industrial tariff reductions were the core of the GATT system for almost 50 years.

Anti-dumping has emerged as a major concern for Japan, South Korea, and Brazil, among other countries. The use of anti-dumping laws by the United States for protectionist purposes--to keep lower-priced foreign products, particularly steel, out of domestic markets--remains a highly charged issue. The United States remained intransigent on this going into Doha, but midway through the process made a deal with Japan. This opened up examination and clarification of anti0dumping disciplines with a view to tightening them, but without any commitment to change U.S. anti-dumping legislation. The recent U.S. decision to impose tariffs of up to 30 percent on a range of steel products, in an attempt to save its noncompetitive producers, does not auger well for progress in this area. Instead, it has the potential to develop into a battle between the United States and much of the rest of the world. Many countries, including China, South Korea, Brazil, and the EU, have filed cases with the WTO dispute-settlement body against the United States on this issue.

The trade-labor linkage, first actively pushed by President Clinton in Seattle at the behest of labor unions, was clearly a contributing factor to the breakdown of talks in 1999. In Doha this discussion made little headway, with developing countries stating that the Singapore Ministerial Declaration on this issue should be reaffirmed and that the matter should be put to rest once and for all in the WTO.

There were only two lines on this issue in the preamble of the final Doha Declaration's language noting the work of the International Labor Organization on the social dimensions of globalization. An important consequence of this is that, for the time being it will be hard for the labor issue reemerge as a subject of discussion, let alone negotiation and agreement, in the WTO. It also appears to have been effectively detached from the environment, to the visible relief of most environmental advocates. Labor union representatives were unhappy that neither the EU nor the United States fought hard for its inclusion and that developing countries dismissed it out of hand.

The LDC group, led very actively by Tanzania, consistently brought up capacity-building issues, pointing out the minimal commitment by the wealthier members in this area. In the end, the group felt most of their issues were not taken seriously, despite their strong preparation and negotiation. The group also objected to the Friends of the Chair process, because no LDC member had been selected and there had been little transparency. A seventh Friend of the Chair, Botswana, was appointed to consider Other Issues midway through the Doha proceedings.

A number of additional matters arose during the Doha meeting; some were used to threaten an agreement. Notable among these was the demand for a waiver by the Africa, Caribbean, and Pacific (ACP) group of states. This group threatened a walkout if its preferential relationship with the EU under the Cotonou Agreement was not recognized with a waiver. The Latin American and Caribbean banana dispute became a focus of discussion, with Ecuador, Honduras, and Colombia actively involved. Thailand and the Philippines raised concerns about the impact on their canned tuna exports if such a waiver were granted. The EU attempted to portray this issue as a South-South matter, but Thailand and the Philippines saw the EU as stalling. The issue was finally resolved with the EU providing the waiver and the WTO membership endorsing it.

The Doha agreement mandated that new negotiations conclude in approximately three years, by January 2005. It is hard to see how this will be achieved, given the experience of previous negotiations--the Uruguay Round took eight years--the fragility of the agreement achieved, the ambitious agenda in the single undertaking, and the fact that negotiations on the most difficult Singapore issues are not mandated to begin until after the Fifth Ministerial meeting, in 2003, and then only upon explicit consensus. Such consensus could prove elusive if the implementation concerns of developing countries are not adequately dealt with by the end of 2002.

Indeed, the key question is whether Doha is genuinely a development round. While the Doha Ministerial had a number of distinctive aspects, from its location to its fortresslike security, one that stood out was the coming of age of many developing countries, who held their ground with sophisticated arguments. Nevertheless, the nature of the agenda going into Doha with post-September 11 geopolitical realities compelled many developing countries to devote most of their energy to damage control rather than the pursuit of a proactive, "positive agenda" of trade and development. Moreover, no country, despite being unhappy, wanted to be the first or only member to veto an agreement. As such, the possibility that Doha would deliver a genuinely positive development round was constrained from the start.

That said, the ministerial did produce a few pro-development initiatives with the TRIPS and Public Health Declaration being the clearest, because even though it is political it increases the flexibility for legal interpretation. In addition, the WTO will create two new working groups--on trade and transfer of technology and on trade, debt and finance--in addition to developing a new work program on small economies. While it is too early to determine whether these working groups will yield any concrete benefits for developing countries, they clearly have the potential to do so. Notwithstanding these gains, an objective balance sheet of the process and outcomes at Doha makes it clear that calling it the Doha Development Agenda stretches both reality and imagination. Many policy makers, especially those in the North, and some multilateral organizations have quickly christened it so--ironically even before negotiation outcomes have been determined.

Having said this, one must add that although Doha cannot be regarded as a clear-cut success for developing countries and development, the preparation and combined strength of many developing countries can be credited for an outcome that was, in many ways, more favorable to their interests than the accomplishments of all previous WTO minsiterials. Despite this, overall, Doha should be viewed only as the first step in what remains a long struggle to create a genuine trade and development agenda. Any rhetorical labeling of what was agreed to by governments as the Doha Development Agenda obfuscates this essential, indisputable fact, and will make this struggle more difficult than if already is for developing countries and their people.

Kamal Malhotra has been senior advisor at the United Nations Development Programme (UNDP) in New York City since September 1999. He works primarily on trade, debt, and global finance issues from a development perspective and leads a UNDP project on trade and sustainable human development.

Previously, Mr. Malhotra was cofounder and codirector of Focus on the Global South, a policy research and advocacy organization in Bangkok. He held earlier positions with Oxfam Australia and the International Institute of Rural Reconstruction in the Philippines.

Mr. Malhotra was educated at the University of Delhi, the Indian Institute of Management, and Columbia University. He is also the coauthor or coeditor of a number of recent books, including Reimagining the Future: Towards Democratic Governance (La Trobe University, 2000) and Global Finance: New Thinking on Regulating Speculative Capital Markets (Zed Books, 2000).

© 2002, Carnegie Endowment for International Peace