DOHA ROUND: LAMY URGES SOUTH AFRICA TO ASSUME

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TAGS: ETRD EAGR ECON WTO SF
SUBJECT: DOHA ROUND: LAMY URGES SOUTH AFRICA TO ASSUME
GREATER LEADERSHIP

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1. Summary. WTO Director General Pascal Lamy opened his
address to the South African Institute for International
Affairs in Johannesburg on February 10 with the conclusion
that he and others were right to "recalibrate expectations"
for December Ministerial in Hong Kong. As a consequence,
results exceeded expectations and now there is greater
attention to what remains to be done. Lamy felt that South
Africa had the size and competitiveness to assume a more
offensive position in the negotiations, and to show other
developing countries that they, too, could pursue offensive
interests. Lamy claimed that everyone knew what had to be
done to move negotiations forward. The United States had to
give more on agricultural domestic support. The European
Union had to give more on agricultural market access.
Developing countries had to give more on industrial tariffs.
Throughout, Lamy emphasized that every issue discussed in
Hong Kong embodied a very strong development dimension. End
Summary.

Protestors
--------------


2. As soon as Lamy began his talk at the South African
Institute for International Affairs on the campus of the
University of the Witswaterand, a dozen raucous protestors
started chanting anti-WTO slogans. Once escorted out of the
building, they continued chanting next to the window of the
auditorium for the entire two hours in an effort to disrupt
the event. It was in this atmosphere that Lamy lifted points
from his prepared statement and answered questions. His
prepared statement may be found at: www.saiia.co.za or
www.wto.org/English/news e/sppl e/spll18 e/htm.

Lower Expectations Exceeded
--------------


3. Lamy began with the conclusion that he and others were
right to "recalibrate expectations" for December Ministerial
in Hong Kong. The result was that the Ministerial exceeded
expectations in agreeing on a date for the elimination of
agricultural export subsidies and on the notion that
developing countries could employ a separate coefficient to
calculate tariff reductions using the Swiss formula. He
listed a number of other areas where progress was made, and
pointed out that every issue discussed in Hong Kong embodied
a very strong development dimension.

South Africa
--------------


4. Hong Kong also opened the door for plurilateral
negotiations in services, an area where Lamy believed South
Africa should play a leading role. He felt that South Africa
had the size and competitiveness to assume a more offensive
position in the negotiations. In addition, South Africa
should recognize that services were hugely important to its
own growth and development, and for the growth and
development of the rest of Africa.


5. Later, Lamy criticized South Africa for taking a
defensive approach to industrial tariffs and services,
despite having offensive interests at stake, especially in
the areas of tariff peaks and escalation. South Africa could
play a constructive role on issues surrounding preference
erosion, as it had suffered from the elimination of textile
and apparel quotas and could understand both sides. While a
successful Doha Round would result in further preference
erosion, especially when it came to AGOA and the EU's
"Everything But Arms," Lamy questioned the notion that the
effort to reduce trade barriers should be scrapped for the
sake of maintaining preferences. Finally, he argued that
much more should be done to advance south-south trade, since
two-thirds of customs charges paid by developing countries
went to fellow developing countries. Lamy hoped South Africa
would be a leader in this regard, to show other developing
countries that they, too, could pursue offensive interests.

Timelines and Deadlines
--------------


6. Lamy explained that the expiration of U.S. Trade
Promotion Authority in July 2007 meant that there was less
than a year left to finish Doha trade negotiations. This was
because lawyers would need three months to put any agreement
into final form, and the U.S. Congress must be notified

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90-days before it could schedule a vote. Complicating
matters was the fact that several important WTO members
(including the United States) would hold elections in the
second half of 2006. Therefore, most of the hard work would
have to be done during the first half of 2006.

Triangular Negotiations
--------------


7. Lamy claimed that everyone knew what had to be done to
move negotiations forward. The United States had to give
more on agricultural domestic support. The European Union
had to give more on agricultural market access. Developing
countries had to give more on industrial tariffs. This was
the "negotiating triangle" that would open the door to making
progress on other issues. The timeline for resolving this
"triangle" was the end of April 2006.

Public Perceptions and Politics
--------------


8. Lamy closed by saying that while making concessions in
trade negotiations was not painless, a successful Doha Round
would be a plus -- both for the world and for each individual
country. The public relations problem was that we would
always hear more about losers than winners. In this context,
he noted that public opinion in favor of trade agreements had
dropped from 66% to 60% this year. This might please some
politicians who continued to think that they could promote
exports while restricting imports, he reckoned, but this was
logically inconsistent and politically unsustainable over the
long run. Lamy cautioned that countries embarking on trade
opening needed to also have the domestic policies in place to
complement multilateral trade adjustments.

Questions and Answers
--------------


9. During question time, Lamy was peppered with
challenging questions from the organizers of the protest
trying to disrupt the event. Other questions reflected a
general lack of knowledge about the WTO and trade
negotiations. In the course of his answers, Lamy said that
there was still the need for a "green room" to facilitate
negotiations. He noted that despite various attempts to
reform the structure of the WTO, pragmatism had lead to the
current system of country groupings, such as the G-20, G-33,
and Latin American countries, that could engineer compromises
and mediate differences. He noted that South Africa played
this role with Brazil and India. Brazil had offensive
interests in agriculture while India had defensive interests.
The result was a G-20 proposal that Lamy thought brought
members much closer to what might be a final compromise than
did proposals from the United States and the European Union.


10. When it came to the power and authority that he
exercised over the negotiations, Lamy explained that the work
of the WTO encompassed negotiations, surveillance,
litigation, and training. The area where he could exercise
the most authority was training. The area were he could play
the most proactive role was negotiations, where in any given
hour he might be called upon to be a broker, navigator,
shepherd, doctor, or even midwife.


11. Lamy noted that increasingly issues in the WTO
surrounded regulatory barriers to trade, such as those
involving health, environment, and other social concerns.
Many of these were rooted in values rather than in monetary
concerns. Negotiating in monetary terms was easier, since
both sides could always split the difference. Negotiating in
value terms was more difficult, and he cited as an example
the debate on genetically modified organisms.


12. When a questioner attacked the WTO as serving the
interests of rich countries, Lamy argued that development
concerns had pervaded Doha negotiations, whose purpose it was
to correct past imbalances in the GATT that had their roots
colonial legacies and cold war geopolitics. He added that
Doha negotiators recognized that it was easier for countries
with budget and administrative capacity to adjust for trade
opening, and for this reason developing countries needed more
flexibility in a final agreement and assistance in
implementation. Finally, he pointed out that three-fourths
of WTO members were now developing countries. Today, the
G-20, G-90, and other developing country clubs wielded

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considerable power in the WTO.


13. In answer to criticism of the United States for
offering in the negotiations to reduce cotton subsidies when
it was required to do so anyway because of a dispute
settlement ruling, Lamy responded that either way -- dispute
settlement or negotiations -- the change was due to the WTO.
He also argued that while EU tariffs were still very high on
sugar, the effort to eliminate subsidies had to move forward.
These were positive developments motivated by the WTO.

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