It seems that the current round of global trade talks at Geneva is headed for a cull de sac, as WTO chief Pascal Lamy has warned. Failure of the talks, Lamy said, will damage WTO, triggering an injurious ripple effect for the global multilateral trading system.
The participants of this crucial round are assembled to hammer out a pact by Sunday on global farm and manufacturing trade - the focus of WTO's Doha round.
Clearly, time is of the essence, as failure of the participants to work out a consensus agreement by this weekend will delay the conclusion of the round that also includes complex issues such as services that have to be sorted out by the end of the current year.
Launched in 2001 to boost global economy and address the issue of poverty, WTO is already well behind schedule, due largely to differences between developed and developing countries. However, a silver lining in the current round is the agreement that has been worked out on putting an end to farm export subsidies by rich states, which is more than what any previous round could achieve.
The developing countries maintain that concessions, offered by rich WTO member states on farm trade are a condition for them to cut industrial tariffs - the other half of the expected accord at Geneva. What has imparted urgency to the current Geneva round are the time constraints arising from the fact that the special US presidential powers to negotiate trade are scheduled to expire next year, and that Congress is unlikely to renew the presidential mandate.
The US has, meanwhile, defended its planned subsidy curtailments and urged other member states to effect deeper cuts into their tariffs before Washington could move further.
There is a perception among some experts that in many ways the WTO is a victim of its own success. Paradoxically enough, its problems stem from successful conclusion of the Uruguay Round and the huge transition that has been made from GATT to WTO.
Secondly, WTO membership has grown to 149, which is almost double the membership at the beginning of the Uruguay Round in 1986. Analysts believe that four broad trends now seem to ring the alarm bells. First, WTO is in danger of regulatory overload and has a creeping standards harmonisation agenda. Detailed prescriptive regulations are intended to bring developing country standards up to the developed country norms. The TRIPS accord on intellectual property sets the precedent for pressure to harmonise labour, environmental, food safety and product standards.
This intrusion in domestic policies and institutions of the developing world is largely seen as an undesirable act. Economically, it raises the developing countries' costs out of line with comparative advantages, and has a negative effect on labour-intensive exports, while politically it goes too far in curtailing national regulatory autonomy.
Second, legalisation of WTO is double-edged. Dispute settlement has by and large worked well so far. However, given its quasi-automaticity, governments have more incentive to fill in regulatory gaps in WTO agreements through litigation. This is a dangerous slippery area. Third, WTO is becoming increasingly politicised. Even more worrying are its deeper internal fissures.
The huge expansion of its membership since the late 1980s has made decision-making unwieldy. And rhetoric and point-scoring seem to have substituted for serious decision-making.
The Doha Round can achieve its objectives only through a strategy focused on market access. Tackling direct border barriers and core non-border regulatory barriers to trade in both developed and developing countries promises by far the biggest welfare gains, especially for developing countries.
Hence negotiations on core market access to agriculture, non-agriculture goods and services are far more important for development than all other aspects of the Doha Round put together.
Participants of the current Geneva session are trying to narrow the gaps on farm and industrial trade, while the US has offered "fundamental change" to its subsidies. Allowing liberal market access holds the key to the success of the Geneva round.
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