Mediterranean Products and the Fate of the Doha Round

1. Mediterranean Products and the Fate of the Doha Round Tim Josling Stanford University

2. Since Montpellier • Doha Round put on hold on July 24 • Technical discussions started in fall • Informal contacts on possible solutions • But no new offers tabled (as of 11/30) • Prospects look slim but not zero Josling Cal/Med Workshop, Washington DC

3. Since Montpellier • Regional Agreements have been sprouting like weeds • Main growth is in Asia • US hurrying to get FTAs approved • Canada winding up half-finished agreements • EU trying to catch up in Asia • EU also under pressure to complete EPAs Josling Cal/Med Workshop, Washington DC

4. Outline • What would happen if no agreement is reached in DDA by April? • Will the WTO multilateral rule system continue as the basis for world trade? • How might one reconcile the multilateral system with the proliferation of regional and bilateral agreements? • Does it matter to producers and consumers of Mediterranean products? Josling Cal/Med Workshop, Washington DC

5. What might happen if no agreement is reached in DDA by April? • Round could be formally closed? • Round could be suspended for a period of a couple of years? • Possibility of a freeze to lock in current low (agricultural) subsidies and applied tariffs? • Partial round with scaled down package? • Extension of TPA to allow time for completion: agreement in June? Josling Cal/Med Workshop, Washington DC

6. What might happen if no agreement is reached in DDA by April? • New round could be started in (say) five years time • May require rethink of agenda • Include topics excluded from this round (Singapore Issues?) • Mode 4 Services • SPS/TBT • Green Box • TRIPS (including GIs) Josling Cal/Med Workshop, Washington DC

7. Will the WTO multilateral rule system continue as the basis for world trade? • WTO still includes basic trade rules and a dispute settlement system • Rules are valuable to most countries • Small countries in particular rely on rule-based multilateral system • No sign (yet) that larger countries are contemplating abandoning WTO system Josling Cal/Med Workshop, Washington DC

8. Will the WTO multilateral rule system continue as the basis for world trade? • WTO litigation could take place of negotiation? • DSU has become a driver of change in policies • EU sugar • US cotton • US could face challenges under serious prejudice for rice and corn (if prices decline) • Impact of production on world market • Price effect hurts competing producers • EU could face challenges on processing subsidies, single farm payment Josling Cal/Med Workshop, Washington DC

9. Will the WTO multilateral rule system continue as the basis for world trade? • However, resistance could increase from domestic lawmakers (e.g. Peterson?) • Not all cases might be won • Only large countries vulnerable to challenge • Remedies still difficult to determine • Sanctions by small countries may be ineffective • May lead back to negotiation to settle cases Josling Cal/Med Workshop, Washington DC

10. Will the WTO multilateral rule system continue as the basis for world trade? • Bilateral and Regional Trade Agreements proliferating • Loss of support for non-discrimination, even in Asia • US hampered by Congressional reluctance (still suffering from NAFTA debate) • Trend towards “bigger” agreements makes them more interesting • WTO compatibility could become a major issue Josling Cal/Med Workshop, Washington DC

11. Will the WTO multilateral rule system continue as the basis for world trade? • Proliferation is not necessarily a bad thing • More likely to include “low cost” supplier in the RTA • Agglomeration into small number of blocs unlikely • Developing countries will try to have access into all developed country markets • Developed countries will search for larger prizes • What’s wrong with spaghetti? Josling Cal/Med Workshop, Washington DC

12. How might one reconcile the WTO with the regional and bilateral agreements? • WTO rules still apply to trade within RTAs (except EU) • WTO dispute settlement process still the most effective, even for settling regional disputes • WTO can deal with subsidy issues better than RTAs • WTO negotiations needed to reduce the margins of preference in RTAs Josling Cal/Med Workshop, Washington DC

13. How might one reconcile the WTO with the regional and bilateral agreements? • We already have a “mixed” trade system • Common trade rules • “WTO Plus” RTAs • Task is to bring coherence • Clarify WTO compatibility (“substantially all trade”) • Simplify rules of origin (encourage cumulation) Josling Cal/Med Workshop, Washington DC

14. How might one reconcile the WTO with the regional and bilateral agreements? • WTO could “internalize” RTAs and referee conflicts among the “alternative” trade systems • Incorporate RTAs into debates and decisions • Take advantage of dynamics of RTAs • Expand monitoring RTA compliance • RTAs will continue to be the “easier” way to trade market access commitments Josling Cal/Med Workshop, Washington DC

15. Does it matter to producers and consumers of Mediterranean products? • If the DDA fails, opportunity lost for some significant trade reform • Agricultural market agreement would have created significant trade opportunities for producers of fruits and vegetables • Domestic Support would have been cut in the EU to the advantage of efficient producers • No more disruptive export subsidies (including subsidies to offset raw material costs) Josling Cal/Med Workshop, Washington DC

16. Does it matter to producers and consumers of Mediterranean products? • NAMA would have created some trade opportunities for Med products (including fish?) • Further liberalization of the service market (wholesale trade) would be postponed • Trade Facilitation (removing administrative and other customs barriers) would also have helped exporters of fruits and vegetables Josling Cal/Med Workshop, Washington DC

17. Does it matter to producers and consumers of Mediterranean products? • On the other hand, DDA agenda tended to be focused on grains, oilseeds, livestock, dairy and sugar • Trade in Med products is often restricted by non-tariff measures • SPS issues always identified as major barrier • GIs cause conflicts for wines, spirits, and other products Josling Cal/Med Workshop, Washington DC

18. Does it matter to producers and consumers of Mediterranean products? • Are these possible Agenda items on the next WTO round? • Can these issues be resolved satisfactorily at at a regional level? • Are private sector standards more important than government regulations in controlling this trade? • Can developing countries participate on an equal footing in Med product trade? Josling Cal/Med Workshop, Washington DC

19. Conclusion • DDA is not “dead” but is more dependent than ever on the US Congress • Litigation is likely to be pursued but is not a good substitute for negotiation • Regional trade agreements are the best chance for progress in improving market access • The next WTO round is some way off but may be even more relevant for Med products Josling Cal/Med Workshop, Washington DC