WTO: The Last Day in Hong Kong–No Fall Off the Precipice But More Climbing to Do

By December 18, 2005Trade

Daily Updates from Hong KongHere is the final installment of Frank Vargo’s daily update–from the front lines–in Hong Kong for the Sixth WTO Ministerial Conference:

Finally, the big day has arrived! It is Sunday, December 19th in Hong Kong, and the WTO Ministerial meeting was scheduled to end by 6:00 pm. The only trouble is that it is now after 10:00 pm, and the meeting just ended. But that’s how these things go.

Here is what happened: After days of hard and sometimes acrimonious bargaining, a revised Hong Kong Ministerial text was issued this afternoon about 4:00 pm. The new text lays out the understandings on what had been agreed and what is supposed to happen next in the negotiations.

The text was developed in what is called, “the green room,” named after a meeting room in the WTO Headquarters building in Geneva, Switzerland (though the room was painted something other than green decades ago). The “green room” is a process in which the most active 30-40 of the 150 countries meet to haggle out the terms of compromises, with some of the participants representing dozens of countries who are not in the room.

Finally, the “green room” text was reviewed by the Heads of Delegation (HOD) meeting involving all the 150 participating countries. Unfortunately, as the WTO proceeds by unanimity — all 150 delegates have to agree.

That means that each country had maximum leverage Sunday night in Hong Kong. If Tonga (which just became a member of the WTO), for example, were to object to a certain provision, the whole process would be on hold until Tonga’s objection was taken care of. The risk was that one or more countries would really dig in on an important point and stymie the whole process. But that didn’t happen, and we now have a final text.

After all our lobbying, and working with manufacturing associations from Europe,
Canada, Japan, Australia, New Zealand, Korea and Taiwan all week, what did we end up with? Basically, there are two pieces of good news — first, we didn’t lose anything — and believe me, more than once that was a real possibility.

And second, language was included that ensures the industrial negotiations can include industry sector negotiations, where groups of countries can agree to totally eliminate their tariffs on products in a particular sector. If you get enough countries to agree, you come close to global free trade in that sector. There are about 20 or so U.S. industries pressing for sectoral agreements — including in electronics, chemicals, wood products and others.

So what’s the bad news? Well, not much was decided as far as guidelines on how you negotiate. Basically all the vagueness that was in the text before the ministers started to meet is still in the final text. The NAM was hoping that ministers would make some fundamental decisions on how tariffs would be cut, how non-trade barriers could be negotiated, and the like. Ministers were supposed to make some basic decisions — what kind of tariff cutting formulas and what sort of exceptions and for whom, and under what circumstances.

But these decisions were not made at the Ministerial. Basically, when you strip away the flowery words, ministers said “we can’t decide here — so let’s give our negotiators four more months to resolve differences, and tell them to wrap this up by the end of April 2006.” Thanks.

The problem with this is that a lot of countries don’t agree with the basic premise that they have to cut their tariffs on our exports of manufactured goods. They still see the Doha Round as essentially a one-way deal in which the U.S. opens up its agricultural market, ends agricultural subsidies and cuts the few remaining high industrial tariffs (textiles, clothing, footwear, and light trucks) — while they basically do nothing.

Without a clear statement from the ministers that one goal of the Doha Round is to cut the tariffs that are applied on manufactured goods, the existing disagreement is likely to continue. At the end of the day, will we get enough to make the deal worthwhile? There is no way to know yet, and we just have to keep trying.

The absence of clear guidelines means that U.S. negotiators will have to slug out the same old issues for another four months in the effort to get something meaningful. The NAM will be right beside them, providing analysis, suggestions — and milk and cookies when needed.

The life of a negotiator is not easy. Consider that U.S. negotiators have been up for 36 hours straight now, meeting with foreign counterparts, drafting text, figuring out tactics, doing more negotiating, checking details, doing more negotiating, etc. And on top of that, when they go back to their hotels to have a meeting of the U.S. team to compare notes and make sure they are on the same page, several times they have found that they could not get back to the convention center to do more negotiating because of the potential danger from the protestors in the streets. The hotels went into “lockdown” — literally locking the doors and not letting people in or out.

And finally, when the U.S. negotiators do get back to the convention center, they can find their foreign counterparts are in lockdown in their hotels and can’t get out — so U.S. negotiators have no one to negotiate with.

But little by little the process gets done, the text gets finalized, and the closing session takes place. We didn’t get what we wanted, but we didn’t lose what we feared we might. There is just a lot of hard work ahead of us.

WTO rounds never collapse and fall off precipices. They just get stuck in endless quicksand.

That’s it for the blogs from Hong Kong. But we’ll continue reporting on how the negotiations go over the coming four months.

Hope you enjoyed these Hong Kong reports, and keep tuning in to the NAM!

FYI, here is a link to our press release from today.