Mediterranean Products and the Fate of the Doha Round

Tim Josling Stanford University

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 2

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 3

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 4

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 5

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 6

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 7

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 Josling Cal/Med Workshop, Washington DC subsidies, single farm payment 8

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 9

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 10

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 11

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 12

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 13

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 14

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 15

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 16

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 17

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 18

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 19