Bilaterals Only Game in Town as Doha Dies

(Embassy Magazine – Jeff Davis)

With the World Trade Organizations’ Doha round of trade negotiations now lying flat on its face, it seems bilateral trade deals are the only game in town for Canada and other nations. However, private sector representatives and experts expressed deep concern that Doha’s death will put Canada at a severe disadvantage, as it will be hard-pressed to ink one-on-one deals with the world’s strongest economic powers.

This last round of WTO talks, launched in Geneva on July 21, was billed as a “do-or-die” effort to complete the deal that negotiators have been reaching for since the talks were launched six years ago. Nine days later, though, talks had run aground.

The negotiations collapsed under the weight of disagreements over agricultural subsidies. Many developing countries, most notably India, pushed hard for special safeguards that would afford their poor farmers protection from cheap, subsidized agricultural imports.

The United States, which heavily subsidizes its agricultural industry, would not accept the requirements, and stood by its 2008 Farm Bill, which plans to see cotton subsidies maintained or increased over the next five years.

By July 29, even the WTO’s most ardent supporters were mourning the death of the talks. “There is no escaping the fact that this meeting has failed,” said WTO Director General Pascal Lamy, adding that the multilateral trading system came away “dented.” “What members have let slip through their fingers this time is a package worth more than $130 billion a year in tariff savings by the end of the implementation period,” he told reporters in Geneva.

Canada Going for Bilats

The day talks collapsed, International Trade Minister Michael Fortier and Agriculture Minister Gerry Ritz held a teleconference with reporters from Geneva.

“There’s no doubt that this is a significant setback, especially for our farmers and exporters given the economic benefits they and Canada stood to achieve from a positive outcome,” said Mr. Fortier. “Talks may have stalled at this time, but we remain committed to more liberalized trade, a rules-based system, and the overall objectives of the Doha negotiations.”

Mr. Fortier said that his government remains dedicated to forging a multilateral consensus on trade. “When you are able to close these transactions, you can accomplish a lot of work through multilaterals, which may take several bilaterals to accomplish,” he said.

However, with multilateral talks stalled, Mr. Fortier said Canada would be aggressively pursuing bilateral agreements. “In terms of opening trade corridors for our exports, we want to continue down the path of bilaterals,” he said, adding the government would be “knocking on doors around the world to create new opportunities for our farmers and exporters.”

Mr. Fortier did not hint as to which bilateral deals he plans to pursue next, except to affirm Canada’s interest in pursuing a trade deal with the European Union during the next Canada-EU summit, planned for October 17 in Montreal. “I have talked about the EU. That is a negotiation that we would be very keen in launching as soon as possible,” Mr. Fortier told reporters.

Concern All Around

Members of the Canadian business community greeted the news with disappointment.

“This isn’t good news for Canada,” said Shirley-Anne George, head of policy at the Canadian Chamber of Commerce. “Canada as an exporting and trading nation needs the WTO. We need an agreement on what the rules for trade are, and we need more countries to reduce barriers to products we want to sell them.”

Canadian Council of Chief Executives president Thomas d’Aquino agreed. “I think that this further collapse is very sad news,” he said. “Canada is a trading nation and we’re very trade dependant. For Canada to have a multilateral system that really works, with rules, is to our advantage.”

Mr. d’Aquino also lamented the ramifications the collapse will have for struggling farmers in developing countries. After all, he said, Doha was the so-called “development round,” and aimed from its inception to help “bridge the gaps between the rich and poor.”

While the government says it will pursue more bilateral trade deals, some fear getting a square deal for Canada will likely be harder in one-on-one talks.

“It’s very difficult for small trading nations like Canada,” said Debra Steger, a former senior negotiator for Canada at the WTO and professor at the University of Ottawa law school. “We don’t have enough bargaining power to negotiate good bilaterals all over the place.” She said that in bilateral negotiations, the overwhelming size and economic clout of a United States, China or European Union can make negotiations very difficult for mid-sized countries.

But mid-size countries are not alone in facing tough negotiations, she says, adding that even big players don’t always get what they want. Ms. Steger said the United States has failed in its efforts to get South Korea to make certain concessions in the auto sector in advance of a possible FTA. Canada has also been unable to budge the Koreans on autos in ongoing Canada-South Korea talks.

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