{"id":262110,"date":"2006-02-01T05:00:00","date_gmt":"2006-02-01T10:00:00","guid":{"rendered":"https:\/\/policyoptions.irpp.org\/issues\/the-wto-plays-hong-kong-so-little-accomplished-by-so-many\/"},"modified":"2025-10-07T19:51:17","modified_gmt":"2025-10-07T23:51:17","slug":"the-wto-plays-hong-kong-so-little-accomplished-by-so-many","status":"publish","type":"issues","link":"https:\/\/policyoptions.irpp.org\/fr\/2006\/02\/the-wto-plays-hong-kong-so-little-accomplished-by-so-many\/","title":{"rendered":"The WTO plays Hong Kong: so little accomplished by so many"},"content":{"rendered":"
\n

The Grand old Duke of York,\/He had ten thousand men.\/ He marched them up to the top of the hill,\/And he marched them down again.<\/em><\/p>\n<\/blockquote>\n

The World Trade Organization (WTO), 10,000 strong, swept into the cavernous Hong Kong Conference Centre two weeks before Christmas to take the hard political decisions necessary to move the global trade negotiations forward to their decisive concluding phase in 2006. After five days of round-the-clock negotiations trying to address the absence of agreement on virtually every issue on the negotiating table, the WTO throng left town with little more than an agreement to keep talking. As one journalist commented, paraphrasing Churchill, \u201cnever in the course of human history was so little accomplished by so many.\u201d<\/p>\n

\u201cIt was worth it,\u201d WTO Director General Pascal Lamy insisted at a press conference late in the evening of the final day. \u201cWe have managed to put the (Doha) Round back on track after a period of hibernation.\u201d The US trade representative, Rob Portman, was more muted in his enthusiasm, expressing relief that the process had at least not moved backwards. Peter Mandelson, the European Union trade commissioner, echoing these sentiments, concluded that the result \u201cis not enough to make this meeting a true success, but it is enough to save it from failure.\u201d Canada’s trade and agriculture ministers, Jim Peterson and Andy Mitchell, claimed that there was progress, \u201calthough much remains to be done.\u201d Others were less sanguine: \u201cmicro-steps,\u201d sniffed Brazil’s foreign minister, Celso Amorim.<\/p>\n

As the ministers of the 149 member countries and the 40 observer countries, including candidates for membership, and the representatives of 76 intergovernmental organizations, made their plenary speeches before dispersing into endless private meetings, 2,000 South Korean rice farmers brought their own message. \u201cSmash the WTO! Down with globalization,\u201d they cried as they fought a series of increasingly violent battles with the police. On December 16, they briefly broke through police lines and surged to the front entrance of the centre before they were beaten off. Over the week, some 900 were arrested. In the intervals between the clashes, they entertained the citizens of Hong Kong with colourful displays of dancing and traditional Korean music. On one day, a small group performed an ancient and arduous Buddhist ceremony, walking slowly for three steps, kneeling and touching their foreheads to the ground throughout the length of a main shopping street. Elsewhere, a small band of Catholic Korean farmers paraded with their anti-WTO and globalization banners. Their message was luminously archaic, ignoring the contribution made by global trade rules and globalization to vaulting South Korea from one of the world’s poorest countries to one of the most powerful economies in Asia in the space of two generations.<\/p>\n

If the South Korean rice farmers were the most numerous and most vocal, there was the usual demimonde of nongovernmental organizations (NGOs) representing an incoherent agglomeration of conflicting demands. Over 1,100 organizations registered for the meeting, representing business and labour groups, farm organizations, human rights advocates, environmental groups, anti-poverty and development advocates, and other global action groups of every possible persuasion. \u201cOpen markets,\u201d cried some. \u201cKeep markets closed,\u201d shouted others. \u201cSave the environment from world trade,\u201d demanded still others. Adding to this tower of confusing babble, an earnest young man from the Socialist Party of Australia claimed that he did not equate Marxism of the Trotskyist variety with anti-globalization. \u201cI’m not anti-globalization, I’m pro-internationalization,\u201d he said. \u201cWhat I am against is capitalist globalization, the idea that things are based on profit and not on public good.\u201d Kept safely away from the delegates, the NGOs held countless earnest seminars and issued peremptory demands for action. Their brief moment in the sun came on the first day, when a small group shouted \u201cLiar!\u201d at Lamy as he addressed the opening session. No one was listening.<\/p>\n

The product of this sixth ministerial meeting was the Hong Kong Declaration. Despite its impressive length\u2014 57 paragraphs, 6,100 words and 6 lengthy annexes\u2014 the declaration is meagre fare indeed, a triumph of process over substance. There are only two firm commitments: one to eliminate export subsidies on cotton by the end of 2006, and the other to eliminate all agriculture subsidies by 2013. If the declaration’s firm commitments were few, its process decisions were abundant. It calls for the establishment of modalities for reducing agriculture subsidies and trade barriers and lowering tariffs on industrial products by April 2006 and the submission of firm offers by July 2006. On trade in services, members are to submit revised offers for opening their markets by July and final draft schedules of commitments by October. Developed countries are to do their best to open markets for least developed countries by 2008 for at least 97 percent of their imports from such countries. On a host of other subjects, the ministers resolved to continue negotiations but fixed no deadlines. If it is a stretch to ask ministers to find politically palatable answers to deeply sensitive negotiating issues over five days of intensive activity, then hoping that the gaps will be bridged over the next few months is to detach reality from probability.<\/p>\n

If the ministers left hungry for more, no one should have been surprised. Shortly after he assumed direction of the WTO in September, Lamy called for a \u201crecalibration\u201d of expectations for the meeting. It was by then clear that the essential component of a deal at Hong Kong, a comprehensive agreement on agriculture, was beyond reach. Without agriculture, there would be no agreement on industrial products, trade in services, or indeed every other item on the agenda. As the weeks passed between September and the Hong Kong meeting, Mandelson and other European ministers complained bitterly that agriculture was hijacking the negotiating agenda to the exclusion of everything else. The complaints fell on deaf ears. For almost half a century, the EU has protected its farmers both by keeping out competing imports and by massively subsidizing the export of surplus production that its system generates. If the Europeans hoped that they would once again shuffle agriculture off the stage of a major trade negotiation, they were to be sorely disappointed.<\/p>\n

The previous round of multilateral negotiations, the Uruguay Round (1986-94), had made a modest beginning in crafting rules to limit domestic and export subsidies and to open agricultural markets. Ten years later, a consensus emerged that agreement could be reached on significant reductions in trade-distorting domestic subsidies, and on the elimination of export subsidies. The stumbling block was access to markets. The EU made an offer that looked good on paper: an average reduction of 39 percent in EU import barriers. However, highly sensitive imports would be excluded. Careful examination of the fine print showed that even with such cuts, the European market would remain effectively closed to competing imports. The EU was not alone. Others were equally obdurate. Japan and Korea among Asian countries placed protection of their rice markets at the top of their negotiating priorities. Canada was equally determined to protect its dairy and poultry sectors and the monopoly of the Canadian Wheat Board. The United States, which offered major reductions, nevertheless made it clear that liberalization could go only so far. The developing countries, although they presented a united front, were sorely conflicted. Brazil and Argentina, competitive agriculture producers, wanted a big deal. Many others have weak agriculture sectors and depend on imports of heavily subsidized agrifood products from rich countries. They would dance with Brazil and Argentina only so long as the terms of any agriculture deal effectively excluded them from its rules.<\/p>\n

The two commitments made are virtually meaningless: the elimination of export subsidies on cotton in 2006 and the elimination of all agriculture export subsidies by 2013. In the case of cotton, it is domestic subsidies, particularly US subsidies, that create the major distortions. In the absence of a comprehensive agriculture agreement, major reductions in US cotton support programs were not to be expected. As for export subsidies generally, without an agreement to reduce domestic subsidies, the temptation to reallocate export subsidies to domestic programs will prove irresistible.<\/p>\n

The looming expiry of negotiating authority granted to the US administration by Congress hangs over the resumption of negotiations. Colloquially known as \u201cfast track,\u201d it provides for Congress to approve or disapprove any trade agreement negotiated without amendment and within a defined time frame. There are two reasons for the important role that this US domestic arrangement plays in trade negotiations. Without such authority, there is no guarantee that any agreement negotiated by the US administration would enter into effect. The second is that given the importance of the United States in global trade, the basis for a multilateral agreement is fatally undermined without US participation. The current grant of negotiating authority expires on July 1, 2007. If the negotiations do not finish successfully by the end of 2006, time will have effectively run out. The prospect that the Bush administration in its last two years would seek, and that Congress would accept, an extension of the authority must be considered remote.<\/p>\n

This round of trade negotiations is now effectively 10 years old. In the heady days following the conclusion of the Uruguay Round and the inauguration of the WTO, replacing the old General Agreement on Tariffs and Trade (GATT), ministers launched the process for a new round of multilateral trade negotiations at the first WTO Ministerial in Singapore. This new round would not only build upon the results of the Uruguay Round but would also tackle new issues, including investment and competition policy, critical to the rapidly emerging global economy. The second ministerial, held in Geneva in 1998, was remarkable for little except the first appearance of demonstrators who, dramatically if ineffectually, chained themselves to the front gate of the WTO building. If the first two meetings could be counted as solid, if unspectacular, successes, the third ministerial, held in Seattle in December 1999, broke up in disarray in clouds of tear gas and multitudes of protestors.<\/p>\n

In November 2001, the fourth WTO Ministerial convened in Doha, Qatar, and agreed to launch the Doha Development Round, to be concluded by the end of 2005. If any believed that the Doha meeting heralded a bright, confident morning, the fifth ministerial at Cancun, Mexico, in September 2003 was a cold shower. After four days of acrimonious discussion punctuated by grandstanding rhetoric, the meeting collapsed. Out of this wreckage, patient efforts finally produced a framework agreement in August 2004 that purported to set the stage for ministers at the Hong Kong meeting to define the negotiating modalities for the detailed bargaining that would lead to a definitive conclusion by the end of 2006. If the number of meetings, the commitment of ministers to the process if not the substance of negotiations, and the volume of proposals counted as progress, the Doha Round would be well on its way to success. However, the problems are deeper and go to the heart of the object and purpose of the multilateral trade system.<\/p>\n

The principal reason for the lack of progress lies in a fundamental impasse on the object and purpose of multilateral trade negotiations. It divides \u201csatisfied powers,\u201d essentially the developed countries, from \u201cdissatisfied powers,\u201d largely the developing countries. The satisfied powers are interested in preserving the vitality of the WTO as a set of rules and procedures but not in major new trade liberalization if it comes at a high domestic political cost. The opposition to trade liberalization in developed countries is now confined to isolated sectors, such as textiles and clothing and agriculture, but it is not counterbalanced by strong domestic support for liberalization. Such support has evaporated, in large measure due to the success of previous negotiations and the consequent absence of an attractive negotiating agenda.<\/p>\n

The dissatisfied powers generally believe, not without reason, that previous rounds of trade negotiations have ignored their interests while imposing significant new obligations upon them, for example, intellectual property protection. Their objective in the Doha Round is to obtain significant reductions of developed countries’ trade barriers on agriculture and low-cost manufactured goods, such as clothing. They are also seeking to effectively renegotiate some aspects of current WTO rules and refuse to take on the two issues, investment and competition policy, that might have generated some support in developed countries. Until the impasse between countries that have low ambitions for the evolution of WTO rules and those that seek a radical refocusing of its rules is resolved, progress will be difficult.<\/p>\n

Agriculture is a case in point. The most serious obstacle to progress on agriculture resides in a paradox: as the economic importance of agriculture declines, its political weight increases. In the OECD countries as a whole, agriculture now accounts for less than 5 percent of GDP and even less of employment. Agriculture support programs may seem ruinously expensive, but the amounts involved are still modest in terms of overall budgets; the costs to consumers through higher prices are sufficiently well camouflaged to muffle any potential consumer backlash. For example, the massive subsidies enjoyed by EU farmers account for 40 percent of the EU’s budget but still amount to less than 2 percent of total government expenditure in the EU countries. For all its diminishing economic weight, the farm sector enjoys powerful emotional support among electorates. If subsidies were reduced and domestic markets opened to international trade, a major downsizing of agriculture would occur in most of the EU, some Asian countries, as well as in certain sectors in Canada and the United States. While a compelling economic case can be made that the EU should get out of growing sugar beets, the United States out of cotton, rice and cane sugar, Korea and Japan out of rice, and Canada out of more than local production of dairy and poultry products, no politician hopeful of re-election would support such a step. The political costs are too high and the economic benefits too low.<\/p>\n

Agriculture is not the only ideological divide. The quixotic attachment of developing countries to special and differential (S&D) treatment\u2014 essentially exceptions from the trade rules and preferential access to rich-country markets while keeping their own markets closed to international trade\u2014 is a serious systemic barrier to progress. Nevertheless, the Hong Kong Declaration ritualistically reaffirms \u201cthat provisions for special and differential treatment are an integral part of the WTO agreements and that all S&D treatment provisions will be reviewed with a view to strengthening them and making them more precise, effective and operational.\u201d The justification for S&D treatment lies in the perception that only developed countries can fully benefit from international trade and developing countries cannot take full advantage of the opportunities created by liberalization and should thus be allowed to shelter their economies from the full application of the trade rules.<\/p>\n

US analyst Gary Hufbauer sums up the real reason with characteristic directness: \u201ceveryone \u201d\u02dcknows’ that trade ministers representing poor countries can’t be asked to dismantle their barriers because…well, because they like to use muddled infant industry arguments to confer favours on well-connected constituents.\u201d At Hong Kong, the arguments became even more tortured. The laudable elimination of export subsidies, ministers declared, should not result in higher costs for food-importing developing countries. The reduction of trade barriers should properly
reflect the need to compensate developing countries for the erosion of trade preferences. The least developed countries should benefit from tariff-free and quota-free market access, but only to rich-country markets and to those developing-country markets that can \u201cafford\u201d to give such access, notwithstanding World Bank studies demonstrating that the potential benefits of remaining trade liberalization are greatest in trade between developing countries. Prior to his selection as WTO director general, Pascal Lamy called for a \u201cfree round\u201d for developing countries\u2014 that is, they should not be expected to lower their trade barriers and reduce their subsidies. At Hong Kong, it became brutally clear that a free round for developing countries was not on the table. At least on that point, the ministers got it right.<\/p>\n

What does all this mean for Canada? In his plenary speech, Trade Minister Jim Peterson captured the conundrum facing Canada’s multilateral trade policy on the central issue of the Hong Kong meeting: \u201cIn agriculture, Canada seeks to rein in subsidies and to achieve major improvements in market access…Canada strongly supports both our supply-managed sectors and…the Canadian Wheat Board.\u201d Canada, in other words, would lend its weight to bringing down trade barriers and subsidies on Canada’s exports while fighting to the end to preserve supply management and the monopoly marketing of wheat and barley. What’s mine is mine and what’s yours is negotiable.<\/p>\n

The inevitable result is that Canada sat largely on the sidelines, unable to contribute constructively. In the not-too-distant past, Canada was a major player and, together with the United States, EU and Japan, essentially determined the agenda and outcome of multilateral trade negotiations. Today, India, Brazil and Australia have displaced Canada at the centre of negotiations. Even if Canada adopted a negotiating position consistent with its interests as a major net agriculture exporter and left the dwindling herd of dairy and chicken farmers to face reality, it would be a minor player because it has little to contribute, or gain, from multilateral trade negotiations. Individual Canadian ministers and officials may still play a useful role on the margins of meetings, but Canada is not engaged in the negotiations because it has no serious stake in their outcome. The clearest evidence comes from the business community and the media: both exhibited massive indifference to the Hong Kong meeting. They understand that we have reached the point of diminishing returns in trying to dot the last i and cross the final t in the trade agreements of the past. The simple fact is that Canada’s most basic economic interests are now inextricably bound up with those of the United States and can no longer be addressed multilaterally in the WTO.<\/p>\n

At Hong Kong, Peterson faced the same dilemma that has confronted every Canadian trade minister over the last 15 years: how to exercise influence in a multilateral negotiation. The trade figures tell it all: 85 percent of Canadian exports are transacted with US customers and, apart from trade in a few agricultural products (for example, sugar-containing goods, dairy and poultry), Canada-US trade is free of conventional trade barriers and occurs under the rules of the NAFTA. Ten percent of Canada’s remaining exports are sold in the markets of the EU and Japan. In the former, a successful Doha Round could mean additional export opportunities for grains, meat and oilseeds, but only marginal gains in industrial products, since average EU tariffs are in the 3 to 4 percent range and a major reduction would still amount to considerably less than annual exchange rate fluctuations. As for Japan, Canadian business has learned that Japanese trade barriers have virtually nothing to do with export opportunities; other factors immune to trade negotiations are the key determinants.<\/p>\n

It is only the remaining 5 percent of Canadian exports, sold largely to developing-country customers, that would stand to benefit from successful multilateral negotiations. Doubtless some Canadian companies would benefit, assuming that developing countries were prepared to open their markets, but the days are long past when the results of multilateral negotiations had a significant impact on the Canadian economy. In such circumstances, the elevation by Jim Peterson and his predecessors of agricultural protectionism for dairy, poultry and wheat over other objectives in the Doha Round makes eminent political sense. The House of Commons certainly agrees. In the dying moments of the last Parliament, it unanimously adopted a resolution urging the government not to yield an inch on supply management.<\/p>\n

Much as WTO Director General Pascal Lamy sought to recalibrate expectations for Hong Kong, the new Canadian government needs to recalibrate the focus of its multilateral trade policy by separating the fate of negotiations from the fate of the WTO. Historically, the multilateral trade system has had two major roles: to provide a rules-based framework for the conduct of international trade, and to sponsor multilateral trade negotiations. After eight rounds of successful negotiations resulting in sustained reductions in trade barriers to the markets of the major trading countries, the system now involves a complex, multifaceted set of rules disciplining government regulation of the full range of international trade transactions. The 80 governments that launched the Uruguay Round in 1986 became the 142 that agreed to the Doha Declaration in 2001 and the 149 that gathered in Hong Kong. Throughout this successful half-century, the twin roles of maintaining a rules-based system and sponsoring negotiations have been carefully balanced. Since the founding of the WTO in 1995, the balance between rules maintenance and negotiations has shifted decisively to the former. The prestige and relevance of the WTO as the arbiter of international trade rules has grown, while its negotiating role has been assumed by flourishing regional and bilateral initiatives now pursued by virtually every WTO member. The result is that while the multilateral trade system is riding a wave of success, as attested to by its growing prestige and membership, its members are looking elsewhere to pursue their negotiating interests.<\/p>\n

Old ideas die hard deaths. The old idea is the \u201cbicycle theory\u201d of trade negotiations. It holds that the bicycle of negotiations has to move forward if the multilateral system is not to fall over. The bicycle should be thrown into the dustbin of history. It is not regional and bilateral trade agreements that weaken the multilateral system, it is the insistence that successful multilateral negotiations and the vitality of the multilateral system as a whole are joined at the hip. As WTO members turn their attention to picking up the pieces of Hong Kong, they should recall that the multilateral trade system is not a goal but rather a means to an end. The goals of the system are clearly set out in the WTO preamble: rising living standards, full employment and steadily growing incomes. Such goals have also been, and will continue to be, achieved through bilateral and preferential agreements, reducing the primary function of the multilateral trade system to guarding and adjudicating application of the multilateral rules. This function will remain important only so long as the members have faith and confidence in the ability of the system to deliver. At some point, later rather than sooner, the Doha Round will conclude. However that conclusion measures up against the lofty ambitions set for the round, it is critical that the multilateral trade system remain unimpaired as an enforceable set of rules and procedures.<\/p>\n

If there is a silver lining to the disappointment that was the Hong Kong Ministerial it is that it put paid to the notion that Canada has a special role to play in multilateral negotiations. It is true that in the founding and the evolution of the multilateral trade regime Canada played both a creative and a sustaining role. It did so because such a role responded clearly to Canadian interests, including addressing cross-border trade problems and opportunities. Canadian trade and economic interests were well served by Canada’s activist multilateral tradecraft. Today, however, further multilateral negotiations can make at best a marginal contribution to the most pressing Canadian trade and economic interests. Instead, the opportunities lie in elaborating the bilateral Canada-US agenda and crafting an accommodation with the United States that is commensurate with the reality of deep and irreversible cross-border integration. That agenda involves creating a less intrusive border, pursuing a more deliberative strategy of regulatory convergence, and establishing institutional capacity to manage deepening and accelerating integration. None of these issues can be addressed multilaterally, but they will be at the heart of Canadian tradecraft for the next generation.\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

The Grand old Duke of York,\/He had ten thousand men.\/ He marched them up to the top of the hill,\/And he marched them down again. The World Trade Organization (WTO), 10,000 strong, swept into the cavernous Hong Kong Conference Centre two weeks before Christmas to take the hard political decisions necessary to move the global […]<\/p>\n","protected":false},"featured_media":0,"template":"","meta":{"_acf_changed":false,"content-type":"","ep_exclude_from_search":false,"apple_news_api_created_at":"2025-10-07T23:51:19Z","apple_news_api_id":"ad65feb1-d2e9-483a-874c-10534e09c47b","apple_news_api_modified_at":"2025-10-07T23:51:19Z","apple_news_api_revision":"AAAAAAAAAAD\/\/\/\/\/\/\/\/\/\/w==","apple_news_api_share_url":"https:\/\/apple.news\/ArWX-sdLpSDqHTBBTTgnEew","apple_news_cover_media_provider":"image","apple_news_coverimage":0,"apple_news_coverimage_caption":"","apple_news_cover_video_id":0,"apple_news_cover_video_url":"","apple_news_cover_embedwebvideo_url":"","apple_news_is_hidden":"","apple_news_is_paid":"","apple_news_is_preview":"","apple_news_is_sponsored":"","apple_news_maturity_rating":"","apple_news_metadata":"\"\"","apple_news_pullquote":"","apple_news_pullquote_position":"","apple_news_slug":"","apple_news_sections":[],"apple_news_suppress_video_url":false,"apple_news_use_image_component":false},"categories":[9346],"tags":[],"article-status":[],"irpp-category":[],"section":[],"irpp-tag":[],"class_list":["post-262110","issues","type-issues","status-publish","hentry","category-uncategorized"],"acf":[],"apple_news_notices":[],"yoast_head":"\nThe WTO plays Hong Kong: so little accomplished by so many<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/policyoptions.irpp.org\/fr\/2006\/02\/the-wto-plays-hong-kong-so-little-accomplished-by-so-many\/\" \/>\n<meta property=\"og:locale\" content=\"fr_FR\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The WTO plays Hong Kong: so little accomplished by so many\" \/>\n<meta property=\"og:description\" content=\"The Grand old Duke of York,\/He had ten thousand men.\/ He marched them up to the top of the hill,\/And he marched them down again. 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