Major Concessions Lead to Success for WTO Talks

Rich and poor nations made landmark concessions early today on drug patents, farm subsidies, dumping rules and other commercial conflicts as they prepared to embark on a new round of global trade negotiations.

The series of compromises meant a successful conclusion to six days of deliberations among the 142 members of the World Trade Organization. Approval of the final documents incorporating the consensus language was expected later in the day.

Upon approval of the full membership, the conference declaration will set the ground rules for more extensive negotiations that are expected to last at least three years. In a trading club that acts only by unanimous consent, simply coming to terms on guidelines for future talks is a monumental accomplishment.

If successful, the talks could lead to another wave of global trade liberalization, obliging nations to reduce or eliminate tariffs, quotas, subsidies and other impediments to international commerce. Previous agreements, including the sweeping Uruguay Round accord of 1994, have contributed to a rapid expansion of world exports, which reached a record $6.2 trillion last year.

“This round will be seen as completing the work begun in the Uruguay Round,” said Alan Oxey, a former Australian trade diplomat who heads a coalition of pro-trade groups. “It will finally bring all of the benefits of the open global trading system to the developing world.”

The campaign to launch negotiations took on a greater sense of urgency after the Sept. 11 attacks and the onset of a global economic malaise. U.S. Trade Representative Robert B. Zoellick told WTO members that a new round would help restore confidence in the world economy and reduce the poverty that fuels terrorist sentiment.

Big Compromises by U.S. and Europe

The United States and Europe led the campaign for a new round, which would expand international markets for their agricultural exports, manufactured goods and commercial services such as finance, insurance, telecommunications and transportation. But they had to offer significant concessions to get the rest of the world on board:

* The United States and other countries with big pharmaceutical sectors acquiesced to demands from African, Asian and Latin American nations on the issue of drug patents. The consensus language declares that an existing agreement on intellectual property rights “does not and should not prevent members from taking measures to protect public health.”

It assures Third World countries, hard pressed to afford patented medication produced by Western pharmaceutical companies, that they can make or buy cheaper generic equivalents to fight such killers as AIDS and malaria. Companies had argued that the higher costs support their research and development programs.

* The industrialized countries were near agreement on language that would open negotiations on the removal of agricultural trade barriers and farm subsidies.

The adjustments would prove particularly painful for Europe and Japan, which protect their small farmers with an expensive array of import restrictions, export subsidies and other forms of support. It would create discomfort in the United States too, at a time when Congress is considering big increases in farm support.

* The United States bowed to pressure from virtually every other nation to negotiate revisions of anti-dumping rules, which Washington has used to protect the domestic steel industry from foreign competition.

The U.S. shift is expected to produce a backlash on Capitol Hill, where defenders of the steel industry have implored the Bush administration to hold the line. But America also stands to benefit from a tightening of anti-dumping rules, which are being used increasingly by other countries to bar exports from the United States and elsewhere.

* Europe appeared likely to substantially scale back its efforts to include environmental policy in the next round of trade negotiations.

The European Commission has wanted to affirm the authority of its member states to require “eco-labeling” of genetically altered food products and to restrict imports if it perceives a health risk, even if it can’t prove one.

The United States and other food exporters fear the Europeans would use the “precautionary principle” as a form of back-door protectionism.

The outcome of other standoffs was less certain as delegates continued their closed-door deliberations early today. The United States was holding out against pressure from developing countries to open its markets to foreign-made textiles and clothing.

Europe and Japan still were pressing to broaden the WTO’s rule-making mandate to include foreign direct investment, impediments to competition and government procurement practices.

Developing countries were seeking more time and leeway to implement commitments they made in the Uruguay Round. One lightning-rod issue, the application of First World labor standards in developing countries, seemed to have fallen off the table altogether.

For Zoellick, Victory at a Price

The launch of a new round would represent a personal victory for Zoellick in his new role as President Bush’s trade emissary to the world. But he is likely to pay a price: U.S. pharmaceutical companies and steelmakers are certain to oppose his concessions on drug patents and the anti-dumping policy and could limit his ability to make good on his promises.

WTO officials and trade advocates say the Doha conference has the potential to produce substantial benefits that would justify any concessions nations agreed to make.

“There are going to be entirely legitimate arguments about particular aspects of the agreement,” said Christopher Roberts, a spokesman for a consortium of European business associations.

“But these arguments pale into complete insignificance compared to the importance of getting a round launched. Liberalizing trade, opening markets, does far more than other policy measures to bring about prosperity around the world,” Roberts said.

Others were less impressed. Lori M. Wallach, director of advocacy group Public Citizen’s Global Trade Watch, said the potential outcome of Doha is less than meets the eye because WTO members appeared to be backing away from new areas of oversight, such as environmental protection.

“What this adds up to is there is no new round,” she said.

Some of the more contentious issues had “north-south” overtones because they pit the interests of wealthy industrialized nations against those of poorer, developing countries. To a greater extent than in previous WTO deliberations, the poor countries came to the conference with a clear agenda and negotiated hard to get at least some of what they wanted.

“On certain issues, we as Africans cannot be moved, and our partners understand,” said Iddi Mohamed Simba, Tanzania’s minister of industry and trade. “We have no intention of coming out of Doha without a success.”

The final rush to adjournment wrapped up six days of almost nonstop speechmaking, arm-twisting and deal brokering. As the conference neared its deadline of midnight Tuesday, eyes reddened, patience ebbed and tempers flared.

“What you are doing now, you put a gun on our head,” said an angry Hegel Goutier, spokesman for a coalition of African, Caribbean and Pacific island banana exporters who feared a severe income loss if their ability to sell fruit to Europe was undermined.

“It’s a good reminder that trade issues are ultimately matters of life and death to some countries,” said European Parliament member Caroline Lucas. “It’s not just some abstruse technicality.”

Although there was plenty of intransigence to spread around during the conference, participants said one of the biggest impediments to progress was Europe’s reluctance to go along with a strong global consensus to reduce agricultural subsidies and its desire to let environmental concerns trump trade policy.

“If the European Union weren’t here, this deal would be done,” said one U.S. trade official, who requested anonymity.

Retorted European Commission spokesman Anthony Gooch: “Flexibility is something that everybody needs to indulge in.”