The negotiations with the United States are still ongoing and Cabinet is reviewing progress and will consider how to move forward.
While the pressure is on Malaysian negotiators with a “deadline” of the impending expiry of the fast-track, the same deadline applies to the multilateral trade negotiations under the auspices of the World Trade Organisation (WTO).
It is perhaps more important from a developing country perspective that the Doha Development Round, which has been comatose since last July, be revived.
It is essential that developed countries, including the US and the European Union, deliver on their development promise of the round ahead of the expiry of the fast-track authority.
The multilateral trade negotiations, which were “sold” to the developing countries, are being held hostage by the developed countries with focus on their development agenda.
The expiry of the US fast-track authority also means that the Doha Development Agenda, too, will be subjected to the same scrutiny as the Malaysia-US bilateral agreement, if and when it is concluded.
The window to conclude the multilateral negotiations, for it to be submitted to Congress for approval before expiry of the fast-track authority, is also closing fast.
Prospects for the renewal of the authority appear even more uncertain after the mid-term elections in the US. The last time the president’s fast-track authority expired, it took eight years (between 1994 and 2002) for it to be renewed.
The developed nations seem to lack an urgency to get the negotiations on track. There is more talk of meetings and negotiations rather than actual negotiations.
Kamal Nath, India’s Minister of Commerce and Industry, said he was not driven by the fast track but wanted a multilateral treaty as “we believe the rules-based multilateral system is as important to India as it is to the US and Europe”. He added that the content of the agreement was as important as its completion.
India, together with Brazil and important developing nation traders, are keen to see an agreement but not one that disadvantages their emerging economies.
Celso Amorin, the Brazilian Minister of Foreign Relations, said he was “prepared to be locked up in a room with the US and European negotiators together with Lamy (Pascal Lamy, WTO director-general), throw away the key until we reach an agreement”.
Even with the right noises made when the trade ministers met in Davos on the sidelines of the annual World Economic Forum last month, there has been little progress since.
Lamy, who has been shuttling between Washington, Brussels and other European capitals, said there was a need to “switch from a flying zone to an approach mode” in the negotiations. He, nevertheless, stressed that the change can only be done “when you get a signal from the ground that it is appropriate to land”.
Since there are no clear signs for a “landing”, countries are looking to bilateral and regional free trade arrangements.
Amorin notes that bilateral agreements are not driven by trade but other reasons. He stresses the need for a “balanced agreement in a multilateral forum like the WTO”.
Lamy, who has the difficult task of bringing everyone to the table, reviving the multilateral negotiations and getting them on track, pointed out that the purpose of the Doha Development Round was to “re-balance the system in favour of developing countries”. Sounding exasperated, Lamy said, “It’s about tariffs and it’s about rules — that is what the trade round is all about. We don’t have a bilateral fish and a multilateral fish.”
But there is a proliferation of bilateral and regional agreements.
Bilateral agreements, according to Doris Leuthard, the Swiss Federal Councillor of Economic Affairs, are second best options after the multilateral agreement.
Second best or not, the WTO has been notified of more than 330 bilateral and regional trade agreements. Indeed, as of 2005, 17 free trade agreements were in force with 60 more in the pipeline in China, India and Southeast Asia alone.
With still no clear sign for a “landing” of the multilateral trade negotiations, countries are likely to seek out more bilateral and regional trade partners for agreements. And in many of these cases, the expiry of the US fast-track authority will not affect nor dictate the pace of negotiations of these agreements.
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