A Monthly Column by T. K. Bhaumik, Senior Advisor, Policy, Confederation of Indian Industry (CII)

July Framework Restores Confidence in Multilateralism

There was a high degree of interest in the General Council Meeting of WTO held in end-July 2004, and it grabbed as much attention as perhaps a Ministerial Conference would. Not surprising, for the Cancun debacle had almost brought the Doha negotiations to a standstill with the stalemate continuing for more than seven months. The July Meeting resulted in a framework agreement, which came as a great relief to all the WTO members, irrespective of their economic status. Crisis in not new to WTO, but the good news is that the member countries have always succeeded in overcoming it. After the collapse of the Third Ministerial Conference in Seattle, the member countries displayed a commendable commitment to multilateralism in Doha, which resulted in the launch of the Doha Work Programme.
The Doha negotiations were, however, fraught with difficulties right from the start. For two years, not a single deadline could be met. Bitter debates were the norm on all the issues under negotiation, particularly the TRIPs and public health issues. Finally at Cancun, the venue of the Fifth Ministerial Conference, the negotiations collapsed. The July framework, therefore, helped in putting the negotiations back on track. Critics may like to weigh the gains and the losses and debate the merits of the agreed guidelines, but the fact is that the WTO members have demonstrated the will to compromise and take the negotiations to the next stage.

This framework agreement is the first of its kind in WTO and a much-needed breakthrough. It gives a new lease of life to the ill-fated Doha negotiations. Significantly, the agreement is the result of a joint initiative of  five interested parties', or FIPs as it is called, compromising both developed and developing countries. The fact that the understanding among FIPs has been accepted by the rest of the members is itself a great achievement and it needs to be viewed in that perspective. However another undeniable fact is that negotiations on the modalities and the specifics are still to be undertaken and there lies the biggest challenge for member countries. Will the spirit of compromise, that was brought into play in the July meeting, last out in future negotiations? What is the guarantee that the agreed guidelines will be honoured and not lead to yet another crisis? After all, the framework agreement is not a legally binding agreement. Care has to be taken to ensure that there are  no deviations from the course.

There are too many things to negotiate, including an appropriate tiered formula for tariff reductions for both agricultural commodities and industrial products; extent of reduction commitments, etc. which are likely to see some hard negotiations. Again, new deadlines have to be met. More importantly, concrete achievements have to be shown before the next Ministerial Conference slated for December 2005.  The developed countries must stick to the commitments that they have agreed to undertake in the July Framework. This is the most important aspect if negotiations have to move forward. While the Doha Ministerial Declaration did provide appropriate and unambiguous guidelines for negotiations on all items, the lack of commitment in honouring those guidelines was the critical reason for the failure of the Doha negotiations. The July framework is once again about guidelines. One can only hope that this time the members will engage themselves with the specifics, try to complete the negotiations on modalities by December 2005 and make the Doha Round a success. 

Implications of the July Framework

The Positive Factors	Cause for Concern
The declaration of a Framework Agreement signals that negotiations are back on track	Negotiations on the modalities remain to be undertaken and there lies the biggest challenge.
The Framework Agreement demonstrates a collective commitment to multilateralism	The Framework Agreement is not a legally binding agreement
The WTO members have demonstrated the will to compromise	There are too many things to negotiate, especially in agriculture: - domestic support reduction - export subsidy elimination - increasing market access for all - special products - special safeguard measures, etc - besides NAMA and Services, among others
The Framework Agreement is a result o  the joint initiative of all five interested parties', comprising developed and developing countries.	Concrete achievements have to be demonstrated before the next Ministerial slated for December 2005