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Bhumika Billa, Legal Research Fellow at the Centre for WTO Studies, Indian Institute of Foreign Trade and Principal Associate at the Negotiation Academy


How to Share an Apple Pie: Recovering from the Negotiation Disaster at WTO

At the negotiation table, if you are striving to get the biggest slice of the pie, you have already lost. Why? Because you begin with a presumption that the size of the pie (i.e. potential benefits/ interests accruing from available options of reaching an agreement) is limited. This approach roots from an inherent belief that the person sitting on the opposite side is an ‘opponent’. If something is inherently wrong in the WTO negotiation process, it is this approach. A brief study of the Doha negotiation round of 2001, where countries failed miserably to reach a consensus, is a perfect cue to why Astana in 2020 is likely to fail.

Evolution of WTO

The WTO was formed in 1995 and has been credited as one of the most successful international organizations since its inception. The reason is clearly rooted in the success of its dispute settlement mechanism. Initially after the Second World War, the organization primarily aimed at global tariff reduction. Gradually, with the development of issues such as environmental protection, trade in services, intellectual property, sustainability and development goals, the dichotomic issue of tariff versus non-tariff barriers soon turned into an entangled web of complex concerns that needed attention.

This web was further complicated by the subtle sides developed and developing countries began to take and this subtleness faded away as the world stepped into the Doha Round negotiations in 2001, which include two glaring aspects that best reflect India’s negotiation strategy. The first one relates to the way developing countries succeeded in blocking 3 of the 4 Singapore issues pushed by the developed countries, and second is about the formation of G20 on agriculture with a proactive agenda as opposed to just a blocking one.

Like Minded Group: A Failed Coalition

The Singapore issues advanced by EU, US, Japan and Korea collectively involved transparency in government procurement, trade facilitation, investment, and competition. The LMG (‘like-minded group’)[1] comprising of 14 developing countries including India, pushed for implementation issues that needed to be resolved first. These issues included high costs of implementing commitments taken in the Uruguay Round and unrealised benefits from the agreements. In return of dropping the opposition, the developed countries began to offer assistance for capacity building and aid packages amongst other incentives to sub-groups within the coalition. At the Doha Ministerial of 2001, the world witnessed a rare occasion where only one country i.e. India, continued to stand in opposition. Although 3 out of 4 issues were finally dropped for the time being, with only facilitation remaining, the biggest failure of LMG is perhaps reflected in the opening up of the Singapore issues for discussion in the future.

G20: A Coalition that Failed

Another coalition was triggered by the US-EU joint paper a few months before the Cancun Ministerial Conference. Prior to 2003, the negotiations related to agriculture had mostly been predominated by the EU and USA. The narrative flipped after developing countries formed the G-20 alliance. The group became much more than a mere blocking force. It had a proactive agenda of proposing radical cuts or caps on the domestic support measures being offered by developed countries. The coalition is special for two reasons. One, this was the first time China had played a leading and committed role since the time of its joining the WTO and had expressed its resistance against US and EU quite vocally. Two, with Brazil, China and India at its helm, the coalition comprising of 69% of the world’s farmers, posed a serious threat to the possibility of a consensus.[2] The coalition therefore had the potential of changing the game solely because of the strength of its weight.

Although G20 was primarily an issue-based alliance, it also used the bloc type style in affirming positions based on a common identity. But it is the flexibility of ‘shifting coalitions’ that practically kept the alliance strong. No signs of breaking from the core leaders (India, Argentina, China and Brazil) provided impetus for others to stick around as well. It was the Singapore issues that led to a final impasse in the end and the question of whether G20 would have sustained till the end or not, will always remain open.

Lessons from Doha

While the failure of LMG can be attributed to its lack of internal strength and weakness of coalition, an ingredient that was the strength of G20, the failure of G20 lies in the conflicting interests and probably more than that, a rigid negotiation strategy on both ends that prevented everyone to go beyond their strong-held positions and creatively look at each other’s underlying interests. Naturally, it ended up as a lose-lose.

Coalitions and Consensus: Utopia at Astana 2020

The bargaining power at the WTO is affected by multiple factors such as population size, geography, demography to name a few. But the most important determining factor is the per capita GDP and volume of imports it can support, especially because it is the trade flows that later become the best alternatives to a negotiated agreement (BATNA).[3] Hence, it will not be too far-fetched to draw a rough link between bargaining powers and GDP. The success of the G20 coalition can hence be attributed to the collective bargaining power of the group. However, one of the major reasons for the ability of developing countries to come together on the issue of agriculture was a comparatively smaller difference in their respective per capita GDPs, because of which alignment of interests was not as difficult back then as it seems today.

 

Per Capita GDP (2003)

(in thousand US dollars)

Per Capita GDP (2017)

(in thousand US dollars)

China

1.28

8.82

India

0.54

1.93

Brazil

3.05

9.82

Source: World Bank

Road Ahead

With the increasing gaps within the ‘common identity’ group, the countries will need a larger common ground than just identifying themselves as ‘developing’ and much more than mere flexibility to shift coalitions. Hence, what worked with G20 seems unlikely to work now and what didn’t work with G20 and LMG has become the elephant in the room- conflicting interests. Besides smart, careful and strong collaborations, it is extremely important to start striving for win-wins. That would probably start with a shift in cut-pie approach to effectively making the pie bigger. The countries need to stop aiming at getting ‘more than the others’ and start to think about ‘more for self and others’.

A reasonable rebuttal might support the metaphor of pie for understanding how market access works. It is fixed in the sense that a country may agree or refuse to grant the whole of it and there are limited countries wanting to access the market of the same member. For all the critics, it is probably time to view access as a dynamic variable that is changing with constant sub-classification of goods, the incoming giant wave of e-commerce, untapped potential in services and emergence of interests that are far more important than trade flows.

About the Author

Bhumika Billa graduated in BA LLB (Hons.) from Vivekananda Institute of Professional Studies with a focus on international economic laws and alternative dispute resolution. Currently a Legal Research Fellow at the Centre for WTO Studies, Indian Institute of Foreign Trade and Principal Associate at the Negotiation Academy, her research interests revolve around trade remedies and theory of international relations. When not researching, she is usually volunteering at schools or dancing to Indian classical music.

Bibliography

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https://hal-sciencespo.archives-ouvertes.fr/hal-00972849/document

 

 



[1]     LMG comprised of Cuba, Dominican Republic, Egypt, Honduras, India, Indonesia, Kenya, Malaysia, Pakistan, Sri Lanka, Pakistan, Tanzania, Uganda and Zimbabwe, with Jamaica and Mauritius as observers.

[2]     Amrita Narlikar, Diana Tussie, “The G20 at the Cancun Ministerial: Developing Countries and Their Evolving Coalitions in the WTO”,

[3]     Kent Jones, “Green Room Politics  the WTO’s Crisis of Representation”, 9:4 Progress in Development Studies (2009)