GENEVA -- Pascal Lamy, the Frenchman who at midyear will begin his second four-year term as director-general of the World Trade Organization, faces a Sisyphean task. After more than seven frustrating years of negotiation in the Doha Round of multilateral trade talks, Lamy will try one more time to push uphill a global deal that many felt was tantalizingly close last July.
Given the worldwide recession and fears of rising protectionism, there is a perception at WTO headquarters that the cost of failing to reach an agreement is greater than ever. And many governments, frightened by the precipitous downturn, exhibit a newfound readiness to finalize the accord. But the most important question is whether negotiators can put enough into the deal to make it economically worthwhile for the United States and politically palatable for an Obama administration beset with more-pressing domestic challenges.
Lamy's task, and that of other governments, is to help President Obama put enough of his imprint on a final accord to be able to call it his own. "WTO members should pick up from where they left off in 2008," Lamy said, "and conclude these negotiations rapidly."
After so many false starts, such sentiments seem Pollyannaish. But today, unlike in July, Chinese negotiators say they are willing to consider zero tariffs for specific goods, a concession that American manufacturers have long sought. Beijing also says it will limit special import protections for its farmers, a previous policy that rankled American soybean growers. The European Union seems similarly more anxious than ever to cut a deal. And Indian Commerce and Industry Minister Kamal Nath, whose obstructionism has long driven U.S. negotiators to distraction, now says he is ready to accept what was on the table last summer.
Of course, this new willingness to make concessions, particularly China's professed flexibility, must be tested in brass-tacks negotiations. The European Union's desire to strike a deal may reflect a cynical hope of avoiding more subsidy cuts in its Common Agricultural Policy. And Nath's assertion that he would accept an agreement on terms he once rejected strains credulity.
Most important, many U.S. business leaders say that last year's deal is no longer acceptable. In July, Washington offered to cap U.S. farm subsidies. The Bush administration could afford to make that offer because commodity prices were at record highs and U.S. farmers did not need past levels of government support. But crop prices have fallen dramatically since then and American farmers are unlikely to accept a lower ceiling on agricultural subsidies. Similarly, U.S. service providers contend that existing and prospective offers from other countries still do not provide sufficient market-access opportunities.
But "if the United States needs a redoing of the July package," Lamy warns, "that would be a killer."
So it is the Frenchman's task to come up with the right combination of economic substance and political window dressing to make finishing the Doha Round attractive to Obama, without appearing to totally scrap the July proposals. On the one hand, the global goodwill spawned by Obama's election should help spur some cooperation. On the other hand, the international black eye that Washington earned over the "Buy American" provisions in the economic stimulus package is a reminder of the cost that the United States would pay for being cast as the lone obstructionist to an agreement.
Any deal would almost certainly require China to open previously protected segments of its market. The Europeans will have to be more supportive of American ambitions for access to manufacturing and services markets. A long phase-in period for a cap on U.S. farm subsidies may be needed to ease immediate American agricultural concerns. Obama may need some leeway on antidumping rules. This would be a major concession by other nations, given recent rulings by the WTO dispute-settlement panel invalidating U.S. antidumping practices. Even if Obama got some of those concessions, he still might face opposition to Doha from U.S. labor and manufacturing interests.
Unless Lamy and the world's other major trading nations manage to revive the July deal and make sufficient new moves, Obama will have no way to make the Doha Round his own. The first sign of what is achievable may come at the April 2 meeting in London of the world's 20 largest economies, where Obama will be expected to show more of his hand on trade. Finding a path to get Obama to say yes to the Doha Round is clearly the challenge for the WTO.
This article appears in the Feb. 14, 2009, edition of National Journal.