FTAs now substitute for multilateral talks
Gulf News, United Arab Emirates
FTAs now substitute for multilateral talks
By Dr. Jasim Ali, Special to Gulf News
29 April 2007
I had the opportunity to present a working paper at the 7th Forum for Democracy, Development and Free Trade held at the Qatari capital of Doha last week.
I argued in my presentation that bilateral free trade agreements (FTAs) besides regional trade agreements (RTAs) are emerging as substitutes for multi-lateral talks within the World Trade Organisation (WTO). The FTAs in particular provide more powerful economies such as the US the opportunity to dictate terms to smaller ones.
Arguably, FTAs are in part blamed for the stalled negations of the Doha Round. Undoubtedly, FTAs and RTAs would further mushroom in case the Doha Round ends in total failure.
In retrospect, the Doha Round has not progressed mainly because of disagreements among leading countries and blocs with regard to the agriculture sector.
In short, numerous nations, including those of the European Union plus Brazil and India, stress that the US must reduce subsidies extended to its farmers. By one account, the US has provided some $150 billion in the form of financial support to farmers in a span of 10 years, from 1995 to 2005.
The argument goes that the support undermines international prices of farm products.
The US demands that powerful economies such as those of Brazil and India significantly reduce tariffs applied on agricultural products. This in turn translates into obtaining market access to these countries. To be sure, some developing countries apply tariffs of up to 65 per cent on the grounds of countering American subsidy as well as generating revenue for treasury.
Still, others suggest that concluding a deal within WTO is not easy mainly due to the sheer number of countries involved in the talks. The WTO encompasses some 150 members.
Against this backdrop, it is no wonder that countries such as the US continue pursuing FTAs with other countries. At the moment, the US has separate FTAs with Canada, Chile, Australia, Singapore, Jordan, Morocco, Bahrain and Oman.
Clinching an FTA is considerably much easier than engaging in multi-lateral negotiations. For example, negotiations over the US-Bahrain FTA lasted only four months. The deal passed through legal requirements in January 2006 but implementation was delayed until August of the same year. The delay was attributed to American insistence that Bahrain enact new legislation providing protection of intellectual property rights .
Likewise, Oman felt obliged to amend labour laws (ie granting foreign workers the right to engage in peaceful strike) in time of a vital vote in the US Congress in 2006. Unquestionably, both Bahrain and Oman opted to sign separate deals with the US as part of efforts to tackle their economic challenges. Both countries suffer from acute unemployment. It is believed that access to the US market should help them address the jobless problem.
Still, within the region, FTAs run contrary to the goal of achieving economic integration within the six-nation Gulf Cooperation Council (GCC). The customs union that went into effect at the start of 2003 requires GCC countries to have a common external trade policy with non-members.
Similar to FTAs, RTAs are increasingly becoming commonplace. For instance, the EU is vigorously pursuing concluding an accord with the GCC, preferably by year-end. Bilateral and regional are becoming the norm rather than the exception in international trade. Trouble is that FTAs and RTAs are becoming a substitute for a multi-lateral accord. Certainly, these accords are not undermining the successful conclusion of Doha Round.
– The writer is a Member of Parliament in Bahrain.
