International Trade Negotiations and Domestic Politics: The Intermestic Politics of Trade Liberalization (Routledge Studies in the Modern World Economy) [1 ed.] 0415811562, 9780415811569

Citation preview

International Trade Negotiations and Domestic Politics

In spite of many years of negotiation on trade liberalization, progress seems to have stalled. This book explores why resistance to further market liberalization seems so strong, given that the benefits are seen to outweigh the costs. This volume argues that in order to understand the slow progress of World Trade Organization negotiations, we need to take into consideration the ‘intermestic’ character of trade politics, that is, the way in which international and domestic aspects of politics and policies have been woven together and become inextricably related to each other. This is a general trend in our globalizing world, and one that is most pronounced in the case of trade politics and policy. International Trade Negotiations and Domestic Politics therefore presents an in-depth analysis of institutions, ideas, interests and actors in the interplay between international trade negotiations and national negotiating positions. At the international level the authors focus on the multilateral negotiations within the World Trade Organization, together with the plurilateral and bilateral negotiations on free trade agreements. At the regional and domestic level they analyze the trade politics and policies of two established powers, the European Union and the USA; two rising powers, China and India; and a small industrialized country with an open economy, Norway. Oluf Langhelle is Professor of Political Science at the University of Stavanger, Norway.

Routledge studies in the modern world economy

1 Interest Rates and Budget Deficits A study of the advanced economies Kanhaya L. Gupta and Bakhtiar Moazzami 2 World Trade after the Uruguay Round Prospects and policy options for the twenty-first century Edited by Harald Sander and András Inotai 3 The Flow Analysis of Labour Markets Edited by Ronald Schettkat 4 Inflation and Unemployment Contributions to a new macroeconomic approach Edited by Alvaro Cencini and Mauro Baranzini 5 Macroeconomic Dimensions of Public Finance Essays in honour of Vito Tanzi Edited by Mario I. Blejer and Teresa M. Ter-Minassian 6 Fiscal Policy and Economic Reforms Essays in honour of Vito Tanzi Edited by Mario I. Blejer and Teresa M. Ter-Minassian

7 Competition Policy in the Global Economy Modalities for co-operation Edited by Leonard Waverman, William S. Comanor and Akira Goto 8 Working in the Macro Economy A study of the US labor market Martin F. J. Prachowny 9 How Does Privatization Work? Edited by Anthony Bennett 10 The Economics and Politics of International Trade Freedom and trade: volume II Edited by Gary Cook 11 The Legal and Moral Aspects of International Trade Freedom and trade: volume III Edited by Asif Qureshi, Hillel Steiner and Geraint Parry 12 Capital Markets and Corporate Governance in Japan, Germany and the United States Organizational response to market inefficiencies Helmut M. Dietl 13 Competition and Trade Policies Coherence or conflict Edited by Einar Hope

14 Rice The primary commodity A. J. H. Latham 15 Trade, Theory and Econometrics Essays in honour of John S. Chipman Edited by James C. Moore, Raymond Riezman and James R. Melvin 16 Who benefits from Privatisation? Edited by Moazzem Hossain and Justin Malbon 17 Towards a Fair Global Labour Market Avoiding the new slave trade Ozay Mehmet, Errol Mendes and Robert Sinding

23 The Employment Impact of Innovation Evidence and policy Edited by Marco Vivarelli and Mario Pianta 24 International Health Care Reform A legal, economic and political analysis Colleen Flood 25 Competition Policy Analysis Edited by Einar Hope 26 Culture and Enterprise The development, representation and morality of business Don Lavoie and Emily Chamlee-Wright

18 Models of Futures Markets Edited by Barry Goss

27 Global Financial Crises and Reforms Cases and caveats B. N. Ghosh

19 Venture Capital Investment An agency analysis of UK practice Gavin C. Reid

28 Geography of Production and Economic Integration Miroslav N. Jovanović

20 Macroeconomic Forecasting A sociological appraisal Robert Evans

29 Technology, Trade and Growth in OECD Countries Does specialisation matter? Valentina Meliciani

21 Multimedia and Regional Economic Restructuring Edited by Hans-Joachim Braczyk, Gerhard Fuchs and Hans-Georg Wolf

30 Post-Industrial Labour Markets Profiles of North America and Scandinavia Edited by Thomas P. Boje and Bengt Furaker

22 The New Industrial Geography Regions, regulation and institutions Edited by Trevor J. Barnes and Meric S. Gertler

31 Capital Flows without Crisis Reconciling capital mobility and economic stability Edited by Dipak Dasgupta, Marc Uzan and Dominic Wilson

32 International Trade and National Welfare Murray C. Kemp 33 Global Trading Systems at Crossroads A post-Seattle perspective Dilip K. Das 34 The Economics and Management of Technological Diversification Edited by John Cantwell, Alfonso Gambardella and Ove Granstrand

42 Tax Systems and Tax Reforms in Europe Edited by Luigi Bernardi and Paola Profeta 43 Trade Liberalization and APEC Edited by Jiro Okamoto 44 Fiscal Deficits in the Pacific Region Edited by Akira Kohsaka 45 Financial Globalization and the Emerging Market Economies Dilip K. Das

35 Before and Beyond EMU Historical lessons and future prospects Edited by Patrick Crowley

46 International Labor Mobility Unemployment and increasing returns to scale Bharati Basu

36 Fiscal Decentralization Ehtisham Ahmad and Vito Tanzi

47 Good Governance in the Era of Global Neoliberalism Conflict and depolitization in Latin America, Eastern Europe, Asia and Africa Edited by Jolle Demmers, Alex E. Fernández Jilberto and Barbara Hogenboom

37 Regionalisation of Globalised Innovation Locations for advanced industrial development and disparities in participation Edited by Ulrich Hilpert 38 Gold and the Modern World Economy Edited by MoonJoong Tcha 39 Global Economic Institutions Willem Molle 40 Global Governance and Financial Crises Edited by Meghnad Desai and Yahia Said 41 Linking Local and Global Economies The ties that bind Edited by Carlo Pietrobelli and Arni Sverrisson

48 The International Trade System Alice Landau 49 International Perspectives on Temporary Work and Workers Edited by John Burgess and Julia Connell 50 Working Time and Workers’ Preferences in Industrialized Countries Finding the balance Edited by Jon C. Messenger 51 Tax Systems and Tax Reforms in New EU Members Edited by Luigi Bernardi, Mark Chandler and Luca Gandullia

52 Globalization and the Nation State The impact of the IMF and the World Bank Edited by Gustav Ranis, James Vreeland and Stephen Kosak 53 Macroeconomic Policies and Poverty Reduction Edited by Ashoka Mody and Catherine Pattillo 54 Regional Monetary Policy Carlos J. Rodríguez-Fuentez 55 Trade and Migration in the Modern World Carl Mosk 56 Globalisation and the Labour Market Trade, technology and less-skilled workers in Europe and the United States Edited by Robert Anderton, Paul Brenton and John Whalley

60 Immigrant Enterprise in Europe and the USA Prodromos Panayiotopoulos 61 Solving the Riddle of Globalization and Development Edited by Manuel Agosín, David Bloom, George Chapelier and Jagdish Saigal 62 Foreign Direct Investment and the World Economy Ashoka Mody 63 The World Economy A global analysis Horst Siebert 64 Production Organizations in Japanese Economic Development Edited by Tetsuji Okazaki 65 The Economics of Language International analyses Edited by Barry R. Chiswick and Paul W. Miller

57 Financial Crises Socio-economic causes and institutional context Brenda Spotton Visano

66 Street Entrepreneurs People, place and politics in local and global perspective Edited by John Cross and Alfonso Morales

58 Globalization and Self Determination Is the nation-state under siege? Edited by David R. Cameron, Gustav Ranis and Annalisa Zinn

67 Global Challenges and Local Responses The East Asian experience Edited by Jang-Sup Shin

59 Developing Countries and the Doha Development Round of the WTO Edited by Pitou van Dijck and Gerrit Faber

68 Globalization and Regional Integration The origins, development and impact of the single European aviation market Alan Dobson

69 Russia Moves into the Global Economy Breaking out John M. Letiche 70 The European Economy in an American Mirror Barry Eichengreen, Michael Landesmann and Dieter Stiefel 71 Working Time Around the World Trends in working hours, laws, and policies in a global comparative perspective Jon C. Messenger, Sangheon Lee and Deidre McCann 72 International Water Treaties Negotiation and cooperation along transboundary rivers Shlomi Dinar 73 Economic Integration in the Americas Edited by Joseph A. McKinney and H. Stephen Gardner 74 Expanding Frontiers of Global Trade Rules The political economy dynamics of the international trading system Nitya Nanda 75 The Macroeconomics of Global Imbalances European and Asian perspectives Edited by Marc Uzan 76 China and Asia Economic and financial interactions Edited by Yin-Wong Cheung and Kar-Yiu Wong

77 Regional Inequality in China Trends, explanations and policy responses Edited by Shenggen Fan, Ravi Kanbur and Xiaobo Zhang 78 Governing Rapid Growth in China Equity and institutions Edited by Ravi Kanbur and Xiaobo Zhang 79 The Indonesian Labour Market Shafiq Dhanani, Iyanatul Islam and Anis Chowdhury 80 Cost-Benefit Analysis in Multilevel Government in Europe and the USA The case of EU cohesion policy and of US federal investment policies Alessandro Ferrara 81 The Economic Geography of Air Transportation Space, time, and the freedom of the sky John Bowen 82 Cartelization, Antitrust and Globalization in the US and Europe Mark LeClair 83 The Political Economy of Integration Jeffrey Cason 84 Critical Issues in Air Transport Economics and Business Rosario Macario and Eddy Van de Voorde 85 Financial Liberalisation and Economic Performance Luiz Fernando de Paula

86 A General Theory of Institutional Change Shiping Tang 87 The Dynamics of Asian Financial Integration Edited by Michael Devereux, Philip Lane, Park Cyn-young and Wei Shang-jin 88 Innovative Fiscal Policy and Economic Development in Transition Economies Aleksandr Gevorkyan 89 Foreign Direct Investments in Asia Edited by Chalongphob Sussangkarn, Yung Chul Park and Sung Jin Kang 90 Time Zones, Communications Networks, and International Trade Toru Kikuchi 91 Miraculous Growth and Stagnation in Post-War Japan Edited by Koichi Hamada, Keijiro Otsuka, Gustav Ranis, and Ken Togo 92 Multilateralism and Regionalism in Global Economic Governance Trade, investment and finance Edited by Junji Nakagawa 93 Economic Growth and Income Inequality in China, India and Singapore Trends and policy implications Pundarik Mukhopadhaya, G. Shantakumar and Bhanoji Rao

94 Foreign Direct Investment in China Spillover effects on domestic enterprises Deng Ziliang 95 Enterprise Forms and Economic Efficiency Capitalist, cooperative and government firms Kazuhiko Mikami 96 Diversity and Transformations of Asian Capitalism Edited by Robert Boyer, Hiroyasu Uemura and Akinori Isogai 97 Knowledge Transfer in the Automobile Industry Global-local production networks Dessy Irawati 98 Exchange Rates and Foreign Direct Investment in Emerging Asia Selected issues and policy options Ramkishen S. Rajan 99 Singapore, the Energy Economy From the first refinery to the end of cheap oil, 1960–2010 Ng Weng Hoong 100 China–India Economics Challenges, competition and collaboration Amitendu Palit 101 Case Studies on Chinese Enterprises Edited by Donglin Xia

102 Argentina’s Economic Growth and Recovery Michael Cohen 103 The Korean Labour Market After the 1997 Economic Crisis Edited by Joonmo Cho, Richard B. Freeman, Jaeho Keum and Sunwoong Kim 104 China and India The quest for energy resources in the twenty-first century Zhao Hong 105 Beyond the Global Crisis Structural adjustments and regional integration in Europe and Latin America Edited by Lionello Punzo, Carmen Aparecida Feio and Martin Putchet Anyui 106 The Global Economic Crisis in Latin America Impacts and responses Edited by Michael Cohen 107 The Processes and Practices of Fair Trade Trust, ethics and governance Edited by Brigitte Granville and Janet Dine 108 Regional Development through Ecological Business Unique cases in Japanese rural regions Makoto Hirano 109 Aging and Economic Growth Potentials in the Pacific Region Edited by Akira Kohsaka

110 Crises of Global Economy and the Future of Capitalism An insight into the Marx’s crisis theory Edited by Kiichiro Yagi, Nobuharu Yokokawa, Shinjiro Hagiwara and Gary A. Dymski 111 The Financial History of the Bank for International Settlements Kazuhiko Yago 112 Freight Transport and the Modern Economy Michel Savy and June Burnham 113 Thoughts on Economic Development in China Edited by Ma Ying and Hans-Michael Trautwein 114 China’s Ethnic Minorities Social and economic indicators Rongxing Guo 115 Globalization, Outsourcing and Labour Development in ASEAN Shandre Thangavelu and Aekapol Chongvilaivan 116 The Role of Informal Economies in the Post-Soviet World The end of transition? Colin C. Williams, John Round and Peter Rodgers 117 Demystifying the Chinese Economy Miracle The rise and future of relational capitalism Yongqin Wang

118 Globalism and Regional Economy Edited by Susumu Egashira 119 Russia’s Changing Economic and Political Regimes The Putin years and afterwards Andrey Makarychev and André Mommen

120 Innovation and Regional Development in China Edited by Ingo Liefner and Yehua Dennis Wei 121 International Trade Negotiations and Domestic Politics The intermestic politics of trade liberalization Edited by Oluf Langhelle

This page intentionally left blank

International Trade Negotiations and Domestic Politics The intermestic politics of trade liberalization Edited by Oluf Langhelle

First published 2014 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 711 Third Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2014 selection and editorial material, Oluf Langhelle; individual chapters, the contributors The right of Oluf Langhelle to be identified as the author of the editorial material, and of the authors for their individual chapters, has been asserted in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data International trade negotiations and domestic politics: the intermestic politics of trade liberalization/edited by Oluf Langhelle. pages cm Includes bibliographical references and index. 1. Free trade. 2. International economic relations. I. Langhelle, Oluf, HF1713.I568 2013 382′.9–dc23 2013004275 ISBN: 978-0-415-81156-9 (hbk) ISBN: 978-0-203-07027-7 (ebk) Typeset in Times New Roman by Wearset Ltd, Boldon, Tyne and Wear

Contents

List of illustrations Notes on contributors Preface Acknowledgements 1

Towards the intermestic politics of trade: institutions, ideas, interests and actors

xv xvi xix xx

1

OLUF LANGHELLE, HILMAR ROMMETVEDT AND ARILD AURVÅG FARSUND

2

The global trade agenda

23

OLUF LANGHELLE, ARILD AURVÅG FARSUND AND HILMAR ROMMETVEDT

3

Multilevel negotiations in American trade policy: Free Trade Agreements from Bush to Obama

49

DAVID M. OLSON

4

The European Union: balancing trade liberalization and protectionism

76

CARSTEN DAUGBJERG

5

India’s trade politics: continuity and change

102

AMRITA NARLIKAR

6

China: an open, confident and booming trading nation NING JUN, YAO LEI AND WANG GEFEI

121

xiv 7

Contents Norway: agricultural exceptionalism and the quest for free trade

148

ARILD AURVÅG FARSUND

8

The intermestic politics of trade

174

OLUF LANGHELLE, ARILD AURVÅG FARSUND AND HILMAR ROMMETVEDT

Appendix 1: groups in the WTO Appendix 2: interviews References Index

207 212 218 236

Illustrations

Figures 2.1 2.2 6.1 6.2

Selected economies’ shares of merchandise exports and imports Selected economies’ shares of commercial service exports and imports China’s import and export of goods during the Eleventh Five-Year Plan period A schematic diagram of the Chinese government’s institutional structure

25 26 125 128

Tables 2.1

Tariff bindings for industrial products, pre- and post-Uruguay Round 2.2 Numerical targets for cutting subsidies and protection. The reductions in agricultural subsidies and protection agreed in the Uruguay Round 3.1 US House votes by party on trade legislation 1993–2008 3.2 International trade policy: US participants 3.3 US trade policy chronology: Clinton, Bush and Obama 1993–2011 3.4 Path to adoption of free trade agreements legislation 2011: chronology of negotiation and action 3.5 US Congressional votes on FTA bills 2011 by Chamber and party 5.1 Participation in PTAs 7.1 External trade in goods and services 2000–2011 (NOK billion) 8.1 The use of the DSM (1995–2012) A.1 Groups in the WTO A.2 Interviews

31 32 52 54 62 68 69 110 149 176 207 212

Box 2.1

Amber, Blue and Green box explained

33

Contributors

Carsten Daugbjerg is Professor in the Crawford School of Public Policy at The Australian National University in Canberra, Australia; and Professor of Agricultural and Food Policy (part-time) in the Department of Food and Resource Economics at the University of Copenhagen, Denmark. His fields of research are agricultural policy reform, trade negotiations in the WTO, private food standards in global trade, government interest group relations and environmental policy. He has published widely on these issues in international journals and has had four books published, including Ideas, Institutions and Trade: The WTO and the Curious Role of EU Farm Policy in Trade Liberalization, Oxford University Press, 2009 (co-authored with Alan Swinbank). His most recent publication includes the special issue ‘Policy analysis and the new politics of food and agriculture’, in Policy & Society (2012), co-edited with Alan Swinbank. Arild Aurvåg Farsund is Associate Professor in Political Science at the University of Stavanger, Norway and Senior Research Scientist at the International Research Institute of Stavanger. His research includes studies of Norwegian agricultural politics, international trade negotiations and the relationship between international and domestic policy making. He has published articles and chapters in national and international journals and books, including (co-edited) Norske byregioner: Utviklingstrekk og styringsutfordringer, Norwegian City-Regions: Characteristics and Governance Challenges, Høyskoleforlaget (2010). Oluf Langhelle is Professor of Political Science at the University of Stavanger, Norway. He has co-edited a number of books, including Governance, Democracy and Sustainable Development: Moving Beyond the Impasse, Cheltenham: Edward Elgar (2012), Caching the Carbon: The Politics and Policy of Carbon Capture and Storage, Cheltenham: Edward Elgar (2009), Arctic Oil and Gas: Sustainability at Risk?, London: Routledge (2008), and articles in journals such as Global Environmental Change and World Trade Review. Amrita Narlikar is based at the University of Cambridge, UK, where she is Reader in International Political Economy at the Department of Politics and

Contributors

xvii

International Studies. She is also the Director of the Centre for Rising Powers, and Official Fellow of Darwin College. Her latest books include (co-edited) The Oxford Handbook on the WTO, Oxford: Oxford University Press (2012), and New Powers: How to Become One and How to Manage Them, New York: Columbia University Press (2010). Ning Jun is Director and Chief Scientist of the Research Center of the Capital Garment Culture and Industry, Director of the Apparel Marketing Research Institute and Doctoral students Supervisor and Professor at Beijing Institute of Fashion Technology, China. Her research interests comprise fashion brand management, garment industry economy and planning, and enterprise management. Her latest books include Fashion Capital: The Development Perspective of Zhengzhou Textile and Clothing Industry (editor in chief), Beijing: China Textile Press (2011), Clothing Production and Management (editor in chief), Beijing: China Textile Press (2011), Clothing Brand VMP System Operation and Practice (editor in chief), Beijing: China Textile Press (2010) and Clothing Brand Planning Practice (editor in chief), Beijing: China Textile Press (2009). She has also chaired a number of projects concerning trade and China’s textile industry. David M. Olson is Professor Emeritus of Political Science and Senior Fellow at the Center for Legislative Studies, University of North Carolina at Greensboro, USA. He is co-editor with William Crowther of Committees in PostCommunist Democratic Parliaments: Comparative Institutionalization, Columbus: Ohio State University Press (2002), and co-editor with Gabriella Ilonszki of Post-Communist Parliaments: Change and Stability in The Second Decade, London, Routledge (2011). His research interests include comparative parliaments and democratization processes around the world. Hilmar Rommetvedt is Head of Research in Political Science at the International Research Institute of Stavanger and Adjunct Professor at the University of Stavanger, Norway. He has published numerous books, including Politikkens allmenngjøring og den nypluralistiske parlamentarismen (The Generalisation of Interests and the Neo-pluralist Parliamentarism), Bergen: Fagbokforlaget, 2nd edition (2011), The Rise of the Norwegian Parliament, London: Frank Cass (2003), and articles in journals such as Government and Opposition, Journal of Legislative Studies, West European Politics and World Trade Review. Wang Gefei is Professor of the Business School at Beijing Institute of Fashion Technology, China. His latest books include China Enterprises Observation, Beijing: China Economic Press (2011), The Lost and Rise: New Perspective Chinese Enterprises, Tianjin: Nankai University Press, (2007), Strategy: A View from the Peak, Tianjin: Nankai University Press (2007), MBA Concentrated Reading, Beijing: Tsinghua University Press (2001), and articles in journals such as Management Science, Journal of Tianjin Polytechnic University, Silks and China Textile Leader. His research interests include China strategic market research.

xviii Contributors Yao Lei is Associate Professor in the Business School at Beijing Institute of Fashion Technology, China. Her research interests include the international clothing business, international trade and economic systems analysis. She has published more than ten research articles the last five years. She has also presided over about six subject projects, among them the publication of academic works of the National Science and Technology Fund, the project of the International Department of the Ministry of Agriculture, the project of the Beijing Municipal Education Commission and the Beijing Philosophy and Social Sciences Planning project.

Preface

The Doha negotiations in the World Trade Organization (WTO) have been at an impasse since December 2011, or, at least, so it seems. Whether a deal may be reached in the foreseeable future is difficult to know. What we do know, however, is that the current negotiations have been extremely challenging for a number of reasons. Not only has the world witnessed tremendous changes in volumes and patterns of trade, but the growing influences of rising powers like India and, especially, China have challenged the positions of the EU and the US, the traditionally dominating actors in world trade. There is broad general support for the multilateral trade system, and in principle all major players support the ideas built into the Doha Development Agenda of 2001. As we try to explore in this volume, however, international trade negotiations are increasingly challenging domestic interests and what many see as legitimate (non-trade) policy objectives. In an article in Foreign Affairs (1977), Bayless Manning created the word ‘intermestic’ in order to capture the concept that new economic issues are ‘simultaneously, profoundly and inseparably both domestic and international’. The intermestic nature of trade politics and policy represent the starting point for this book. Here, we address the intermestic nature of trade politics and policy in the following way. The first chapter presents the theoretical framework and the research questions. The second chapter gives an empirical presentation of the Doha negotiations and the proliferation of Preferential Trade Agreements (PTAs) over the last decade. The subsequent chapters present case studies of the United States, the European Union (EU), Norway, India and China, while the last chapter draws together the findings from the case studies in an intermestic framework. This book is the result of a truly collaborative effort among scholars from China, Denmark (representing the EU), India, Norway and the United States. Altogether, we have held three collaborative workshops in order to flesh out the themes, structure and content of this volume. Stavanger, January, 2013. Professor Oluf Langhelle University of Stavanger and International Research Institute of Stavanger, Norway

Acknowledgements

The research on which this volume is based was supported by the Research Council of Norway through the Research Programme on Nature based Industry (project number 190184/I10). The Research Council, however, has supported our work on trade politics and policy in three previous projects managed by the International Research Institute of Stavanger, Norway (project numbers 133929/110, 147492/I10 and 22037403), from 2000 onwards, making it possible for the Norwegian researchers to follow the negotiations more or less continuously from the Ministerial Conference in the World Trade Organization (WTO) in Seattle in 1999. We are deeply grateful for this support, which was granted despite the fact that, at times, not much happened in Geneva. We have conducted interviews with trade representatives in Geneva and in the capitals of our cases, i.e. Beijing, Brussels, New Delhi, Oslo and Washington DC. We thank all the interviewees for their willingness to share their experiences and assessments with us. The list would be too long if we were to mention them all, but they all know how dependent we are on their contributions. We would also like to thank two anonymous referees who gave us valuable advice early in the process of making this book. In addition we would like to thank. . . . [Here there will be some more to mention when the book is ready for publication!] Professor Oluf Langhelle

1

Towards the intermestic politics of trade Institutions, ideas, interests and actors Oluf Langhelle, Hilmar Rommetvedt and Arild Aurvåg Farsund

1.1 Introduction After ten years of negotiations on trade liberalization, the members of the World Trade Organization (WTO) who were assembled at the Eighth Ministerial Conference in Geneva, which occurred from 15–17 December 2011, could not avoid concluding that progress was ‘disappointingly limited’ and that negotiations were ‘at an impasse’ (WTO 2011a: 3). According to the conference chairman’s concluding statement, the ministers emphasized ‘the value of the rules-based multilateral trading system’ and underscored that ‘the WTO’s role in keeping markets open’ was ‘particularly critical in light of the challenging global economic environment’ (WTO 2011b: 1). However, nobody was able to describe how the WTO negotiators could overcome existing trade-related problems. The determination ‘to maintain the process of reform and liberalization of trade policies, thus ensuring that the [multilateral trading] system plays its full part in promoting recovery, growth and development’, which was expressed in 2001 at the Fourth Ministerial Conference in Doha, Qatar, appeared to have evaporated by the Eighth Ministerial Conference.1 Why? This simple question is the essential issue that we address in this book. When ‘everybody’ appears to be determined to liberalize trade to benefit from the contributions of trade to economic growth, development and employment, why is it extremely difficult to realize these good intentions? Naturally, we do not claim to provide the complete answer to this question. However, we do believe that this answer should be related to an essential feature of modern politics and policy in general and of trade politics and trade policy in particular. In a globalizing world, this crucial feature is that international and domestic aspects of politics and policies have been interwoven and have become inextricably related to each other. Thus, the point of departure for our study is the intermestic character of trade politics and policy. The creation of the term ‘intermestic’ may be traced to Bayless Manning, who employs this term in an article in Foreign Affairs in 1977, to capture the notion that new economic issues are ‘simultaneously, profoundly and inseparably both domestic and international’ (Manning 1977: 309). Manning predicted that negotiations would increasingly become multilateral

2

O. Langhelle et al.

rather than bilateral and that new issues on the international agenda would have ‘immediate and profound impact[s] upon domestic interests’. There were two major factors underlying this new development, namely, economic interdependence and a growth in the number of issues that involved economic transactions and regulations. The first factor, economic interdependence, has been described by Manning as both international and inter-local. Although an interruption in the flow of a particular exported or imported commodity would not necessarily disrupt the economy of a nation as a whole, this interruption was nonetheless ‘certain to raise hob with particular domestic regions, industries, farmers or workers’. The second factor in the development of intermestic trade politics related to the prediction that economic issues that were linked to domestic interests would increasingly be placed on the international agenda. Thus, Manning argues that ‘foreign policy practitioners will be crowded with politically pressured negotiations about economic matters’ (Manning 1977: 307). How do the domestic and international levels of policy interact? One of the most acknowledged theoretical attempts to link these two analytical levels is Putnam’s two-level games approach (Putnam, 1988). In the two-level games approach, foreign and domestic policies are regarded as fundamentally interconnected aspects of international negotiations. Domestic groups pursue their interests by pressuring the government to adopt favourable policies at the domestic level, whereas national governments seek to maximize their own abilities to satisfy domestic pressures at the international level. The two-level game metaphor invites one to examine the interplay between the factors that exist at these two levels. However, according to Chorev (2007), two-level games do not ‘explain how tensions between conflicting international and domestic pressures are resolved’. To ‘capture this interplay better, it is useful to think not in terms of two distinct levels, one domestic and one international, but rather of one field of action that incorporates both’. Chorev labels this perspective an ‘integrative approach’. In particular, this approach is integrative in the sense that it attempts to demonstrate how ‘factors from both levels shape a particular outcome’ and how the interplay between these factors occurs within a ‘unified field of political action’ in which the boundary between domestic and international considerations is best represented as a ‘fluid divide’ (Chorev 2007: 653, 655, 657). To understand the current standstill in WTO negotiations, we must consider the ‘intermestic’ character of trade policy (Manning 1977), the ‘two-level game’ character of trade negotiations (Putnam 1988), and the ‘fluid divide’ between international and domestic politics (Chorev 2007). Consequently, in this book, we analyse the interplay between international trade negotiations and the domestic determinants of negotiating positions. In particular, we explore the bilateral and plurilateral negotiations regarding preferential trade agreements (PTAs) and the multinational negotiations that occur within the WTO; we particularly focus on agriculture-related and Non-Agricultural Market Access (NAMA) negotiations. Furthermore, we address the domestic politics and negotiating positions of two established powers, the European Union and the USA;

Towards the intermestic politics of trade 3 two rising powers, China and India; and the small industrialized country of Norway. The first four of these five entities are among the largest economies in the world and are key players in international trade negotiations, whereas the example of Norway illustrates how a small country that depends on international rules and institutions can operate in this field.

1.2 From breakthrough in Marrakesh to standstill in Geneva The establishment of the WTO, on 1 January 1995, has been described as a ‘momentous event’ (Narlikar 2005: 22) and as the ‘biggest reform of international trade since after the Second World War’ (WTO 2010a: 15). The WTO was a result of the Uruguay Round of negotiations within the framework of the General Agreement on Tariffs and Trade (GATT). This round of negotiations was concluded in Marrakesh, Morocco, in 1994. Although previous rounds of negotiations had largely addressed trade in industrial goods and tariff reductions, the Uruguay Round expanded the scope of rules that related to trade issues. Agriculture was among the new questions that arose during the Uruguay Round of negotiations. This round was constructed as a single undertaking; in other words, the principle was adopted that ‘nothing is agreed until everything is agreed’. This principle implied that a nation could only become a member of the WTO if it accepted the negotiated package deal in its entirety. The agreement that was reached in Marrakesh included a ‘built-in-agenda’ with timetables for further negotiations. New negotiations were scheduled to start in 2000 with respect to both agriculture and services. The launch of this new round of negotiations was planned for the Third Ministerial Conference of the WTO in Seattle, which occurred in 1999. However, this conference was besieged by public and riot-like protests. An estimated 40,000 to 50,000 protesters crowded the streets outside this conference to represent a variety of different agendas, including not only anti-globalization and protectionist sentiments but also concerns about issues that related to environmental considerations, labour standards, global justice, developing countries, sovereignty, transparency and a perceived deficit in democracy in the WTO (Ostry 2001; Narlikar 2005; Blustein, 2009). For the first time, ‘the fury of the protesters seemed to be [directed at] the WTO itself ’ (Jones 2004: 21). Two years later, at the Fourth Ministerial Conference in 2001 in Doha, Qatar, the member states of the WTO reached agreement on a broad mandate for negotiations on a range of issues and concerns; these topics were referred to as the Doha Development Agenda (DDA). The new Doha Round of negotiations was supposed to be concluded by 1 January 2005, but this deadline was not reached. A major setback occurred at the Fifth Ministerial Conference, which occurred in 2003 in Cancún, Mexico, and in 2006, the negotiations were suspended. However, after several turbulent developments, a ‘July package’ was created in Geneva in 2008. The negotiators appeared close to striking a deal regarding this package, but were once again unsuccessful in reaching an agreement. A number

4

O. Langhelle et al.

of informal deadlines regarding these negotiations have been proposed, but all have elapsed without the achievement of substantial progress. Three broad issues have been identified as major points of contention that prevent an agreement from occurring: the question of whether there should be freer trade in specific sectors that are addressed by the NAMA negotiations, the design of a Special Safeguard Mechanism (SSM) for developing countries to use with respect to agricultural products, and the USA’s use of the principle of ‘zeroing’ in antidumping procedures (Martin and Mattoo 2011: 15). A number of less fundamental issues also remain unsettled at the present time (Bhagwati and Sutherland 2011). In the absence of a new WTO agreement, a new wave of PTAs has been negotiated. By November 2011, the GATT/WTO had received notifications regarding 505 regional, inter-regional, and bilateral trade agreements (counting goods and services notifications separately); 313 of these agreements remained in force.2 The PTAs have their legal foundation in the GATT agreement, and the WTO has established a Committee on Regional Trade Agreements with the mandate of assessing whether PTAs are in compliance with WTO rules. There is little evidence that this form of regionalism is dysfunctional for the multilateral trade system, and certain indications appear to imply that regionalism is associated with general liberalization; nonetheless, several concerns have been expressed with respect to this development. One of these concerns is that the formation of regional trade blocs with high external trade barriers may hinder multilateralism (Baldwin and Freund 2011: 121). Another concern with the growth of PTAs is that regional trade agreements can divert negotiating energy and resources from multilateral forums; this diversion may have particularly serious consequences for developing countries with limited diplomatic capabilities (Lamy 2006). Numerous explanations have been offered for the lack of progress in the DDA negotiations. One of these explanations relates to the sensitivity of agriculture (which will be additionally scrutinized in this volume). Another of the main explanations that has been set forth involves a lack of political will or political support for the DDA. According to Bhagwati and Sutherland (2011: 8), the Doha Round ‘is dying of political neglect’, and in the ‘absence of political will’, a deal appears to be out of reach. The lack of political will is also one of the key explanations for the stalling of the DDA negotiations that has been provided by former WTO director-general Peter Sutherland, who has argued that ‘[c]urrent priorities in many capitals simply do not include new trade agreements’. This phenomenon has occurred not only as a result of other pressing issues or priorities but also because of a ‘fundamental deficit in effective political support for the WTO system’. As Sutherland rhetorically observes, ‘Seattle created a generation and a legion of WTO-haters. And they have votes’ (Sutherland 2010: 6). The Warwick Commission, which was created by the University of Warwick in 2007, presents similar arguments, although the language that the Warwick Commission utilized to frame these arguments differed from the terms that were presented above.3 The primary objective of the Warwick Commission was to

Towards the intermestic politics of trade 5 examine the governance of the world trading system and to issue recommendations for improvements to this governance. The Warwick Commission’s report argues that one of the main challenges that must be overcome ‘if the multilateral trade regime is to succeed in the early 21st century’ is the ‘growing opposition to further multilateral trade liberalisation in industrialised countries’ because this opposition ‘threatens to render further reciprocal opening of markets unduly limited and to weaken a valuable instrument of international economic cooperation’. Although the use of the term ‘industrialized’ in the above quotations eschews the dichotomy between developing and developed countries and thereby avoids the problem of defining these two categories of nations, the Warwick Commission nevertheless regards the aforementioned concern as an issue that was most relevant in the major Organization for Economic Co-operation and Development OECD countries; this limitation is somewhat debatable. The Commission argues that ‘[g]rowing discontent appears to be eating away at the domestic political roots that have underpinned reciprocity in trade relations[,] and it raises important questions about how to restore national political bargains to support openness’ (Warwick Commission 2007: 1f., 9). An in-depth analysis of these domestic changes lay beyond the scope of the Warwick Commission’s report.

1.3 From agricultural exceptionalism to behind-the-border measures The intertwinement of international and domestic (or intermestic) aspects of trade issues is related to a transformation of trade politics and policy that has occurred over the past several decades. During the course of this transformation, a ‘deep trade agenda’ featuring new issues has been developed (Young and Peterson, 2006). The new trade agenda may be regarded as a response to changes in international economic exchange. In particular, international economic exchange has become more diverse and has expanded rapidly since the mid 1980s due to increases in foreign direct investment (FDI) and in trade in services. This increasing economic interdependence caused policies that were formerly regarded as ‘domestic’ issues to become the focus of international trade negotiations and rules (Jones 2006). Domestic rules, or ‘behind-the-border’ measures, were identified as key obstacles to both FDI and trade in services (Young and Peterson 2006). Behind-the-border measures and domestic rules became aspects of the negotiations within the GATT, and the Uruguay Round of negotiations was markedly different from previous rounds of negotiations (Holmes 2006; Young and Peterson 2006). In particular, one of the major achievements of the Uruguay Round of negotiations was the inclusion of agriculture within the framework of the WTO. Since its creation in 1947, ‘agricultural exceptionalism’ has been the fundamental underpinning of the GATT; this principle was incorporated into the domestic agricultural policies of many nations, most notably European countries and the USA (Skogstad 1998; Daugbjerg and Swinbank 2009). Agricultural exceptionalism is based on the

6

O. Langhelle et al.

perception that agriculture is markedly different from most other economic sectors for several reasons. First, agriculture may be impacted by various climatic conditions, such as unstable weather, droughts, and other phenomena. Second, market mechanisms do not function properly in the agricultural sector; low price elasticity and possible over-supply may occur in this sector, resulting in unstable farm incomes. Agricultural exceptionalism also includes the claim that the farming sector contributes to broader national interests and goals; this idea is referred to either as the concept of non-trade concerns or as the principle of the multifunctionality of agriculture (Skogstad 1998; Daugbjerg and Swinbank 2009). The incorporation of agriculture into the WTO represented a fundamental ‘ideational change’ in the ‘underlying perception of agriculture’ from agricultural exceptionalism to a ‘market-liberal policy paradigm’ (Daugbjerg and Swinbank 2009: 12) that caused the agricultural sector to be placed on par with other economic sectors. According to Krueger (1998: 12), the agricultural agreement was ‘a major step in beginning to dismantle economic inefficiencies in the world’s agricultural activities’; this dismantling was to be continued by future multilateral negotiations. However, the agreement regarding agriculture represented an encroachment on the traditional domains of national legislatures and imposed international constraints on the agricultural policies of states. The new trade agenda, which involves behind-the-border measures, presents challenges to domestic politics and policies in a manner that is not posed by negotiations on tariffs and quantitative restrictions. As argued by Jones (2006: 816), there ‘is an inevitable trade-off between national regulatory sovereignty and market integration’. Domestic regulations are typically enacted to realize a public policy objective; in many situations, these regulations impact trade only as a side effect. The stricter disciplining of trade barriers increases ‘the danger that perfectly reasonable measures will be caught by the rules’. According to Young and Peterson, the challenge that is addressed by trade agendas is therefore to identify ways ‘to address the adverse trade effects of domestic rules’. The deep trade agenda is an effort to find methods at the multilateral level to accomplish this task by ‘agreeing [to] disciplines, usually procedural, on domestic rules’ (Young and Peterson 2006: 798). The Uruguay Round of negotiations resulted in a marked increase in the legalisation of trade policy (Young and Peterson 2006; Barton et al. 2006). This agreement establishes ‘the legal ground rules for international commerce’ and binds ‘governments to keep their trade policies within agreed limits’ (WTO 2010a: 9). Thus, the WTO is unique with respect to the extent of both its members’ contractual obligations and the enforcement mechanisms that are incorporated into the Dispute Settlement Understanding (DSU) of the WTO structure (Jones 2004). The DSU has been described as ‘the central feature’ (Jackson 1998: 162) and the ‘[j]ewel in the crown’ (Narlikar 2005: 85) of the WTO. A procedure for resolving disputes also existed under the GATT, but this prior procedure involved no fixed timetables; thus, cases could linger for inordinate durations. Moreover, under the GATT dispute settlement procedure, decisions could be blocked by the losing country because the adoption of a

Towards the intermestic politics of trade 7 ruling required a consensus decision. The DSU operates using clear timetables and procedures, and a consensus is required to reject a ruling (a negative consensus) (WTO 2010a). These policies grant the WTO more power to enforce its rules than any other international organization. In fact, the WTO exhibits the ability to overrule domestic policies. The development of a new international trade agenda that is broader and deeper than past agendas and the recent increase in the legalization of international trade represent a challenge to a variety of domestic interests. As observed by Young and Peterson (2006: 800), When the focus was on at-the-border measures, trade liberalization hurt the few (the protected producers) and benefited the many (consumer and user industries). When national rules are the focus of liberalization, however, the distribution of costs is quite different: the benefits of cheaper products compete with benefits from measures adopted to achieve desired public policy objectives, such as reducing consumer risk or containing environmental damage. The recent broadening of trade policy agendas has caused these agendas to not only involve increasing numbers of actors, sectors and issues, but also become more complex with respect to both trade itself and the inter-linkages between trade and other issues, such as the environment and climate change. As a result, the number of governmental authorities and agencies that are involved in trade politics and policy formation has multiplied, and ‘so too [has] the number and diversity of non-state actors (NSAs) laying claim to a say in policy deliberations’ (Capling and Low 2010: 1). Interest groups and non-governmental organisations (NGOs) that were previously relatively uninvolved in trade politics, have mobilized to address trade issues. The WTO has a mandate to consult and cooperate with NGOs that are concerned with topics relating to the issues it addresses. NGOs have been accredited participants in the various ministerial conferences of the WTO, which regularly organizes public forums. At the national level, government ministers and MPs from a variety of ministries and standing committees become engaged in international trade politics and negotiations (Langhelle and Rommetvedt 2004). In addition, national MPs have engaged in the development of a ‘parliamentary dimension’ of the WTO, which involves parliamentary conferences that are organized by the Inter-Parliamentary Union and the European Parliament (Rommetvedt 2011). As argued by Capling and Low (2010: 1), ‘[g]one are the days when trade policy decisions were settled by one or two government ministries and conveyed with little ceremony to Parliament and the public’.

1.4 Crucial factors in trade politics and policy Traditionally, international relations studies have been characterized by what Clark (1999) refers to as the ‘Great Divide’; in particular, most theories of trade policy formation and negotiations have focused on either domestic or

8

O. Langhelle et al.

international factors (Chorev 2007). However, ‘almost all scholars’ now ‘recognize that politics at both the domestic and international levels should be a feature of any complete analysis of foreign economic policy’ (Hiscox 2005: 128). According to Chorev (2007), most scholars who have attempted to overcome the distinction between the two analytical levels of domestic policy and international policy have utilized Putnam’s two-level games approach (e.g. Moravcsik 1993; Keohane and Milner 1996; Milner 1997; Caporaso 1997; Frieden and Martin 2002; Rogowski 2002). In his seminal article, ‘Diplomacy and Domestic Politics: the Logic of TwoLevel Games’, Putnam (1988: 434) argues that in international negotiations, foreign and domestic policies are fundamentally interconnected; in particular, Putnam states that ‘[a]t the national level, domestic groups pursue their interests by pressuring the government to adopt favourable policies’, whereas ‘[a]t the international level, national governments seek to maximize their own ability to satisfy domestic pressures’ and minimize ‘the adverse consequences of foreign developments’. Chorev (2007) argues that although the two-level approach ‘has proven useful in bringing together domestic and international explanatory factors’, it ‘leaves too many questions outside [of] its analytical framework’. To ‘capture this interplay better, it is useful to think not in terms of two distinct levels, one domestic and one international, but rather of one field of action that incorporates both’ (Chorev 2007: 655, 657). In principle, we agree with Chorev’s recommendation, but as Hiscox (2005: 128) has observed, ‘[i]ntegrating theoretical insights about politics at these two levels is an extremely complex and challenging task that still remains, to a very large extent, undone’. It would be over-ambitious to state that our study overcomes this challenge. Our analysis includes both international and domestic factors that explain trade issues. In the subsequent chapters, we regard only one of these levels at a time as our point of departure; however, as we proceed to the concluding chapter, we attempt to demonstrate how international trade negotiations and agreements are inextricably intertwined with domestic politics and policy and provide possible explanations for the lack of political support for further trade liberalization. The following three research questions guide our efforts: (1) How do the domestic and international factors in our cases interact in trade negotiations?; (2) What are the key conflicts that permeate trade policy both at the international and domestic level and how do these conflicts interact?; (3) Finally, what can our case studies contribute to explanations of the current impasse in the DDA negotiations and the proliferation of PTAs? In our analysis of the fundamentally ‘intermestic’ character of the politics of trade, we focus on four interrelated elements of institutions, ideas, interests and actors at both the international and the domestic levels. 1.4.1 Institutions Our concept of political institutions is a multifaceted notion that includes not only certain structures and organizations, but also formal and informal rules of

Towards the intermestic politics of trade 9 the game (cf. March and Olsen 1989; Peters 1999; Rhodes et al. 2006). We regard institutions both as playgrounds for actors that represent and promote different interests and ideas and as the setting for the institutionalized norms and routines that regulate political processes. International relations are regulated by customary international law and by negotiated agreements and treaties. With respect to international trade, the most important institutions are the WTO, which features various rules and regulations, and the numerous preferential or Free Trade Agreements that have been negotiated on a bilateral or plurilateral basis. The WTO is a particularly interesting organization because of its widespread membership; its regulations concerning PTAs; the supranational court-like competence that is assigned to the WTO through its Dispute Settlement Mechanism (DSM); and the WTO’s built-in agenda for further negotiations and the development of international trade regulations. However, in the absence of progress in recent WTO negotiations, numerous countries have resorted to bilateral and/or plurilateral negotiations to conclude preferential trade agreements. Domestic political institutions are designed and regulated by formal constitutions and by informal practices and routines that have been developed and institutionalized within the framework of these constitutions. Traditionally, foreign affairs have been the prerogatives of a president, monarch, and/or other members of the executive branch of a government, and international treaties and agreements continue to be negotiated by government representatives and ministers. However, in most countries, a treaty must be ratified by the national legislature. The acceptance of an agreement by legislators who represent various domestic constituencies is necessary before the agreement in question can be implemented, and ‘[t]here are likely to be prior consultations and bargaining’ at the national level that ‘hammer out an initial position’ for negotiations at the international level (Putnam 1988: 436). Consequently, national parliamentarians have become increasingly involved in trade negotiations, and a ‘parliamentary dimension’ is developing in the WTO (Langhelle and Rommetvedt 2004; Rommetvedt 2011). The cases that we have selected for our study represent very different government systems. India and the USA are federal systems with bicameral legislatures; these legislatures feature an upper house that represents the states and a lower house that first and foremost represents political parties. Despite exhibiting tremendous differences in size and culture, China and Norway are both unitary states with unicameral legislatures that represent both provinces/counties and political parties. India and Norway are frequently governed by coalition governments, whereas China and the USA are governed by single-party governments, although China and the USA differ greatly in other aspects of their governmental systems. Executive-legislative relations may be characterized by either the separation or the integration of powers. Separation of powers is most pronounced in the cases of certain presidential systems, such as the American system, which features ‘checks and balances’. In China, by contrast, power is concentrated in the Communist Party of China. In government systems that are based on proportional representation and the principle of parliamentarianism,

10

O. Langhelle et al.

such as the Norwegian governmental system, the government requires support, or at least acceptance, from the majority of the parliament. The European Union is clearly a transnational institution; although this fact is considered in our study, we regard the EU as an entity that is similar to a ‘national’ institution. The EU can be characterized as a federation in which the European Parliament represents both the EU member states and different families of political parties. The Council of the EU represents national executives, but the ‘true’ EU executive is the European Commission, which negotiates trade agreements on behalf of the entire union. Although the commissioners of the European Commission are assumed to be acting in the common interests of the EU as a whole, this commission is nonetheless composed of a coalition of members from different member states. Gradually, particularly following the implementation of the Lisbon Treaty, the European Parliament has strengthened its position vis-à-vis the European Commission and the Council of the EU. The basic institutional features noted above are important elements in the explanations of political processes and trade negotiations. Questions that must be analysed in this context include the following concerns. How are the selected countries influenced by their membership in the WTO, and what explains variations among these nations with respect to participation in preferential trade negotiations and agreements? How are the authorities and responsibilities regarding trade policy distributed between national legislatures and executives in these nations, and how are these institutions organized to conduct trade negotiations? Finally, how do differences in executive-legislative power relationships influence countries’ trade negotiating positions? 1.4.2 Ideas Ideas include both perceptions of reality that relate to how the world is, and norms and values regarding how the world ought to be. Ideas may be either general and diffuse or the building blocks of consciously and systematically developed ideologies that feature specific goals, conceptions of the world and guidelines for action. For an extended period of time, the widespread idea of agricultural exceptionalism legitimized the exclusion of food from efforts to liberalize international trade. However, as neo-liberalist ideas found fertile soil, agricultural exceptionalism declined, paving the way for negotiations regarding the liberalization of trade with respect to agricultural products (Skogstad 1998; Daugbjerg and Swinbank 2009). Agriculture was included in the Uruguay Round of GATT negotiations and constitutes a central element of the Doha Round of WTO negotiations. However, the developments in the Doha Round of negotiations clearly demonstrate that agricultural exceptionalism remains alive. The argument that food production, supply and security are related to the very basic needs of human beings and that agricultural products therefore cannot be treated in the same manner as other tradable goods has many adherents. ‘Non-trade concerns’ (NTCs) are a catchphrase in this context.

Towards the intermestic politics of trade 11 The outcome of the Uruguay Round of negotiations has been regarded as a result that features inequities, imbalances and unfairness. According to the HighLevel Panel on Financing for Development, which was appointed by UN Secretary General Kofi Annan in 2000, ‘[t]he Uruguay Round reached a satisfactory conclusion only because developing countries were flexible’. The attempt to launch a new round of negotiations in Seattle in 1999 failed ‘not because of the protesters in the streets, but because the major trading powers lacked the political will to accommodate the interests of developing countries’; moreover, the contention was raised that ‘[d]eveloping countries should not be expected [to] once again . . . bear the burden for improving the multilateral trading system’ (United Nations 2001: 18). Irrespective of whether the development of the Doha Development Agenda (DDA) should be ascribed to the protesters in the streets or changes in the major powers’ willingness, the mandate for the DDA, the new round of WTO negotiations that were agreed upon in Doha in 2001, represented a breakthrough for the idea that particular attention should be devoted to the interests of developing countries. The idea at the international level that the Doha Round of negotiations should focus on developing nations is reflected by a roughly ideological orientation among political parties and national NGOs towards social justice and economic equalization. In general, the question of liberalization is an issue of ideology; rightist parties typically support liberalization, whereas leftist parties oppose liberalization (Milner and Judkins 2004). Consequently, the ideological left-right dimension, which appears to be a central aspect of the politics of most countries, should be expected to impact views regarding the liberalization of international trade. Furthermore, the environmental impacts of international trade and the long-distance transportation of goods may increase the saliency of political orientations with respect to certain debates, such as the questions of economic growth versus environmental protection or of materialism versus postmaterialism (Inglehart 1990). The support of these types of ideas and ideologies, and the saliency of the aforementioned divisions and other domestic cleavages, varies among the countries that are examined in this book. Important questions to be considered with respect to ideas and ideologies include the following concerns. How strong and widespread are certain ideas, such as fairness and a concern for developing countries, agricultural exceptionalism and agricultural trade liberalization? What are the dominant ideological cleavages in different countries? Finally, what impact do these ideas and ideological orientations have on national bargaining positions and international trade negotiations? 1.4.3 Interests By interests, we refer to the economic and material interests of various actors. In an era of globalization, a growing number of transnational companies increase their profits by operating across national borders. From the perspectives of these companies, international trade may be perceived as simply a question of

12

O. Langhelle et al.

intra-company transactions. However, in this study, we primarily focus on the various domestic interests of the selected countries. In international negotiations, national governments have the role of attending to and safeguarding national interests. For issues of security and defence, the definition of the national interest is fairly straightforward: the national interest involves protecting the territory and sovereignty of the state. However, in modern internationalized societies, the definition of the national interest is not straightforward (Barton et al. 2006). The effects of international negotiations and agreements on domestic policies do not merely impact a single and unified national interest; instead, a variety of national interests are involved. Milner (1997: 254) argues that ‘there is no single set of national policy preferences, no single national preference ranking on any issue, and no single national “interest” ’, whereas Trubowitz (1998: 12, 4) maintains that the definition of the national interest is ‘a product of politics’ and that the national interest is therefore defined by the societal interests that have the power to work within the political system to form winning coalitions and alliances. As Frankel (1970: 97) observes, the definition of the national interest is an ‘essentially political process’. However, material interests are related to the structural characteristics of the national economy. Interests may conflict and a variety of domestic interest groups are involved in the competition for influence on the formation of public policies. The presence of new issues and behind-the-border measures on international trade agendas causes new domestic interests to be mobilized. In general, export industries and related groups seek access to markets; consequently, these entities advocate trade liberalization. By contrast, industries that compete with imports and the groups that are affiliated with these industries seek protection and import regulation. Furthermore, business and industry structures may vary among domestic regions; consequently, the interests of one region may conflict with the interests of another. The combination of offensive and defensive interests in Norway may illustrate these points (Langhelle and Rommetvedt 2004). In this nation, fisheries and fish farming constitute an important export industry that is interested in greater market access. However, because Norway is a country with a cold climate and harsh conditions for farming, Norwegian agricultural industries seek protection and import restrictions. Fisheries and fish farming activities are found along the Norwegian coast, whereas farmers are found in central areas of Norway, and small holders are located in peripheral portions of the country; thus, there are substantial regional variations across Norway with respect to the relative importance of these aforementioned interests. Similar contrasts and regional variations in economic interests are found in most nations. As argued by Moon, ‘[g]iven the range of alternative values being sought by nations and the different priorities attached to them by different actors, it is hard to argue unequivocally’ that a single specific strategy ‘best achieve[s] the interests of any nation’ (Moon 1999: 50). Governments and their negotiators must consider various domestic interests in their assessments of possible gains and

Towards the intermestic politics of trade 13 losses and their formulations of bargaining positions in international trade negotiations. The question of how to balance and/or prioritize different domestic interests is crucial if negotiations are intended to contribute to a single undertaking, such as the WTO. Consequently, in this study we will examine the following questions more closely. Which are the most relevant domestic interests with respect to international trade negotiations? What are the most important regional variations in these interests? How are different interests prioritized during the development of bargaining strategies and positions; in other words, what constitutes an acceptable concession in one sector for the achievement of a possible gain in another sector? 1.4.4 Actors Actors are the interpreters, representatives and promoters of ideas and interests in policy-making processes. At the international level, national governments (and the European Commission) are the prime actors negotiating on behalf of their respective countries. In 2012, 157 members of the WTO were involved in the Doha Round of negotiations. The number of actors involved in bilateral or plurilateral negotiations on a specific preferential trade agreement is much more limited; however, in combination, a vast number of countries have been, and still are, involved in these types of negotiations. During the WTO negotiations, numerous coalitions and groups of countries with similar attitudes have been established to strengthen the negotiating power of individual countries. Diego-Fernández (2008: 450) lists 51 different coalitions; the 25 groups that have been listed by the WTO as ‘some of the most active’ entities include the group of recently acceded members (RAMs); the association of the least developed countries (LDCs); the G-20 coalition, which consists of ‘developing countries pressing for ambitious reforms of agriculture in developed countries with some flexibility for developing countries’; the G-33 alliance among ‘Friends of Special Products’ in agriculture; the Cairns group of ‘agricultural exporting nations lobbying for agricultural trade liberalization’; the G-10 coalition of ‘countries lobbying for agriculture to be treated as diverse and special because of non-trade concerns’; the NAMA-11 coalition of ‘developing countries seeking flexibilities to limit market opening in industrial goods trade’; and the Friends of Ambition, which seeks ‘to maximize tariff reductions and achieve real market access in NAMA’.4 The new alliances have contributed to a remarkable change in the global balance of power and negotiating strength and have promoted an ‘increasing assertiveness and influence’ among developing countries (Young and Peterson 2006). At the present time, developing countries and their alliances are major players in the WTO. Several factors have contributed to this development. One of these factors is power that is derived from economic strength. Relative market share is an underlying source of bargaining power (Steinberg 2002), and certain countries, such as China and India, have experienced unprecedented economic

14

O. Langhelle et al.

growth and increased their shares of global trade. Another factor in this development is the experiences and lessons that have been learnt from earlier negotiations within the WTO, most notably the Uruguay Round of negotiations, which have contributed to the ways in which developing countries have managed to form new alliances during the course of the DDA negotiations (Narlikar 2003; Narlikar and Hurrell 2007). As a consequence of the broadened agenda of the WTO negotiations, the number of governmental authorities and agencies that are involved in domestic trade politics and policy formation has multiplied, and ‘so too [has] the number and diversity of non-state actors (NSAs) laying claim to a say in policy deliberations’ (Capling and Low 2010: 1). Hanegraaff et al. (2011) have registered a total of 1,992 interest groups that have participated in one or more of the seven WTO ministerial conferences between 1996 and 2009. Capling and Low’s (2010: 1) argument that ‘[g]one are the days when trade policy decisions were settled by one or two government ministries and conveyed with little ceremony to Parliament and the public’ has been substantiated by a survey among the missions at the WTO in Geneva and by an overview of the questions that MPs have asked government ministers in Norway. The Geneva survey revealed that a variety of domestic actors have an impact on the negotiating positions adopted in the WTO. The most influential actors in industrialized nations were interest groups that represented capital or labour from import-competing sectors, followed by export-oriented groups, the national parliament, and civil society associations. In developing countries, importoriented groups were again the most influential domestic constituents, followed by ‘additional ministries and agencies’ (that is, ministries and agencies that are not directly relevant to trade, economic matters, finance and foreign policy), export-oriented groups, and the national parliament (Zahrnt 2008: 401). The Norwegian overview spanned the period from 1993 to 2008 and demonstrated that in Norway, both the prime minister and the ministers of nine different government ministries were required to answer questions from the Norwegian parliament regarding the GATT and the WTO (Rommetvedt et al. 2009: 77). The non-state actors that are involved in trade politics may be categorized into two groups. One group of these actors consists of the political parties that represent the voters in the legislature and the government, whereas the other group of these actors includes interest groups and civil society groups, such as industrial enterprises, business associations, trade unions and NGOs. This second group of actors may exert an indirect influence on policy-making procedures by lobbying politicians and civil servants; by contrast, political parties are directly involved in decision-making processes through which different domestic concerns are prioritized and balanced and negotiating positions are formulated. Naturally, the direct involvement of a political party in trade politics is highly dependent on this party’s status as a member of the government or of the opposition in parliament. Party systems vary, and the development of parties is related to variations in the saliency of different political cleavages (Lipset and Rokkan 1967). These

Towards the intermestic politics of trade 15 cleavages are no longer ‘frozen’ in place; instead, ‘new politics’ with new political concerns and attitudes have developed. These attitudes may be integrated into the outlooks of existing parties or may trigger the formation of new parties. Members of parliaments and congresses typically represent not only their political parties but also certain territories or geographical constituencies. In the EU, this phenomenon is particularly relevant because the members of the European Parliament represent both their families of political parties and their countries. However, the same principle applies to parties and regions within individual countries; consequently, the behaviours of national MPs and congressmen are influenced not only by differences in ideologies and party platforms but also by the economic structures and interests of their constituencies. Furthermore, political cultures vary with respect to the balance between party discipline and individual freedom for representatives. In the case of Norway, party cohesion is strong; therefore, parliamentary votes typically follow party lines, although deviations may be accepted for certain MPs for issues that relate to matters of conscience or to strong local interests (Rommetvedt 2003). Party cleavages are less clear-cut in the USA than in Europe. Relative to Europe, the USA features a stronger tradition of congressmen and senators operating independently and making bargains to promote the interests of their constituencies. Consequently, the number of veto players appears to be higher in the USA than in many other countries. Political parties are the key players with respect to territorial representation, whereas functional representation occurs through a variety of interest groups (Rokkan 1966). Farmers’ associations, business associations, and trade unions, in combination with broadly ‘idealistic’ civil society associations and NGOs, exert their influence indirectly through civil servants in the public administration and/or through the elected representatives of political parties. Different countries have different traditions regarding interest intermediation and the incorporation of organized interests and NGOs into public policy-making processes. In highly corporatist countries, privileged interest groups not only negotiate with public authorities but also achieve representation in the formation of public policy and the implementation of boards, committees and councils. In relatively pluralist countries, numerous organized interests lobby political parties, legislators, government ministers, and civil servants (Heinz et al. 1993; Christiansen et al. 2010; Öberg et al. 2011; Rommetvedt et al. 2012). From an economic perspective, the aforementioned domestic actors are regarded as rational decision makers with pre-determined and materially derived interests. These actors’ support for, or opposition to, free trade may be predicted on the basis of these interests. However, competing theories exist that provide different predictions regarding which groups will support or oppose free trade based on various metrics, including factor endowments (e.g. endowments of capital, land or labour), economies of scale or other indicators. Capling and Low (2010: 10) distinguish between a Heckscher-Ohlin model and a Ricardo-Viner model. The former model predicts that ‘within nations the owners of locally abundant factors of production will support trade liberalization, while the owners

16

O. Langhelle et al.

of scarce resources will oppose openness’; by contrast, the latter model predicts that ‘individuals who own or work in export industries are more likely to favour trade liberalization than those who are invested in or employed by importcompeting industries’. Frieden and Rogowski (1996: 37) argue that liberalization will be favoured by ‘those whose products are in line with the country’s comparative advantage [and therefore] stand to gain most from easier world trade’, whereas protection will be supported by ‘those “farthest” away from comparative advantage (at greatest comparative disadvantage)’ because these entities ‘stand to lose [the] most’ from free trade. As observed by Dür (2010: 8), entities with interests in exports are more inclined to lobby for their interests if they are threatened by losses than if the opening of new markets is on the agenda. Moreover, collective action is easier to organize in small groups that are negatively affected by trade liberalization than in larger groups, which may benefit from trade liberalization. This notion of concentrated costs and dispersed gains creates ‘a fundamental asymmetry between the lobbying pressure generated from groups seeking protectionists policies, and the lobbying pressure that comes from groups who oppose such restrictions’ (Hiscox 2005: 115). However, no straightforward connection exists between the preferences of private interest groups and the outcomes of public policies. The interests and preferences of private entities are mediated by existing political coalitions and institutions (Garrett and Lange 1996; Keohane and Milner 1996). The following important questions exist regarding different types of actors. Which parties represent the various interests, ideas and ideologies that may impact trade policy? How does the relationship between individual politicians and their respective parties function with respect to topics that relate to the interests of the elected representatives’ constituencies? What are the most important interest groups and NGOs in the fields of trade policy and trade negotiating positions? Finally, how do political parties, interest groups and NGOs operate within the institutional framework of the EU and the countries that we study?

1.5 Selected cases, areas of focus and data Our empirical analyses are based on the following three elements: • • •

We study two types of international negotiations, WTO negotiations and bilateral/plurilateral negotiations regarding preferential trade agreements. We concentrate on the five selected negotiators of China, India, Norway, the USA and the European Union (which is assumed to negotiate on behalf of its member states). We focus primarily on negotiations that are related to agriculture and to non-agricultural market access (NAMA).

The five negotiators were chosen for several reasons. With the exception of Norway, all of these negotiators are key players in international trade negotiations. In fact, four of the selected negotiators are among the largest economies in

Towards the intermestic politics of trade 17 the world. Historically, the EU and the USA have dominated international trade negotiations, and this phenomenon also occurred during the Uruguay Round of negotiations in the GATT (Daugbjerg 2009). However, the Doha Round of negotiations in the WTO has illustrated the rise of new powers and the changes in power relations that have occurred in world trade politics. India was one of the founding fathers of the GATT and has exhibited a long history of multilateral trade negotiations. China became a member of the WTO on 11 December 2001. The Doha Round of negotiations has revealed new alliances between groups of countries and the growing importance of certain developing countries, such as China and India. These two nations share significant similarities with respect to challenges to economic development and trade, but there are huge differences between the political organizations and models of government of these two countries. Norway is a small country with a relatively large economy; moreover, this economy is fairly open in sectors other than agriculture. Norway has been an active participant in the DDA negotiations and was a founder of the GATT. In this study, Norway exemplifies the small nation states that regard the WTO as a guarantor of a rule-based system of international trade. The selected negotiators are distinguished by their differing interests in negotiations regarding agricultural and non-agricultural market access (NAMA). In particular, the USA has primarily offensive interests in agriculture (with certain exceptions), whereas the interests of the EU are more mixed. China, India and especially Norway, have exhibited defensive interests in agriculture. In the context of the NAMA negotiations, the interests of the examined entities depend on the specific sector in question. However, in general, the EU, the USA and Norway have offensive interests with respect to NAMA; by contrast, China’s position regarding NAMA is mixed, and India favours defensive interests regarding NAMA. The institutional framework of a single undertaking for trade negotiations would permit concessions in NAMA to be linked to gains in agriculture (and vice versa). However, because the DDA negotiations are deadlocked within both areas of negotiation, this type of compromise has not proven to be possible. By focusing on the EU and the four countries of China, India, Norway and the USA, we also include representatives of the major alliances that have developed during the course of the agriculture and NAMA negotiations. In the negotiations on agriculture, China and India are members of G-20 and G-33, whereas Norway is a member of G-10. China originally promoted its status as a recently acceded member (RAM) of the WTO, but this nation has become more active over time. In the NAMA negotiations, India is one of the NAMA-11 members, whereas the EU, Norway and the USA are Friends of Ambition. The EU, India and the USA are major players and are members of the group of core negotiators in the overall DDA negotiations, which have shifted from the G-4 to the G-7 groups (passing through the G-6 stage in the process). Since approximately 2007, the G-7 group has included China. China, the EU, India, Norway and the USA have all signed a variety of PTAs, and all of these entities are involved in negotiations to establish new PTAs.

18

O. Langhelle et al.

This book builds on a number of data sources. The authors have conducted interviews with staff from the European Free Trade Association (EFTA) and the WTO; members of national trade delegations in Geneva (including representatives from a number of countries that are not addressed in this study); and employees in ministries, parliaments, interest organizations and NGOs in Beijing, Brussels, New Delhi, Oslo and Washington. In total, 139 interviews (with 171 persons) are considered in this book; the first of these interviews was conducted in 2000, and the last occurred in 2011. Certain key persons in the Geneva-based delegations and the capitals of the examined entities have been interviewed more than once. The names of the countries and institutions that each respondent represents are listed in Appendix 2 of this book; however, in accordance with the requests of a number of respondents, the anonymity of the informants has been protected. Other data sources for this book include documents from the WTO database, public documents from the five examined entities and articles from newspapers and periodicals. An extensive review of the research literature regarding the policy-making processes of international and domestic trade has also been conducted. This review includes both empirical and theoretical analyses of the Uruguay Round of negotiations, the Doha Round of negotiations, and PTA negotiations. The authors of this book are experienced researchers who have previously conducted studies on the diverse topics that are addressed here, including international trade policy, international and national agricultural policy and the relationship between the executive and legislative branches of government. Each country that is examined, is assessed by a ‘native’ author who is familiar with the national and political characteristics of the nation in question. A detailed research protocol was prepared in advance to ensure that the chapters regarding each country discussed the same topics and analytical dimensions. The editor and other members of the Norwegian team have participated in interviews in other countries to strengthen the comparative elements of the book.

1.6 An outline of the book In Chapter 2, Oluf Langhelle, Hilmar Rommetvedt and Arild Aurvåg Farsund, provide the international context for the subsequent case studies that occurred at the national level. The first portion of Chapter 2 provides a brief overview of the changing volume and patterns of global trade that have occurred between the establishment of the GATT in 1948 and the end of 2010. The second portion of Chapter 2 provides not only a short history of international policy-making processes regarding free trade that focuses on free-trade negotiations within the GATT, but also a more detailed account of the outcomes of the Uruguay Round negotiations and the proliferation of PTAs. The third portion of Chapter 2 discusses developments that have occurred over time in the Doha Round negotiations, with a particular focus on agriculture- and NAMA-related issues. Alliances, conflicts and major decisions from ministerial meetings of the WTO are described to provide a context for the country chapters of this book.

Towards the intermestic politics of trade 19 The following case studies (Chapters 3–7) are ‘country chapters’, although the analyses in each chapter are based on the ‘intermestic’ character of the politics of trade in both PTA and multilateral negotiations. All of these chapters are structured around the four aforementioned interrelated elements of institutions, ideas, interests and actors at both the international and the domestic levels. These chapters analyse the actors, interests, political institutions and economic and institutional developments that have contributed to forming and explaining the interests, negotiating positions, strategies and ideas that frame and underpin national trade interests. These chapters also focus on the dynamics and interplay between domestic trade interests and international negotiating processes. A key aspect of these chapters is the provision of possible explanations for the (eventual) lack of political support for trade agreements that support the further openness and liberalization of trade. In Chapter 3, David M. Olson focuses on tensions in the trade politics and policy of the USA during the final congressional term of the Bush administration and the first two congressional terms of the Obama administration. The USA has historically been the dominant player in the world economy and the guarantor for the international trade regime that was established in 1947. In recent decades, the country has supported global growth through its role as the world’s largest import market. National politics are important to the international relationships of American trade policy. Olson demonstrates how American trade policy requires multiple levels of negotiations. One set of trade negotiations involves a discourse between the United States and other sovereign countries, whereas another set of trade negotiations simultaneously and interactively occurs among the American Congress, the President of the United States, and various interest groups. American trade policy is factional, partisan and bipartisan with respect to different topics. The formation and implementation of American trade policy are also bicameral and inter-branch processes. Congressmen and lobbyists on Capitol Hill exert major influences on American positions regarding trade issues. Both the nature of the dominant position in trade questions in the Obama administration and the way in which this position aligns with demands from Congress and powerful interest groups remain debatable. In Chapter 4, Carsten Daugbjerg discusses the trade politics and policies of the European Union over the course of the previous three decades. There have been major developments in EU trade policy during this period. The EU was merely a reactive actor in the GATT; by contrast, this union was one of the key drivers in the establishment of the WTO and it has become a proactive player in this organization. The EU fulfilled a key role in the launch of the multilateral Doha Development Round of negotiations. EU trade policies have also changed significantly from a relatively protectionist approach to the promotion of a liberal trade agenda regarding the majority of the trade issues on the WTO agenda. Positive experiences with market integration within the EU are the major explanatory factor for this change in trade policy. Daugbjerg demonstrates that with respect to agricultural trade and certain service trade issues, the EU has remained protectionist and has pursued a defensive negotiating strategy. The European agricultural sector has a small and declining importance in employment and income generation, but the

20

O. Langhelle et al.

political importance of this sector extends far beyond its economic impact. The strong norm of consensus in EU policy making implies that Council of the EU is an institution that effectively creates veto points for protectionist interests. The Lisbon Treaty has increased the complexity of trade-related policy making by granting new powers to the European Parliament (EP). Nonetheless, despite the institutional complexity of the EU system for devising trade policy, the EU performs relatively well in the arena of international trade policy. In particular, the EU has proactively engaged in the Doha Round of WTO negotiations and has agreed to bilateral FTAs that extend beyond the WTO agenda of trade liberalization. In Chapter 5, Amrita Narlikar analyses the trade policies and trade politics of India and the key role that has been played by India in the DDA negotiations. India has been an important player in the Doha Round of negotiations through its participation in not only the G-20 and G-33 groups during negotiations on agriculture, but also the G-11 group in the NAMA negotiations. India has been one of the strongest supporters of trade liberalization and of cuts in domestic support in rich countries. However, India has not displayed a particularly prominent willingness to liberalize domestically. Thus, India’s trade diplomacy continues to be characterized by its leadership of Third World-ist coalitions and by a developmentalist agenda. Narlikar argues that India’s policy-making and negotiation processes with respect to trade remain largely state-driven, although these processes have been expanded to include different stakeholders, such as domestic institutions, business interests and civil society. Although India has previously enjoyed many benefits from its participation and growing clout in the WTO, and continues to maintain high stakes in this organization, it’s nay-saying behaviour persists. This behaviour is unlikely to be readily altered until and unless changes occur in India’s pattern of economic development and in certain aspects of this nation’s negotiation style and ideational culture. In Chapter 6, Ning Jun, Yao Lei and Wang Gefei examine China’s trade policies and trade politics, the engagement of China in the DDA negotiations and its increased use of PTAs. The chapter focuses on how Chinese authorities have coordinated different domestic economic issues with their trade policies. At the present time, China is the second largest economy and the largest exporter in the world. In the Doha Round of negotiations, China initially used its RAM status as its bargaining position and refrained from high levels of participation in deliberations on other topics. However, it has gradually become more engaged in WTO negotiations, first through the G-20 and G-33 groups, and subsequently as a large power in its own right. In domestic politics, China faces a number of challenges that may influence its international positions in trade, including its productivity in the agricultural sector; the widening income disparities among regions and between urban and rural areas; and the need to facilitate the movement of surplus labour from agriculture into other activities, particularly services. The modernization of the Chinese economy has been uneven from both an industrial and a geographical perspective. Coastal provinces and cities have demonstrated remarkable industrial growth, whereas interior Chinese provinces remain dominated by traditional agriculture. This uneven modernization process has resulted in a rural-urban divide in

Towards the intermestic politics of trade 21 which the populaces of these two types of regions demonstrate not only large and growing income disparities, but also differences with respect to their access to education, health care, pensions and other social benefits. In Chapter 7, Arild Aurvåg Farsund explores Norway’s trade politics and policies, its use of PTAs and its engagement in WTO negotiations. Norway is a small player in world trade compared with the great powers that have been described above; however, the rule-based multilateral system of the WTO is of vital importance to Norwegian interests. The Norwegian government has been negotiating trade deals with other countries or groups of countries through the European Free Trade Association (EFTA). In the Doha Round of negotiations, Norway is positioned close to the protectionist extreme in negotiations regarding agriculture, whereas it is close to the liberalist extreme in the NAMA negotiations. In principle, Norwegian political parties use deliberations in the nation’s parliament and cabinet to determine the ideas and interests that its trade negotiators should pursue or defend. In practice, different government ministries formulate the details of Norway’s trade policies; these details are typically based on consultations with a variety of interest groups and NGOs. In general, the idea that the international trade system can be further developed through the Doha Round of negotiations and supplementary PTAs is supported by most Norwegian political parties, government ministries and interest organizations. However, there is an exception from the dominant position that has been widely shared above; namely, that Norway exhibits a need to protect a sizable portion of its domestic agricultural production from international competition. The five aforementioned case studies involve discussions of the basic issues addressing the four interrelated elements of institutions, ideas, interests and actors at both the international and the domestic level for the examined countries. These discussions provide a foundation for subsequent comparative analyses and the assessment of the fundamentally ‘intermestic’ character of the politics of trade with respect to both PTA negotiations and a new WTO agreement. In Chapter 8, the final chapter of this book, Oluf Langhelle, Arild Aurvåg Farsund and Hilmar Rommetvedt explore the differences and similarities among the five case studies on the basis of the four interrelated elements of analysis that are discussed above. The following questions are addressed. What are the most important factors that explain trade politics and trade policies in the different countries? What roles do institutions, ideas, interests and actors play in different domestic contexts? How can the interplay between international and domestic factors explain why, despite the expected benefits of international trade, the chairman of the Eighth Ministerial Conference of the WTO in Geneva was forced to concede that trade liberalization negotiations were at an impasse?

Notes 1 Ministerial declaration that was adopted on 14 November 2001. WT/MIN(01)/DEC/1, available online at: www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_e.pdf (accessed 19 December 2011).

22

O. Langhelle et al.

2 Goods and service notifications are counted separately; for more information, see: www.wto.org/english/tratop_e/region_e/region_e.htm (accessed 12 January 2012). 3 The Commission’s report, The Multilateral Trade Regime: Which Way Forward? (2007) examines ‘how the multilateral trade regime can better serve the global community’. For more information, see http://www2.warwick.ac.uk/research/warwickcommission/worldtrade/ (accessed 5 September 2012). 4 See Appendix 1 and http://wto.org/english/tratop_e/dda_e/negotiating_groups_e.htm (accessed 2 January 2012).

2

The global trade agenda Oluf Langhelle, Arild Aurvåg Farsund and Hilmar Rommetvedt

2.1 Introduction The purpose of this chapter is to present an overview of trade and trade policy developments at the international level. We focus on changing patterns of trade, the institutionalization of the international trade regime, GATT/WTO negotiations and the proliferation of preferential trade agreements (PTAs). These developments in the international arena have shaped important elements of the intermestic character of international trade. The first section documents developments in trade and changes in the patterns of trade since the establishment of GATT in 1948 through the period of the Doha Round of negotiations. The Doha Round occurred in a period with strong economic growth in developing countries, especially in Asia. Arguably, the rise of new economic powers such as China and India and the changing patterns of global trade have affected both the interests and the relative bargaining power of the actors and influenced the bargaining climate in the WTO. The second section presents a brief history of the free-trade negotiations within the framework of GATT, focusing primarily on the outcomes and implications of the Uruguay Round of negotiations. Understanding the current conflicts within the Doha negotiations necessitates an historic account of the legacy of the Uruguay Round. The Marrakesh agreements, with the establishment of the World Trade Organization (WTO) and its legal mechanisms, represent a stronger institutionalization and judicialization of the multilateral trading system. In parallel with the multilateral negotiations, PTAs have proliferated. As the Doha Round negotiations have dragged on, PTAs have become an important alternative or complementary strategy for trade liberalization for many countries. The third section outlines the major conflicts, events and decisions that occurred during the Doha Round of negotiations, with a particular focus on agriculture and non-agricultural market access (NAMA). These two negotiating areas have been pivotal in the current round. Agriculture in particular, as well as the linkages between the levels of ambition in agriculture and NAMA, has been among the most contentious issues, where conflicting interests, actors and alliances and conflicting ideas over the nature of agriculture have played out over the course of the negotiations.

24

O. Langhelle et al.

2.2 Developments in international trade International trade has undoubtedly become a more important element in the global economy.1 From 1951 to 2000, the world experienced 3.9 per cent annual growth in world GDP (gross domestic product) and a 4 per cent annual increase in the production of merchandise. However, international trade grew to an even greater extent. During the second half of the twentieth century, the world witnessed a 6.4 per cent annual growth in the volume of merchandise exports. Despite the financial crisis of 2008–2009, during the first decade of the twentyfirst century, the volume of merchandise exports continued to grow, by 4 per cent annually from 2000 to 2004 and by 3.5 per cent annually from 2005 to 2010. Moreover, both the production of merchandise and world GDP grew by 2 per cent annually. From 2000 to 2010, the value of merchandise exports increased from US $6,186 to US $14,851 billion, while the value of commercial service exports increased from US $1,435 billion to US $3,695 billion. Even more interesting in our context are the changes that have occurred in the different countries’ shares of world trade. Shares of world trade can be used as a proxy indicator for bargaining power (Steinberg 2002), and these changes have undoubtedly affected countries’ interests in international trade and their bargaining power in international trade negotiations. Figure 2.1 presents selected economies’ shares of the value of merchandise exports and imports. The 1948–2010 graphs include intra-EU exports and imports, while the 2000–2010 graphs only include extra-EU exports and imports. In the long term, from 1948 to 2010, we find a substantial decrease in the US share of merchandise exports. The US decline is fairly dramatic compared to the increases in the export shares of the EU and China. However, the growth in EU shares of both exports and imports (including intra-EU trade) is somewhat artificial due to the stepwise enlargement of the EU (from 6 members in 1963 to 27 from 2007). In the short term, from 2000 to 2010, we see that both the extra-EU and the US shares of exports decreased. China is a latecomer to the international marketplace, but since the 1980s – and particularly since the turn of the century – Chinese shares of both exports and imports have grown dramatically. The Chinese share of exports bypassed the US share in 2008. The Indian shares of exports and imports have grown during the last decade, but it is noteworthy that, initially, Norway (with fewer than five million people) had nearly the same shares of exports and imports as India (with well over a billion people). Norway’s share of exports is related to its status as a major exporter of oil and natural gas. Merchandise includes agricultural products, which are particularly interesting in relation to GATT/WTO negotiations. However, agriculture has a number of distinct characteristics with respect to international trade. Most of the world’s food is grown and consumed within national borders. Agricultural trade amounts to less than 10 per cent of world trade. Whereas 50 per cent of industrial goods enter international markets, the same is true for only 25 per cent of agricultural products. Most of this is processed food; for instance, only 5 per cent of global rice consumption is traded internationally (Paarlberg 2010: 24).

The global trade agenda 25

50

Merchandise exports 1948–2010

25

USA

Merchandise exports 2000–2010 China

EU

Extra-EU 20

0 20

10

0

00

5

08

10

10

50

Norway

20

20

USA

15

04

Percent

30

India

20

India

20

China

19 1948 1953 1963 1973 1983 2093 2003 10

Percent

40

Year

Year

Merchandise imports 1948–2010

Merchandise imports 2000–2010

25

USA

China

EU

Extra-EU 20

0 20

10

0

00

5

08

10

10

Year

Norway

20

20

USA

15

04

Percent

30

India

20

India

20

China

19 1948 1953 1963 1973 1983 2093 2003 10

Percent

40

Year

Figure 2.1 Selected economies’ shares of merchandise exports and imports (source: adopted from WTO statistics. See www.wto.org).

Large countries such as China and India have high degrees of selfsufficiency for most agricultural products. However, China’s economic growth and growing wealth have led to increased imports of food and agricultural products. The Chinese share of imports of agricultural products grew from 3.3 per cent in 2000 to 7.6 per cent in 2010. During the same period, there was a slight increase in China’s share of agricultural exports, from 3.0 to 3.8 per cent. The US and the EU are still the major exporters and importers of agricultural products, although their shares of agricultural trade have declined. From 2000 to 2010, US exports decreased from 12.9 to 10.5 per cent, while imports decreased from 11.5 to 8.2 per cent. During the same period, the extra-EU

26

O. Langhelle et al.

share of exports decreased from 10.1 to 9.5 per cent and imports decreased from 13.2 to 10.8 per cent. In this context, Norway is insignificant, and India’s shares are small. India’s agricultural exports grew from 1.2 to 1.7 per cent, while its imports grew from 0.7 to 1.2 per cent from 2000 to 2010. The EU and the US are also the major exporters and importers of commercial services (cf. Figure 2.2). The extra-EU shares of both exports and imports have dropped, while the US shares at the end of the 2000–2010 period are almost the same as at the beginning. This is an area where the US has a large trade surplus – although not large enough to compensate for the trade deficit in goods. China and India are undoubtedly growing players in the international service market. Both countries have experienced significant increases in their shares of both exports and imports of commercial services. The rise of India is mainly explained by the remarkable growth of its IT sector (Nilekani 2009). Again, we see that little Norway was almost on a par with one of the largest countries in the world. The limited growth in Norwegian shares of service exports and imports at the beginning of the 2000–2010 period stalled and then experienced a minor decline in the middle of the decade. Developments in international trade should be understood in relation to the institutionalization of the international trade regime. Trade agreements and the rules and regulations of international trade have affected growth in international trade, while changing volumes and patterns of trade have influenced bargaining power and power relations, further complicating the task of negotiating multilateral trade agreements in the modern world. Against this background we now turn to the institutionalization of the international trade regime.

30

Commercial service exports

25

China

30

Extra-EU

25

Commercial service imports China Extra-EU

India

India 20

20 10

0

20 08

0

20 00

5

20 10

5

20 08

10

20 04

Norway

15

10

Year

USA

20 04

Norway

Percent

USA

15

20 00

Percent

20

Year

Figure 2.2 Selected economies’ shares of commercial service exports and imports (source: adopted from WTO statistics. See www.wto.org).

The global trade agenda 27

2.3 International trade politics and policy International free trade had its first major period of success beginning in the middle of the nineteenth century. Ideologically, it was rooted in the ideas of freemarket economists such as Adam Smith and David Ricardo (Rodrik 2011: 25). Institutionally, the growth in free trade was based on bilateral agreements among Western European countries. Outside Europe, Western powers imposed free trade policies on their colonies; China and Japan were also forced to accept low tariffs on Western imports. Importantly, the treaties also included the mostfavoured-nation (MFN) principle, which implies that countries should not discriminate between their trading partners. If one country grants someone a special favour (such as a lower tariff for one of their products), then it has to do the same for all other countries. This greatly strengthened the multilateral nature of the nineteenth-century trade regime (Findlay and O’Rourke 2007: 396). This ‘golden age’ with historically low tariff levels only lasted for approximately 20 years. The support for free trade began to falter gradually, but it was World War I that brought the liberal order to an abrupt halt. The League of Nations was charged with maintaining an international trading environment, but it was unable to fulfil its function (Findlay and O’Rourke 2007: 429, 443). In the inter-war period, trade policy was in turmoil, and the US implementation of the Smoot-Hawley Act in 1930 undermined the trust that still existed in the international trading system and wrought havoc in global trade flows. Although new actions on trade liberalization were taken from 1934 onwards, no major breakthrough for free trade was achieved before World War II (WTO 2007b: 42–43). Thus, the idea of free trade survived, but strong opposition from domestic interests and weak global institutions obstructed its comeback. 2.3.1 The development of a multilateral trade regime The post-war period represented a fresh start for the belief in the benefits of free trade. In the aftermath of World War II, there was strong support for developing international institutions, and the small town of Bretton Woods lent its name to the new order. The two dominant thinkers behind the initiative, the British economist John Maynard Keynes and the American Treasury official Harry Dexter White, were more cautious about the benefits of free trade and more sensitive to domestic political interests than traditional liberal economists. This time there was an American willingness to take a large share of the responsibility for the development of a new global economic system. The preference for multilateralism – rule-setting through international organizations based on the principle of non-discrimination – has been described as the most notable American contribution to the new world order (Rodrik 2011: 67–70). The design of this new institutional order was nevertheless disputed in the US. In 1948, 53 countries agreed to establish the International Trade Organisation (ITO), but domestic interests in the US blocked its establishment. A majority in Congress and several business groups opposed the ITO charter, and

28

O. Langhelle et al.

President Truman decided not to submit the charter for congressional approval. Instead, international trade relations were safeguarded through the General Agreement on Tariffs and Trade (GATT).2 The overall objectives of the GATT were to reduce tariffs and certain trade barriers, such as quotas. The cornerstone of the GATT agreement was the principle of non-discrimination or the MFN principle (WTO 2007b: 180). Exceptions were made for customs unions and free trade areas if they did not lead to third parties facing higher tariffs on average than they had beforehand (Findlay and O’Rourke 2007: 490). The GATT agreement was extended through several rounds of negotiations, with a steadily increasing number of participating member states. New topics added to the GATT agenda in the 1960s complicated the negotiations. The Dillon Round (1960–1961) was primarily concerned with transforming the tariffs of the six EEC members into a common tariff for all non-member countries. For the first time, agriculture was a topic during the negotiations, and the new EEC Common Agricultural Policy (CAP) was the main challenge. After the negotiations were brought to the brink of failure, the US decided that European integration had priority over certain US agricultural export interests, and an agreement was reached without the inclusion of agriculture (WTO 2007b: 183). The Kennedy Round (1964–1967) and the Tokyo Round (1973–1979) were both characterized by a number of new topics and shared challenges. Agricultural products became a major negotiation topic, but in neither of the rounds did the negotiators find solutions that resulted in principal changes to the way agriculture was treated in the GATT. The concerns of developing countries were for the first time explicitly addressed in the negotiations. The outcome provided limited benefits to developing countries, but the introduction of a clause that allowed members to provide differential and more favourable treatment to developing countries was an important component of the Tokyo Round agreement. Non-tariff measures also became part of the GATT agreement during this round. Although it was limited, the introduction of this type of measure demonstrated governments’ willingness to deepen and broaden the scope of the GATT (WTO 2007b: 188). The status in the middle of the 1980s was that seven successful GATT negotiation rounds had contributed to market openings through tariff reductions. Nevertheless, over time, a number of challenges had become visible. First, agriculture was an unresolved issue among developed members, such as the US and the EU, and between the developed and developing countries. Second, dissatisfaction with the GATT was growing. The changing comparative advantage of developing countries and the need to address new issues such as services, intellectual property rights and investment issues, were gradually being recognized. Third, developing countries also had increasing interests in trade liberalization and export-oriented growth, although their concerns and interests were related to a number of issues that differed from those of the developed countries. Thus, to: reap the benefits of unilateral liberalization, to protect themselves against increasing non-trade barriers, and to ensure that the new issues where

The global trade agenda 29 included in a manner with a trade-off that supported their interests, developing countries had to go to the negotiating table. (Narlikar 2005: 22–23) 2.3.2 From GATT to WTO: the Uruguay Round The Uruguay Round was launched in September 1986 and concluded in April 1994. A total of 103 countries were involved at the outset of the round; ultimately, 123 countries participated. Despite several major crises in the negotiations, the Uruguay Round delivered much more than many expected. The parties agreed to establish the World Trade Organization, which has been described as the ‘biggest reform of international trade since after the Second World War’ (WTO 2010a: 15). Although the WTO was not on the agenda when the Uruguay Round was launched, it became one of the hallmarks of the round, effectively creating one of the most important intergovernmental organizations in the world. The Uruguay Round was also a milestone for other reasons. Whereas the previous rounds primarily concerned trade in industrial goods and tariff reductions, this round expanded the scope of the rules covering trade. The former GATT agreements continued under the WTO’s umbrella treaty for trade in goods (amended in the Uruguay Round as GATT 1994), and a number of other areas were covered, such as services (General Agreement on Trade in Services [GATS]), trade-related investment (Trade-Related Investment Measures [TRIMs]), textiles (Agreement on Textiles and Clothing [ATC]), intellectual property rights (Trade-Related Intellectual Property Measures [TRIPs]) and – not least – agriculture. Altogether, the Uruguay Round agreement included a total of 1,000 pages of treaty text and 26,000 pages of tariff tables (Jones 2004). The agreements were constructed as a single undertaking, where nothing was agreed until everything was agreed. The single package deal had to be accepted in its entirety for a country to become a member of the new WTO. The outcome of the Uruguay negotiations in the form of the single undertaking has been called a ‘Grand Bargain’ between developed and developing countries (Ostry 2000; Narlikar 2005). In the overall North–South bargain struck in the Uruguay Round, the developing countries took on significant commitments in new areas such as intellectual property and services, where industrial country enterprises saw opportunities for expanding international sales. In exchange, industrial countries took on areas of particular export interest to developing countries: agriculture, textiles and clothing (Finger and Nogués 2002: 322). Yet the ‘Grand Bargain’ was soon the centre of disagreements over who obtained the greatest benefits from the deal. Summing up the Uruguay Round agreements, Jackson and Sykes (1997: 5) argued that the agreements were ‘filled with ambiguities and omissions – deliberate and unintended – that will challenge WTO members for decades, and may well affect the course of future negotiations’. Indeed, the outcomes of the Uruguay Round had a substantial effect on what was later to become the Doha Development Agenda (DDA) and the political and ideational framing of the Doha Round. Both NAMA and agriculture played key roles in this battle.

30

O. Langhelle et al.

2.3.3 Industrial goods in the Uruguay Round In WTO terminology, market access for industrial goods is referred to as NAMA. In practice, it includes manufacturing products, fuels and mining products, fish and fish products and forestry products.3 The Uruguay Round produced significant improvements in market access for industrial products in the developed countries. Tariff reductions were close to 40 per cent (leading to an average tariff rate of less than 4 per cent) and the share of duty-free tariff lines increased from 20 to 44 per cent. The share of tariff peak lines was also reduced from 14 to 10 per cent (WTO 2007b).4 However, tariff reductions by sector varied markedly. According to the WTO (2007b: 209), three product categories recorded the smallest tariff cuts, ranging from 18 to 26 per cent: textiles and clothing, rubber and footwear, and transport equipment – all three categories of great importance for developing countries. The Agreement on Textiles and Clothing (ATC) negotiated in the Uruguay Round was meant to rectify a history where trade in textiles and clothing had been severely constrained not only by tariffs and tariff peaks but also by import restrictions and the use of import quotas in developed countries. The textile and clothing sector was a particular point of contention. This is a labour-intensive sector dominated by traditional production technology and it has low capital requirements. As a result, clothing manufacturing has frequently proven to be an early step in the process of industrialization (Abernathy et al. 1999). The Multifibre Arrangement (MFA), that was negotiated as part of the Tokyo Round in 1974, limited the import growth of textiles and clothing to 6 per cent per annum (Hoekman and Kostecki 2009). As a result, 61 per cent of textiles and 78 per cent of clothing were exposed to import restrictions in the developed world in 1986 (Lindström 2010). The ATC set out the rules for a transition period where the agreement, and the managed trade regime, would terminate in 2005, resulting in the end of import quotas and a full integration of textiles and clothing in the regular WTO system (Hoekman and Kostecki 2009). The implementation of this agreement as part of the ‘Grand Bargain’ was later to become important for the political and ideational framing of the Doha Round of negotiations. For many important products, liberalization was moved to the final implementation phase (Narlikar 2005). The ‘back loaded nature’ of ATC implementation (Hoekman and Kostecki 2009: 308) had the effect that the benefits that ‘were supposed to have accrued in the first decade of the WTO, and thereby [have] provided a balance against the costs that developing countries bore through the inclusion of new issues’, did not materialize (Narlikar 2005: 71). Special rules for product-specific safeguarding actions were part of China’s protocol of accession, leading to continued restrictions being imposed on the country (Hoekman and Kostecki 2009: 308). The Uruguay Round also led to a substantial increase in tariff bindings. Table 2.1 provides an overview of tariff bindings for industrial products before and after the Uruguay Round (source: Hoekman and Kostecki 2009: 192).

The global trade agenda 31 Table 2.1 Tariff bindings for industrial products, pre- and post-Uruguay Round Country group

Developed countries Developing countries* Transition economies

Number of tariff lines

86,968 157,805 18,962

Percentage of tariff lines bound Pre-Uruguay

Post-Uruguay

78 22 73

99 72 98

Note * Data spans 26 countries accounting for 80 per cent of the total trade of countries participating. Source: Hoekman and Kostecki (2009: 192). Originally from GATT (1994).

Bound tariff rates, or the maximum tariff rates allowable, imply predictability in the sense that the maximum tariff that can be applied is known. This establishes a baseline from which future reductions can be made (Low and Santana 2009). However, the applied tariff rate can be close to the bound tariff or even substantially lower. Most members of the WTO have scheduled tariff bindings far above applied tariff rates. According to Hoekman and Kostecki (2009: 192), only eight members have for the most part bound their tariffs at the applied rate, including the EU, the US and China. For developing countries, one of the most important contributions of the Uruguay Round came in the form of new tariff bindings. Binding coverage for NAMA products in developing countries increased from 22 to 72 per cent. The difference between the average applied rate and bound rate has been called ‘the binding overhang’: ‘The greater this difference, the deeper the average tariff cut that must be realized in a MTN [multilateral trade negotiation] for the outcome to imply actual liberalization’ (Hoekman and Kostecki 2009: 192). Very little was done in the Uruguay Round ‘by way of binding commitments that affected applied tariff rates’ (Low and Santana 2009). Therefore, an important challenge inherited from the Uruguay Round was how to solve the problem of reaching the applied tariffs. It was to become one of the major issues in the NAMA negotiations in the Doha Round of negotiations and sparked the larger question of what ‘the appropriate level of market access commitments for developing countries’ should be – a question that lies at ‘the heart of the difficulties over closing the NAMA negotiation’ in the Doha Round (Low and Santana 2009: 68). 2.3.4 Agriculture in the Uruguay Round Agriculture was no doubt the most contentious and difficult negotiating area during the Uruguay Round, and it almost led to a collapse of the round. The Agreement on Agriculture is described as an agreement that ‘strikes a balance between agricultural trade liberalization and governments’ desire to pursue legitimate agricultural policy goals, including non-trade concerns’ (WTO 2004: 5).

32

O. Langhelle et al.

Non-trade concerns include issues such as ‘food security, livelihood and poverty alleviation, rural development, protection of the environment, food safety, and animal welfare’ (WTO 2002a, TN/AG/6: 3). The agreement addressed three essentials or ‘pillars’ that distort trade in agriculture: market access, export competition and domestic support. All WTO members, except the least developed countries (LDCs), were required to make commitments to all three pillars. Table 2.2 presents the numerical targets for subsidies and protection cuts in the Agreement on Agriculture. Although developed countries had more or less liberalized industrial goods and developing countries still had relatively high tariffs to protect domestic infant industries, agriculture was heavily supported and protected in developed countries and less protected in developing countries. High tariffs, tariff peaks and tariff escalation, domestic support in terms of substantial budget transfers and various means of subsidizing exports distorted both trade in, and the world market prices of, agricultural products before and during the Uruguay Round. Different dynamics during the 1980s pushed agriculture into a new ideational framing, away from agricultural exceptionalism and towards agricultural normalism, seeing agriculture as no different from other sectors. Daugbjerg and Swinbank (2009) highlighted a number of factors contributing to this ideational shift. The costs of agricultural protectionism and the level of support to farmers were quantified and exposed by organizations such as the FAO (Food and Agriculture Organization) and OECD (Organization for Economic Cooperation and Development), which coincided with a severe crisis in the global markets for farm products, depressing prices and farm incomes. Farm policy reforms in Australia and New Zealand, and a policy change in the US under President Reagan, also played a role. In addition, agricultural exporting countries, both developed and developing, sought to liberalize trade in agriculture. However, ultimately, the Agreement on Agriculture was in many respects the result of a compromise between the US and the EU, the so-called Blair Table 2.2 Numerical targets for cutting subsidies and protection. The reductions in agricultural subsidies and protection agreed in the Uruguay Round Developed countries Developing countries 6 years: 1995–2000 10 years: 1995–2004 Tariffs average cut for all agricultural products minimum cut per product

–36% –15%

–24% –10%

Domestic support cuts in total (‘AMS’) support for the sector

–20%

–13%

Exports value of subsidies (outlays) subsidized quantities

–36% –21%

–24% –14%

Source: WTO (2004: 5).

The global trade agenda 33 House accord in 1992, leading to a deal between the two in December 1993, although the final agreement did not go very far in terms of real trade liberalization (Daugbjerg and Swinbank 2009: 53). For domestic support, the agreement established three ‘boxes’, categorized by the extent to which support actually distorts trade (see Box 2.1). The Amber box contains domestic support measures considered to distort production and trade. The Blue box contains domestic support that has to be linked to production limitation programmes that might have trade distorting effects, although to a lesser extent than Amber box subsidies. There are no limitations on Blue box support. Green box domestic support contains subsidies that either do not distort trade or cause minimal distortions to trade. There are no limitations on Green box spending in the Agreement on Agriculture.

Box 2.1 Amber, Blue and Green box explained Amber box All domestic support measures considered to distort production and trade (with some exceptions) fall into the amber box, which is defined in Article 6 of the Agriculture Agreement as all domestic supports except those in the blue and green boxes. These include measures to support prices, or subsidies directly related to production quantities. These supports are subject to limits: de minimis minimal supports are allowed (5 per cent of agricultural production for developed countries, 10 per cent for developing countries); the 30 WTO members that had larger subsidies than the de minimis levels at the beginning of the post-Uruguay Round reform period are committed to reduce these subsidies. The reduction commitments are expressed in terms of a ‘Total Aggregate Measurement of Support’ (Total AMS), which includes all supports for specified products together with supports that are not for specific products, in one single figure. In the current negotiations, various proposals deal with how much further these subsidies should be reduced, and whether limits should be set for specific products rather than continuing with the single overall ‘aggregate limits’. Blue box This is the ‘amber box with conditions’ – conditions designed to reduce distortion. Any support that would normally be in the amber box is placed in the blue box if the support also requires farmers to limit production. At present there are no limits on spending on blue box subsidies. In the current negotiations, some countries want to keep the blue box as it is, because they see it as a crucial means of moving away from distorting amber box subsidies without causing too much hardship. Others want to set limits or reduction commitments, some advocating moving these supports into the amber box. Green box In order to qualify, green box subsidies must not distort trade, or at most, cause minimal distortion . . . They have to be government-funded (not by charging

34

O. Langhelle et al. consumers higher prices) and must not involve price support. They tend to be programmes that are not targeted at particular products, and include direct income supports for farmers that are not related to (are ‘decoupled’ from) current production levels or prices. They also include environmental protection and regional development programmes. ‘Green box’ subsidies are therefore allowed without limits. Source: WTO (2002) Domestic support in agriculture. THE BOXES, available online at: www.wto.org/english/tratop_e/agric_e/agboxes_e.pdf (accessed 12 March 2012).

The agreement also required that all agricultural tariffs be bound. Existing nontariff barriers thus had to be converted into tariffs. Also in this pillar, the agreement had few serious effects on trade liberalization. Tariffs were high from the outset, and the tariffication process required that a representative internal price be compared with an appropriate external price for a base period from 1986–1988. However, during this period, world market prices for many agricultural products were at an historic low, resulting in ‘historically high levels of border protection’ (Daugbjerg and Swinbank 2009: 56). Thus, market access through the reduction of high tariffs, tariff peaks and tariff escalation became perhaps the most contentious issue in the agricultural negotiations in the Doha Round. Another issue under market access is the Special Safeguards (SSG) for agricultural products, which allow member states to impose an additional duty on imports ‘without the need to show either that the product was dumped or that the domestic industry suffered damage’– contrary to what is required under GATT Article VI regulating anti-dumping measures (Daugbjerg and Swinbank 2009: 56). However, the SSG require that the member states have reserved the right during the Uruguay negotiations, and they can only be used for products that are tariffed, and not within quotas. Only 39 member states have reserved this right, among them the EU (for 539 products), Norway (for 581 products) and the US (for 189 products). The third pillar in the Agreement on Agriculture was export competition. The Agreement on Agriculture imposed tighter limits on export subsidies. Only 25 WTO members – among them the EU (20 products), Norway (11 products) and the United States (13 products) – can subsidize exports, and they can do so only ‘for products on which they have commitments to reduce the subsidies’ (WTO 2004: 19). Other countries are not allowed to subsidize exports at all.5 According to Daugbjerg and Swinbank (2009: 64), this provision was ‘clearly aimed at eroding agricultural exceptionalism in export competition’, although the agreement in effect also made export subsidies legal (Poletti 2010). 2.3.5 PTAs and the legacy of the Uruguay Round Historically, trade has been liberalized either unilaterally, through bilateral and plurilateral PTAs, or via multilateral agreements. PTAs can be seen as both an

The global trade agenda 35 alternative and a supplement to multilateral trade agreements. Bilateral trade agreements have a long history preceding the establishment of the GATT, and PTAs have existed legally in parallel with both the GATT and the WTO.6 When the GATT agreement was signed in 1947, there was a general belief that both multilateral and regional trade liberalization was good and that regional liberalization was complementary to the multilateral trading system (WTO 2007b: 305). Scholars speak of three waves of new preferential trade agreements (Pomfret 2006; Hoekeman and Kostecki 2009; WTO 2011c). The first wave was initiated by the establishment of the EEC (European Economic Community) in the 1950s. This was followed by the establishment of EFTA (European Free Trade Association), and a number of trade blocks encompassing developing countries, many of which were unsuccessful and collapsed. The second wave was initiated by the US in the mid 1980s and culminated in the North American Free Trade Agreement (NAFTA) in 1993. The American initiative was partly a response to the problems associated with the launch of a new GATT round and partly a response to the Single European Act, which expanded free trade within the EEC. There were also a number of PTAs in South America, Asia and Africa, of which the extended Mercosur agreement is the most prominent. The third wave was initiated in the late 1990s in East Asia. This was partly stimulated by the 1997 Asian crisis and partly by the increase in China’s economic power (Pomfret 2006). Both the EU and the US developed new initiatives during this period. Since the creation of the GATT in 1947, 362 regional trade agreements have been notified in the WTO (WTO 2011c: 6). PTAs have become another cornerstone of the international trade system, but not without problems. The proliferation of PTAs and concerns about the relationship between these agreements and the multilateral framework were other important drivers behind the efforts to start a new round of negotiations within the WTO. However, the Uruguay Round agreements, which included schedules for future multilateral trade negotiations on a number of issues, were more important. This type of ‘built in agenda’ refers to set timetables for new or further negotiations and makes it clear that trade liberalization is an on-going project. New negotiations were scheduled to begin in 2000 on both agriculture and services. During the Uruguay Round, a number of other issues were also being tabled as possible areas or issues to be negotiated in a new round. Working groups were established on trade and the environment (Marrakesh 1994); on trade and investment, competition policy, transparency in government procurement and trade facilitation (Singapore 1996);7 and on global electronic commerce (Geneva 1998). In 1998, the member countries agreed to begin preparations for a new round at the WTO Ministerial Conference in Geneva. Negotiations were to include ‘further liberalization sufficiently broad-based to respond to the range of interests and concerns of all Members’ (WTO 1998: Ministerial Declaration). Many countries saw the Ministerial Conference in Seattle in 1999 as the starting point of such a new broad round of negotiations. However, as noted in the introductory chapter, the conference was overwhelmed by public and riot-like protests, held on the streets of Seattle.

36

O. Langhelle et al.

A number of explanations have been advanced for the failure in Seattle. Although the political significance of the protests themselves should not be underestimated, it is doubtful that a new Millennium Round of negotiations would have been launched in Seattle, even in the absence of popular discontent (Jones 2004; Narlikar 2005).8 The main reasons for the failure were the tensions and disagreements among member states – most notably between developing and developed countries – over what a new round of negotiations should encompass. The push for a new broad round came primarily from developed countries seeking to expand the negotiating agenda. The EU in particular pushed strongly to have the so-called Singapore Issues (i.e. investment, competition policy, government procurement and trade facilitation) included in a new negotiation mandate – matters that, with the exception of trade facilitation, are, strictly speaking, non-trade issues (Khor 2007). A number of developing countries led by India, Egypt and Pakistan, opposed the inclusion of the Singapore Issues (Michalopoulos 1999). The legacy of the Uruguay Round also played an important role in this context. Many developing countries perceived the round as one characterized by inequities and imbalances, and the ‘Grand Bargain’ as close to fraud. The ‘Report of the High Level Panel on Financing for Development to the UN Secretary General’ (United Nations 2001: 40) illustrates the political and ideational framing of a new round of negotiations in terms of developing countries’ concerns. The report referred to studies estimating the possible loss from a lack of market access reaching as much as US $130 billion per year for developing countries, and it argued that the concerns of developing countries should be at the centre of a new negotiating round. Developing countries ‘should not be expected once again to bear the burden for improving the multilateral trading system’. For developing countries to ‘have confidence in a new round, rich countries must deliver on commitments made in the past, such as accelerating the agricultural trade negotiations and phasing out quotas on textiles and clothing’ (United Nations 2001; see also Michalopoulos 1999; Krueger 1999; Binswanger and Lutz 2000; Khor 2002; Buckley 2003; Jones 2004).9 So widespread was this political and ideational framing of a possible new round that the former WTO Director-General Peter Sutherland (2010: 8) later stated that: In any event, Doha was founded on a notion of historic unfairness. That unfairness was supposed to be engineered out of existence. Whether right or wrong, the attempt at systemic engineering has hit the buffers of political reality.

2.4 The Doha Development Agenda (DDA) The changes in trade volumes and patterns, the legacy of the Uruguay Round, new issues and the proliferation of PTAs are important for understanding the

The global trade agenda 37 Doha Round of negotiations. This section outlines the major conflicts, events and decisions that have taken place in the Doha Round and the advances and setbacks in the negotiations. 2.4.1 The Doha mandate The Doha Development Agenda (DDA) negotiations were launched at the Fourth Ministerial Conference in Doha, Qatar, in November 2001. The name of the round was the work of WTO Director-General, Mike Moore, and Qatari minister Yousef Hussain Kamal, host of the Doha Ministerial (Blustein 2009: 129). The DDA has been perceived as an expression of what Narlikar (2005: 104) terms ‘a newfound sensitivity in the WTO to development concerns’. According to Blustein (2009: 3), there was ‘broad concurrence in Doha’ that the top priority of any new negotiations had to be to ‘bestow more of the benefits of globalization on developing countries’. The Ministerial Declaration represented a number of compromises and concessions by several countries. The US opened up for negotiations on WTO rules that could interfere with its anti-dumping and countervailing duty laws. The existence of these laws was heavily criticized by many countries, and they were essentially perceived as a disguised form of protectionism. The EU had the greatest concerns with the proposed text on agriculture, especially the wording on export subsidies, and Agriculture Commissioner Franz Fischler was able to insert ‘without prejudging the outcome of the negotiations’ in the Declaration. India was the last country to accept the new broad round and had particular concerns over the inclusion of the Singapore Issues. India finally accepted after the inclusion of a statement that negotiations on the Singapore Issues should proceed after the 2003 Ministerial and only if there was an explicit consensus to do so (Blustein 2009). The Doha Declaration outlined the negotiating agenda for agriculture in Paragraph 13. The members committed themselves to a number of aims for the negotiations. First, there should be substantial improvements in market access; reductions of, with a view to phasing out, all forms of export subsidies; and substantial reductions in trade-distorting domestic support. Second, the special and differential treatment for developing countries should be an integrated component in all of the elements in the negotiations. Developing countries should be allowed to consider their developmental needs, including food security and rural development. Third, it was confirmed that non-trade concerns would be considered in the negotiations as provided for in the Agreement on Agriculture (WTO 2001b (WT/MIN(01)/DEC/1)). According to Paragraph 14, the modalities,10 including provisions for special and differential treatment, were to be established ‘no later than 31 March 2003’. Paragraph 16 provided the framework for the NAMA negotiations. The member states agreed to negotiate modalities that reduced or, if appropriate, eliminated tariffs, including the reduction or elimination of tariff peaks, high tariffs, and tariff escalation and non-tariff barriers, particularly on products of export interest to developing countries. It was also stated that product coverage should be

38

O. Langhelle et al.

comprehensive and without a priori exclusions. The special needs and interests of developing and least-developed country participants should also be fully taken into account in the negotiations, including through less-than-full reciprocity in reduction commitments (WTO 2001b (WT/MIN(01)/DEC/1)). There was no set deadline for modalities in NAMA. In effect, this implied that agriculture would set the pace and ambitiousness of the negotiations. Both agriculture and NAMA were to be concluded no later than 1 January 2005 as part of a single undertaking. 2.4.2 Rebellion in the ranks: Cancún and the rising powers As many expected, agriculture soon came to play a pivotal role in the negotiations. After Doha, the negotiations quickly went into a period where little progress was made on the core issues. The overview paper from the Chair of the Committee on Agriculture, released on 18 December 2002, reported ‘wide gaps’ between the participants’ positions. Most important, the members disagreed on the level of ambition implied by Paragraph 13. Some countries had submitted full-fledged possible modalities for further commitment, but without any counter-proposals from the opponents, it was ‘difficult to move the process forward’. There was also disagreement regarding how and to what extent nontrade concerns should be considered. Some participants had already ‘established a link between their willingness to move on agriculture’ and their ambitions in other areas of the negotiations (WTO 2002a, TN/AG/6: 3). For the core negotiation areas in agriculture (i.e. market access, export competition and domestic support), the disagreements among member states were fundamental. Under market access, the core issue was the formula and quantitative targets to be used for further tariff reductions. The EU and the countries in the G-10 coalition11 (including Norway) preferred the Uruguay Round formula, where developed countries had to cut tariffs on agricultural products by an average of 36 per cent over six years (6 per cent per year) with a minimum of 15 per cent on each product for the period. Others such as the US and China preferred the Swiss formula, a single mathematical formula to harmonize or greatly narrow the gap between high and low tariffs. The Swiss formula defines a maximum final rate and a narrow range of final tariff rates regardless of the initial tariffs (WTO 2003d).12 The Swiss formula would provide greater market access than the Uruguay formula. At this time, neither the EU nor Norway submitted figures for their desired reductions. Prior to the Ministerial Conference in Cancún in September 2003, Stuart Harbinson, Chair of the agricultural negotiations, advanced two proposals: a first and a revised draft, which attempted to strike a balance between the different negotiating parties’ positions. No one was particularly satisfied with his proposal. What really sparked controversy, however, was a ‘joint text’ proposal from the EU and the US that was circulated on 13 August 2003. Although the ‘joint text’ was a result of pressure on the EU and the US to move the negotiations forward, many countries saw this as a repetition of the Uruguay Round, where the EU and the US – through the Blair House agreement – more or less

The global trade agenda 39 directed the Agreement on Agriculture. Thus the ‘joint text’ was perceived by many as another fait accompli, which they strongly opposed. The ‘joint text’ led to the establishment of new coalitions and groupings in the agricultural negotiations that had a substantial impact on the negotiations that were to follow, among them the G-20 and G-33 in agriculture. The G-10 was consolidated in Cancún, while the Cairns Group, an established coalition of agricultural exporting nations, lost much of its influence. As one informant stated, ‘the Cairns Group was unable to deliver when it was mostly needed in a critical phase of the negotiation’.13 The G-20, led by Brazil, was established in August 2003 in the final stages of the preparations for Cancún. The G-20 is an alliance focusing on agriculture, or what their home page refers to as ‘the central issue of the Doha Development Agenda’.14 The G-20 is an alliance of exclusively developing countries, currently consisting of 23 members.15 The group was organized to ‘avoid a predetermined result at Cancun and to open up a space for negotiations in agriculture’. The G-20 is primarily interested in market access and the reduction of domestic support in developed countries, but the group also struck a compromise between developing countries with offensive and defensive interests in agriculture. India, with defensive interests, and Brazil, with offensive interests, joined in a concerted effort to challenge the developed countries over agriculture. In addition, for the first time, China joined an alliance in the WTO. The G-33 is a much more narrowly focused alliance. At the beginning of 2003, the Philippines and Indonesia established an alliance on Special Products (SP) and Special Safeguard Measures (SSM) to protect national agricultural production as part of the Special and Differential treatment to developing and leastdeveloped countries, which was later to become the G-33. The G-33 focuses on non-trade concerns such as food security, livelihood security and rural development. The alliance is a ‘single-issue alliance’, focusing exclusively on aspects of the Agricultural Agreement, and has also been called the ‘SP/SSM-alliance’ (Bernal et al. 2004: 19).16 Both India and China became important actors in the G-33. The Ministerial in Cancún 2003 ended in failure, not only because of the negotiations on agriculture, but also because of the Singapore Issues. Attempts to conduct negotiations on all four of the Singapore Issues and the resistance against it ‘became the fulcrum’ of the G-90, the largest developing country alliance during the Cancún Ministerial. It was informally called the G-90 because it had approximately the same number of members (Bernal et al. 2004: 20). The NAMA negotiations never managed to move out of the shadow of agriculture and the Singapore Issues, and the Doha Round of negotiations were never to be the same after Cancún. 2.4.3 Moving forward, but slowly The period after Cancún was marked by disagreement between the main parties, and it took time before the US and the EU realized that G-20 was here to stay. In

40

O. Langhelle et al.

January 2004, US Trade Minister Robert Zoellick proposed a new initiative in a letter to all WTO members. He withdrew support for the US and EU Cancún proposal on agriculture and stated that the US would commit itself to cutting its export subsidies, including cotton and trade distorting subsidies (Blustein 2009: 181). After some discussion, the agricultural negotiations resumed in Geneva in late March, and in May, the EU developed a new initiative that included the elimination of all export subsidies and greater flexibility on the Singapore Issues in exchange for a Green box free of restrictions. Finally, in June 2004, the G-20 presented a proposal on marked access that called for tariff reductions but accepted sensitive products with lower cuts in exchange for minimum import quotas for these products (Conceicao-Heldt 2011: 173). These initiatives paved the way for the first compromise draft text from the WTO secretariat. A limited Ministerial meeting was held in Geneva in July 2004. Ministers from 30 countries met from 26 to 30 July, and again agriculture became the main topic of the negotiations. Many of the discussions were limited to a key group of Five Interested Parties (FIPs), comprising the US, the EU, Brazil, India and Australia. Agriculture was discussed, and they agreed on a text that was supposed to form the basis for a final agreement. The role played by the FIPs prompted strong reactions from the other members, especially the G-10 and G-33 groups, which voiced their deep concern over being excluded from the process (Bridges Weekly 3 August 2004). However, the package negotiated by the FIPs in many ways appears to grant concessions to the demands of large developing countries. During the agricultural negotiations, it was recognized that developing countries should have the right to define a portion of their food production as special products with extra high tariffs. This was to be a system with many similarities to the system of sensitive products that industrial countries had been awarded in the Uruguay Round. Furthermore, they were allowed to establish a special safeguard mechanism (SSM) that could serve as a protection mechanism in cases of rapid and strong import growth (Blustein 2009). Another victory for the developing countries was that all Singapore Issues, except trade facilitation, were excluded from further negotiations (Langhelle 2005). No concrete progress was made in other areas, partly due to demands from several countries that NAMA concessions depend on progress in the agriculture negotiations. The FIP’s package did not revive the negotiations, and there was little movement through 2004 and early 2005. The situation was influenced by events outside the Doha Round. The appointment of a new European Commission, the US presidential election in November 2004 and the nomination of a new US Trade Representative in March 2005 were crucial for the lack of movement. The G-20 circulated a new proposal on marked access in July (Conceicao-Heldt 2011: 176), and there were new proposals from the US, the EU and the G-20 in the autumn, but little rapprochement occurred. The point of departure for the Hong Kong Ministerial Conference that took place from 13–18 December 2005, was a draft declaration text prepared by WTO Director-General Pascal Lamy. The atmosphere at the meeting has been

The global trade agenda 41 described as tense, and again agriculture was the main topic. Some of the problems, such as domestic subsidies and tariff rates, were postponed to 30 April 2006 (Conceicao-Heldt 2011: 180). However, progress was made in the agricultural negotiations on the key issue of export subsidies. Export subsidies were to be eliminated by the end of 2013, and a framework for sensitive and special products was also agreed on. Wealthy countries would have a number of sensitive products and poor countries a number of additional special products that were to be granted further tariff protection. In exchange, each country was to award extra duty-free quotas for these products. The idea was to ensure a certain level of food production in all countries. No agreement was made on the number of products, and no consensus emerged on the size of the import quotas. The WTO members agreed on the end of 2006 as the new deadline for concluding the negotiations. However, a familiar pattern re-emerged after Hong Kong. Little progress occurred in the negotiations, and the original time frame passed. A new initiative was made in July 2006. Ministers from the so-called G-6 group – the EU, the US, Japan, Australia, Brazil and India – met in Potsdam, Germany, to discuss outstanding issues, but they failed to find common positions on topics such as the scale of cuts in tariffs and subsidies in the agricultural negotiations. In particular, the US showed little flexibility regarding cutting the ceiling on domestic support (Blustein 2009: 234). After this fiasco, WTO Director-General Pascal Lamy recommended that the negotiations be formally suspended; his proposal was accepted. During the autumn of 2006, informal consultations were held with the aim of finding positions that could lay the foundation for renewed negotiations. In early 2007, Lamy concluded that the discussions had been sufficiently positive to reopen formal negotiations. However, the timeline for the completion of the negotiations was a problem. The US president had a fast track or Trade Promotion Authority (TPA) from the Congress that was valid until 1 July 2007. This authority was considered essential for the president’s possibilities to compromise on behalf of the US. A renewal was out of the question because the Democrats in the Congress did not wish to provide a new TPA to President Bush (Blustein 2009: 135–136). In June 2007, two main negotiation areas became particularly challenging. In agriculture, there was a cleavage between the EU and the US regarding the latter’s demand for greater access to the European market. Another major cleavage was between the EU and the US on the one hand and the G-20 and G-33 on the other. The rich countries demanded market access, while the different groups of developing countries demanded reductions in domestic support for agriculture in the rich countries, including reductions in the Green box, an issue that had thus far not been on the table. Furthermore, as there had hardly been any movement in the NAMA negotiations, there was a need for progress in this area. An especially challenging issue was the industrial countries’ demand for tariff reductions in fast-growing developing economies such as China and India.

42

O. Langhelle et al.

The negotiations continued in Geneva after the TPA deadline in July. The turn of the year 2007–2008 became a new unofficial WTO deadline, but the deadline passed without notice. New initiatives were made during the spring of 2008, and increasing uncertainties in the world economy spurred renewed interest in the Doha Round. New draft texts were prepared by the Chairs of the agricultural and NAMA negotiations. Adjustments to the texts were made during the Geneva consultations, but there was a need for further solutions to the principal issues. Compromises across agriculture, NAMA and services were seen as important. The next initiative came from Director-General Pascal Lamy. He was particularly concerned by the growing global economic crisis and feared increased protectionism based on the fact that many countries had lower applied tariffs than the bound tariffs agreed to in the Uruguay Round. A new WTO agreement would reduce the possibility of raising applied tariffs in the difficult economic times ahead. Lamy also sought to conclude an agreement before the next US president took office in early January 2009 (Blustein 2009). Therefore, ministers from 35 countries were invited to come to Geneva to negotiate a general framework for a deal that could be completed in the autumn of 2008. 2.4.4 The deal that was nearly struck: Geneva 2008 From the outset, the Geneva meeting that began on Monday 21 July was marked by the classic conflict between the US and the EU on the one hand, and, notably, India, Brazil and China on the other. Two controversial issues were on the table: how deep the rich countries’ cuts in agricultural support should be and how much market access the newly industrialized countries should provide in the NAMA negotiations. During the negotiations, significant progress was reported in both the agriculture and NAMA negotiations. Nevertheless, there were considerable difficulties along the way, and the Chair applied different techniques to move the negotiations forward. The first step was to have separate negotiations among seven of the most important countries. The so-called G-7 group consisted of Australia, Brazil, the EU, India, Japan, China and the US. This was the first time in the history of the WTO that China was invited to take such a central position in the negotiations (Blustein 2009: 263). The consultations covered issues in both NAMA and agriculture. Director-General Lamy chaired the negotiations, and, for the first time, a proposal that promoted compromises across various negotiation areas was discussed. Another action to achieve results was to prolong the negotiations. Originally, the meeting was planned to last for five days but it was extended to ten. Lamy presented a draft of what was to become the ‘July package’ for the G-7 countries on Friday 25th. The draft included proposals for solutions to several of the most important issues in agriculture and NAMA. The package formed the basis for further negotiations, and a deal was nearly struck, but on Tuesday 29th, the negotiations broke down (Ismail 2009: 585). According to several of our

The global trade agenda 43 informants, the proposal had initially been approved by six of the G-7 countries, a view supported by Blustein (2009), who emphasizes that this represented an important break in the alliance between Brazil and India. India was opposed to the deal because it was not satisfied with the proposal for the SSM for developing countries, while Brazil sought to exploit the opportunities that the package provided in relation to its key export interests in agriculture. Both the US and China attempted to find solutions that could make a compromise possible. The US wanted three things from China: a Chinese commitment to buy more US cotton, guarantees that China would not put wheat and maize among its special products and concessions in NAMA areas such as chemicals and machinery. The requests were justified by the US government’s need to appease domestic interests to accept a deal. China, however, employed the same argument when it rejected the US proposal (Blustein 2009: 272). The lack of progress led to the withdrawal of the Chinese support for the July package, and the negotiations ended. The disagreement was formally between the US on the one hand and India and China on the other, but many of our informants highlighted the possibility that neither India nor the US really wanted a deal at this time due to a variety of domestic political conditions, including the upcoming elections in the two countries.17 Although there was no agreement, major progress was made in several areas. In agriculture, the rich countries committed themselves to reducing domestic support. It was agreed that the EU and the US should reduce their trade distorting support by 80 and 70 per cent respectively. Tariffs of more than 75 per cent would be reduced by 70 per cent. Developed countries would have 4 per cent tariff lines defined as sensitive products with lower tariff cuts and increased import quotas equivalent to 4 per cent of domestic consumption. Developing countries would have 12 per cent of product lines as sensitive products with low tariff cuts, of which 5 per cent could be exempted from all tariff cuts. In NAMA, there was agreement on the extent to which tariffs should be cut for industrialized countries, and for the 30 developing countries covered by this agreement, the reduction was 20, 22 or 25 per cent, depending on the proportion of tariff lines they wanted to shield from tariff reductions. However, unresolved conflicts also remained. In particular, the SSM for developing countries created conflict. Developing countries, with India and China in the lead, demanded that it should be possible to apply special safeguard measures if imports of a product increased sharply. The requirement was that the barriers had to be so low that it would be feasible to introduce such measures before the import volume was so great that it damaged domestic production. The US in particular was sceptical of this claim and argued that such a mechanism would lead to the introduction of barriers that would affect the normal trade in agricultural products. A number of crucial issues were not discussed, such as cotton, tropical products, bananas, new tariff quotas, tariff simplification, geographical indicators for food, fisheries subsidies, anti-dumping rules and TRIPS and services. In all of these areas, there were conflicts with the potential to prevent a final agreement (Ismail 2009: 589).

44

O. Langhelle et al.

Although the talks had broken down again, negotiations were not suspended. In early September, diplomats from the G-7 countries met in Geneva and discussed the SSM issue. The discussion clarified that the break in July was based on actual controversy and not a result of negotiators being exhausted after lengthy negotiations. The technical consultations continued after this meeting under the auspices of the negotiation coordinators. Initially, the goal was to establish a framework for an agreement by the end of 2008. New texts were put forth on both agriculture and NAMA, and Director-General Lamy worked actively to assemble key ministers for further negotiations in Geneva on 16 and 17 December. Several bilateral and trilateral videoconferences were held among the responsible ministers from the US (Susan Schwab), India (Kamal Nath) and China (Chen Deming). The SSM issue was central, together with cotton and market access in China for selected US industries. It was still not possible for the great powers to agree on a compromise, and on Friday 13 December, Lamy cancelled the Ministerial meeting that was scheduled for the following week (Ismail 2009: 588). 2.4.5 Negotiations in deadlock, 2009–2011 The first half of 2009 was marked by little progress in the negotiations in Geneva. The new US administration took a long time to assemble the staff responsible for trade, and for a long time there were few and weak signals regarding the Doha Round. However, in late April, a new trade representative, Ron Kirk, was appointed. He confirmed that the completion of the round was given a high priority by the Obama administration (Bridges Weekly 29 April 2009). The global financial crisis added new urgency to trade talks, and the issues were now discussed in a new arena. In April, the G-20 group of leading economies (not to be confused with the WTO G-20 of developing countries) met in London to discuss the economic situation. In the final declaration from the meeting, the political leaders stated that the situation in the world economy called for an agreement in the Doha Round. The new trade representatives of the US and India, Ron Kirk and Anand Shama, met WTO Director-General Lamy in early June, and they agreed that the goal was to finalize the round by the end of 2010 (Bridges Weekly 10 June 2009). However, there was little progress in Geneva during the autumn of 2009. On a general level, there was support for the overall goal of completing the Doha Round; this was also stated in the final communiqué from a G-20 meeting held in Pittsburgh in September 2009 (Bridges Weekly 30 September 2009). Instead of pursuing this goal, attention was directed towards the general activities of the WTO. A Ministerial conference was held in Geneva from 2 to 4 December. In the final communiqué, the ministers supported the view that it was necessary that the negotiations be completed in 2010. There was also broad support for the view that the negotiations should be based on what had been agreed to thus far. Priority should be given to the agriculture and NAMA negotiations, but it was also important to make progress in areas such as services, rules and trade facilitation (WTO 2009: Chairman’s Summary).

The global trade agenda 45 2010 began with a meeting between a group of trade ministers and DirectorGeneral Lamy in Davos in January, but the outcome was a familiar statement that stressed the importance of the round and promised renewed engagement in the negotiations (Bridges Weekly 3 February 2010). There was little movement in Geneva before the arrival of the new US Deputy Trade Representative Michael Punke in March. A formal ‘stocktaking’ meeting was held in the Trade Negotiations Committee (TNC), but despite the fact that the meeting was a response to initiatives made by trade ministers, little progress was reported from the Chairs of the agriculture and NAMA negotiations (Bridges Weekly 24 March 2010). New efforts were made in subsequent months, and several meetings were held to move the negotiations forward: a G-5 Ministerial meeting in Paris in April, a gathering of 19 countries in Geneva in early May, an OECD Ministerial meeting in Paris in late May and a G-20 Head of State meeting in Toronto in June, where the final statement emphasized that the Doha Round should be finalized as soon as possible (albeit to no avail). A report from an open discussion in Geneva illustrates the challenges faced by the negotiators. At this meeting, US Deputy Trade Representative Punke complained that: a Doha Round deal would be impossible to sell in Congress because the ‘pain’ (concessions demanded of the US, such as farm subsidy reform and cuts in tariff peaks on textiles) was clear, while the ‘gains’ were obscured by unclear flexibilities for developing countries. (Bridges Weekly 3 November 2010) Punke called for increased liberalization, particularly from fast-growing developing countries, in agriculture, NAMA and services, with cuts to applied levels of market-openness. The Brazilian and Chinese ambassadors, meanwhile, said that realism demanded the conclusion of an agreement on the basis of the Chair’s draft texts (ibid.). The Heads of Government of the G-20 group of leading economies met again in Seoul in South Korea in November. In their final statement, they said that 2011 represented ‘a critical window of opportunity, albeit narrow’ for an agreement. They directed their ‘negotiators to engage in across-the-board negotiations to promptly bring the Doha Development Round to a successful, ambitious, comprehensive, and balanced conclusion consistent with the mandate of the Doha Development Round and built on the progress achieved’. The leaders also pledged to seek ratification of a Doha deal within their own countries (Bridges Weekly 17 November 2010). This gave new energy to the efforts in Geneva, and the year ended with optimism. Director-General Lamy called it the ‘final countdown’, and a ‘changed atmosphere’ was reported from small group meetings (Bridges Weekly 22 December 2010). Optimism was still dominant in early 2011, but by April the optimism was already gone. In a statement to the Trade Negotiations Committee on 29 April 2011, Lamy declared that ‘the remaining open issues are blocked because of a

46

O. Langhelle et al.

classic mercantilist issue: tariffs on industrial products, the bread and butter of WTO negotiations since their inception’ (WTO 2011d). Instead of pursuing a comprehensive agreement, Lamy proposed that priority be given to issues of importance to the LDC group. However, no substantial agreement was reached.

2.5 Towards the end of the game? Moving towards the end-game and identifying a landing zone have proven difficult in the Doha Round of negotiations. The Eighth Ministerial Conference of the WTO held in Geneva in December 2011 concluded that progress was ‘disappointingly limited’ and negotiations ‘at an impasse’ (WTO 2011a). It is possible to identify both achievable benefits and issues that are blocking any agreement. According to Martin and Mattoo (2011: 4), the proposals on the table in December 2008 implied three key benefits: new market access in agriculture and manufacturing; greater security for market access in agriculture, manufacturing and services; and expanded opportunities for the LDCs. Bhagwati and Sutherland (2011: 1) argued that ‘what is already on offer is a package that would provide a global economic stimulus of hundreds of billions of dollars in new trade annually. Everyone would gain – both developed and developing countries alike and the latter particularly so’. The broad issues that are currently blocking an agreement include disagreements regarding the extent of the actual liberalization of merchandise trade and whether there should be free or freer trade in specific sectors covered by the NAMA negotiations, disagreement over the design of an SSM in agriculture for developing countries, and the US use of zeroing in anti-dumping procedures (Martin and Mattoo 2011: 15). Hubauer et al. (2010: 2) argued that the overall Doha package is achievable, but it is ‘still not ambitious enough and does not adequately balance the interests of the major trading nations’. It is therefore ‘unlikely to garner the necessary political support in national legislatures’. Bhagwati and Sutherland (2011) argued in the same manner. What is already on the table needs to be improved, particularly in terms of services and NAMA, to reach a balanced outcome. Parallel to the deadlocked Doha negotiations, trade liberalization has continued through a rising number of PTAs (Chauffour and Maur 2011; WTO 2011a). However, attention has been drawn to two concerns in this context. The first is connected to the relationship between the bilateral and multilateral trade agenda. One prominent critic, Bhagwati (1991, 2008), perceives PTAs as having two disruptive effects. Preferential trade agreements might divert trade away from the most efficient global producers towards regional partners, thereby reducing welfare. Even more important, regionalism might hinder multilateralism, thereby leading to a negative equilibrium in which regional trade blocs maintain high external trade barriers (Bhagwati 2008; Baldwin and Freund 2011: 121). In an appeal to the delegates in Geneva in February 2012, WTO DirectorGeneral Lamy said that ‘2012 cannot and should not be a wasted year’

The global trade agenda 47 (Bridges Weekly 15 February 2012). However, the most pessimistic observers now see 2020 as a realistic time frame for finalising the Doha Round (Baldwin and Evenett 2011: 2). According to Bhagwati and Sutherland (2011: 8), politics is to blame for the impasse: ‘The Doha Round is dying of political neglect’. Yet the alleged political neglect might have its explanations in the intermestic character of trade politics and policy. In this chapter, we have focused on the international level. In the following five chapters, we will turn to the domestic level and analyse developments in the domestic politics of China, the EU, India, Norway and the US. We will take a closer look at the institutions and ideas, interests and actors that might promote or hamper the negotiations on a new WTO agreement.

Notes 1 Figures in this section are based on WTO statistics, available online at: www.wto.org/ english/res_e/statis_e/statis_e.htm. 2 Originally, the intention of the 23 countries that signed the GATT agreement in 1947 was that it should be temporary until the ratification of the ITO charter. 3 For details see www.wto.org/english/tratop_e/markacc_e/nama_negotiations_e.htm. 4 The OECD provides the following formal definition of tariff peaks: ‘Relatively high tariffs, usually on “sensitive” products, amidst generally low tariff levels. For industrialized countries, tariffs of 15 per cent and above are generally recognized as “tariff peaks” ’. See http://stats.oecd.org/glossary/detail.asp?ID=4985. 5 However, there were some ‘temporary exemptions for developing countries, allowing them to subsidize marketing, cost reduction and transport (Art 9.4)’ (WTO 2004:19). 6 The legal foundation for PTAs is Article XXIV of the GATT agreement and Article V of the GATS agreement. This is somewhat ironic, as PTAs definitively violate MFN treatment by offering preferences to specific countries and go against the principle of non-discrimination that is at the heart of the multilateral system (Baldwin and Freund 2011: 122). To avoid abuse, the WTO has established the Committee on Regional Trade Agreements, which has the mandate to assess whether PTAs are in compliance with WTO rules. There are three types of substantive conditions a regional agreement needs to fulfil to be WTO consistent. First, in free-trade areas and customs unions, there is the obligation not to raise barriers with third parties higher than those existing before the formation of the agreement. Second, a customs union must harmonize the external trade policies of its members and compensate affected non-members accordingly. Third, both tariffs and other restrictive regulations of commerce must be phased out on ‘substantially all trade’ within a ‘reasonable length of time’ (WTO 2007b: 307). 7 Only the first three were actually working groups, but the ministers at the 1996 Singapore Ministerial Conference also instructed the WTO Goods Council to consider possible ways of simplifying trade procedures, usually referred to as ‘trade facilitation’. Trade and investment, competition policy, transparency in government procurement and trade facilitation are therefore denoted the Singapore Issues. 8 However, Blustein (2009: 81) argued that the protests in Seattle actually had a real impact on the failure to launch a new round of negotiations. The protests wrecked the meetings on the first day and influenced the decision not to extend the Ministerial Conference for another day. ‘Extra time might have made a difference’, according to several people on the US team, but it was far from certain. 9 Buckley (2003: 2) described the mood among developing countries in the following way:

48

O. Langhelle et al. Many significant developing and least developed countries believe that they have been cheated in the way the Uruguay Round commitments have been implemented [. . .] Accordingly, the WTO faces a particular challenge in the Doha Round in redressing this sense of broken promises and unfinished business.

10 ‘Modalities’ are targets (including numerical targets) for achieving the objectives of the negotiations, as well as issues related to rules. 11 For an overview of the most active coalitions and groups in the WTO and the Doha Round negotiations, see Appendix 1. 12 As noted by the WTO (2003), the formula was proposed by Switzerland in the 1973–79 Tokyo Round of negotiations. 13 Interview, Geneva 2004. 14 See www.g-20.mre.gov.br/history.asp Accessed 8 February 2010. 15 See Appendix 1. 16 See Appendix 1. 17 Interviews, Geneva 2008.

3

Multilevel negotiations in American trade policy Free Trade Agreements from Bush to Obama1 David M. Olson

3.1 Introduction The United States has been distinctive among the world’s countries in the postWorld War II era for its leadership in promoting open trade, and in the active participation of its legislative body in the development of trade policy. At the beginning of the twenty-first century (though its open trade leadership has been challenged by a rapidly changing global economy) it remains distinctive in the ways in which its trade policies are developed, especially with regard to the active participation of the US Congress. The stresses and strains upon both policy and policy formation are illustrated by the recent experiences of the Bush and Obama Administrations. The lack of progress in the WTO Doha Round of multilateral negotiations has been accompanied by an emphasis on bilateral Free Trade Agreements (FTAs) among many countries, including the United States (Allee 2012: 250). The American trade decision-making process has been subjected to its own set of tensions in the shifting relationships between political parties and between the President and Congress. During the last two years of the Bush Administration, relationships with Congress on trade policy were stymied. One basic challenge facing the Obama Administration has been to revive those working relationships, initially with Democrats elected with him in 2008, and then also, following the congressional midterm elections of 2010, with Republicans for the next two-year congressional term. This chapter reviews American international trade policy through the Bush and Obama Administrations, coinciding with the Doha Round of WTO negotiations, with concentration on the last congressional two-year term of President Bush, and the first two congressional terms of the Obama Administration. Most trade policy activity concerned the FTAs with Colombia, Panama and South Korea. The decade-long WTO Doha Round had stalled, while the Trans-Pacific Partnership proposal was reactivated, and the Obama Administration launched a new Export Initiative. These policy activities generated negotiations between the Executive and Congress, the two congressional chambers, and both political parties. The trade agreements were adopted in 2011, with congressional voting patterns which were both partisan and factional within a bipartisan set of legislative procedures.

50

D. M. Olson

An “inter-branch” perspective is used to trace the changing interactions between Congress and President (Pastor 1980; King 1976; Cohen 2000: 191–208). The inter-branch relationships intersect with shifting party relationships and inter-cameral relationships as well. The Doha Round and four FTA bills in the Bush and Obama Administrations provide examples of three distinct patterns of executive-congressional party relationships: intra-party factionalism, partisan opposition, and bipartisan cooperation. This chapter begins with the NAFTA impact upon subsequent trade issues. The second section outlines the actors in the American trade policy system. The third section reviews increasing American disillusionment with the Doha Round. In the fourth and longest section, America’s increasing reliance on preferential FTAs is examined, with particular attention to the interaction between the Executive and Congress. The fifth and sixth sections examine the Obama expansion of the FTA vehicle to a plurilateral Trans Pacific Partnership and the Obama Export Initiative, respectively, while the conclusions comprise the seventh and closing section. The conclusion considers the constantly changing interactive relationships among the many official and private participants in the trade policy system. American trade policy requires multiple levels of negotiations. If one set of negotiations is between the United States and sovereign countries, another occurs between President and Congress. The negotiations are not separated by level, but are interactive and simultaneous. The changing relationships among branches, congressional chambers and political parties interact with the changing international economy and negotiations to generate American trade policy (Manning 1977).

3.2 NAFTA: party and faction Recurring issues in American trade policy are expressed through the rhetoric of intended increased business, contrasted with feared job loss. While this stark – at least in rhetoric – contrast was expressed in the Trade Act of 1962 in the Kennedy Administration, and in the 1974 Act in the Nixon Administration, it has been most acutely expressed in association with “NAFTA,” The North American Free Trade Act of 1993, in the Reagan-Clinton Administrations. Democratic party critics of the Obama FTAs, for example, refer to the “NAFTAlike trade deals.” American political parties have changed trade policy views over the past century. Republicans, during the period of rapid industrialization in the last half of the nineteenth century, proclaimed the benefits of a protective tariff, while Democrats, more dependent upon agricultural support, were ambivalent (Sait 1927: 221–223). The Republican high tariffs of the Hoover Administration (Smoot-Hawley bill) were widely blamed for the worldwide depression of the 1930’s, followed by the Democratic Roosevelt Administration’s emphasis upon “reciprocal trade agreements” with our trading partners (Schattscheider 1935).2

American trade policy negotiations 51 Trade views of the two American political parties have gradually shifted in the post-World War II period. Republicans have increasingly advocated “free trade,” while Democrats have increasingly seen rising imports as a source of economic decline, as experienced mainly through automobiles, TV sets, and the low-tech and high-tech combination of textiles and computers. Republicans have emphasized “trade, not aid,” as a way to promote international peace, while Democrats have emphasized the disadvantages of “cheap foreign imports” and the resulting loss of jobs. As an alternative, they have occasionally sought to define an “industrial policy” (Olson et al. 1991: 90; Destler 2005: 170–192).3 These inter-party differences, combined with intra-party tensions, were visible as early as the Kennedy Administration. The 1962 Trade Act, which authorized trade expansion negotiations (The Kennedy GATT Round), also instituted ways to protect workers from losing income from imports (Trade Adjustment Assistance). The need for presidential negotiating authority coupled with congressional concern for worker income remains a vital combination of preferences in the Obama Administration (Destler 2005: 11–24). Until the 2011–2012 House of Representatives, that combination also had bipartisan support. Changing party positions and the growing split among Democrats were most dramatically visible in the enactment of the NAFTA implementation bill. The US House of Representatives vote on the NAFTA bill, toward the end of the twentieth century, is especially relevant for the beginning years of the twentyfirst century. The contentious, though not very narrow, congressional vote on NAFTA has provided the template for many of the ensuing controversies over American trade policy (Table 3.1). The outlines of the 1993 vote patterns, especially in the House of Representatives, were clear: Members from congressional districts threatened by economic (and especially employment) loss from low wage country imports voted against the bill, while Members whose districts could be advantaged, tended to vote affirmatively (Congressional Quarterly Weekly, December 18, 1993: 3448; November 6, 1993: 3012–3015). While this pattern was expressed through a party difference, Members whose districts conflicted with the party pattern tended to vote against their party majorities (Baldwin and Magee 2000; Rothgeb 2001: 202–207; Destler 2005: 197–206). District-based reasoning was the same basis for Member votes on the FTAs in 2011. The NAFTA vote showed the deep divisions among congressional Democrats. The House Democratic leadership was split, with several leaders actively opposing their own President. Democrats from districts with strong labor unions especially voted against the NAFTA implementation bill (Biggs and Foley 1999: 218–220). The Republican Speaker (Gingrich, R-GA), in cooperation with President Clinton, helped obtain Republican support to outvote Democratic opposition, as he subsequently did in passing Clinton’s fast track authority (Gillon 2008: 116, 202, 217; Clinton 2004: 540). Ironically, Clinton, the Democrat, had inherited the North American Free Trade Agreement from the Republican Administrations of Reagan and Bush Sr., in the same way as Obama the Democrat inherited the Republican Bush Jr. Free Trade Agreements.

52

D. M. Olson

Table 3.1 US House votes by party on trade legislation 1993–2008 President and House Party Majority Year

Topic

Vote

Bush: Democratic Majority 2007 Peru FTA

2008

Colombia* FTA Rule

Total

Democrats

Republicans

N

%

N

%

102 155 257

40 60 100

132 43 175

Yes No Total

21 189 210

10 90 100

Yes No Total

109 116 225

Yes No Total

218 10 228

Clinton: Democratic Majority 1993 NAFTA Yes No Total Bush: Republican Majority 2002 Trade Authority

Party

N

%

75 25 100

234 200 432

54 46 100

193 23 216

89 11 100

215 214 426

50 50 100

48 52 100

176 16 192

92 8 100

285 132 417

68 32 100

96 4 100

6 185 191

3 97 100

224 195 419

53 47 100

Source: by year of vote: 1993: CQ Roll Call (1994) p. 140-H # 575; 2002: CQ Roll Call (2003) p. H-116 # 370; 2007 CQ Roll Call (2008) p. H-338 #1060; 2008 CQ Roll Call (2009) p. H-58 # 181 Notes * 2008 Colombia vote on procedure to not consider bill. Independents’ votes have been added to total column but are not separately shown.

In many respects, NAFTA simply continued the ways in which trade policy had been decided through Congress and the executive branch. Specific industries – textiles, autos, and sugar, for example – were provided specific exemptions, while Congress and the Administration improvised, as in the FTA-TAA question in 2011, the schedule and means of their joint consultation on the implementation bill. Specific NAFTA provisions, however, have been implemented gradually. Some agriculture tariffs were phased out a full decade after the agreement, while Mexican truck access to the United States was not resolved until 2011 (New York Times, July 7, 2011, The Economist, July 16, 2011: 40). Both sides on American trade policy point to the economic record of that policy. With different numbers, each side claims either job loss or economic gain resulting from NAFTA itself. Environmental objections to the current FTAs were likewise expressed against NAFTA, and the environmental record since then is interpreted as a reason to oppose liberalized trade, at least under current conditions. Side agreements on both environmental and labor standards, which had emerged even earlier, became part of the broader arrangements in support of

American trade policy negotiations 53 NAFTA (Congressional Quarterly Weekly, April 19, 1986: 852–855; Destler 2005: 198–201). The NAFTA debate and vote can be viewed in Congress as a “turning point in how members view trade policy” (Congressional Quarterly Weekly, December 6, 2003: 2996–3001). Though based upon the Canadian-US FTA, the first-time inclusion in an FTA of an underdeveloped country, Mexico, provoked concerns about how low wage and underdeveloped societies would impact upon jobs, wages, and conditions of life in America. That fearful concern only intensified labor union anxieties about earlier job losses from Japanese competition. The inclusion of Vietnam in the current Trans Pacific Partnership talks may activate exactly the same anxieties.

3.3 Participants in the American trade policy system In the institutional structure of American national government, numerous executive branch entities and congressional committees constantly interact with one another and with interest groups, in the formulation and implementation of American trade policy. The responsibility for two sets of trade negotiations – international and congressional – rests with the Office of the United States Trade Representative (USTR). Many other executive branch agencies also share in the policy formulation and implementation of trade policy. The congressional committees with trade negotiation jurisdiction – Ways and Means in the House, Finance in the Senate – similarly share responsibilities with other congressional committees. There is also an extensive set of industry and agriculture advisory bodies (Table 3.2). Together, these many actors constitute an “issue network,” of constant interaction in trade policy formation and implementation (Heclo 1978). 3.3.1 Executive branch The Office of the USTR, in the Executive Office of the President, and its relationship to the lead congressional committees has evolved slowly to accommodate specific characteristics of trade policy formation and administration. Created in the 1962 Kennedy Trade Expansion Act, it is headed by The Ambassador, with two Assistant Ambassadors, one in Geneva, the other responsible for agriculture. Its responsibility includes international negotiations: it has a WTO office and a unit for multilateral negotiations, while geographic offices take the lead on bilateral Free Trade Agreements. For over a decade, the USTR has had a staff of approximately 220 in Washington, with a compliment of approximately 30 persons in Geneva. Its many offices, both geographic and functional, reflect the multifaceted character of international trade, each with a staff of under 10 persons (Cohen 2000: 58–59; Destler 2005: 118–119; Allee 2012: 240). The USTR combines a direct negotiation function with a coordinating function; it coordinates the views of the many other administrative agencies on trade policy topics. The many other US administrative units active in trade policy begin with the Department of Agriculture and the Department of Commerce.

54

D. M. Olson

Table 3.2 International trade policy: US participants Executive

Congress

Interest groups

Office of President: President White House staff Economic Council

Party Leaders

Committees: US Trade Representative HR Ways and Means Sen Finance Committee

Departments: Commerce State Treasury Defense Agriculture Labor

Commerce Foreign Affairs Banking, Currency Armed Services Agriculture Labor Specialized Groupings: Textile Caucus

Chamber of Commerce NAM AFL-CIO AFBF Global Trade Watch

AFBF AFL-CIO National Council Textile Organizations

Steel Caucus Notes NAM: National Association of Manufacturers AFL-CIO: American Federation of Labor – Congress of Industrial Organizations AFBF: American Farm Bureau Federation

Each has major responsibility for encouraging American exports and for advising the USTR in its negotiations. The Department of Commerce and Department of Agriculture are active respectively in NAMA and agriculture negotiations. The coordination activities of the USTR are structured through the Trade Policy Staff Committee at the senior professional level, and the Trade Policy Review Group at the political appointee level of assistant secretaries of cabinet departments. Toward the end of the Bush Administration, more than 80 such committees and subcommittees had been formed, on both a geographic and functional basis (e.g. China, the EU, chemical trade, fisheries; see Cohen 2000: 88–94). Trade policy, however, is much broader than only exchanges of monetary value. It has implications for, and is conducted in support of, broader goals of national security and foreign policy. The USTR is not the highest level coordination body for those purposes. That function is held within the Office of the White House, by both the National Security Council and the National Economic

American trade policy negotiations 55 Council, which, since the Clinton Administration in the 1990s, has shared a staff for international economic policy. The Trade Policy Review Committee, discussed above, reports to the NEC, not to the USTR (Cohen 2000: 61–62, 86–86; Destler 2005: 199; Dolan and Rosati 2006; Rodman 2009: 211–213). The NEC, for example, was directly involved in the discussions of how to proceed in Congress on the 2011 Free Trade Agreement legislation. 3.3.2 Congress Each of the two main congressional committees with trade jurisdiction has a subcommittee with specialized trade staff; that staff is partisan, with the majority party having the larger staff and space. The House Ways and Means Committee, more than the Senate Finance Committee, functions through an active Trade Subcommittee; the Senate Committee functions on a more bipartisan basis than its House counterpart (Cohen 2000: 192–207). Both committees, concerned with revenue, have far broader responsibilities than trade; both, for example, were heavily engaged in the health reform bill (which dominated Congress’ agenda in the first year (2009) of the Obama Administration) as they have been in 2011–2012 with revenue and budget concerns. The more broadly trade questions are defined beyond tariffs, the more other congressional committees become involved, as do administrative agencies (Allee 2012: 247). Further, each administrative unit is more within the jurisdiction of a parallel committee than within the jurisdiction of the finance committees. The confirmation of the Commerce Department Secretary, for example, is conducted by the Senate Commerce Committee, not the Finance Committee, while confirmation of the Secretary of Agriculture is a responsibility of the Senate Committee on Agriculture. The periodic American agriculture legislation, with important consequences for trade negotiations, is in the jurisdiction of the Agriculture Committee of each of the congressional chambers. 3.3.3 Reorganization Reorganization is often proposed as a quick solution to long-range problems, such as formation of either a single Department of Trade, or at least a twosegment approach of an expanded USTR office and a strengthened Department of Commerce (Cohen 2000: 263–290; Destler 2005: 111–114, 322–328). Administrative reorganization requires congressional approval. An example of a failed attempt at policy change through agency reorganization was the proposal by Senator Roth (R-DE), during the Reagan Administration, to create a unified Department of Trade. The proposal was readily, and rapidly, endorsed by President Reagan, but Congress never seriously considered it because the Reagan Administration itself was divided, with the Department of Commerce in disagreement with USTR (Olson et al. 1991: 90; Destler 2005: 111–118). Early in 2012, President Obama proposed the consolidation of six government agencies into a single trade promotion unit. The US Trade Representative’s

56

D. M. Olson

office would be combined with the portion of the Department of Commerce concerned with trade together with the Small Business Administration, the US Export-Import Bank, the Overseas Private Investment Corporation, and the US Trade and Development Agency. The objective of the new agency would be to help “America’s small businesses – which are America’s job creators – to compete, export and grow” (US White House 2012a). The Chairpersons (one Democratic, the other Republican) of the two major congressional trade committees (House Ways and Means, Senate Finance) jointly urged a careful consideration of the president’s proposal (New York Times, January 14, 2012: A1, A11). To better coordinate among administrative agencies, however, the Obama Administration did create (on its own in early 2012) a new Interagency Enforcement Center, located in the USTR office, with a Director from USTR and a Deputy Director appointed by the Secretary of Commerce (US White House 2012b). 3.3.4 Interest groups organization In addition to official departments and congressional committees, another set of actors on foreign trade policy includes companies, labor unions, and interest groups, as well as foreign companies and their governments (Odegard 1928; Schattscheider 1935; Herring 1936; Truman 1951; Bauer et al. 1963; Berry and Wilcox 2009; Cigler and Loomis 2012). Business has been organized, not only through national and multi-industry “peak” organizations, but also through statelevel as well as industry-specific groups, while labor unions also have had a long existence at the peak, industry and state levels (Truman 1951: 66–93). The NAFTA debate during the Clinton Administration, however, stimulated the formation of “advocacy” or “issue” organizations with permanent research and publicity arms on issues of human rights and environmental protection (King 1978: 377; Destler 2005: 96–98; Berry and Wilcox 2009: 17–33). One group that concentrates its political perspective on trade policy is Global Trade Watch, created in 1995 (Public Citizen 2012). The chaotic scenes on the streets at the 1999 WTO Conference in Seattle, focused international attention on trade policy activity by a wide variety of economic and interest groups (Cohen 2000: 126–135; Destler 2005: 185–191, 271–73; Blustein 2009: 57–82). When trade legislation becomes a visible contentious voting act by Congress, an Administration typically stimulates the organization of a sizeable outside lobbying effort. To gain congressional approval of NAFTA legislation, for example, American companies created a Coalition for Trade Expansion (with 500 companies), which then became USA-NAFTA, with over 1200 companies and trade associations. This ad hoc, single purpose coalition was formed to help persuade House Democrats to vote affirmatively, for even their own party leadership had split, signaling the same type of intra-Democratic party tensions currently experienced by the Obama Administration. The opposition was headed by the AFL-CIO and the Citizens Trade Campaign, in order to coordinate the lobbying of approximately 70 labor, environmental, and religious organizations.

American trade policy negotiations 57 This experience mirrored events in the Eisenhower Administration (Bauer et al. 1963: 40–41). Foreign governments, companies, and interest groups are also active in obtaining desired decisions on American trade policy. This is achieved not only through formal governmental means, such as Embassies and delegations, but also through direct company and group contacts, and the employment of Washington professional lobbying firms, foreign governments and organizations in the attempt to persuade American decision-makers. They frequently become active allies with American companies and interest groups on different sides of a policy topic. To support the NAFTA bill, for example, Mexico’s government and businesses employed about 70 public relations and lobbying firms. Japanese companies had earlier been active against proposed trade restraints (Cohen 2000: 125–129). Neither business nor labor has, in the diverse American economy, uniform and consistent views on trade policy. Companies within a single sector may directly oppose one another on any given trade question, while working together on another issue. Multinational firms may themselves be both exporters and importers, so that their international trade is intra-company trade. States and regions vary in their economic bases, and thus also vary in their involvement in trade issues. Private interest groups are formed and disbanded as economy and society changes (Drutman 2012). The major groups active on trade legislation have changed over the years. Only the US Chamber of Commerce and several large companies have been consistently active. Temporary lobbying coalitions come and go with each major bill. The sectoral organizations also change over time. One explanation for variable business organization and policy activity is that they become active when facing the episodic threat of loss of export markets (Dür 2010). Examples of changes in interest group formation and disappearance are the American Textile Manufacturers Association (ATMI) and the US-China Business Council. When active and profitable, the textile industry’s ATMI was a major organization on trade policy, and was particularly active on textile quota legislation. As textile manufacturing has disappeared from American soil, the ATMI has disappeared, with several small surviving segments of the textile industry forming a new but smaller successor organization, the National Council of Textile Organizations. The US-China Business Council, by contrast, has more recently been formed as one of several means by which companies and interest groups coordinate their activities on the new topic of American trade policy toward China (Hrebenar and Thomas 2012). 3.3.5 Formal advisory committees Private sector individuals, such as company managers or interest group leaders and lobbyists, participate more formally and officially in trade policy through a structure of industry advisory groups initially formed for the Tokyo WTO Round

58

D. M. Olson

in the 1970’s (Cohen 2000: 59, 120–121). Advisory panels are a long-standing practice for American administrative agencies, suggesting a corporatist type of policy making (Truman 1951: 458–461, Berry and Wilcox 2009: 67). One of the trade advisory committees advises the President; many advise a single government agency on very specific and limited topics, while an intermediate set of advisory committees is placed at the agency level. The whole system is administered jointly by USTR, the Departments of Agriculture and Commerce, and also the Environment Protection Agency. Not only do they advise, but they also decide: Specific agreement from the appropriate advisory panel is required for an international trade agreement to be signed. New appointments to advisory bodies have been made by the Obama Administration under revised rules that professional lobbyists may not be Members. The purpose is to block the influence of privileged information; the complaint, however, is that the very persons who are experts and thus are needed on the committees, are prevented from talking with congressmen who have to decide. The committee Members receive advance texts of US negotiating positions and are frequently present at the negotiations for quick consultations with official negotiators. The Obama Administration briefed the Chairs of the trade advisory committees on the Trans-Pacific Partnership negotiations, and also the Labor Advisory Council (USTR 2009). 3.3.6 Public and legislative attention The relative unimportance of trade policy in public attention cushions the active participation of interest groups, corporations, and labor unions (and also foreign governments) in trade policy official decisions. Public, and even legislative, inattention to trade is illustrated by both magazine coverage and Speaker floor statements in the House. In a sample of weekly articles covering a five-year period, for example, five articles on trade had been published in the Republican-oriented Weekly Standard (January 2005–June 2011) out of a total of 1267 articles; while 13 articles on trade had been published in the Democratic-oriented American Prospect out of a total of 835 articles over a three-year period (covering January 2008–July 2011). Both party-linked journals concentrated instead on issues such as the recession, taxation, or immigration. Similarly, in Congress, among all statements on the House floor by seven Speakers of both parties over a 59-year period (1941–2000) trade was addressed in only 16 of 418 statements. Other topical issues, such as international affairs or the economy were, in many speakerships, 10 percent or more of their floor statements.4 Furthermore, in only two congressional terms did any of the House roll call votes associated with statements by the Speaker concern trade (Green 2010: 37–43). For economic interest groups, however, trade can be one of the more important issues. The US Chamber of Commerce, for example, was noted as devoting much more effort and funding to congressional lobbying for the Free Trade Agreements in the Obama Administration, than on a range of other current controversial issues (New York Times, July 27, 2011: A16).

American trade policy negotiations 59 In the 2012 American presidential election, trade was linked to an occasional reference to unemployment as a major issue. Both President Obama and Republican challenger Romney accused the other of being an “outsourcer” of jobs, especially to China. Obama bragged about increased American exports, while Romney pledged that, if elected president, he would declare on “Day 1” that China is a currency manipulator (New York Times, October 18, 2012 B3, October 24, 2012 B1, 2). The following sections provide examples of how trade policy in the Bush and Obama Administrations has involved all of these official and private organizations in constant interactions and negotiations. While many of the participants could become “veto players” if united, it is the sheer number and diversity of players and of procedures which characterizes the American trade policy system (Conceicao-Heldt 2011: 219–230).

3.4 The Doha Round The US has been a major player in the development of the world trade system (see Chapter 2 of this volume), but has become disappointed in the course of the Doha Round. Much more public attention has been given to the several Free Trade Agreements. The relative silence surrounding American policy in the Doha Round is, itself, a loud signal. The failure of successive meetings meant, to the American side, that the rapidly growing and developing countries would not provide sufficient access to their markets for American products. At the beginning of the Round (at the start of the Bush Administration) the American position of seeking reduced trade barriers had been, at least partially, undermined by its own actions (Destler 2005: 298–99; Conceicao-Heldt 2011: 154, 177). In 2002, the US, at the behest of steel management and labor, had imposed tariffs on steel imports, which were later invalidated by a WTO decision. Further, the US agriculture bill of 2002 continued subsidies to farmers, which contradicted its declarations for expanded agricultural trade (ConceicaoHeldt 2011: 152, 159–160). The subsequent joint US-EU position on agriculture, however, helped stimulate the formation of a counter-coalition of developing countries, the new G-20 group, at the Cancún meetings (Destler 2005: 302–303; Blustein 2009: 134–156, 282; Conceicao-Heldt 2011: 155–156). Farm subsidies were a constant feature of American agriculture legislation. However there was, apparently, a strong interest (in the second term of the Bush Administration) to propose a major reduction of agricultural subsidies. Following discussions with Members of Congress, the then-current USTR (Robert Portman), who had previously been a Member of the House of Representatives, did not introduce the proposal into the negotiations (Blustein 2009: 204; Conceicao-Heldt 2011: 67–70, 182–186, 196–198, 202–203). An additional complication was presented by the difficulties the Bush Administration faced in obtaining renewed “fast track” Trade Promotion Authority from Congress in 2002 (Destler 2005: 290–298). Labor unions and Democrats were increasingly insistent that both labor and environmental standards be

60

D. M. Olson

included in the WTO negotiations, though Republicans were strongly opposed, as were developing countries (Conceicao-Heldt 2011: 137). As the negotiations continued, the President’s authority (and presumably effectiveness) was threatened by the expiration five years later in 2007, of congressional “fast track” authority (Blustein 2009: 136, 224). Toward the end of the Bush Administration, the US hoped for a completion of negotiations, which, however, floundered on the reluctance of many countries, including the United States, to provide concessions to others. China’s reluctance to open markets to American industrial and agricultural products was a particular difficulty. At the end of the Bush Administration negotiations, USTR Susan Schwab met with leaders of American interest groups, including the National Association of Manufacturers and the American Farm Bureau Federation, who agreed that America could not accept the pending offers (Blustein 2009: 265–271). The American hope and disappointment during the entire Round was captured by a comment by USTR Robert Portman prior to the 2005 Hong Kong ministerial: “Hong Kong will not be a time for us to make some major breakthroughs that the United States had hoped for, but we do hope than we can make incremental progress . . .” (New York Times, December 12, 2005: C3). This assessment, during the last half of the Bush Administration, has continued into the Obama Administration. In 2010, for example, the Treasury Undersecretary for International Affairs observed, “We have asked some of our key trading partners to come back to the negotiating table and provide some market access, to make sure it is one the Congress can get excited about.” The Administration, however, was “not quite there yet” (New York Times, August 2, 2010: B1, B7). At the July 26, 2011 WTO Trade Negotiations Committee, Ambassador Michael Punke judged that the lack of “meaningful contributions” from participating countries meant that the “Early Harvest package is not happening and is not going to happen.” A few months earlier, he noted the “gaps on market access – . . . I refer to services and agriculture, as well as NAMA – should not come as a surprise” (Punke 2011a, 2011b). Trade specialists now informally speculate in public about how to end, perhaps gracefully, the Doha Round (Schwab 2011; Schott 2011a). The hope is to find a way to be able to negotiate, free of the procedural constraints developed within the Doha Round itself. The term “market access” has long been America’s key goal in both multiand bi-lateral negotiations. One often hears terms such as “significant access” and “balanced access” or “meaningful access” to characterize American goals. The BRIC countries, of Brazil, Russia, India and, above all, China, are the objects of these terms: their markets should become more open than they now are, to American products in agriculture, industry, and services. Beyond tariff reductions in broad categories, the US has also emphasized deeper cuts in specific product sectors, such as auto parts, fish and toys (USTR 2012).5 The deep American economic recession, only beginning in the last Bush days but proving long-lasting during the Obama years, has made American negotiators seek “aggressive” market access.

American trade policy negotiations 61 Obama Administration silence has also reflected the slow pace at which its major appointees have been installed in office. The senior American negotiators were not in office until the middle of Obama’s second year; the two most important positions in Geneva were held on “recess appointments,” meaning they had not yet been confirmed by the Senate, even though approved by the Senate Finance Committee. However, discussions have proceeded at the professional staff level to prepare the ground for WTO ministerial level negotiations. Trade Ministers themselves have also been meeting informally to attempt to find a basis for agreement. It is only at that level that major concessions can be agreed upon. It is also only at the government level that they can balance the competing claims among their respective national economic sectors. The American emphasis upon Free Trade Agreements occurs within the context of stalled and disappointing broader negotiations. Action on bilateral FTAs does not so much deflect American interest in WTO negotiations as both supplement and strengthen its position in the multilateral forum (ConceicaoHeldt 2011: 191–192).

3.5 Free Trade Agreements Faced with the immobilism of the Doha Round, both the Bush and Obama Administrations have turned to Free Trade Agreements. Both considered plurilateral agreements; the Bush Administration had early hoped for an FTA including all of Latin America (Blustein 2009: 174–175; Destler 2005: 298–302), and the Obama Administration is currently actively engaged in the Trans-Pacific Partnership. 3.5.1 Bush trade agreements Bilateral agreements have been the main, but not only, vehicle for trade policy action (see trade policy chronology, Table 3.3). The political circumstances within which both Administrations function have changed dramatically, greatly affecting not only immediate agreements, but also the scope and meaning of “fast track” trade authority. The many difficulties in gaining congressional approval of three bilateral FTAs over a five-year period, illustrates the many obstacles to the approval of a potential Doha agreement. The Bush Administration had signed four trade agreements prior to the expiration (July 1, 2007) of congressional authorization for trade negotiations under expedited “fast track” procedures. The Democratic Congress, elected in 2006, did approve the Peru Free Trade Agreement in 2007 in the Bush Administration, but not the three others. The Obama Administration renegotiated all three under close congressional observation, and all were approved by Congress in 2011. The FTAs were considered under changing political circumstances, including changes in the party of the President and in the majority parties in Congress. Bush, the Republican President, had congressional party majorities until Democrats regained the majority in both congressional chambers in the 2006 election

62

D. M. Olson

Table 3.3 US trade policy chronology: Clinton, Bush and Obama 1993–2011 Pres. Clinton (Dem.) 1993–2000: 1993 NAFTA implementation bill pass 1997 House Representatives defeats “fast track” extension bill 2000 China normal trade relations bill pass Pres. Bush (Rep.) 2001–2008: 2002 China joins WTO “Fast track” legislation passed 2003 Central American Agreement (CAFTA) signed 2005 CAFTA implementation bill pass Colombia FTA signed 2007 Bush – Democratic trade “agreement” Panama, South Korean FTAs signed “Fast track” authority expired Trade Adjustment Assistance Act passed Peru FTA bill passed 2008 Colombia FTA bill blocked in House of Representatives Pres. Obama (Dem.) 2009–: 2009 Trans-Pacific Partnership congressional notification 2010 Obama goal: double exports KORUS FTA renegotiated 2011 Colombia, Panama FTAs renegotiated FTA-TAA bills adopted

for Bush’s last two years. Obama, the Democrat, was elected in 2008, retaining Democratic majorities in both chambers. In the ensuing “midterm” election in 2010, however, Republicans gained a majority in the House, while Democrats held a small majority in the Senate. The Obama Administration has been constrained to act within the policy and political relationships developed during the last two years of the Bush Administration, especially as shaped by events surrounding the Colombia FTA. In 2008, Bush’s last year, the House Democratic majority refused to act on the Colombia FTA. The basic policy disagreement concerns the Democratic emphasis that labor, human rights, and environmental provisions in partner countries must be included in trade agreements, which continue with consideration of the TransPacific Partnership. The even more basic question, however, concerned the conditions and the means of Congressional participation in trade negotiation policy. 3.5.2 “Fast track” between Congress and President Trade policy is a special case of the working relationship between Congress and President. Trade agreements require implementation legislation, which can be considered by Congress under special conditions of both consultation and expedited approval procedures. Domestic level agreement is essential for

American trade policy negotiations 63 international negotiations to succeed. The basis of congressional support, however, is knowledge by Congress of the content of trade negotiations as they occur (Goldstein 2002: 220–222; Conceicao-Heldt 2011: 146–147). Trade agreements are, or at least have been, usually considered in Congress through a unique “fast track” procedure, originating the 1974 Act leading to the Tokyo Round, which occurs through two complex stages. First, Congress informally considers an implementation bill through two committees (Ways and Means in the House, Finance in the Senate), a process that could take months if not years. This unofficial text, though usually initially prepared in the administrative agencies, is subject to congressional consideration, revision, and joint drafting. One implementation bill, for example, had apparently been written on the Ways and Means Committee staff computers following an extensive committee “non-markup” and, between the Senate and House committees, a “non-conference,” which resulted in a bill approved by wide margins (Destler 2005: 95–96). The procedures may involve formal debate and amendment, or could be more flexible and informal, but seem to be improvised from one bill to the next, as they were also in the Bush and Obama years (Cohen 2000: 206–275; Hornbeck and Cooper 2008: 24–25). It is only at the point at which the implementation bill is formally submitted by President to Congress that the “fast track” 90-day clock begins, as the second step, requiring Congress to vote on the bill without amendment, leading to either adoption or rejection within the 90-day limit (Villarreal 2008). It is this complicated series of actions – preparation of the bill and its submission to Congress – which have been called into question by the Bushcongressional conflict on the Colombia Free Trade Agreement. Though the Obama-congressional relationship in the 2011–2012 congressional term (with a Republican majority in the House) recalls the Bush-Democratic majority relationship during the last two years of the Bush presidency, the Obama Administration did obtain congressional approval of all three pending FTAs. 3.5.3 Colombia FTA: President Bush and the Democratic Congress Two critical events on trade policy in the congressional-Bush Administration relationship during the 2007–2008 Congress occurred within the context of “fast-track” procedure. In the first, the congressional Democratic leadership and the Bush Administration announced an agreement on trade policy early in the initial year, May 10, 2007. In the second, that agreement was decisively abrogated one year later, April 10, 2008. The “May agreement” is once again referred to in current trade policy discussions. Congressional Democrats called the attention of USTR Kirk to those “key obligations” in a letter expressing interest in the Trans- Pacific Partnership negotiations of 2011 (HR WM 2011c). The leadership agreement was a “bipartisan” and “historic agreement” to revise the four pending FTAs. The Bush Administration – congressional Democratic leadership agreement:

64

D. M. Olson included all of the changes to the texts of the Peru and Panama FTA’s that Committee Chairman Rangel and Trade Subcommittee Chairman Levin considered necessary . . . The Chairmen also considered these changes necessary – but not sufficient – for Committee consideration of the Colombia and Korea FTAs. (HR WM 2009: Section I.B.1.b, pp. 1–2)

In accordance with this understanding, the Peru enabling legislation was easily enacted in 2007 (Villarreal 2008: 7–9). In the Colombia FTA case, by contrast, the Bush Administration announced that it intended to send an implementation bill to Congress, even though the Democratic congressional leadership advised against it (New York Times, July 8 2007: A4; March 13, 2008: A10; April 10, 2008: A1). The President acted “over the objections of the Speaker of the House and the Majority Leaders” (HR WM 2009). To act on trade policy, much less legislation, without congressional approval was unprecedented. The Administration was apparently frustrated by continued congressional inaction in spite of the May agreement a year earlier. The committee did not “markup” an implementation bill, though there had been continuing discussions at both the staff and leadership levels about substance, procedure, and timing of the bill. The Administration implementation bill itself was not officially debated or voted in the House; rather, the rules were changed to not consider the bill under expedited procedures, and thus to exclude the bill from further House consideration (Villarreal 2008: 2; Congressional Record, April 10, 2008: H2177-H2190). Members voted on the rules change, and thus they did not vote on the implementation bill itself. Democrats were shielded from the necessity to take a public position (the vote would be by name) on an issue on which they were badly divided. The result was more a vote by congressional Democrats against the Bush Administration in a presidential election year than upon the substance of the bill itself. The withdrawal announcement was made by the Speaker (Pelosi, D-CA) on the House floor; she was immediately followed by the Republican Minority Leader (Republican Boehner, R-OH), who defended the FTA and denounced the Democratic leadership’s refusal to come to an agreement on when and how to consider the bill. This quick set of events – submission of the bill and its rejection in a few days – marked the high point of partisanship on American trade policy. The vote patterns on the Colombia and earlier major trade bills are shown in Table 3.1. The Colombia FTA episode during the Bush Administration, defined the political parameters within which the Obama Administration has acted on trade policy. While the Democratic House refused to act on the Bush Administration initiative, thus showing a partisan dimension to trade policy, the more critical intra-Democratic party divisions on earlier bills revealed the factional dimension. The Bush Administration had provided fractious Democrats with the sole opportunity to vote together as a unified party.

American trade policy negotiations 65 3.5.4 The FTA option revived: President Obama and the partydivided Congress Over a period of two years, 2010–2011, the Obama Administration, congressional Democrats, and congressional Republicans agreed on congressional approval of implementation bills on the three pending Free Trade Agreements (Colombia, Panama, South Korea) negotiated during the Bush Administration. But first, they had to agree on how to obtain approval. The three Bush agreements were renegotiated and the revised FTA implementation bills were approved in conjunction with a Trade Adjustment Assistance bill.6 The schedule and procedures were developed in a series of discussions among chamber and party leaders, committee Chairpersons, and White House officials. The schedule and procedures were bipartisan, permitting both parties and factions to vote against portions, while the total package of four bills would, in the end, be approved. The whole sequence was inter-cameral, bipartisan, partisan, factional, and inter-branch. The Obama Administration moved first on the South Korean FTA (KORUS). President Obama, as early as his first year in office, stated that he intended to renegotiate all three pending agreements (Panama, South Korea, Colombia) to be able to submit them for congressional approval (Wall Street Journal, June 29, 2009; New York Times, July 8, 2010). Of the three countries with pending FTAs, South Korea had, by far, the largest volume of trade with the United States. However, the 2007 agreement was not universally welcomed in either country, with agriculture and automobiles being the largest sources of difficulty in both countries (Schott 2011b). The US and South Korea announced a revised agreement toward the end of 2010. At the June 2010 meetings of the G-20 group of leading economies in Toronto, President Obama set the coming Seoul meeting (in November) as a time and place to announce successful completion of a revised KORUS-FTA. Negotiations were continued beyond Seoul, however, leading to the agreement of December 3, 2010 (Financial Times, November 11, 2010; New York Times, November 12, 2010). Obama had announced even the year before that “I have told President Lee . . . that I am committed to seeing the two countries work together to move this agreement forward” (New York Times, November 20, 2009: B3). Revisions agreed at the end of 2010 provided mutual concessions on automobiles, resulting in endorsement by major US economic organizations. The three American automobile companies and the United Automobile Workers Union both endorsed the revised agreement, though immediately prior to that agreement, the Ford Company had been a public dissenter. Agricultural organizations also supported the revised agreement. Major business organizations, such as the Chamber of Commerce, endorsed the revised agreement, as they had also the original version. Global Trade Watch, consistently opposed to FTAs, however, denounced the revisions as “another Bush NAFTA-style trade deal,” as had major labor unions (Washington Post, December 3, 2010; New York Times,

66

D. M. Olson

December 9, 2010; The Economist, December 11, 2010: 52; Public Citizen’s Global Trade Watch, December 3, 2010, website). Consistent with their prior record, congressional Republicans supported the revised agreement, while some Democrats changed their positions. The former Democratic Chair of the House Ways and Means Committee and also of its Trade Subcommittee (Levin, D-MI), endorsed the revised agreement, as did his committee Republican successor (Camp, R-MI), both of whom represent automobile-state Michigan districts. 3.5.5 Three FTAs, two parties, two Chambers, and President and Congress The US-Korean agreement of December 2010 was announced shortly after Republicans had become the House majority party in the November 2010 midterm congressional elections. The new Republican Chairman of the House Ways and Means Committee demanded that all three Free Trade Agreements be considered by Congress at the same time: “I want to move all three agreements by July 1.” USTR Kirk quickly assured the House Ways and Means Committee (February 9, 2011) in a public hearing that implementing legislation would be submitted for the South Korean FTA, and that the Administration would attempt to revise the other two pending Colombia and Panama agreements (New York Times, February 10, 2011; March 1, 2011: B1, B8). Revised agreements with both Colombia and Panama were announced in April. The Administration had its own counter demand, in support of congressional Democrats. It would not send FTA implementation bills to Congress “until we have an agreement with Congress on the renewal” of the Trade Adjustment Assistance bill, which Republicans in the House had earlier blocked as “wasteful spending.” This statement was issued, not only by the US Trade Representative (R. Kirk), but also by the Director of the National Economic Council (G. Sperling) in the White House (Washington Post, May 16, 2011, website; New York Times, June 29, 2011: B1, B4). Economic interest groups had mixed views. The Chamber of Commerce, for example, supported the FTAs under almost any set of conditions, while labor unions were opposed. Business groups were opposed to the TAA bill, which labor strongly supported. In the end, both the Chamber of Commerce and the American Farm Bureau Federation supported the linkage of the FTA bills with renewal of the TAA program (“Business Leader” 2011; American Farm Bureau Federation 2011). Labor unions were pleased at both the KORUS modifications and Administration support of the TAA bill, but the United Auto Workers, though supporting the Korean FTA, continued to oppose the Colombian FTA in solidarity with other unions (UAW 2010). Part of the Chamber of Commerce’s lobbying effort in support of the FTATAA agreement was a website listing the trade benefits in jobs and dollars for each of the 435 congressional districts (US Chamber of Commerce 2011). The tangled mix of FTA and TAA bills with competing party majorities in the two congressional chambers was not placed on a possible “path” to resolution

American trade policy negotiations 67 until a June 28 agreement among the two committee chairpersons (Democratic Senator Baucus and Republican Representative Camp) with the Director of the White House National Economic Council (G. Sperling), that both the TAA and the FTA bills would be considered in both chambers (New York Times, June 29, 2011: B1, B4; Washington Post, June 28, 2011, website). In both chambers, “markups” were held by the relevant committees. The two committees had identical texts, except for the inclusion in the Senate version of the TAA bill in the KORUS text, while the House bill did not include this. In a single day in July, the committees had approved rival texts. The inter-party, inter-cameral, and inter-branch agreement of June 28 became the key to unraveling the constantly escalating counter demands of the many actors. It was not, however, the final step, for it left open the question of how each chamber would sequence consideration of the FTA bills with the TAA bill. Each chamber has its own rules, and House consideration was complicated by the failed attempt, in 2008, to consider a Colombia implementation bill. A procedural agreement was reached first in the Senate. The Senate Majority Leader (Reid) in a joint statement with the Minority Leader (McConnell), said that “We . . . have provided a path forward in the Senate . . . for passage of the bipartisan compromise on the Trade Adjustment Assistance program, followed by passage of the three FTAs.” The Minority Leader agreed, “we have a path forward on TAA and the Free Trade Agreements” (Senate Democrats 2011). The Senate party leaders agreed to disagree, however, on the merits of either the FTA or the TAA bill by themselves. Reid observed, “I do not support movement on the FTAs, which I have never supported, until TAA has passed.” McConnell noted, “Although I do not personally support TAA, I know there is bipartisan support for this program.” The House part of the June 28 agreement had not assured passage of either the FTA or TAA bills. Chairman Camp emphasized “the decision on how to move these items through the House is a matter for Republican leadership to determine” (Washington Post, June 28, 2011, website). This first-step, tentative character of the key congressional-Administration agreement was reinforced by the Speaker: “I look forward to the House passing the FTAs, in tandem with separate consideration of TAA legislation” (House Republican Speaker 2011). There was no agreement among the House party leaders to match the Senate leaders. House Democrats and Republicans did not hesitate to disagree with one another. Democratic Ranking Minority Member on the Ways and Means Committee (Levin), who had previously chaired the Trade Subcommittee, praised Administration renegotiations on the Panama and South Korean FTAs as needed improvements on the Bush Administration’s original versions. He insisted, however, that the Colombia FTA bill include a specific reference to an “Action Plan” to curb worker abuses, as well as arguing that the TAA should be written into the KORUS bill (HR WM 2011b). The June 28 inter-party and inter-chamber agreement to include the TAA bill in a schedule of linked bills had reduced its expenditure and extended its life for

68

D. M. Olson

only two years. The New York Times report termed the TAA program as “modest and obscure” (New York Times, June 29, 2011: B1; Wall Street Journal, July 1, 2011: A5; Congressional Quarterly Report, June 20, 2011: 1305; Rosen 2008; Margalit 2011). It was, nevertheless, the most pointed object of partisan controversy and the most important objective of labor unions. 3.5.6 Negotiations and votes The formal legislative steps began in early September of 2011, with House bipartisan adoption of the Generalized System of Preferences (GSP) bill, which provides low tariffs for a wide range of goods covering a wide range of countries.7 To this widely accepted bill, the Senate attached the Trade Adjustment Assistance bill as an amendment later in the same month (see Path to Adoption Table 3.4). The amended GPS bill was the vehicle that enabled the FTA and TAA bills themselves to clear both legislative chambers. It provided both the opening and concluding votes in the entire sequence. While all Democrats in the Senate voted for the amended bill in September, a majority of Republican Senators voted against, as wasteful spending (Table 3.5). But enough Republicans voted for the bill to enable it to pass without a filibuster (Congressional Quarterly Report, September 26, 2011, 1991). Senate Minority Leader McConnell’s statement in August, that he would permit the bill to come to a vote, recognized the reality of sizeable Republican support in the Senate for the Trade Adjustment Assistance program. In accordance with the inter-party agreement of early May, the Republican Chairperson of the House Ways and Means Committee expressed satisfaction with the Senate’s amendments, declaring that the “next step is for the president to promptly submit the pending free trade agreements . . . to the House . . .

Table 3.4 Path to adoption of free trade agreements legislation 2011: chronology of negotiation and action January 25 Obama asks for trade agreements adoption, State of Union Address A. Negotiations May 16 Administration will not send FTA bills to Congress without TAA bill approval: White House and USTR statement June 28 Baucus-Camp-Sperling agreement July 7 Markup by House Ways and Means Committee and Senate Finance Committee of proposed FTA implementation bills August 3 Senate Party Leader agreement on TAA bill B. Action Septempter 7 September 22 October 3 October 12

House passes GSP bill Senate votes to attach TAA bill to House GSP bill President transmits FTA bills to Congress FTA and GSP-TAA bills adopted in both chambers

American trade policy negotiations 69 Table 3.5 US Congressional votes on FTA bills 2011 by Chamber and party Chamber

Bill topic

Party

Total

Republican

Democratic

Yes

Yes

No

Yes

No

No

Senate

GSP-TAA South Korea FTA Panama FTA Colombia FTA

17 45 46 44

27 1 0 2

51 37 30 21

0 14 21 30

70 83 77 60

27 15 22 33

House

Colombia FTA Panama FTA South Korea FTA GPS-TAA

231 234 219 118

9 6 21 122

31 66 59 189

158 123 130 0

262 300 278 307

167 129 151 122

Source: by Chamber: Senate: Congressional Quarterly Report, Sept. 26, 2011, Roll Call 150, p. 1999; Oct. 17, 2011, Roll Calls 161–163, pp. 2174–2175. House: Congressional Quarterly Report, Oct. 17, 2011, Roll Calls 781–784, pp. 2178–2179. Notes Two Senate Independents not separately shown. GSP = Generalized System of Preferences. TAA = Trade Adjustment Assistance. All votes on “passage” except for House to “concur” in Senate amendment to House GSP-TAA bill.

Congress has in good faith shown a clear path forward” (HR WM 2011e). The three FTA bills were sent to Congress early October, following the initial Senate vote. In the last vote of the sequence, in which the House concurred in the Senate version of the GPS bill which included the TAA bill, a majority of Republicans voted against the bill. The sizeable minority of Republican votes, however, combined with unanimous Democratic support, meant that this amended bill received the largest number of affirmative votes in the House of any in the entire twochamber sequence. The two votes on the GPS bill bracketed consideration of the three FTA implementation bills. Republicans voted for all three bills by large margins (Congressional Quarterly Weekly Report, October 17, 2011: 2168). While all three had only minor Republican opposition in the Senate, the South Korean FTA had the largest Republican opposition in the House, largely from textile-state Members. Continuing their aversion to the Colombia bill during the Bush Administration, Democratic opposition in both chambers was greatest against the Colombia FTA bill. A large majority of House Democrats voted against all three, though a majority of Senate Democrats supported two of the three FTA bills.8 The President, the White House staff, and the USTR provided essential support to the entire legislative sequence. Congressional consideration of the FTA bills was initiated only when the bills were formally submitted by

70

D. M. Olson

the President to Congress under “fast track” procedures. The bills were not submitted, however, until the “path” to adoption had been agreed. Following adoption of the bills, the Chairperson of the House Ways and Means Committee noted that “today’s trade package included Trade Adjustment Assistance (TAA) legislation that the White House insisted on before it would send the three trade agreements to Congress” (HR WM 2011f ). The TAA provisions themselves, he noted, had been considerably reduced, consistent with Republican preferences. This complicated sequence of steps, taking most of 2011, permitted each major segment of opinion to vote their disagreements on specific portions of the package without jeopardizing their own main goals. Democrats could oppose all three FTA bills without defeating the Obama Administration’s goals, while Republicans could vote against the TAA bill without defeating the trade agreements initiated by the Bush Administration. The long effort of the Obama Administration to rescue the left-over Bush Administration FTAs, while also bolstering its position with congressional Democrats, had finally borne positive results. Its interpretation of trade agreements as a means toward the broader goal of job creation and economic recovery was a way of appealing to, and working with, both Democrats and Republicans.

3.6 Trans-Pacific Partnership The Trans-Pacific Partnership (TPP) is viewed as the Obama Administration’s best opportunity to shape American trade policy. Beginning with four countries in 2006 (Brunei, Chile, New Zealand, and Singapore), the Bush Administration joined the negotiations in 2008 and the Obama Administration has now made the TPP its own. While the three approved FTAs were negotiated and signed during the Bush Administration, the TPP negotiations could be seen as the signal achievement in trade policy of the Obama Administration. A “framework” for detailed negotiations was announced at the Honolulu TPP sessions in late 2011 in conjunction with the annual meeting of the Asia-Pacific Economic Cooperation group of 21 nations (New York Times, November 14, 2011: A6). The number of participating countries has grown to nine (Australia, Malaysia, Peru, Vietnam, and the US). Japan announced its intention to join, while Canada and Mexico (as partners with the US in NAFTA) expressed interest. The possibility that China and South Korea might consider joining was also the subject of speculation following the Honolulu meetings. Though “fast track” authority had expired, the USTR formally notified Congress of its intention to engage in this set of international trade agreement negotiations (December 14, 2009), and pledged that “the Administration will hold regular and rigorous consultations on all elements of the agreement . . . consistent with both Administration and Congressional priorities and objectives” (USTR 2009). In early 2012, the USTR informed the House Ways and Means Committee that the Administration would request “fast track” Trade Promotion Authority in conjunction with the anticipated completion of the TPP negotiations by the end of 2012 (Reuters, February 29, 2012).

American trade policy negotiations 71 Though the TPP has generally been well received, the inclusion of Vietnam presents the difficulties of trade with an undeveloped country (Wall Street Journal, October 26, 2011: A12). Vietnam is also the first communist country to be included in American FTA negotiations. Members of Congress expressed a mix of support and concerns about the potential FTA. Their immediate and authoritative reaction to the 2011 framework agreement was to insist upon the need for congressional “consultation.” The announcement that Japan may join the TPP negotiations drew an immediate congressional response urging Ambassador Kirk, the USTR, to “closely consult with Congress . . . well in advance of any decisions” (HR WM 2011d). The letter, signed by the Chairman and Ranking Member of both the House Ways and Means Committee and the Senate Finance Committee, was a bipartisan as well as a bi-chamber letter. Members of Congress have also expressed, both individually and collectively, more detailed apprehensions about the TPP, reflecting the potential harm to selected segments of the American economy, such as diary, textiles, and autos. Intellectual property in biologics data, for example, was the topic of a bipartisan letter from 35 Senators to USTR Kirk in September 2011 (Sen Fin 2011b). Democratic Members of the House Ways and Means Committee have seized the Obama participation in the TPP as an opportunity “to craft a trade agreement that reflects American values.” They pointed to the May 10 agreement in 2007 between the Bush Administration and Congress to promote “key obligations to help raise living standards at home and abroad” (HR WM 2011c).

3.7 The Obama Export Initiative “We will double our exports over the next five years,” President Obama asserted in his 2010 State of the Union address, to “help farmers and small businesses increase their exports.” The New York Times reported, however, that in the beginning of its second year, the Obama Administration “has not yet clearly articulated a trade policy.” Indeed, the Obama “pledge to double exports in five years was greeted with incredulity, even among Democratic trade policy experts” (New York Times, January 29, 2010, B1). A cabinet-level Export Council was formed soon after the pledge in early 2010, to coordinate government departments, and at the end of 2010, an advisory body of outside persons had been activated. The external advisory Council on Jobs and Competitiveness was announced on January 22, 2011, while a few months earlier, the President had appointed Members to a reactivated Exports Council, which had been created in 1973 (Politico July 7, 2010; New York Times, July 8, 2010: B6, and January 22, 2011: A1). These events occurred at the same time the revised KORUS agreement was announced. President Hu, during his US visit at this same time, met with a selected set of American businessmen, most of whom, presumably, were involved in, or would wish to become involved in, trade with China.

72

D. M. Olson

The cabinet-level Council is chaired by the Secretary of Commerce, reflecting that department’s long-term participation in stimulating exports of industrial goods (Destler 2005: 114). The Department of Agriculture is also a member, as are other agencies involved in trade policy, including the Department of Treasury, the Department of State and the Small Business Administration. There is, in addition, congressional membership, again reflecting their continuing participation in trade. The full council meets infrequently, while staff-level meetings occur at least monthly. The initial indications are that the economic recession, if nothing else, gives this group reason to attempt to work harmoniously on behalf of increased exports. The emphasis upon export promotion is expressed in several linked ways, beyond the formal appointment of advisory and coordination councils. International meetings, such as the G-20, and the Asian-Pacific forums, have been occasions for President Obama and other officials to promote trade agreements in general, and the South Korean agreement and the Trans-Pacific Partnership in particular. International fora have presented many opportunities, especially for Secretary of Treasury Geithner, to argue that currency imbalances (i.e. Chinese) were a major source of trade imbalances (New York Times, February 16, 2012: A12). Audiences and groups at home are also opportunities to emphasize exports. President Obama has spoken, for example, to both the AFL-CIO, the leading labor union organization, most of whose members supported him in the 2008 presidential election, and to the Chamber of Commerce, most of whose members opposed him, as the leading business organization (Wall Street Journal, August 4, 2010; New York Times, Februry 8, 2010: A17). As an expression of the National Export Initiative, the Import-Export Bank and Small Business Administration jointly have held local and state meetings with prospective exporters to inform them of government programs and to encourage and support their export goals. The corollary of an emphasis upon exports is defense against “unfair” imports. If exports are a broad theme, complaints about imports require more specific actions against specific products, practices, and countries (Allee 2012: 242–243). The Secretary of Commerce announced new steps against “illegal import practices”, especially from “non-market economies, to help keep U.S. companies competitive” (US Department of Commerce 2010). Not so much as a new Obama initiative, but as a continuing practice (Destler 2005: 196–197, 237–242), the US has brought several complaints, for example, against China through the WTO dispute settlement procedures, while China has acted similarly (The Economist, July 9, 2011: 75). A 2011 WTO arbitration panel delivered verdicts in the long-running US-EU dispute over unfair subsidies to airplane manufacturers (New York Times, May 19, 2011: B3). In 2011, the US requested a WTO panel about Guatemalan failure to protect worker rights under the CAFTA-Dominican Republic Free Trade Agreement (Reuters, August 9, 2011). Ranking Democratic Members of the Ways and Means Committee welcomed the initiative, noting that “Democrats overwhelmingly

American trade policy negotiations 73 opposed CAFTA as negotiated by the Bush Administration” because of its weak worker rights provisions (HR WM 2011g). The timing of this action nicely fitted into the dispute in the House of Representatives over sequencing of FTA and TAA bills, permitting Democrats to emphasize their concerns over worker rights in the Colombia FTA. Obama’s 2012 State of the Union address to Congress drew many separate strands of American practice together to promote American competitiveness in the world economy and to “bring manufacturing back” in a set of three proposals: changes in the federal tax code to “stop rewarding businesses that ship jobs overseas”, intensified border inspections by a new “Trade Enforcement Unit,” and expansion of education and job training programs. The three packages of tax, enforcement and training programs illustrate the many ways in which domestic programs and international trade policy penetrate each other. These domestic programs were outlined as means of achieving Obama’s broader goal of doubling exports in five years. “We are on track to meet that goal – ahead of schedule” (National Public Radio, 2012). The emphasis upon exports is not new, and neither is the rationale (Destler 2005: 109–110). Not only are increased exports needed in a recession, but the appeal for exports is also a way to deflect attention from protectionist measures toward expanded trade policies. The export appeal permits the Administration to be on the offensive both with Congress and in international trade negotiations. This strategy was also part of the Bush Administration’s emphasis on FTAs with a limited number of countries in lieu of sole reliance upon the stalled multilateral Doha Round (Blustein 2009: 175; Destler 2005: 299–302). The export emphasis also deflects attention from the continuing imbalance of trade. Exports may be more readily increased than imports can be limited, thus indirectly dealing with a long-term complaint. The export emphasis directs business and political action toward positive accomplishments, rather than to hope that businesses would simply react defensively against perceived foreign threats (Dür 2010). “Jobs” has become the most common theme of both Democratic party emphasis and Republican complaint. Vice President Biden in his August 2011 visit to China, for example, emphasized “jobs and growth,” through “the reordering of our economies – yours and ours” (New York Times, August 19, 2011: A10). Meanwhile, at home, congressional Republicans had been complaining that President Obama was stifling job growth by not promptly sending the three FTA implementation bills to the Hill. The goals of trade policy are pragmatic.

3.8 Dual negotiations in the American trade policy system Though this chapter concentrates on the last congressional term of the Bush Administration, and the first two congressional terms of the Obama Administration, there is a broader context from earlier events, within which current controversies and decisions occur. The issues are continuous, as are the proposed solutions. Likewise, the dilemmas of how decisions should be made, and of the

74

D. M. Olson

relationships between Executive and Congress, also continue over decades. The intertwined character of domestic and international levels of policy negotiation is also continuous in American trade policy. One important source of change, however, lies in the ever-widening scope of trade policy topics. From tariffs, as in the Smoot-Hawley tariff bill in 1930 to environmental protection and labor standards in the 2011 trade agreements, the number and variety of specific issues and participants increases. Though the number of congressional committees and administrative agencies involved in trade policy increases, the House Ways and Means Committee, the Senate Finance Committee in Congress, and the Office of the United States Trade Representative and the Department of Commerce, retain their lead positions. The private actors are more variable, in keeping with changes in society and economy. The broad national “peak” associations endure, such as the US Chamber of Commerce and the American Farm Bureau Federation. The demise of the American Textile Manufacturers Association, however, illustrates the impact of industrial loss, as the US-China Business Council illustrates changes among our international partners. American trade policy requires multiple levels of negotiations. While one set of negotiations is between the United States and sovereign countries, another occurs, simultaneously and interactively, among Congress, President and interest groups. American trade policy is factional, partisan and bipartisan on different topics, and is also bicameral and inter-branch in both policy formation and implementation. The American experience suggests three challenges in the development and understanding of trade policy: administrative structure, congressional-executive relationships, and increasing cross-border interdependence. The efforts of the Obama Administration to reorganize and coordinate the many administrative agencies for a consistent and effective trade policy, illustrate the continued dilemmas of how to design an appropriate administrative structure. The refusal of the House of Representatives to utilize the “fast track” procedure on the Bush bill to implement the Colombia trade agreement illustrates how the executivecongressional relationships respond to, and reflect, shifting policy preferences. Trade policy preferences, in turn, reflect the growing globalization of economic relations among nations and the “intermestic” character of the ever-broadening scope of trade policy. There is a fourth – intellectual – challenge: how can policy makers and social scientists understand the rapidly changing multidimensional character of international trade and the increasingly complex ways in which trade policy is developed, both within and among nations?

Notes 1 Many persons have been consulted for this study, both in Washington DC and elsewhere. All deserve thanks through anonymity. Michael Gold and Austin Smith were research assistants for this study at the Center for Legislative Studies in the Political Science Department of the University of North Carolina at Greensboro. Their diligence and command of sources are much appreciated.

American trade policy negotiations 75 2 For tariffs and trade through American history, see Hiscox 2002; Verdier 1993; Allee 2012; Goldstein 2002. 3 The problem of reviving manufacturing in America was recently revisited in a review of possible Democratic policy options (The American Prospect, July/August 2011: 47–50). 4 Unlike Westminster parliaments, the US House Speaker is leader of the majority party. 5 USTR (2012) ‘Non-Agricultural Market Access (NAMA)’, available online at: www. ustr.gov/trade-topics/industry-manufacturing/non-agricultural-market-access, accessed 12 November 2012. 6 The Trade Adjustment Assistance program funds retraining and sustenance for workers displaced by imports. 7 The Generalized System of Preferences, which had expired in 2010, eliminates tariffs for thousands of products from over 100 beneficiary countries (HR WM 2011h). 8 This account condenses complex patterns of private discussions among the participants, congressional committee meetings, and also of votes, both substantive and procedural, in committee and on the floor of both chambers.

4

The European Union Balancing trade liberalization and protectionism Carsten Daugbjerg

4.1 Introduction1 Since its formation, the European Economic Community (EEC), later to become the European Union (EU), has developed into a major trading partner accounting for almost a fifth of all the world’s imports and exports. However, despite its market size, which has grown over time as a result of the enlargements, it was not until late in the GATT era that the EU became a more proactive player. In the mid 1990s, the EU emerged as a proactive player in the newly established World Trade Organization (WTO), taking the lead in launching a comprehensive round in 2001, the Doha Development Agenda Round (Woolcock 2005b: 391; van den Hoven 2004). As suggested in the introductory chapter of this book, institutions, ideas, interests and actors and how they interrelate are important analytical dimensions in the study of trade policy. This chapter demonstrates that the EU’s trade policy is the outcome of complex policy and negotiation processes in which these factors have privileged certain courses of action and constrained others. Trade policy making in the EU is a highly complex process in which the European Commission must find common ground among 27 member states and at the same time engage in dialogue with a vast number of pan-European and member state-based interest groups to obtain legitimacy for its policy initiatives. Recently, the European Parliament has been granted more powers in trade policy, which will undoubtedly increase the difficulty of reaching agreement on a common EU position. Despite this high level of institutional complexity, the EU has succeeded in becoming a proactive player in the global trade regime. The new role for the EU in the WTO was facilitated by a general shift to a more liberal trade agenda. The EU’s own experience of market opening in the European single market project generated positive experiences with market integration. However, this new emphasis on market liberalism did allow room for gradual market opening to ease the transition to more free trade for developing countries in particular. Another important plank of the EU’s trade policy is the recognition of states’ legitimate right to pursue public policy objectives through domestic regulation, provided that such regulation complies with international

EU trade liberalization and protectionism 77 trade rules. This vision of the global trading regime, promoted as managed globalism, was pursued within the WTO’s Doha Round negotiations, but more profoundly in the EU’s recent bilateral free trade agreements. However, the EU has not pursued liberalization across the board. It has had to balance offensive interests in NAMA and services with defensive interests in agricultural trade. The trade liberalization agenda has been severely constrained by agricultural interests, for whom an opening of the EU market has been and remains an unattractive prospect. Its defensive interests in agricultural trade have constrained its ability to achieve liberalization of trade in industrial goods and services in the ongoing WTO trade round.

4.2 Trade institutions in the EU The GATT predated the formation of the EEC and, as a market integration project, the founding fathers of the EEC therefore had to take the rules of the GATT into account. The GATT was an important influence on the institutional design of the EEC when it was formed in the late 1950s. A basic principle in the GATT was the Most Favoured Nation (MFN) principle, which obliged a GATT member to extend favourable terms of trade, negotiated with another GATT member state, to all GATT members. To form a common market in the EEC, trade barriers amongst the six founding members (France, Germany, Italy, the Netherlands, Belgium and Luxembourg) were to be lowered and eventually abolished. The MFN principle of the GATT dictated that these favourable terms of trade be extended to all GATT members, which would have been politically impossible for the EEC. However, the GATT did provide an alternative. Article XXIV of the GATT allowed a group of countries to create a customs union in which ‘duties and other restrictive regulations of commerce’ would be eliminated on ‘substantially all the trade in products originating’ in the customs union, and thus avoid extending these concessions to the rest of the GATT membership. Although there were some suggestions that the new EEC did not quite meet the requirements of Article XXIV, its formation as a customs union thus enabled its members to abolish barriers to trade within the union and at the same time maintain external trade barriers. The three most important institutions in the EU are: the Commission, the Council of the European Union and the European Parliament (EP). The Commission is constituted of a college of commissioners, appointed by the member states. When appointed, these are entrusted to act independently of national governments. Their basic function is to represent and uphold the interests of the EU as a whole. The Commission has the right of initiative in the legislative process and thus drafts proposals for new legislation. It is also responsible for implementing the decisions of the Parliament and the Council. Most day-to-day policy administration is undertaken by national authorities and supervised by the Commission. The Commission’s staff is organized into a number of directorategenerals (DGs), for instance DG Trade and DG Agriculture and Rural Development. The Council of the European Union represents the member states

78

C. Daugbjerg

of the EU. It decides EU policies and commits member states to comply with them. The Council has nine different configurations and, in relation to trade policy, the General Affairs and External Relations Council and the Council of Agriculture and Fisheries are the most important ones. The European Parliament represents the EU’s citizens and is directly elected by them. Currently, the EP has 736 members. It shares legislative power equally with the Council under the co-decision making procedure, which applies for most policy areas, including trade policy and agricultural policy. Essentially, the EU is an ‘intermestic’ political system in which member state negotiators in Brussels are simultaneously involved in negotiations in their national capitals. As stated in GATT Article XXIV (1), ‘Each such customs territory shall . . . be treated as though it were a contracting party’. This meant that the six original EEC member states had to find ways to speak with one voice in the GATT. The Treaty of Rome of 1957 granted exclusive competence to the EU to negotiate and conclude trade agreements. It delegated authority to the Commission to negotiate on the behalf of the member states concerning trade in goods, while in other trade issues, the competence was shared between the Commission and the member states. However, for trade in goods the member states, represented in the Council of Ministers, did not devolve powers to the Commission without keeping a check on it. The Council retained the right to give the Commission a negotiating mandate, monitor the negotiations and ratify agreements with third parties reached by the Commission. In relation to the GATT this was fairly unproblematic in the beginning, but as the agenda went beyond trade in goods in the Tokyo Round and in the Uruguay Round (UR) in particular, this shared competence became more troublesome. In relation to multilateral negotiations, the Commission initiates the debate on the EU’s position by producing a draft mandate to be discussed by the Council. In the drafting process, the Commission draws: on the positions of the member governments, and the views of business and increasingly also civil society, and resolutions or reports from the European or national parliaments. The Commission rarely works from a blank sheet. The agenda for multinational trade policy is an iterative process, so that the EU position on the DDA was shaped by positions in previous rounds and the continuing work in the WTO working groups. (Woolcock 2005b: 383) Before the draft mandate – drawn up by DG Trade (the agricultural part of DG agriculture) – is sent to the Council, it is coordinated by the inter-services working group, composed of members of the various directorate-generals with a stake in the mandate. Then, the draft mandate is sent to the relevant cabinets of the Commissioners, and after scrutiny and coordination among the interested cabinets, the Heads of Cabinet screen it before sending it to the college of commissioners to be approved or rejected by a simple majority vote (Moyer and Josling 2002: 53; Woolcock 2010: 388–389).

EU trade liberalization and protectionism 79 When the Commission’s draft mandate is submitted to the General Affairs and External Relations Council of Ministers (composed of foreign and/or trade ministers), the first stage in the Council process is undertaken by the Article 133 Committee (previously the Article 113 Committee), which is composed of delegations of senior civil servants from the member states, including ministries of agriculture, and the Commission. The representatives of the Commission are from the directorate-generals of trade and agriculture. Consensus is the de facto decision rule in the Committee; however, decisions can be formally made by a qualified majority. After being scrutinized by the Article 133 Committee, the draft mandate is forwarded to the Committee of Permanent Representatives, COREPER, which screens it before it goes to the Council. Draft mandates concerning agriculture are dealt with by the Special Committee on Agriculture (SCA) before being submitted to the Council of Agriculture Ministers, which makes recommendations to the General Affairs and External Relations Council. Though the Treaty of Rome stated that the decision rule in the Council was qualified majority voting, issues of some importance to the member states are decided by consensus (Meunier and Nicolaïdis 1999: 480). The ministers make a major effort to accommodate the interests of all members and particularly those of the large member states, not least when French sensitivities are affected. Smaller member states can be dealt with differently, by offering side payments to buy them off and thus give them an incentive to join the majority (Woolcock 2005b: 385; Moyer and Josling 2002: 51–55). After the mandate of the Commission is established, the Commission can start negotiating with its trading partners. Negotiations in the WTO are led by the Trade Commissioner (previously the Commissioner for External Affairs) assisted by a cadre of trade diplomats drawn from the DG Trade and other directorate-generals. In the WTO negotiations, the Commissioner for Agriculture and Rural Development is the EU lead negotiator on agricultural trade. In the Uruguay Round, the Commissioner for Agriculture, Ray MacSharry, was the lead negotiator in agricultural trade issues (Keeler 1996: 137; Swinbank and Tanner 1996: 109) and conducted the negotiations rather autonomously from the rest of the EU’s negotiating agenda. In the first part of Doha Round, the then Agriculture Commissioner, Franz Fischler, working in tandem with the then Trade Commissioner Pascal Lamy, was able to perform a role fairly similar to that of MacSharry. This changed somewhat when Peter Mandelson was appointed Trade Commissioner, and Mariann Fisher Boel Agriculture Commissioner, in 2004. As expected, Fischer Boel took the role as the EU’s lead negotiator in the agricultural trade negotiations but did not conduct the negotiations as autonomously as her two predecessors. Her public announcements (to a much larger extent) stressed the linkage between concessions on farm trade and gains on NAMA and services in the Doha Round (personal conversation with Alan Swinbank). With her liberal background, she would not allow the CAP to block a Doha Round trade agreement and was willing to give the concessions necessary to reach a compromise on agricultural trade (Fischer Boel, talk given at DIIS Seminar, 12 April 2012, Copenhagen).

80

C. Daugbjerg

During negotiations in the WTO, the Commission is closely monitored by the Article 133 Committee (Conceicão, 2010, 114–116), which is usually present at the important WTO meetings. In WTO Ministerials or in WTO sessions in which breakthroughs are expected, the Council of General Affairs and External Relations and/or the Council of Agricultural Ministers can also be present to give the Commission a new mandate or to adopt deals made by the Commission (Daugbjerg and Swinbank 2009: 23). The way in which the trade policy process is organized in the EU has a profound impact on the power relations between the principal (the Council of Ministers) and the agent (the Commission). The EU’s system of delegating negotiating authority is very different from that of political systems in which parliament gives the executive a mandate to negotiate a trade agreement. Though parliaments may monitor the executive during the trade negotiations, they do not have access to trade policy expertise, which comes near that of the Council. The ministers in the Council have at their disposal the combined government expertise found in 27 government bureaucracies, and are therefore able to conduct day-to-day and detailed monitoring of the Commission when it negotiates. In the literature on EU trade politics, there is a debate on the extent to which the Council, as a principal, is able to control its agent, the Commission. There are basically two positions on this issue. Some argue that the Commission is the more powerful actor in EU trade negotiations (see Dür and Zimmermann, 2007 for an overview of this debate). For instance, Elsig (2007) argues that the Commission has considerable leeway to dominate EU trade policy. First, the Commission has agenda setting power since it, and not the Council, proposes the mandate. Second, divergent interests among the member states can be utilized by the Commission to pursue its own interests. Third, it is difficult for the member states to sanction the Commission after a mandate has been given. Finally, since the Commission is the negotiator in trade negotiations, it can take advantage of the information asymmetry that is likely to emerge as a result of this delegation of negotiating competence. Others take the opposite view, arguing that the Council is able to control the Commission since it appoints the Trade Commissioner, controls the delegation of negotiating competences, monitors and instructs the Commission during the negotiations and ratifies trade agreements (e.g. Dür 2012). Given these powers of the Council, the Commission has a strong interest in ensuring that its position is supported by the Council to remain a credible negotiating partner in trade negotiations (van den Hoven 2004: 271–272; Conceicão 2010: 1116). In the debate on the power relationship between the Commission and the Council, Meunier (2007: 922) takes a intermediate position, arguing that: By reframing and repackaging Member State interests into a coherent doctrine, the Commission can reshape Member State preferences slightly . . . But the Commission cannot seize this limited autonomy if what it proposes is too far from the preference of the major Member States.

EU trade liberalization and protectionism 81 A trade agreement is ratified by the General Affairs and External Relations Council of Ministers and, since the Lisbon Treaty came into force in 2009, by the European Parliament. If the implementation of an agreement requires a change of EU legislation, other Councils are involved in the ratification process. However, beforehand, the Commission ensures that such changes are supported within the Council and expressed in the negotiating mandate as it evolves during a trade round. This is most problematic for agriculture, in which policy change required to ratify a trade agreement has always been viewed by farm ministers as a burdensome decision. So far, the practical solution to this has been to reform the Common Agricultural Policy (CAP) and translate this into the negotiating mandate given to the Commission. The close interaction between the Commission and the Council means that sub-packages, agreed during various stages of a trade round, are adopted by the Council at WTO meetings if it is in session. The member states are divided over the priority that should be given to agricultural interests in international trade negotiations. Though the pattern of national positions on agricultural policy and coalitions is complex, ‘Overall, countries who oppose CAP reform typically receive substantial budget transfers, measured in absolute and/or per capita terms’ (Ackrill 2005: 478). A relatively large group of member states consisting of Austria, Belgium, Cyprus, France, Greece, Hungary, Ireland, Italy, Lithuania, Poland, Portugal and Spain, forms a conservative coalition that defends a relatively high level of import protection and farm subsidization. This group commands a large majority of the weighted votes in the Council of Ministers, but not enough to form a qualified majority. As the major recipient of farm support in the EU, France plays a key role in this coalition. Germany pursues protectionist interests in farm trade, but is a major exporter in services and manufactured goods. Therefore, it has to balance defensive and offensive interests. This implies that Germany sometimes sides with the conservative coalition of member states and at other times gives higher priority to its manufacturing and services interests. Another group of member states expresses more liberal interests in agricultural trade. This group includes the Czech Republic, Denmark, Estonia, Finland, Latvia, Luxembourg, Malta, the Netherlands, Slovakia, Slovenia, Sweden and the United Kingdom. The United Kingdom is usually the lead member within the group. With the exception of the Netherlands and Denmark, which have export oriented agricultural sectors, these member states have relatively small agricultural sectors and offensive interests in trade in manufactured goods and services (Conceicão-Heldt 2011: 83–84). This group of member states commands only a minority of the weighted votes that do have sufficient votes to form a blocking minority in qualified majority voting. Though most decisions in the Council of Ministers can be made by qualified majority voting, the Council and Commission emphasize reaching consensus to avoid the need to vote. In general, Heisenberg (2005: 71–73) finds that 81 per cent of all Council decisions are made by consensus. Though the Treaty of Rome granted the Commission the sole competence to negotiate on behalf of the member states in negotiations with third party countries on trade in goods, including agriculture, the delegation of authority has led

82

C. Daugbjerg

to tensions between the Council of Ministers and the Commission on the interpretation of the scope of the negotiating mandate. These tensions emerged in particular after the GATT agenda was broadened in the UR, from concentrating on trade in goods to new areas such as trade in services, and deepened from mainly border measures (tariffs) into domestic regulation (e.g. domestic regulations of food safety and intellectual property rights). The treaty language was vague on which particular trade aspects the Commission had the negotiating competence and this has often been a source of tension between the Commission and the Council. The agenda of the UR highlighted the need to clarify the Treaty text. Though the member states had decided in 1986 that, for practical reasons, the Commission should represent the EU on all issues, they stated that this decision should not, ‘prejudge the question of the competence of the Community or the Member States on particular issues’ (ECJ opinion, quoted in Dür 2012). In the run up to the EU intergovernmental conferences resulting in the Maastricht Treaty in 1992, the Commission put forward a proposal to amend Article 113 of the Rome Treaty to extend its competences in trade policy to all issues covered in the UR. The heads of government considered the proposal and eventually decided not to change the competences in trade policy. A controversy over whether or not the Farm Commissioner had exceeded his mandate in relation to the deal on agriculture between him and his American counterpart in November 1992 (the Blair House Accord) triggered a new discussion in the EU about the competences of the Commission (Dür 2012). Asked to give its opinion, the European Court of Justice concluded that the Commission’s exclusive competences were limited to trade in goods and one aspect of services (mode 4) (Hilf 1995). The tensions in relation to the competences of the Commission continued, but it was not until the adoption of the Nice Treaty, implemented in 2003, that the Commission obtained negotiating competences extending beyond trade in goods. The Treaty ‘extended EU competences to all types of services and the trade-related aspects of intellectual property rights, but cultural and audiovisual, education, and human health services remained excluded’ (Dür 2012; see also Meunier 2005: 32). Thus, the Nice Treaty retained the member states’ control over the most sensitive issues. The new competences of the Commission are essentially in trade issues in which the EU has offensive interests, and therefore the mandate given to the Commission by the Council is likely to be extensive rather than restricted (Meunier 2005). Hence, it is unlikely that the extended competence will cause serious tensions between the Commission and the Council on the EU’s interests in trade in services. The Lisbon Treaty, which came into force in 2009, granted co-decision to the European Parliament (EP) in agricultural policy making and granted the EP the right to ratify trade agreements by a simple majority. However, the Parliament has usually been consulted regularly by the Commission. Both the Council and the Commission have been keen to maintain good relations with the EP (Woolcock 2005b: 385) and members of the EP’s Committee on International Trade (INTA) have formed part of the EU negotiating delegation at important WTO Ministerials (Daugbjerg and Swinbank 2009, Chapter 1). If a trade agreement

EU trade liberalization and protectionism 83 requires change of EU legislation, the normal co-decision procedure applies. In such situations, the proposal adopted by the Council must also be adopted by the Parliament. The Commission will ensure that such legislation is proposed and processed by the Council and the EP so that it can be adopted no later than at the time when the agreement is ratified. The impact of the increased powers of the EP on trade policy is not yet clear, but so far the Commission views this institution as responsible, effective and fast in legislative processes related to trade agreements. Within the Commission there is an expectation that it will emphasize environmental trade rules and social regulation. For instance, in the EU’s free trade agreement with South Korea the EP insisted that a sustainability chapter on environmental and labour standards was included. Another concern pursued by the Parliament is safeguards to ease the transition to more open markets for European industries which are vulnerable to increased international competition (interview DG Trade, February 2011). More generally, in services and most issues in NAMA, the EU has an offensive interest and therefore the EP would be likely to support liberalization. In issues where the EU has a defensive interest, mainly agriculture and some sensitive issues within NAMA and services (e.g. the issues in which the Council has retained shared competence), protectionist interests may have gained ground. In relation to EU agricultural policy, there have been speculations that the increased powers of the Parliament would empower non-agricultural interests. However, recent discussions on the forthcoming reform of the CAP in 2013, have demonstrated that agricultural interests can muster considerable support in the Parliament and therefore the EU is likely to remain defensive on agriculture in the WTO.

4.3 Interest groups Interest groups play an important role in the EU trade policy making and implementation process, but the member states remain the key players with the EP as an emergent actor. As a senior official in DG Trade said: ‘we can choose to ignore economic and social interest groups, but we can’t bypass the member states’ (interview DG Trade, February 2011). Compared with most national interest groups, the Euro-groups are not particularly well staffed. For instance Business Europe, which represents the European manufacturing industry, has a staff of 52 and COPA-COGECA, representing European farm and cooperatives interests, has a staff of 27 of which 4 are purely administrative officers. Nonetheless, the Euro-groups perform important roles for the Commission in developing and supporting pan-European policy positions. However, it was not until after the GATT Uruguay Round was concluded in 1995 that the Commission more actively consulted the Euro-groups. During the Uruguay Round, the Commission sidelined the interest groups with the result that the European business community was almost absent from the negotiations and did very little to influence the EU’s negotiating position. Business groups either believed they had no interest in the Round or they feared a confrontation with the famers’ associations if they supported trade liberalization. Only UNICE (now Business Europe)

84

C. Daugbjerg

openly supported the Commission’s attempt to further liberalize trade in goods (van den Hoven 2002: 10). Though the European association of farm groups, COPA was mobilized, particularly in the final phases of the Uruguay Round, it had limited influence. Farm interests were mainly channelled through the member state governments (van den Hoven 2002: 11). The limited influence of COPA can be put down to its internal problems of reaching agreement on policy positions that can be constructively applied by the Commission. What COPA did agree to put forward in the UR, was the lowest common denominator; it came late in the day and was of little interest to the Commission (Daugbjerg 1998). The current importance of Euro-groups for the Commission is clearly illustrated by the fact that former Trade Commissioner Leon Brittan played an instrumental role in the formation of the European Service Forum to enable the service industry to speak with one voice (van den Hoven 2002: 21; Woll 2009: 290). Another indication of the Commission’s willingness to integrate the interest groups better into the trade policy process was the establishment of a new forum for discussions with interest groups – the Civil Society Dialogue (CSD). It was formed by former Trade Commissioner Pascal Lamy after the breakdown of the Seattle Ministerial in 1999, as a response to the growing mobilization of NGOs (non-governemental organizations) in global trade politics. However, though the CSD was a new forum in EU trade policy making, it did not mark a radical change. Lamy’s predecessor, Leon Brittan, already liaised with NGOs and some of them were included in the EU’s delegation to the Seattle Ministerial Conference (Dür and de Bièvre 2007: 85). The CSD is a very broad forum. As stated at its webpage: Civil society organisations attending represent a wide variety of institutions and organisations, which include non-governmental organisations working on topics as diverse as consumer protection, the environmental protection, animal welfare, human rights and humanitarian aid, as well as organized labour and employers’ associations and the European Economic and Social Committee.2 (Civil Society Dialogue webpage) It was formed as a forum in which the Commission could gain support for a new broad post-UR trade round, with the aim of strengthening its position in relation to the Council in which trade liberalizing enjoyed far less support (van den Hoven 2002: 11). As Van den Hoven (2002: 22) concludes: . . . by mobilising a pro-Doha declaration coalition of interest groups representing business, the environment and development, the Commission made it very difficult for Member States to oppose a new round. Indeed, the Commission had a clear interest in supporting the demands put forward by business, environmental and development groups because they prevented a Member State revolt against the Development round agenda negotiated by the Commission at Doha.

EU trade liberalization and protectionism 85 The CSD has not become a forum within which the NGOs can effectively pursue their interests. A number of NGOs have complained that the meetings are characterized by debriefing rather than dialogue (Dür and de Bièvre 2007: 86). This is clearly indicated by glancing through the records of the meetings of the CSD. The Commission representative is clearly the most frequent speaker, commenting on the comments and questions put forward by the delegates from the interest groups. There are two routes through which interest groups can pursue their interests, the domestic and the supra-national channels of influence. Protectionist interests are best pursued through the national channel of influence by attempting to persuade the Trade Minister to put forward such views in the Council. Protectionist proposals often have a national bias and therefore it can be difficult to form a pan-European position, since they potentially create controversies amongst member states. The supra-national channel of influence is best suited for panEuropean trade lobbyism aimed at trade liberalization, since the Commission is usually more liberal than most of the member states. However, this does not mean that only initiatives aimed at reducing trade barriers can be pursued through the supra-national channel of influence. Lobbying in favour of regulatory trade measures that do not discriminate on the basis of nationality can be pursued supra-nationally if they appeal to broader Community interests such as the environment or social conditions (Woll 2009). A major challenge for the Euro-groups is to mediate between their national member associations when attempting to form a shared policy position reaching beyond the lowest common denominator. For instance, Business Europe represents 41 business groups from 35 countries and COPA represents 60 farm groups from the 27 EU member states. Given the heterogeneous structure of preferences amongst member associations, the Euro-groups tend to put forward more general positions and leave it to the Commission to engage with the national groups or the member state governments to hammer out the details of a Commission proposal (interviews, Business Europe and COPA, February 2011). The Euro-groups perform important functions for the Commission. They can help to find a balance among sectors within their membership, which have differing interests in relation to trade liberalization. For instance, in relation to the negotiations on the FTA with South Korea, Business Europe put considerable effort into finding a balance between the European car industry, which was very sceptical towards an FTA with Korea, and other industries that were supporting the initiative (interview Business Europe, February 2011). Thus, by involving interest groups, the Commission can better form pan-European positions in trade policy that are acceptable and legitimate to the member states when discussed in the Council (Woll 2009). Though interest group involvement in EU trade policy making is not well institutionalized, it does not mean that economic interests (in particular) are not taken into account. Dür (2007) has attempted to assess the influence of economic interest groups and suggests that the EU’s position in general reflects their preferences. Though environmental, consumer, human rights, labour and development groups have increasingly engaged in trade policy, their influence does not match those of the economic interest groups.

86

C. Daugbjerg

4.4 Ideas in EU trade policy and engagement with the Doha Development Agenda Round Following the conclusion of the UR, there was a belief within the Commission that the EU had done well in the UR negotiations, and that its proactive trade agenda put the Union in a position to take the lead in launching a new comprehensive round. The UR had an built-in agenda for continued trade liberalization, since the Uruguay Round Agricultural Agreement (URAA) obliged the contracting parties to initiate new negotiations before the end of 1999 and the GATS also requires new negotiations on progressive liberalization. The EU was eager to have a broad trade round, since there would little to gain from a narrow agricultural round. At the Geneva Ministerial in 1998, the EU persuaded the US to support a new ‘Millennium’ Round, but did not succeed in agreeing on the comprehensiveness of its agenda and this issue was left open for the Seattle Ministerial, scheduled for late November and early December 1999. The failure to launch a new round in Seattle meant that the issue remained undecided. The problem for the EU was that, ‘The US had a much smaller agenda for the Doha Ministerial Conference than the EU because it was opposed to introducing certain new issues such as rules on competition, the environment or core labour standards’ (van den Hoven 2004: 264). EU Trade Commissioner Pascal Lamy realized that to launch a new comprehensive round in this situation, the support of the developing countries was essential. Unless persuaded, they were likely to oppose some of the new trade issues such as trade and environment, competition and investment rules, which the EU was eager to put onto the agenda of the Round. Their support was also essential to isolate the US in the question of the comprehensiveness of the agenda (van den Hoven 2004: 260–267). Eventually, after the 9/11 terror actions in 2001, the US accepted a comprehensive agenda for the new round, which officially was launched at the Doha Ministerial in November 2001 (Woolcock 2005b: 391). There are a number of reasons behind the EU’s desire for a comprehensive round. One reason, often mentioned among agricultural trade analysts, was the need to be able to trade off concessions on agriculture for gains in other industries (see Van den Hoven 2002: 17). There is definitely some truth in this. As accounted for in more detail below, the EU basically has a defensive interest in agriculture and held the view that negotiations on agriculture are ‘only going to lead to substantive results if placed within a broader, time-bound negotiating framework’ (Commission of the European Communities 1999: 5). However, there were other concerns as well. As Woolcock (2005a: 241) points out, ‘there has clearly been a shift in EU trade policies towards greater support for multilateralism and a rules-based system from the mid-1980s . . .’. There was a desire to launch what has been called a ‘deep’ trade agenda (Young and Peterson 2006: 796), which was basically an attempt to diffuse the single European market model into the WTO. As Young and Peterson (2006: 804) argue, ‘the most compelling explanation for the shape and direction of the EU’s new trade policy is its own experience as a market integration project’.

EU trade liberalization and protectionism 87 Up until mid 1980, many European countries had pursued a policy of national champions created by mergers of smaller firms, sponsored by governments. These national champions enjoyed a dominant position in the domestic market and protection from international competition. This resulted in inefficient and non-innovative firms, which were unable to follow suit with Japanese and American companies. The poor competitiveness of the European firms was an important reason behind the adoption of the single market programme, which would create a large European market and expose European companies to greater competition. This would enable them to reap the same economics of scale which the US market provided to American firms (McGuire 2006: 888–889). So in the 1980s, there was a growing recognition in the European Commission that a more liberal trading system would provide benefits and ‘By the end of the Uruguay Round in 1994 the EU was matching the US on liberalization, with the exception of agriculture’ (Woolcock 2005b: 381). Between 1995 and 2003, EU firms had increased their overall share of world markets for midand upmarket products while it had declined for low-market products (Commission of the European Communities 2006: 16–17). This development demonstrated that the manufacturing sector had little to fear from liberalization of trade. On the contrary, there were potential benefits from it (Young 2007: 798). The service industry was also likely to benefit from liberalization. As the world’s leading service exporter and importer, the EU was pressing for increased market access in almost all service sectors (Young 2007: 802). Successful market integration in Europe created a fertile political environment for the promotion of market liberal ideas within the EU and laid the foundation for the EU’s negotiating position in the WTO. As the EU Commission (Commission of the European Communities 2006: 5–6) stated: Openness to global trade and investment increases our ability to exploit the benefits of an effective single market. It exposes the domestic economy to creative competitive pressures, spurring and rewarding innovation, providing access to new technologies and increasing incentives for investment. Europe must reject protectionism. Protectionism raises prices for consumers and business, and limits choice. In the medium term, protecting import-competing sectors from fair external competition diverts resources away from more productive sectors of the economy . . . Our core argument is that rejection of protectionism at home must be accompanied by activism in creating open markets and fair conditions for trade abroad. This improves the global business environment and helps spur economic reform in other countries. It reinforces the competitive position of EU industry in a globalised economy and is necessary to sustain domestic political support for our own openness. At the same time that the EU was pursuing market opening at home and abroad, the EU warned that globalization had to be tamed. As the then EU Trade Commissioner Pascal Lamy often argued: ‘Globalization is the force that amplifies

88

C. Daugbjerg

and reinforces the strengths, but also the contradictions, of market capitalism: its efficiency, its instability and its inequality’ (Lamy as quoted in Meunier 2007: 906). The EU approach to avoiding the undesired effects of globalization was to manage it. As Lamy (European Commission 2004: 3) suggested: The right way forward is removing obstacles to trade gradually, settling disputes peacefully, building up a body of rules that allow for fair play and transparency in world trade, and always ensuring that our policies and politics help those who are affected by the ‘globally’ more efficient division of labour. The EU’s vision on managed globalism rested on two pillars. First, markets had to be opened, by lowering trade barriers at the border and by creating a set of multilateral rules disciplining domestic regulations affecting trade. Second, since many developing countries were likely to suffer from market opening in the short term, special attention had to be directed towards their needs for transitory measures. Trade Commissioner Lamy argued that there was significant potential in extending the European experience with market integration to the global level. As he stated: The European blend of market integration, common rules and social safety net mechanisms can serve as an inspiration for many countries in coping with the effects of globalization. The European Union is interested in promoting politically managed globalization so as to ensure that its potential benefits are shared more widely across nations and societies and that social values are prioritized. (Lamy as quoted in Meunier 2007: 906) The experience with market integration in Europe since the late 1950s, had shown the Europeans that market integration could not only be achieved by lowering barriers at the border; it also required common disciplines on regulations behind the border. Hence, the EU wanted to deepen the trade agenda. In addition to continued negotiation of further liberalization of the new trade issues brought into the Uruguay Round, the EU wanted to put new set of trade issues onto to the agenda of the WTO, most notably trade and environment, labour standards and the ‘Singapore issues,’ (competition policy, investment, government procurement and trade facilitation). Negotiations on these new issues, like on trade in services, would concentrate on establishing multilateral rules disciplining national regulations affecting trade. The attempt to discipline domestic regulations recognized that countries had legitimate concerns when applying behind-the-border measures, but these had to comply with a set of international disciplines to prevent them being used as technical barriers to trade. The other pillar of managed globalization was to take the interests of the developing countries into account. The philosophy of the EU, as of late 1999,

EU trade liberalization and protectionism 89 was that better integration of the developing countries into the global economy would contribute to economic development in these countries. At the same time it was acknowledged that to minimize the negative effects of globalization, retaining the ability of developing countries to manage their economic and monetary policies was essential, as was allowing them sufficient time to adjust through extended transition periods (Commission of the European Communities 1999, see also 2003: 15). In relation to the least developed countries (LDCs), the EU urged ‘all industrialised countries . . . to commit themselves to tariff free treatment on essentially all products from the least developed countries to be implemented by 2003’ (Commission of the European Communities 1999: 19).3 The political necessity to accommodate the interests of the developing countries in the new trade round became evident after the dramatic failure of the Seattle Ministerial, which was intended to launch the Millennium Round. One way of demonstrating to the developing countries that the EU was increasingly prepared to take their interests into account in the global trade regime was to launch initiatives favoured by the developing countries (van den Hoven 2004: 260). For instance, after a policy process which, in an EU context was relatively short, the EU adopt the Everything-But-Arms Initiative (EBA) in February 2001, well before the launch of the Doha Round. The EBA is a preferential trade agreement granting the least developed countries duty and quota free access for all goods, with the exception of arms, into the EU internal market, albeit for rice, bananas and sugar there were longer transition periods. In the WTO, the EU has persistently argued that the other developed countries should commit themselves to do likewise. After the setback at the Cancún Ministerial Conference in 2003, which again reminded the developed countries that development was an issue on which the developing countries wanted real action, the EU repeated its position in trade and development, arguing that The integration of the developing countries into the world economy is a necessary condition for development. Such integration will be deeper and fairer if anchored in the multilateral trading system . . . It is evident that the biggest developmental gains of the DDA will come from ambitious trade liberalisation and the strengthening of multilateral rules. (Commission of the European Communities 2003: 15) The developing countries’ insistence on longer transition periods and exemptions was acknowledged by the Commission. However, it reminded them that: The original role of exemptions and transitional periods was to allow developing countries the time to implement rules that should in principle benefit them as much as they benefit developed countries, but which in the short term unduly stretch their resources. This has all too often been forgotten: developing countries have too often relied on exemptions and transitional periods to postpone indefinitely the assumption of new obligations. (Commission of the European Communities 2003: 16).

90

C. Daugbjerg

Hence, developing countries, with the exception of the LDCs, were eventually expected to integrate fully into the multilateral trading system with the same rights and obligations as the developed countries. The EU’s attempt to realize its deep trade agenda, in which emphasis was placed in market integration through the removal or lowering of trade barriers and at the same strengthening of the multilateral rules disciplining behind-theborder regulations, largely failed within the WTO. The Union appeared to be quite successful in the run up to the Millennium Round, as indicated by establishment of working groups to discuss the ‘Singapore issues’ in 1996. However, in the Doha Round it suffered serious setbacks. At the Doha Ministerial Conference, the trade and environment agenda was severely watered down, but it was at the Cancún Ministerial that the EU’s broad trade agenda suffered the most. Paradoxically, it was the developing countries, from which the EU had worked hard to obtain support for the Doha Round, which mobilized against the EU and the US in Cancún and blocked negotiations on the ‘Singapore issues’. The EU and the US could no longer dominate the negotiations. The developing countries had been opposed to discussing three of the four ‘Singapore issues’ (competition policy, investment and government procurement) in Doha and succeeded to postpone the start of such negotiations on the ‘Singapore issues’ until the Cancún Ministerial, provided that at that time there would be a consensus among all WTO members to include them on the agenda for the negotiations. For the EU, the Cancún Ministerial was a major disappointment. Already from the outset of the Ministerial, things started going wrong for the EU. The EU and the US triggered the anger of the developing countries by agreeing on a joint draft text for the modalities on agriculture without involving the developing countries in the negotiations on the text, though most of them had significant interests in farm trade. Further, there did not appear to be a consensus on starting the negotiations on the ‘Singapore issues’. The failure in Cancún led to a crisis for the round, and it became necessary for the EU to give concessions to the developing countries to demonstrate that its negotiating agenda did indeed take their interests into account. Three of the four ‘Singapore issues’ were taken off the agenda and only trade facilitation remained, since it was not seen as a sticking point by the developing countries. The deep trade agenda pursued by the Europeans had suffered a major blow and what was left on the agenda as major issues were agriculture, services, NAMA and rules. Elsig (2009) has argued that after that time, the enthusiastic leadership of the EU vanished and rather than leading the Round, the role played by the EU has been to avoid being blamed for its collapse. It is true that a collapse would be a major blow for the EU’s reputation as a major player in global politics, since it had invested much prestige in launching the Doha Round and had strongly voiced the need to take developing country interests into account. A collapse would question the EU’s credibility in world politics. Trade policy is the external policy field in which most competence has been devolved to the EU Commission and in which the EU has had a long-standing role on the world scene, sharing equal status with the US (van den Hoven 2004: 258). However,

EU trade liberalization and protectionism 91 this is a too simplistic a view. First, the EU did not withdraw from its leadership role after Cancún. Trade Commissioner Lamy and Agriculture Commissioner Fischler undertook a major effort to revitalize the Round in 2004. This resulted in the framework agreement on modalities for agriculture and NAMA in July 2004. This agreement set the direction for the subsequent negotiations (interview, DG Trade, February 2011), which were as close as ever to reaching agreement on the modalities for agriculture and NAMA in July 2008. The less visible role of the EU in the aftermath of these events is the result of the US demand for more gains on NAMA following the inauguration of the Obama administration. The key to a conclusion of the Round is a deal between the US and China on market access in some specific manufacturing sectors. Thus, there is not much the EU can do to unlock the deadlock until the US and China have reached agreement (interviews, DG Agriculture and DG Trade, February 2011). The EU still has a major interest in seeing the Round successfully closed. The EU Commission, supported by the European business community, believes that many important trade liberalization issues, in particular the new trade issues such as the ‘Singapore issues’, can best be addressed multilaterally (interviews, DG Trade and Business Europe, February 2011). As a Commission (see also European Commission 2010: 9) document stated: The world needs a strong multilateral trading system. It is the most effective means of expanding and managing trade for the benefit of all and provides a unique framework for dispute settlement. There will be no European retreat from multilateralism. We stand by our commitments to multilateralism and are prepared to pay, reasonably, to keep the system thriving. . . . Europe remains committed to the WTO. (Commission of the European Communities 2006: 10) In the short and medium term, the strategy of the EU is to include the new trade issues in bilateral trade agreements, though there is a risk that this may result in an incomprehensible and perhaps even inconsistent system of trade rules in the global market. The idea is to use bilateral trade agreements as a lever to ‘upload’ the rules to the WTO in a later Round. Quoting the same Commission document, this strategy is spelled out: Free Trade Agreements (FTAs), if approached with care can build on WTO and other international rules by going further and faster in promoting openness and integration, by tackling issues which are not ready for multilateral discussion and by preparing the ground for the next multilateral liberalisation . . . . . . The EU’s priority is to ensure that any new FTAs, including our own, serve as a stepping stone, not a stumbling block for multilateral liberalisation. (Commission of the European Communities 2006: 8; interviews, DG Trade, February 2011)

92

C. Daugbjerg

Therefore, it is important for the EU that the Doha Round is closed successfully, not necessarily by taking a great leap forward in terms of increased market access in agriculture, industrial goods and services, but by consolidating trade liberalization already untaken unilaterally.

4.5 EU trade interests in agriculture, NAMA and services 4.5.1 Agriculture4 Agricultural trade has been a sticking point for the European Union since inception of the European Economic Community. In general the European farm sector has limited international competitiveness and therefore a major purpose of the Common Agricultural Policy (CAP) was to protect European farmers from overseas competition to ensure that their incomes remained at a politically acceptable level. In the first five years of the UR, the EU was very inflexible on agriculture, but a series of CAP reforms from the early 1990s onwards has enabled much more flexibility in the EU’s negotiating position on farm trade, though it is still defensive. The original design of the CAP was basically a high-price policy in which the consumers provided significant share of farm support through artificially high consumer prices. The CAP stabilized markets, and thus farm incomes, by providing minimum prices in the markets for various commodities. Variable import levies ensured that imports would not enter the EU market below a threshold price for imports. Schemes for stockpiling, destruction and/or export subsidies, ensured that when EU internal supplies increased, EU prices would not fall below politically determined floor prices, which were usually substantially higher than world market prices. Third countries were strongly affected by this policy system, initially in the form of foregone European markets. Their exports would not be competitive in the European market until the internal price in the EU reached the threshold price for imports, at which imports would be competitive, but only as long as internal market prices remained high. The variable import levies ensured that as soon as prices decreased below the threshold price, imported produce would lose competiveness in the EU market. Later on, as EU agricultural surplus production increased and was sold in the world market with extensive use of export subsidies, third countries were priced out of their export markets by these subsidized exports. This was perhaps the most important reason why the US, supported by the Cairns Group, insisted that farm trade was to be fully integrated in the UR and become an integral part of the single undertaking. This caused major difficulties for the EU’s negotiators because they were constrained by the lack of political will to change the architecture of the CAP which, in turn, was the direct cause of setbacks during the UR. The EU’s negotiating position on agriculture is defined by the CAP, and therefore the EU had little leeway on market access, domestic support and export subsidization. Eventually, after the dramatic breakdown of the GATT negotiations in Brussels in

EU trade liberalization and protectionism 93 December 1990, EU farm ministers realized that their unwillingness to undertake substantial CAP reform blocked a deal on farm trade as well as an agreement on the whole package of agreements, including trade in industrial products, trade in services, intellectual property rights and reform of the Dispute Settlement System; all issues of importance for the Europeans. After one and a half years of tough negotiations among EU Farm Ministers, Farm Commissioner Ray MacSharry was able to utilize the exogenous pressures as a means of bringing about policy change within the CAP in May 1992. The architecture of the CAP was transformed through a partial shift from price support to direct payments, mainly in the arable sectors. Guaranteed minimum prices for cereals were reduced by 29 per cent. Farmers were compensated for the lost income by direct payments established on the basis of the area of eligible land upon which the socalled reform crops (cereals, oilseed, and protein crops) were grown, provided that the farmer set aside 15 per cent of his arable land. In the beef sector, minimum prices were reduced and direct livestock payments were increased. In relation to the GATT negotiations, the MacSharry reform worked because it enabled the EU to give concessions on domestic support, tariffs and export subsidies. A substantial part of the domestic support was shifted away from the trade distorting ‘amber box’ into what became the less trade distorting ‘blue box’. The transformation of price support, in the arable and beef sectors, into direct support (reducing internal prices by a third) meant that the EU became less dependent upon high tariffs and export subsidies to maintain high prices in the EU internal market, and could commit itself to reduce tariffs and export subsidies. The 1992 CAP reform enabled EU and US negotiators to reach a final agreement in December 1993. The other negotiating parties accepted the EU-US deal as a fait accompli and the Agricultural Agreement was agreed as part of the single undertaking of the UR. In the early phases of the Doha Round, the CAP came under renewed pressure from many of its trading partners. The US and the Cairns Group in particular wanted to abolish the ‘blue box’ as a domestic support category, with the result that the EU’s direct payments would become ‘amber box’ payments and thus subject to reduction commitments.5 This would potentially force the EU to undertake substantial cuts in domestic farm support. Initially, the EU negotiated in the Doha Round on the basis of the CAP as adopted in 1992 and adjusted in 1999. This enabled the negotiators to give concessions on tariffs since there was a lot of water in the tariff schedules of the URAA. The levels from which tariffs had to be reduced were those notified in the URAA, which were based on the tariff levels of the mid 1980s when world market prices were low and tariffs correspondingly high. The actual tariff levels in the early 2000s were considerably lower than the ceilings and therefore the EU could give concessions without changing the CAP. However, on domestic support the EU’s negotiating position was locked in by the then design of the CAP and therefore a policy reform was needed to enable the EU to be more flexible on domestic support. The reform, agreed in June 2003, decoupled direct payments from production requirements and transformed them into a flat-rate, single farm payment.6 The reform shared

94

C. Daugbjerg

the principle of decoupled support with the so-called Simplified Approach, introduced in the new member states in Central and Eastern Europe in 2004. In these countries, farmers would be entitled to a flat-rate decoupled direct payment, which would start at 25 per cent of the EU-15 level and gradually increase to 100 per cent in 2013. It was believed that the 2003 reform shifted direct payments in EU-15 from the ‘blue box’ into the ‘green box’ which, as a support category for minimally trade-distorting domestic support, would be exempt the direct payments from reduction commitments. The decoupled payment scheme in the Central and Eastern Europe countries would also be considered as ‘green box’ payments. This relieved the pressure on the EU’s domestic farm support and, expectedly, improved the EU’s negotiating position in the Doha Round. While the 2003 reform was aimed at the large arable sectors (cereals, oil and protein crops), a second phase of reforms brought cotton, tobacco, olive oil, hops (2004), sugar (2005), fruit and vegetables (2007) and wine (2008) into the decoupled framework, which was further, but not significantly, deepened by the 2008 Health Check reform of the CAP. Though these CAP reforms did little on export subsidies, the EU was also in a good position on this issue. The structural production surpluses of the 1980s had disappeared as a result of production limitation measures introduced in the arable, beef and dairy sectors. Nevertheless, the EU still has defensive interests in agricultural trade and can be expected to remain defensive in the future. However, there has been a major change in the way in which the EU supports its farmers. The farm support level in the EU remains comparatively high, but its agricultural policy has become much less trade distorting. The protection levels have been lowered substantially for the arable commodity sectors (with sugar as the major exception) and the use of export subsidies is minimal. However, in some animal commodity sectors subsidies remain high. This change is a result of the fact that agricultural trade became an integral part of the WTO trade liberalization agenda in the mid 1980s onwards (Daugbjerg and Swinbank 2009). 4.5.2 NAMA The negotiations on non-agricultural market access have traditionally been concerned with tariff reductions and the Doha Round was no different in that respect. The key issues in tariff reduction are the formula applied and how to incorporate flexibility in the reduction formula to take developing country interests into account. Flexibility means that the developing countries are given lower reduction rates and longer transition periods. The formula agreed is the ‘Swiss formula’, which produces deeper cuts the higher the tariffs. The negotiations have focussed on the coefficients that determine the magnitude of the reductions, whether higher or lower coefficients should apply for particular groups of countries and whether further flexibility was needed. Another issue is whether deeper tariff cuts or tariff elimination in selected sectors should be included on the agenda, and how such agreements should be made.

EU trade liberalization and protectionism 95 The EU has had higher average tariffs but fewer tariff peaks than the US and therefore the EU’s position on tariff reduction has been a formula approach, which reduces tariff peaks by more than the average (Woolcock 2005b: 393). In NAMA, the EU wants ‘a comprehensive tariff negotiation aiming at reducing tariffs, removing all tariff peaks and harmonising tariff structures of all Members across all nonagricultural products, without exceptions’ (Commission of the European Communities 1999: 13; see also Commission of the European Communities 2003: 9). Its overall objective is to bring ‘the gap between the EU tariffs and those of our trading partners more closely in line’ (ibid.). A certain level of flexibility was to be allowed in order to enable developing countries to maintain higher tariffs and enable tariff reductions, differentiated according to the level of development. Further, the EU wanted sectoral negotiations to eliminate tariffs for particular products or groups of products (ibid.). The main interests of the EU in relation to sectorals are chemicals and machinery. In a later communication, published shortly after the setback in Cancún, the EU upheld its approach to the NAMA negotiations, but had become more specific in relation to the tariff reductions of the developing countries, arguing that flexibility in the application of tariff cut rates did not mean non-participation of developing countries and that these had to contribute to the liberalization process (Commission of the European Communities 2003: 9). A major reason for the inclusion of the developing countries in the liberalization process was that trade liberalization was seen as essential for development. As it was stated: Given that 70% of the trade of developing countries is in industrial products and that they raise the highest barriers between themselves, important trade and development benefits will only be found if there is serious market opening within the developing countries, particularly on the part of the more advanced developing countries, which are perfectly able to make a meaningful contribution. (Commission of the European Communities 2003: 9) 4.5.3 Services Trade in services was one of the new issues brought into the UR. The US put forward the most liberal proposal, while the EU, realizing that it was a large service exporter and competitive in a number of fields, also supported liberalization but was more cautious, leaving room for a number of non-trade concerns in the service trade rules. The EU proposed: establishing a commitment to determine the ‘appropriateness’ of regulations, with inappropriate measures to become subject of liberalization negotiations and commitments on a sector-to-sector basis for all participating countries. Any framework agreement for trade in services was to involve only limited obligations of a generally binding nature. National treatment was to be negotiated on a sector-by-sector basis. (Hoekman and Kostecki 2001: 249)

96

C. Daugbjerg

The EU’s approach was supported by the major developing countries and eventually prevailed (ibid: 250). In the Doha Round, the EU is pushing for further liberalization of trade in services. As the leading exporter and importer of services, the EU has pushed for more opening of markets in almost all service sectors, ‘seeking, at the very least, for governments to bind all unilateral liberalization that had taken place since the end of the Uruguay Round and wanting further liberalization, particularly in professional services, energy-related services and e-commerce’ (Young 2007: 802; see also Commission 2004: 8). However, there are limits to the EU’s pursuit of liberalization, as it has taken a protectionist position on some sensitive service sectors, mainly audio-visual services, education and health services. The EU has set out to obtain more commitments for all WTO members, including the developing countries, on market access and national treatment, i.e. treatment of foreign suppliers of services no less favourable than that accorded to domestic suppliers of like services. Recognizing the legitimate right of WTO members to pursue public policy objectives through domestic regulation, the EU called for transparency and predictability of such regulation and strengthened WTO rules ‘to provide a basic international discipline to certain practices preventing or reducing market entry’ (Commission of the European Communities 1999: 8). Within the Commission there is awareness that the European service industry has much to gain from the liberalization of the services trade and, therefore, for the EU the issue is a top priority in the Doha Round (Commission of the European Communities 2003: 10 and European Commission 2004: 8).

4.6 Defensive interests coming to the fore The narrowing down of the agenda of the Doha Round as a result of the developing countries’ reluctance to negotiate key aspects of the ‘Singapore issues’ put the EU in a difficult situation. There had to be a new deal on agriculture because of the so called ‘peace clause’ of the URAA, which protected the WTO members’ agricultural policies from legal challenge in the WTO’s Dispute Settlement System until the end of 2003 as long as they complied with the provisions of the URAA. Although domestic agricultural policies are in conformity with the URAA, they are not safe after the ‘peace clause’ has expired because they can be legally challenged under other agreements, in particular the Agreement on Subsidies and Countervailing Measures (Steinberg and Josling 2003). Though this results in difficulties for the EU in the long term, it is not a problem in the shorter term because cases against the EU, such as beef hormone and GMO, have demonstrated that the proceedings in the WTO Dispute Settlement System can drag on for years. A more serious concern of the EU was that the developing countries had mobilized to put pressure on the EU and the US to give real concessions on agriculture to agree to more market access for services and industrial goods into their markets. The Group of 20 (G20) was formed during the Cancún Ministerial with Brazil and India as the leading initiators and proved more resilient than expected (Narlikar and Tussie 2004). It became clear to the EU negotiators that there had to be a deal on

EU trade liberalization and protectionism 97 agriculture that would satisfy the Latin American agricultural exporters’ demands for increased market access in Europe and North America and for a phasing out of direct and indirect export subsidies. As a result of the water in its tariffs schedules, the URAA had not delivered the increased markets access that the developing countries had expected. The sequence of CAP reforms, starting with the MacSharry reform in 1992, had provided the EU with substantial leeway on domestic support and tariffs since they had shifted the bulk of domestic support from the trade distorting ‘amber box’ to the ‘blue box’ in 1992 and subsequently to the ‘green box’ in 2003. The switch from a high price to a low price policy had also reduced the overall need for high tariffs and export subsidies. This does not mean, however, that the EU’s Common Agricultural Policy is safe. The succession of CAP reforms has not transformed price support into direct payments in all commodity sectors. Farm income maintenance in the large commodity sectors, dairy, beef and sugar, is still based almost entirely or partially on price support and therefore these market schemes still rely on border protection by relatively high tariffs. Thus, there is a limit to the concessions that the EU can give on market access and this is problematic in relation to Brazil, which, as a major beef exporter, pushes hard for market opening in that sector. The real trouble for the EU is that a Doha Round agreement on agriculture would lock the CAP into its current form by freezing tariffs near (and for some sectors, below) the current levels and thus prevent the EU from increasing agricultural protection in the future. It would also prohibit the use of export subsidies, but although the EU had already almost stopped using export subsidies when it was agreed to phase them out by 2013 at the Hong Kong Ministerial in 2005, it was a real concession. A market situation in which they are needed to safeguard farm incomes could easily emerge, which is clearly demonstrated by the temporary reintroduction of dairy export subsidies in early 2009. Up until the Hong Kong Ministerial, France had been unwilling to set an end date on the use of export subsidies. From an overall perspective, the EU has been much more flexible on agriculture in the Doha Round than in the UR. An indication that the EU had moved considerably on agriculture was the fact that the US was increasingly blamed for setbacks in the farm trade negotiations. The US had to take most of the blame for the lack of progress resulting in the suspension of the Round in 2006 in particular, and also in July and December 2008, when Indian and Brazilian negotiators blamed it for causing the failure to reach agreement on the modalities of the Agricultural Agreement. In return, the US blamed India. In the Uruguay Round the EU was blamed for every setback caused by the lack of progress in agriculture (Daugbjerg and Swinbank 2009). The EU’s limited ability to move beyond the concessions enabled by the 2003 CAP reform, and the subsequent sectoral follow-up reforms, has constrained the EU’s ability to be more offensive on NAMA and services. To a considerable extent, agricultural concessions have been used by the EU agricultural negotiators to offset pressure on sensitive issues related to agricultural market access

98

C. Daugbjerg

and, to a lesser extent, to obtain increased market access on industrial goods (NAMA) and services (Interviews, DG Trade, DG Agriculture, Business Europe, COPA/COGECA). The unwillingness to give further concessions on agricultural market access has prevented the EU from being more offensive on services and NAMA. Demands for further market opening are likely to be met by further demands for concessions on agricultural market access (Interviews, DG Trade, DG Agriculture and Business Europe).

4.7 Free trade agreements As argued above, free trade agreements are an integral part of the EU’s external trade policy. The EU has agreed numerous association agreements with countries throughout the world. Some of them have free trade area provisions, of which some have been in force for a quite long time. For instance, FTAs were agreed with Norway, Iceland and Switzerland in 1973. Over the last two decades, there has been some fluctuation in the EU’s strategy in relation to FTAs. The earlier association agreements had broader objectives and were not only agreed for trade reasons. They were also seen as political tools, for instance to gain support from developing countries within the WTO. This became crucial after the conclusion of the UR and particularly after the failed Seattle Ministerial, which demonstrated that developing countries were playing a more active role in the WTO and were determined to gain more influence (Van den Hoven 2004: 260). Other association agreements, for instance the one agreed with South Africa in 1999, had as an important objective, the support of the transition to democracy (Larsén 2007). Soon after his appointment as Trade Commissioner in 1999, Pascal Lamy brought a hold to the initiation of FTA negotiations, prioritizing multilateral trade agreements instead. Bilateral trade agreements were seen as too costly and time-consuming, offering relatively limited rewards in terms of trade and investment (Garcia 2011: 503). However, those FTA negotiations that had already been initiated were concluded during Lamy’s term as Trade Commissioner. The FTAs with Mexico (agreed in 2000) and Chile (concluded in 2002) have been considered the most important ones. Indeed, the latter was the most comprehensive FTA agreed by the EU, covering tariff elimination, phyto-sanitary measures, customs procedures, labelling, intellectual property rights, investment and public procurement. It was later to serve as a model for future FTAs (Garcia 2011: 502–503). As the Doha Round dragged on and was narrowed down, excluding some of the issues of major importance to the EU, its ability to deliver actual trade liberalization was questioned. This motivated the new Trade Commissioner, Peter Mandelson, to reconsider the EU’s strategy on FTAs. The Commission document, Global Europe, published in 2006, outlined a new strategy. Whereas the previous bilateral trade agreements had served neighbour and development objectives well, new FTAs were to put more emphasis on economic interests to help create jobs and drive economic growth within the EU (Commission of the European Communities 2006: 9).

EU trade liberalization and protectionism 99 The new strategy was ambitious, putting emphasis on trade interests rather than broader political interests. The deep trade agenda was at the core of the strategy, aiming at agreeing FTAs that were ‘comprehensive and ambitious in coverage aiming at the highest possible degree of trade liberalisation including far-reaching liberalisation of services and investment’ (Commission of the European Communities 2006: 9). Further, the EU also aimed at strong provisions for, and enforcement of, intellectual property rights (ibid.). The choice of trade partners with whom to engage in negotiations on FTAs would primarily be based on economic criteria. These are ‘market potential (economic size and growth) and the level of protection against EU export interests (tariffs and non tariff barriers)’ (ibid.). Another concern, which would influence the EU’s decision on whether or not to engage in negotiations on FTAs, would be: potential partners’ negotiations with EU competitors, the likely impact of this on EU markets and economies, as well as the risk that the preferential access to EU markets currently enjoyed by our neighbouring and developing country partners may be eroded. (ibid.) Dür (2007) argues that the FTAs with Mexico were mainly driven by fears of losing EU exports to Mexico as a result of the establishment of the North American Free Trade Agreement (NAFTA) and by fears that the US might agree on a bilateral trade agreement with Chile, which potentially would disadvantage EU exporters in relation to US exporters. The FTA with South Korea is the most ambitious FTA the EU has concluded with a non-European trading partner. The negotiations were launched in 2007 and concluded in 2009, but not put into effect until 2011. Similarly to the FTAs with Mexico and Chile, an important driving force behind the EU’s engagement in the negotiations with South Korea was the potential threat to EU-exporter interests posed by the US-Korea bilateral trade agreement concluded in 2007 (Elsig and Dupont 2010: 12), but still awaiting congressional approval. The EU has had less success in negotiating FTAs with regional trade blocs. Negotiations with Mercosur were initiated in the late 1990s, but there are no signs of an immediate agreement. In relation to ASEAN, negotiations were launched in 2007 and frozen in 2009. This led to a shift in the EU’s strategy and it has now engaged in bilateral negotiations with ASEAN countries. Negotiations with Singapore were initiated in December 2009 and with Malaysia in October 2010. Negotiations with the Andean Community and Central America were launched in 2010. A network of association agreements has been established with the Mediterranean and Middle East countries on bilateral basis. Other negotiations on bilateral FTAs are ongoing, for instance those with India (launched in 2007), with Ukraine (launched in 2008) and with Canada (launched in 2009). Negotiations with China have been initiated, but these are envisaged to be very difficult and are progressing slowly (interview, DG Trade, February 2011).7

100

C. Daugbjerg

4.8 Conclusion In the last three decades, there have been major developments in EU trade policy. From being a reactive actor in the GATT, the Union has become a proactive player in the WTO, performing a key role in the launch of the multilateral Doha Development Round. Its trade policies have also changed significantly, from being relatively protectionist, to promoting a liberal trade approach in most trade issues on the WTO agenda. Its positive experience with market integration within the EU is the major explanatory factor behind this change in trade policy. The trade policy of the EU is based on the vision of managed globalism in which states’ legitimate right to pursue public policy objectives through domestic regulation is recognized, provided that such regulation complies with international trade rules. However, in relation to agricultural trade and some service trade issues, in particular cultural and audiovisual, education and human health services, the EU has remained protectionist and has pursued a defensive negotiating strategy. In bilateral trade negotiations on FTAs, the trade liberalization agenda has gone beyond the WTO agenda and revealed that some manufacturing sectors, like the European car industry, are still not prepared for increased market opening in the EU. The European agricultural sector has a small, and declining, importance in employment and income generation, but its political importance is well beyond its economic impact. Therefore, the EU’s agricultural policy (the CAP) has often been the source of conflict between the EU and its trade partners within first the GATT, and then the WTO. However, the CAP is not static. It has evolved considerably over the last two decades (responding to the developments in the WTO farm trade agenda) and has created some leeway for the EU in the Doha Round negotiations. However, agricultural protectionist interests are still powerful and the CAP is a serious constraining factor for the EU when pursuing its trade liberal agenda in other economic sectors. A conclusion of long-lasting FTA negotiations with Mercusor,8 which was formed by South American countries with strong export interests in agriculture, will indicate whether the balance between agricultural interests on the one hand, and non-agricultural trade interest on the other, is changing. Since the four founding members of Mercusor: Argentina, Paraguay, Uruguay and, in particular, Brazil, are major agricultural exporters, it is unlikely that they will accept a trade agreement that does not provide increased agricultural market access to the EU. The institutional complexity of the EU is high with a relatively large number of veto points in the trade policy-making system. The strong consensus norm in EU policy making means that Council of Ministers is an institution that effectively creates veto points for protectionist interests. The Lisbon Treaty, which came into force in 2009, has increased the complexity of trade policy making by granting new powers to the European Parliament. Before the Lisbon Treaty, the EP was only consulted on trade policy and ratification of trade agreements was the prerogative of the member states in the Council of Ministers. Now, the EP must also ratify trade agreements by a simple majority vote. Despite this

EU trade liberalization and protectionism 101 institutional complexity of the EU trade policy-making system, the EU does perform relatively well in the international trade policy arena. It has performed proactively in the WTO Doha Round negotiations and has proved able to agree bilateral FTAs that go beyond the WTO trade liberalization agenda.

Notes 1 Earlier versions of this chapter were presented at the book project meeting in Stavanger, October 2011, at the IPSA’s XXII World Congress of Political Science, Madrid, July 2012 and at the annual conference of the Danish European Community Studies Association, Copenhagen, September 2012. I thank the participants, in particular the discussants David Olson, Frode Veggeland and Gorm Rye Olsen and the editors of this book, for valuable and helpful comments. 2 See: http://trade.ec.europa.eu/civilsoc/csd_proc.cfm. 3 Note the use of the term ‘essentially all products’. This meant that the so-called ‘sensitive products’ could be exempted. The sensitiveness of the products is often influenced by political rather than macro-economic factors, meaning that products in which the international competitiveness is low and industry mobilization high, would be likely to be exempted from tariff free access. 4 This section is based on Daugbjerg and Swinbank (2009). 5 The 2002 US Farm bill introduced counter-cyclical payments for which the US would need to retain the ‘blue box’, and hence its interest in eliminating the ‘blue box’ dampened. 6 It must be said, however, that the reform did not involve a 100 per cent decoupling. To receive payments, farmers were required to retain land in good agricultural condition and to comply with a number of environmental, animal health and welfare and food safety regulations (cross-compliance). But there was no longer a requirement to produce certain crops or to keep certain kinds of livestock. 7 For an overview over the EU’s FTA negotiations, see http://trade.ec.europa.eu/doclib/ docs/2006/december/tradoc_118238.pdf and http://trade.ec.europa.eu/doclib/docs/2006/ december/tradoc_111588.pdf. 8 Argentina, Brazil, Paraguay and Uruguay. In 2008, Venezuela, Chile and Bolivia became associate members.

5

India’s trade politics Continuity and change Amrita Narlikar

5.1 Introduction India’s trade politics constitutes a fascinating puzzle in its own right. A study of India’s trade policy internally, and its trade negotiations abroad, is of direct relevance to its economic partners and competitors. But an analysis of India’s trade politics assumes special value for scholars and practitioners seeking to better understand the pathways of India’s rise. The benefits of market opening have served India well, and the free trade agenda of the World Trade Organization (WTO) conforms broadly to the thrust of India’s own programme of economic liberalisation (in contrast to the inherent conflict between the free trade ideology of the GATT and the discourse of self-sufficiency that characterised the post-independence Indian economy). Further, and in contrast to other international organisations that have been slow to catch up with the changing balance of power and reform accordingly, the WTO has accorded a place of primacy to India (and other rising powers) at the High Table of multilateral trade negotiations. A broad alignment of its continuing programme of economic reforms with the WTO’s free trade agenda, and a voice of influence at the core of the WTO, should make India’s trade politics an ‘easy’ case study of progressive commitment to the regime, accompanied by a growing willingness to burden new responsibilities in a system in which it has growing stakes. Interestingly, however, an analysis of India’s trade diplomacy generates some surprising results. Evidence of India’s socialisation into the regime is limited, as are any indications of its willingness to share the burden of providing the global public good of free trade. India still leads coalitions of developing countries, much as it used to in the days of the GATT. It still espouses the cause of development, fairness, and poverty reduction. As the negotiations over the Doha Development Agenda have revealed, it has been all too willing to hold up the negotiation process and contribute to the recurrence of deadlock in the WTO. In this chapter, I trace the pattern of India’s trade diplomacy, and argue that the explanation is embedded in particular types of ideas of development as well as negotiating culture. As such, the Indian case fits broadly within the theoretical framework of this book, and its emphasis on the ‘intermestic’ basis of political

India’s trade politics 103 economy. Importantly, however, the domestic factors in India’s two-level games do not express themselves directly through institutional and societal pressures as one would expect; rather, we see more diffuse mechanisms and imperatives operating at the domestic level and translating into India’s international trade position. Particularly important drivers are domestic interests, and ideas and negotiating culture. The chapter proceeds in five parts. I start off by providing a historical overview of India’s negotiation behaviour in the GATT, and also the domestic policies that underpinned it. In section 5.3, I investigate India’s negotiation behaviour in the WTO today, and demonstrate the incongruity between the persistence of its diehard tactics of distributive bargaining and commitment to Third Worldist coalitions in the WTO on the one hand, and India’s program of economic liberalisation and the many benefits that it has gained from the multilateral trading system on the other. I also discuss India’s policy and negotiation strategy in terms of regional trade agreements. In Section 5.4, I focus particularly on India’s negotiations in the issue areas of agriculture and NAMA. The two issue areas are vital to India’s own interests, and have also proven to be the most contested areas in the Doha negotiations. They also serve as interesting points of comparison, given the declining role of the former and expanding role of the latter in India’s growing economy. In Section 5.5, I explain the sources of these negotiation positions. The sixth section concludes the analysis and discusses some of the implications of the findings.

5.2 India in a ‘rich man’s club’ India was one of the twenty-three original signatories of the GATT, having already played an active role in the Havana Charter negotiations. Sir Rahavan Pillai, the Indian representative, reminded the plenary meeting of the GATT in 1954 that negotiations over the GATT were completed only a few months after India’s independence, and ‘there were many in India who felt that, without anything like a clear picture before us of our economic future and with so many uncertainties ahead, it would be unwise for us to enter into commitments affecting our future tariff and trade policy’. The caginess of a newly independent postcolonial India to take on new international bindings notwithstanding, internationalism and multilateralism won out. Offering explanations for this, particularly striking was Pillai’s claim that the government of India decided to join the GATT ‘. . . not only because they recognised the value and soundness of the basic principles of the GATT but also because they felt that, as a nation which had just come into its own, they would, by so doing, be making their own contribution to the peace and prosperity of the world.’ And interestingly, even though Pillai’s statement suggests buy-in by India of the broad principles of the GATT, the greater part of the speech focuses on outlining the ‘special facilities which underdeveloped countries need in order to fulfil their industrial development program.’ Pillai highlights not just the specific mechanisms, but also offers an early and eloquent enunciation of the normative claim underlying the specific

104

A. Narlikar

demands: ‘Equality of treatment is equitable only among equals. A weakling cannot carry the same load as a giant’ (GATT 1954). The above remarks provide us with a snapshot of India’s negotiation behaviour in the early days of the GATT. The speech highlights three notable features of India’s trade diplomacy. First, even though India had signed onto the GATT, the caution that Pillai refers to against accepting agreements that could constrain India’s tariffs and trade policy was important in not just the early years, but through much of India’s participation in the multilateral trade regime. These concerns fitted naturally with the sovereignty and autonomy-related concerns of a newly independent India, but were also an early indication of the importance that would be accorded for some three decades (from the late 1950s to the late 1980s) on the role of trade protectionism in facilitating economic development and growth. Second, and just as important, is the attention given to India’s international role even in the difficult years of post-colonial recovery. It illustrates trade-offs inherent in the pathways to power, when a country must choose between narrowly perceived self-interests and broader goals of international prestige. Contestation over different variants of such trade-offs has in fact only increased as India’s power has risen in recent years. Third, despite the professed commitment by India to the broad principles represented by the regime, the greater part of the speech points to the emergence of an alternative agenda that was at variance with the goal of free trade as espoused by the regime. This agenda found support from many other developing countries too, and took several shapes, including the creation of the UN Conference on Trade and Development (1964). It found its way into the GATT through the provisions based on ‘Special and Differential Treatment’ (SDT) in the GATT, and indeed the principle of ‘Less Than Full Reciprocity’ (LTFR) in the Doha negotiations of the WTO. India’s central role in the GATT in support of Special and Differential Treatment was rooted at least partly in institution-specific idiosyncracies. The Principal Supplier Principle, whereby GATT negotiations were conducted, for example, reduced the incentive for even major developing countries to take a proactive role in trade liberalisation when a free ride on the concessions exchanged was available via MFN (the Most Favoured Nation rule, which requires that any concessions exchanged between the contracting parties be multilateralised). But very importantly, India’s defensive stance in the GATT had strong domestic roots too, which became more deeply entrenched as India’s economic policy evolved. The relationship between India’s economic policy and its trade diplomacy in the GATT is discussed in the paragraphs below. Arvind Panagariya, in his detailed account of India’s economic policy, classifies India’s post-independence growth into four phases. Phase I, from 1951–1965, had an annual GDP growth rate of 4.1 per cent. This growth rate was a dramatic jump from the 1 per cent average growth rate that India had experienced in the first half of the twentieth century. Panagariya argues persuasively that this increased growth rate took place amidst active participation of the state but also an ‘essentially liberal policy environment’. Phase II, from

India’s trade politics 105 1965–1981, saw ‘socialism strike with a vengeance’ and a decline in the annual growth rate to 3.2 per cent. Phase III saw a change in policy, and an acceleration of growth that averaged at 4.8 per cent and lasted from 1981–1988. Panagariya describes the bulk of policy reforms of this phase as undoing the harm that was done in Phase II. While many authors mark 1991 as the turning point in India’s economic policy, Panagariya categorises Phase IV as starting in 1988 on the grounds that the reforms may have become systematic in 1991 but did not start in that year. In Phase IV, from 1988 to 2006, the Indian economy grew at an annual growth rate of 6.3 per cent, in good measure due considerably to the liberalisation of the policy regime (Panagariya 2008). With reference to Phase I, Panagariya stresses the relatively liberal policy environment within India in the 1950s. Examining the writings of Prime Minister Jawaharlal Nehru, he argues the following: While Nehru did want domestic production to eventually replace imports, there are no statements in his writings or speeches to suggest that he wanted to achieve this by erecting import barriers. Instead, his vision was more consistent with interventions in production via direct public sector participation and licensing of private sector investment to progressively realign the domestic production basket with the consumption basket (including capital and intermediate goods necessary for production). (Panagariya 2008: 24–25) While Panagariya’s assessment of India’s economic policy in Phase I is broadly positive, he is critical of India’s attitude towards international trade: India’s single most important mistake was to ignore the critical importance of international trade for a poor, developing country. Rather than turn to outward-oriented policies that exploited the export potential in labour intensive-products . . . India pushed import substitution and deeper and deeper into a diverse set of goods including machinery. Moreover, an evertightening licensing policy scuttled domestic competition as well, and therefore the efficiency effects such competition brings. (Ibid) Nehru’s emphasis on the values of self-sufficiency provided a comfortable breeding ground for domestic indifference towards the opportunities of international trade. In fact, combine this ideational context with the goals of ‘Swadeshi’ that had been espoused by Mahatma Gandhi and had been embraced widely by the masses in the struggle for independence, and it is not surprising that the indifference could – and did – develop into a more active antipathy towards free trade. Hence, even in the liberal Phase I, we find India’s stance on the GATT cautious and defensive. This was illustrated in not only the 1954 statement by Raghavan Pillai (cited earlier) but in other statements too. In 1960, the Indian delegate S.T. Swaminathan argued:

106

A. Narlikar We feel that the CONTRACTING PARTIES have, in the past, not been able to sufficiently come to grips with the problems of expanding the trade of less developed countries . . . It would, in our view, be a thousand pities if the concentration of pressures from imports on certain limited sectors of production in particular countries leads to a general reversal of the efforts to expand international trade and, in particular, exports from the less-developed countries. (GATT 1960)

And the talk of developing country exceptionalism was accompanied by actions that displayed reluctance to engage in reciprocal concessions in the GATT. The reluctance to exploit international markets via trade in Phase I was transformed into a declining ability to do so in Phase II. Following a failed attempt at liberalisation at the start of Phase II, the 1960s and 1970s in India were marked by high levels of protectionism through import controls and export subsidies. The highly restrictive import policy excluded most consumer goods; it not only identified the users who would be allowed to import particular inputs and the quantity to be allowed, but also often required that the input be essential i.e. domestically non-available. Stifled industry at home, due to a variety of measures, found itself unable to compete internationally (Panagariya 2008). Domestic economic constraints originating in Phase II worked hand in hand with India’s growing recalcitrance in its multilateral trade diplomacy. It was joined in the resistance to free trade by many other developing countries. Rhetoric began to translate into reality with the creation of the UNCTAD as an alternative forum for development-friendly trade negotiations in 1964; the call for the inclusion of development concerns in the GATT resulting in Part IV in 1965; the signing of the Enabling Clause in the GATT in 1971 that formally allowed SDT; and the collective Third World demand for the New International Economic Order in 1973 that demanded distributive justice in favour of the South. In all these initiatives, within the GATT and outside, India took a leading role (Bhagwati 1977; Hansen 1979; Narlikar 2003). Within the GATT, it made individual submissions (as well as others) as part of the Informal Group of Developing Countries, many of which targeted the inadequacy of the GATT’s provisions regarding development concerns.1 Phase III of India’s economic growth is one that Panagariya dubs ‘liberalisation by stealth’. Important reform measures were taken, which included the deregulation of industry and a liberalisation of licensing rules. Interestingly, the period also witnessed steep tariff escalation, which was reflected in the increase in tariff revenue from 27 per cent in 1977–1978 to 62 per cent in 1987–1988. Contrary to an indication of rising protectionism, however, the increased tariffs were a product of improving transparency of India’s trade policy and included the conversion of quotas into tariffs (Panagariya 2008: 89). These steps of gradual reform, however, were not accompanied by a more pro-liberalisation stance by India in the GATT. If anything, the 1980s saw India at its most defensive on trade liberalisation yet.

India’s trade politics 107 India’s activism in the GATT came to the fore when US-led discussions began in the early 1980s to start a round of trade negotiations, which would include the new issues of services, Trade Related Intellectual Property Rights (TRIPS) and Trade Related Investment Measures (TRIMS). The first of these issues over which bargaining began, was trade in services. Considerable theoretical and empirical ambiguity existed, however, on the implications of liberalisation of the services sector. India, together with Brazil, brought together a coalition of developing countries – the G-10 – to resist the inclusion of services until developed countries roll backed their expanding protectionism (for example, via Voluntary Export Restraints) and also liberalised their agriculture and textiles markets that were governed by exceptions to GATT rules and thereby enjoyed very high levels of protection. Not only was India at the forefront of leading the G-10 coalition, but it was also the last point of resistance: well after other allies had been bought off through bilateral pressures, India stood isolated in its resistance to the Uruguay Round (Narlikar 2003; also Narlikar and Odell 2006, for a similar pattern of India’s behaviour in the LikeMinded Group). Through the three phases of its economic growth, and amidst the swings from a liberal policy environment (Phase I) through high levels of protectionism (Phase II) to gradual reform (Phase III), India’s trade diplomacy showed three, consistent characteristics. First, whether bargaining alone or collectively in coalitions, it used a predominantly strict distributive negotiating strategy. Its hard-line negotiating position was typified in its refusal to make concessions in the face of carrots and sticks, which would leave it isolated in the endgame. Second, almost all the coalitions that India participated in and led comprised developing countries. Third, despite its professed commitment to the multilateral trading regime, its demands were primarily those of securing exceptions to free trade for developing countries, resulting in a defensive negotiating agenda. It could be argued that these characteristics of India’s negotiating behaviour in the GATT, in spite of the evolving reform agenda at home, were a product of domestic institutional and societal lags, and that India’s trade diplomacy would evolve as the programme of economic reform became more firmly entrenched. It could be further posited that the institutional setting of the GATT, with its Quaddominated club-like politics of the Green Room, was hardly conducive to the constructive participation of India or indeed any other developing country. India’s negotiating behaviour in the WTO, in conjunction with Phase IV of its domestic economic growth, provides us a useful test of both these counterarguments.

5.3 India’s veto-player status in the World Trade Organization India’s reform agenda received a more definite and explicit direction in the aftermath of India’s ‘balance of payments’ crisis in 1991. With specific reference to trade liberalisation, the July 1991 reforms did away with import licensing on the

108

A. Narlikar

great majority of intermediate inputs and capital goods; consumer goods had their import licenses abolished in 2001. Tariffs on industrial goods were brought down, particularly applied tariffs. Export restrictions were also reduced. Particularly substantial liberalisation of trade in services occurred as a result of freeing up of controls over foreign investment (Panagariya 2008). The reforms have generated huge pay-offs. India’s export shares have increased significantly: it appeared as the fifteenth largest exporter of merchandise (i.e. goods) occupying 1.7 per cent of the world’s share, and sixth largest exporter of services and cornering 3.5 per cent of the world’s market (WTO International Trade Statistics 2010). Panagariya, in his book published in 2008, even considers the beginnings of a fifth phase of even higher growth rates for the country. He notes that from 2003–2007, India’s growth rate averaged 8.6 per cent. It is noteworthy that even in the aftermath of the global financial crisis in 2008, the Indian economy grew at a reassuring 5.9 per cent in 2009, and returned to over 8 per cent growth rates in 2010. More recently, although both India and China have shown signs of slowing down amidst the persistent and worldwide economic malaise, growth remains respectable in comparison to Western economies. These dramatic improvements in India’s economic performance are an indication of the success of the economic reforms. Trade liberalisation forms an important part of this reform agenda, and it has clearly served India well thus far. We would therefore expect India’s commitment to the free trade regime to improve in light of this reform-led economic boom and its increasing stakes in the preservation and further opening of international markets. There is a second reason why institutional developments in the WTO might produce greater buy-in from India. Compare the process and content of trade negotiations in the WTO today, and the contrast with the GATT (and the early years of the WTO for that matter) is striking. In response to the critique presented by the India-led Like-Minded Group (LMG) as well as other developing countries and non-governmental organisations (NGOs), the WTO has reformed key decision-making processes. The most important of these changes is the transformation of invitation-only and secretive Green Room meetings of the GATT into new small-group meetings, whose agendas are publicised and whose deliberations are reported back to the membership. They are explicitly consultative in purpose, and oriented towards consensus-building rather than decisionmaking. Deliberate attempts have been made under Director General Pascal Lamy’s guard, to ensure that these small-group meetings are more representative than ever before. In the July Package negotiations of 2008, for example, delegations in the Green Room numbered between thirty and forty, and gave voice to even the smallest members by ensuring that at least some of their allies on different coalitions were included. Further, and again in contrast to the GATT and early years of the WTO, the WTO Secretariat has maintained considerably greater transparency, and details of the process can be easily accessed on the WTO’s website.2 Not only do India’s economic reforms present a success story, but India’s push for institutional reform in the WTO has generated tangible results.

India’s trade politics 109 While the above developments have benefited the marginalised majority of developing countries in the WTO, another set of measures has directly enhanced the influence of the rising powers, including India. The Old Quad has been radically reconstituted into several new permutations that include the ‘New Quad’, the Five Interested Parties, the G-6, and the G-7. In all these groupings, four parties appear as constants: the EU, the US, India and Brazil (and, since 2008, China). India has thus acquired a position of considerable importance at the High Table of trade negotiations. Nor is the improved inclusiveness of the core decision-making forums a form of mere tokenism: as the US, the EU, and the WTO Secretariat have learned through hard experience, India is not afraid to use its position of influence to hold up the negotiation process. And while India had exercised a similar willingness to ‘Just say No’ (Cohen 2001) in the GATT, too, the dramatic change today is that it can no longer be coerced into accepting a deal that it is not satisfied with. The recognition by all its negotiating partners that a Doha deal will be impossible unless India is on board effectively imparts the country (and also the other rising powers) with newfound veto power. It would be reasonable to expect that the logic of its successful programme of economic liberalisation (which is highly compatible with the WTO’s goal of freer trade), and institutional reform of the WTO, that includes India into the heart of its decision-making, should produce increased regime conformity from India. One might even go so far as to suppose that India’s increased stakes in the system would make it willing to offer leadership and at least share the responsibility of providing global public goods. This however is not the case. Vital continuities persist in India’s trade diplomacy, despite changes in its trade policy and changes within the multilateral trade institution. Below, I illustrate these continuities along the three indicators of negotiation strategy, coalitions and a developmentalist agenda. First, India’s negotiation strategy in the WTO continues to be largely distributive. Its trademark, ‘Just say No’ diplomacy persists. The closest that the Doha negotiations came to an agreement was in July 2008; the negotiations broke down in good measure due to Indian recalcitrance, and India’s chief negotiator had the dubious distinction of being branded ‘Dr No’ in reports covering the negotiations (Beattie 2008). While the next section provides a brief discussion of the specific aspects of India’s negotiation behaviour in relation to agriculture and NAMA, it is worth noting at this point the persistent belligerence in the speeches of the Indian Trade Minister. For example, at the start of the July 2008 meeting, Minister Kamal Nath’s opening statement showed little sign of a willingness to compromise: ‘The position of developed counties is utterly self-righteous . . . This self-righteousness will not do. If it means no deal, so be it . . . I am obviously not here to hand around freebies without getting something in return’ (Nath 2008). It is worth mentioning, at this point, that though India has always expressed commitment to multilateralism, its participation in regional trade arrangements places at least a small question mark on how real this commitment is. Simply in

110

A. Narlikar

terms of its willingness to sign PTAs, the WTO’s regionalism database reveals that India’s resort to regionalism is high (higher than Brazil or China or even the US, though lower than the EU). These findings are summarised in Table 5.1 below. Of course, not all these PTA’s are deep integration agreements. Nor is India guilty of the all-too-familiar tactic employed by the US and the EU to stomp out of the multilateral room into the regional when the going gets tough. But insofar as the pursuit of regional routes can serve as a signal of the availability of attractive BATNAs (Best Alternative to Negotiated Agreement), India’s participation in PTAs is another indicator of the potential resort to even more distributive strategies. Second, India continues to lead coalitions that comprise developing countries, as illustrated in the table below. Its involvement in coalitions involving developed countries is limited (an example of this is W52 Sponsors on Geographical Indications) and it does not invest comparable levels of leadership in these coalitions. Its adherence to coalitions involving other developing countries resembles its coalition behaviour in the past. Importantly, however, while India’s general strategy towards coalition formation resembles its coalition strategies in the days of the GATT, the coalitions of the Doha Development Agenda (DDA) are different from former India-led coalitions. The most notable difference is that these coalitions are ‘strong coalitions’ i.e. coalitions that are able to adhere to their collective positions and do not collapse in the endgame. The G-20 and G-33 on agriculture stand out in this regard (Narlikar and Tussie 2004, Narlikar 2012). Both coalitions were formed at the Cancún Ministerial of 2003. Despite some of their contradictory aims (the G-20 comprises a mix of developing countries with offensive and defensive interests, led by Brazil and India, seeking agricultural liberalization in the West; the G-33 comprises developing countries mainly with a defensive interest – and therefore includes India but not Brazil – seeking to protect the agricultural markets of developing countries), both have proven to be remarkably resilient, and resistant to defection and collapse. Their strength derives partly from the enhanced influence of their leaders, particularly India and Brazil, as well as the greater ability and willingness by India and Brazil to bear the costs of sustaining coalition unity through information-sharing, and by allowing considerable free-riding for the smaller members. These strong coalitions, in turn, greatly enhance India’s bargaining power, allowing it to claim that its demands are backed by a large number of developing countries. However, these strong coalitions come at a price: they find it very difficult to make Table 5.1 Participation in PTAs

PTAs in force Early Notifications Source: www.wto.org.

Brazil

China

India

US

EU

5 0

11 4

16 4

13 1

34 3

India’s trade politics 111 concessions for two reasons: (1) coalition allies may see any attempts by the leaders to initiate concessions as a sign of potential defection; and (2) the outside party (in this case, the EU and the US) can also interpret concessions as a sign of weakness, especially if it is aware of potential divisions within the coalition. India’s coalition behaviour adds up to the following: India continues to lead coalitions of developing countries, as was its practice in the GATT. The difference is that these coalitions of the DDA are strong coalitions. While they represent a considerable source of empowerment for smaller developing countries as well as their leaders such as Brazil and India, they also exacerbate the likelihood of deadlock. Its own strict distributive strategy, as well as the coalitions that it leads, perversely contribute to stalemate in an organisation that India has every interest in sustaining and reinforcing. The third distinctive characteristic of India’s GATT diplomacy is its commitment to developmentalism. Even today, despite the gains from economic liberalisation, this commitment persists. It is reflected in the coalitions that India leads, and it is further evidenced in the emphasis that it has repeatedly placed on provisions of LTFR for not just the least developed countries (LDCs) but also middle-income developing countries. This reinforces India’s reluctance to make concessions in the form of opening its own markets, even though it is highly articulate and firm in its demand for market opening in the developed world. The continuities in India’s use of the distributive strategy, its leadership of coalitions of developing countries (albeit coalitions that differ from the GATT coalitions in terms of their ability to resist pressures), and its developmentalist agenda are somewhat surprising given the far-reaching developments within its own economy and also its increased position and voice in the WTO. While the deadlocks of the DDA cannot be blamed on any one country alone, India’s trade diplomacy must take its fair share of the blame in certain stages of the negotiation. Persistent deadlocks not only delay the benefits of the round (from which India stands to gain, along with other members of the WTO) but they also jeopardise the credibility of the multilateral trading system (from which India has already gained a great deal, and on whose survival India’s growth trajectory depends). The persistence of India’s diplomatic idiosyncracies in the face of these costs needs explaining. I do this in Section 5.5, after a brief review of India’s interests in agriculture and NAMA, and how they translate into India’s negotiating positions.

5.4 Negotiating over agriculture and NAMA If we focus particularly on the negotiations over the key issue areas of agriculture and NAMA, we find that India’s trade diplomacy reflects a pattern broadly similar to that outlined in the previous section. In this section, I provide a brief overview of India’s interests in each area, and what variation and similarity in the negotiation positions these interests produce.

112

A. Narlikar

5.4.1 Agriculture The WTO Secretariat’s Report of the 2011 Trade Policy Review for India describes Indian agriculture as characterised by ‘low productivity and modest growth rates’ (WTO 2011e). Its contribution to GDP declined from 18.1 per cent in 2006–2007 to 16.6 per cent in 2009–2010. Its inefficiencies become evident when one takes into account the very large shares of the Indian population that it employs: 52 per cent of the population is engaged in an activity that contributes to just over 16 per cent of GDP. Small and marginal farm holdings contribute to half of India’s total agricultural output. Even though India is a net exporter in this sector, agriculture constituted only 10.6 per cent of India’s total merchandise exports in 2009–2010. Agriculture enjoys very high levels of protectionism in India, partly because of the goal of self-sufficiency in food that necessitates several complex policy measures. Average tariffs are at a relatively high 33.2 per cent. For many agricultural products, there is therefore much water in the tariffs, with applied tariffs ranging from 0–150 per cent and bound tariffs ranging from 10–300 per cent. The government can, and does, modify its tariffs substantially, without breaking any WTO rules. The variability of tariffs acts as a further impediment to trade. The US Ambassador, Michael Punke, was not far off the mark in his statement delivered at the time of the India’s Trade Policy Review in his remarks on agriculture: Where exceedingly high tariffs themselves do not make importation prohibitive, they foster an unpredictable trading environment inasmuch as India can change the applied tariff rates at a moment’s notice. Furthermore products often face obstacles in the form of SPS and TBT measures that appear to have no scientific or other justifiable basis under the WTO’s Agreements. . . . Given the increasing concerns with food price inflation, and the growing needs of India’s food processing industries, India’s agricultural trade policy continues to do a disservice to consumers and producers in India. (US Statement 2011) It would serve India well to make concessions in this declining sector, and make gains in the many other sectors in which it has a clear advantage. But this has not been the case in the many opportunities that the last decade has generated to reach an agreement. We return to the July 2008 negotiations as an illustrative landmark moment. There were several issues that had the potential to cause a breakdown in the talks, but the immediate cause for deadlock over the July 2008 Package was agriculture. Lamy had proposed a compromise between developing countries with a defensive interest in agriculture (including India and China) and developed countries seeking access to their markets, which would have allowed developing countries to resort to the Special Safeguard Mechanism (SSM) and even surpass pre-Doha tariff bindings by 15 per cent when their imports surged by 40 per cent over a three-year average. India, along with China, however, led a

India’s trade politics 113 large number of developing countries in demanding a lower trigger for the SSM to be invoked, and also a higher cap on the percentage points they would be allowed above current bound levels.3 By rejecting the deal primarily because of its disagreements with the US in particular on the SSM, India lost out an important part of the ‘insurance policy’ that was entailed in the US offer to bind its trade distorting subsidies to $14.5 billion. Admittedly this ceiling was higher than what the US spent on subsidies at the time. But in the previous eight out of ten years, the US had spent higher amounts than that. Having the binding in place would have ensured that the US would no longer be able to hike up spending over the $14.5 billion mark, even if prices declined. India’s refusal to make or broker concessions on the SSM meant that the world had lost this significant guarantee. Not only did India draw on the support of its G-33 allies in adopting this distributive strategy, but it also rejected the suggestions of its G-20 ally Brazil to accept the deal on offer, and further managed to ‘persuade’ Brazil to return to the collective position of resistance (Narlikar 2010). Several other meetings have followed. But they have not afforded the window of opportunity that was lost in 2008. Adverse conditions since then have included a US administration that is, at its best, unfriendly to multilateral trade liberalisation, and the global financial crisis that has heightened the temptation for governments to resort to protectionism worldwide. If India did not compromise then, it is unsurprising that it has been reluctant to compromise over agriculture in later iterations. 5.4.2 NAMA NAMA negotiations cover a multiplicity of sectors, and include manufacturing products, fuels and mining products, fish and fish products and forestry products (see Coskeran et al. 2012 for an overview). Trade in manufactures constituted the bulk of GATT negotiations, and hence average tariffs in NAMA are considerably lower than in agriculture. In India, for instance, while applied agriculture tariffs averaged to 33.2 per cent, they were considerably lower for manufactured products at 8.2 per cent average (WTO 2011e). Areas covered by NAMA do not include India’s most productive sectors (in contrast, for example, to services, which constitute 56 per cent of India’s GDP), but these are also not sectors in which India finds itself at its most defensive (in contrast, for example, to agriculture). The latest Trade Policy Review by the WTO describes growth in manufacturing in recent years to be ‘erratic’: The sector showed robust growth over 2006/07 and 2007/08, but was subsequently affected by the economic crisis, which led to a decline in foreign demand, particularly in areas including textiles and clothing. In 2009/10, there was a resurgence of growth in the sector, mainly triggered by stronger domestic demand, particularly for consumer durables, capital goods, and industrial inputs. (WTO 2011e: xiii)

114

A. Narlikar

Adversities caused by the recent economic crisis notwithstanding though, the report recognises the services and manufacturing sectors as the drivers for growth. NAMA therefore offers an interesting point of comparison against agriculture: if India is somewhat less on the defensive here, it is surely more likely to have an ‘offensive’ agenda that involves a greater willingness to exchange concessions? We see some willingness to make concessions by India in the earlier phases. One major concession was to accept a variation of the non-linear Swiss Formula approach, in 2005, as part of the ABI (Argentina, Brazil, India) proposal. Another was to accept that reaching binding coverage to 100 per cent was at least a ‘desirable’ goal of the round (Das 2006). But since then, moves by India have been largely defensive. At the Hong Kong Ministerial Conference in December 2005, India was actively involved in the creation of the NAMA-11 coalition, and remains an active member to this date. The central agenda of this coalition was to ensure that developing countries were allowed to make use of the flexibilities implied under LTFR, and resist the demands of drastic formula-based cuts. Additionally, the NAMA-11 resisted attempts by the developed countries to coerce developing countries into accepting NAMA modalities prior to an agreement on agriculture. The coalition was thereby instrumental in establishing the principle of balance between the level of ambition in NAMA and the level of ambition in agriculture (Ismail 2011). The July Package negotiations broke down over agriculture, without fully putting the offers available in NAMA to the test. But prior to the July talks, India’s chief trade negotiator was scathing in his assessment of the text offered by the Chair of NAMA negotiations: ‘While some revisions have to be made in the agri text, the NAMA text has to be completely re-done’ (Economic Times 2008).

5.5 Explaining persistent recalcitrance4 There are several reasons why neither the changes in its economic policies at home nor the significant institutional reforms within the WTO have managed to produce the expected regime-conformity from India. I offer two sets of explanations below, and also consider a third alternative explanation that is less persuasive in explaining the Indian case. 5.5.1 Domestic interests in a developing country The first explanation is domestic, and lies in the skewed nature of India’s economic growth. It has found frequent reference in Minister Kamal Nath’s speeches: For us, agriculture involves the livelihoods of the poorest farmers who number in the hundreds of millions. We cannot have a development Round without an outcome which provides full comfort to livelihood and food

India’s trade politics 115 security concerns in developing countries . . . The poor of the world will not forgive us if we compromise on these concerns. These concerns are too vital to be the subject of trade-offs. (Nath 2008) In fact, the share of agriculture to India’s GDP is small and declining (from 23 per cent in 2000–2001, to 18 per cent in 2005–2006 to 16.6 per cent in 2009–2010) (WTO 2007a, 2011e). A Doha deal, even after requiring concessions on agriculture, would through other issue areas (and especially services) work to India’s overall advantage. But any indication of making concessions on agriculture – which employs nearly 60 per cent of India’s population – would be a hard sell for any government. Corruption and indebtedness are high in the rural sector, and farmers constitute the great majority of India’s rural poor. India’s ability to make concessions in this area is reduced considerably because of the poor safety nets and welfare mechanisms available to farmers that would help them tide over any difficult transitions. The manufacturing sector has its own share of problems. In comparison to India’s booming services sector, manufacturing comprises a smaller share of its GDP (16 per cent in 2005–2006), and is ridden with infrastructural weaknesses. The World Bank’s Ease of Doing Business Index ranks India as 134th in a list of 183 countries. On certain indicators, India performs particularly badly, e.g. 182nd on enforcing contracts, 177th on dealing with construction permits, and 165th on starting a business.5 These issues affect general productivity of course, and also act as a deterrent against investors. The weaknesses of India’s manufacturing sector also mean that farmers forced out of agriculture, due to any reform instituted under the provisions of the WTO, would have few alternative avenues of employment to turn to. Resistance to concessions in NAMA and agriculture becomes clearer in this light: even though such concessions would be of direct benefit to the sectors themselves and would also secure gains in other vital issue areas such as services, the short-term costs of transition act against such interest maximisation. This sorry state of affairs in agriculture and manufacturing means that until and unless the government is better able to institute welfare policies to combat poverty and indebtedness, which would involve radical reform of its domestic institutions, India will find it extremely difficult to show any flexibility on agriculture. These constraints also raise some serious questions about India’s future as a responsible Great Power. The extreme income inequalities, lack of infrastructure, high levels of corruption and highly-skewed patterns of development make it a qualitatively different aspiring power to deal with (say in comparison to the rise of Japan and Germany in the 1980s, or even China today). While the domestic problems that India faces on agriculture help explain why it dug its heels in on the issue of the SSM, they do not tell us the full story. Even more than the domestic politics of poverty, the second and third explanations show us why India’s behaviour remains unreformed in a reforming WTO: its ideational proclivity and unique world-view, and the source of its power within the WTO thus far.

116

A. Narlikar

5.5.2 The role of ideas in trade negotiations In India, even today, suspicion of liberalisation at the domestic level remains strong. Its negotiation positions of resistance abroad have been accompanied by a cautious and gradual policy of liberalisation at home (see Kohli 2004; Athreye 2004; and Jenkins 1999, on Indian liberalisation). The Congress party in power today under Dr Manmohan Singh represents perhaps the most liberal face of India’s economic power. However, even under this government, we do not see India giving in easily to pressures from the North. In fact, in good measure, the Indian government’s caution in trade negotiations transcends party politics (and hence, governments ranging from Right to Left across the ideational spectrum have adopted a broadly similar stance in the GATT and the WTO). Rather, India’s negotiation position on trade is a reflection of the suspicions of its populace. Deriving partly from its post-colonial development, which was based on models of import-substituted industrialisation and an emphasis on selfsufficiency, there remains ‘a very strong colonial mindset’ in India, where the WTO is seen as an ‘instrument of neo-colonialism’. 6 In a country where ‘the spirit of liberalization has simply not seeped in’,7 gains won in the WTO in favour of certain export interests enjoy little popular support. Popular Indian self-perceptions remain closely bound with almost Nehruvian post-colonial ideals of self-sufficiency and resistance to neo-imperialism.8 In one of our earlier interviews, an Indian official presented us with an important insight along similar lines: ‘It is easier for our minister to come back home empty-handed as a wounded hero, rather than to come back with something after having had to make a compromise.’9 With such ideational leanings at home, India’s resistance to reform its behaviour in the WTO becomes less surprising. Add to this ideational variable the role of India’s negotiating culture. Experimental comparative studies show that Indians make particularly competitive negotiators: they are reluctant to compromise or cooperate, willing to reject offers from counterparts, and ready to engage in prolonged negotiations (Druckman et al. 1976). Stephen Cohen has described Indian negotiators as relishing in ‘Getting to No’ (Cohen 2001). While the roots of India’s negotiating culture lie beyond the scope of this paper (Narlikar and Narlikar 2013), suffice it to note that the explosive cocktail of ideas (such as attachment to self-sufficiency) and negotiating culture (e.g. of ‘Just say No’) easily make for regime-challenging behaviour. 5.5.3 What role of domestic institutions and societal interests? In Section 5.5.1, we discussed the importance of certain domestic interests in determining India’s trade policy and negotiation, but to what extent do domestic institutions and interest groups serve as conduits for this interest articulation? In this sub-section, we find that at least direct mechanisms of influence are somewhat less effective than standard theories of ‘intermestic’ political economy would predict.

India’s trade politics 117 Even though the Ministry of Commerce and Industry (MOCI) was responsible for developing and executing trade policy and negotiations, India’s traditional negotiating skill in trade matters was Geneva-based rather than founded on a close connection with expertise in the capital. Julius Sen, writing in 2003 for instance, noted the following: In the absence of a workable or particularly useful negotiating mandate, the ambassadors were able to evolve strategies on the spot by drawing upon their sense of the situation, the experience, and the advice of their negotiating colleagues, many of whom were in the same position. (Sen 2003) Effectively, this translated into a relatively insular trade policy and trade negotiation process, managed principally by diplomats and technical experts based in Geneva. Admittedly, some important changes have taken place since then. The Trade Policy Division in the MOCI began to acquire greater clout, and communication between the Indian Mission to the WTO in Geneva and the MOCI increased and continues to deepen. Other changes include an increased consultation between the MOCI and other cognate ministries, depending on the issue area (e.g. agriculture, tourism, public health when dealing with trade in agriculture, tourism services and TRIPs respectively), and also various state-level governments. The frequency of consultations with numerous stakeholders, including the private sector, NGOs, think tanks and other research institutions, has also increased. All these changes are, to some extent, an inevitable function of the expanding mandate of the WTO: TRIPs, for instance, necessitated changes in India’s domestic legislation, thereby impacting on a large proportion of the populace (in contrast to the limited reach of the tariff reduction effects of the GATT). The supply of opinions and views by affected stakeholders into the policy-making and negotiation process increases. Further, increasing issue complexity, deriving from both the number of issues under negotiation, as well as the controversies surrounding them, also creates a demand for inputs from informed stakeholders on the part of policy-makers and negotiators. Apex industry organisations, such as the Federation of Chambers of Commerce and Industry (FICCI) and Confederation of Indian Industry (CII), various sector-specific organiations, and prominent NGOs, such as CUTS-International, form a part of this expanding process of consultation and cooperation. They also enjoy greater representation: the Seattle Ministerial, for instance, was the first time that industry groups were included as part of the Indian delegation. Aseema Sinha (2007) has traced the development of domestic institutions in India in some detail, and has interestingly argued that the apparent democratisation of the trade policy process has in fact strengthened the hand of the state vis-à-vis societal interests. Just how the state continues to act as a gatekeeper to trade policy and trade negotiation, in spite of and perhaps even reinforced by the legitimacy acquired via recent institution-building, is illustrated below.

118

A. Narlikar

While the process of consultation with businesses and interest groups has increased, Julius Sen notes the following: Trade and business associations should be the key demandeurs in Indian trade policy formulation. To be sure they are widely consulted, but they are by no means the initiators or driving force for the generation of ideas or of negotiating options (though this situation is slowly changing). They are used as a sounding board for ideas and as a way to build a domestic consensus in favour of a position that the government has already taken, rather than as institutions capable of putting forward negotiating ideas. (Sen 2004: 2; also Narlikar and Hurrell 2007) Shishir Priyadarshi makes a similar point with reference to the consultations that take place between the MOCI and state governments on agriculture, and states, ‘. . . awareness of WTO-related issues is very superficial in the states, including amongst the state bureaucracy, and the positions taken by them are largely political rather than being based on the likely implications of the proposals’ (Priyadarshi 2006).10 Parliamentary oversight remains limited. Kapur and Mehta (2006) offer several useful examples that illustrate the minimal inputs of the Indian parliament in the international obligations that India takes on. In the case of trade negotiations, this translates into considerable leeway for the executive arm of the government via the MOCI. What of the multiple NGOs and social movements that flourish in the Indian democracy? Priyadarshi cites a former official of the Ministry of Agriculture stating the following about the role of NGOs: ‘The views expressed by the civil society representatives are always protectionist in nature. According to them, Indian agriculture is simply not trade-driven; their only objective is, therefore, to ensure that the livelihood of the subsistence farmers is protected’ (Priyadarshi 2006). Sen, while commending NGOs for the analytic work that they have undertaken on trade policy, offers us conclusions similar to Priyadarshi’s specific ones on agriculture: ‘Their basic mindset is still consistent with the development consensus. . . . Their inputs therefore tend to reinforce the defensive stance taken by the Indian trade negotiators instead of helping to shift their approach to a more participatory one’ (Sen 2004: 2). What we then see before us then, is greater involvement and activism by different stakeholders and institutions within the country in the trade policy and negotiation process. Interestingly, however, though the process of consultation with diverse stakeholders is flourishing and growing under multiple initiatives that the Ministry takes, it is the Ministry that still retains its agenda-setting power and chooses whom to consult with, when, and over what. There is little evidence of resistance to the positions that India has taken in the WTO within the country; nor is there much evidence of proactive agenda-setting by exporting interests. This is not to argue that the positions taken by India in trade negotiations are unrepresentative of its popular will; as the discussion on the role of ideas suggests, India’s nay-saying in fact enjoys strong popular support. But the

India’s trade politics 119 mechanisms whereby this popular opinion is conveyed are less straightforward than conventional accounts of domestic interest groups and institutions would suggest.

5.6 Conclusion India’s trade diplomacy continues to be characterised by a distributive bargaining strategy, leadership of Third World-ist coalitions and a developmentalist agenda. These features of India’s trade diplomacy have persisted in spite of changes in trade policy (as part of India’s economic reforms) and institutional reform within the WTO. The consistency of India’s negotiating behaviour transcends different periods of economic growth, differences in economic policy and different issue-areas. The continuities in India’s trade negotiations, in spite of other changes, suggest deep roots of this behaviour – deeper than standard accounts of domestic interests and institutions (which naturally change in tandem with economic policy) would suggest. As Section 5.5 has argued, conventional explanations of ‘intermestic’ political economy do not suffice: India’s trade policy-making and negotiations remain largely state-driven, even though the process has been expanded to include different stakeholders, including domestic institutions, business interests and civil society. Rather, it is only by investigating the role of ideas and India’s negotiating culture, and also the skewed patterns and peculiarities of its economic development, that we can begin to understand the longstanding consistencies in India’s trade behaviour in the face of multiple domestic and international changes. An interesting implication of this chapter’s findings is that, contrary to constructivist and liberal accounts, attempts at socialisation of a rising behaviour, and even changes in domestic configurations of interests, might not produce greater buy-in and regime conformity. Hence, for example, even though the Indian economy has flourished in the aggregate under a progressively liberal trade regime, as have many large and powerful groups within it who constitute the small and super-rich minority, support for trade liberalisation is weak and poorly articulated. And despite having reaped many benefits from its participation and growing clout in the WTO, and its still high stakes in the system, India’s nay-saying behaviour persists. And this behaviour is unlikely to change easily, until and unless India’s pattern of economic development changes (and also certain aspects of its negotiation and ideational culture). Finally, while this chapter has highlighted the pattern and sources of India’s resistance to regime-upholding behaviour in the WTO, one important question remains unanswered: are there any alternative public goods that India might be willing to contribute towards the provision of, even if it continues to be reluctant to contribute towards the public good of free trade? This chapter has highlighted, for instance, the key role that India plays in organising collective action in the WTO via coalitions, and thereby contributes to the provision of (at least) a club that is good for several developing country allies. Further, it remains to be seen

120

A. Narlikar

whether India’s commitment to certain developmentalist ideas and coalitions is simply a function of the current distribution of economic growth and poverty levels (implying that as per capita income rises, India’s commitment to developmentalism and Third World-ist coalitions will decline commensurately), or if the persistent pattern of resistance represents a more fundamental commitment to the prioritisation of development considerations over growth. Effectively, different variants of this theme translate into one central puzzle: what vision of global order does India bring to the international trading system; how far is this vision a function of India’s position as a rising power (rather than a Great Power); and how deeply entrenched are such visions? Herein lies a potentially exciting agenda for future research.

Notes 1 Evidence of this activism can be found at Stanford’s GATT Digital library, see http:// gatt.stanford.edu, under the search terms of ‘Minutes of the Informal Group of Developing Countries’. India was an active part of this group, and the GATT archive generates 611 minuted reports of the group. India was also involved in the collective submissions by ‘A group of Less Developed Countries’ through the 1960s, available on the Stanford GATT Archive. 2 See www.wto.org. 3 For the details of the proposals, see www.wto.org; also see Bridges Daily Update for daily reports on developments in the negotiations, available online at: www.ictsd.org. 4 This section draws on previous work by the author, particularly Narlikar 2010 and Narlikar 2010a. 5 Ease of Doing Business Index, available online at: www.doingbusiness.org/rankings, accessed on 19 July 2011. 6 Interview, member of Indian delegation, Geneva, May 2003. 7 Interview, head of a think tank, New Delhi, 11 April 2004. 8 This idea was strongly reinforced in the interviews that we conducted for this project in Delhi and Indore in March 2010. 9 Interview with a member of the Indian delegation, Geneva, 20 May 2003. 10 Agriculture, in fact, is one of the areas where one would expect to see a particularly high level of activism by different states, not least because the area of agriculture is a ‘state list’ subject.

6

China An open, confident and booming trading nation Ning Jun, Yao Lei and Wang Gefei

6.1 Introduction Since the start of the ‘reform and opening-up’ process in 1978, China has followed the trend of economic globalisation and, over the years, intensified its opening up to the world. China is now actively developing trade connections and economic cooperation with countries throughout the world. Since becoming a member of the World Trade Organization (WTO) in 2001, China has accelerated the integration of its economy into the global economy and strengthened its foreign trade. In China, foreign trade is one of the fastest growing and most active parts of the economy, and the country has also become one of the world’s largest trading nations. Foreign trade closely links developments in China and the world, and China’s modernisation has become a strong impetus for development throughout the world. This chapter summarises and analyses the evolution of China’s trade policies from the establishment of the ‘New China’ in 1949 to the current state of Chinese trade relations. Special attention is given to the evolution of institutions, interests and ideas in the last few decades. To illustrate how different actors interact in trade policy development, recent trends and current hot topics such as the renminbi (RMB) exchange rate and trade balance problems are discussed in the institutional context of the political system. This chapter also focuses on issues such as decision-making mechanisms and the characteristics of China’s trade policy formation. The chapter explores Chinese interests and concerns regarding the negotiations on agriculture and non-agricultural market access (NAMA) by analysing the decision-making mechanism used in the WTO Doha Round and other trade negotiations. Finally, the chapter combines recommendations from the Chinese Government Development Report and the Twelfth FiveYear Plan to illuminate the direction and priorities for future Chinese trade policies.

6.2 Trade policies: historical evolution The evolution of China’s trade policy started with the deregulation of a highly monopolised trade system – a process that is on-going (Li Wenfeng 2001). Many

122

N. Jun et al.

scholars have summarised the process of China’s trade policy evolution (Zhang Shuguang 1996; Yin Xiangshuo 1998; Lou Zhui 2010; Xu Heimei 2007; Sun Qiying 2007; Wei Jianping 2007; Wu Xianbin 2002). From a historical perspective, the development of China’s trade policy can be divided into four stages. 6.2.1 The first stage (1949–1978): state-controlled trade policy under a planned economy The Chinese People’s Political Consultative Conference of September 1949 established a programme of foreign trade control, which led China to implement a trade protection policy. It could be said that a closed and controlled economy composed the main historical foundation of the protective trade policies during this period. Specifically, the government replaced the market in the allocation of resources and adopted a basic administrative plan as its tool for managing foreign trade, using this plan and quantitative restrictions to intervene with imports and exports. The government did not participate in international trade organisations, and it hardly ever took part in bilateral trade cooperation. Until 1978, China followed the former Soviet Union’s trade management model, with foreign trade being highly controlled. Under this system, enterprises’ rights to engage in foreign trade were subject to approval by the government. This system created a few monopolised foreign trade companies, while limiting local, departmental and enterprise initiative to develop foreign trade. These enterprises did not pay attention to efficiency, resulting in inefficient operations and increased costs. The highly centralised foreign trade management system suited domestic interests in foreign trade policy at that time. It was inward-looking and protective, with distinctive product characteristics. Although the trade policy was highly protective, it was also relatively unified and standardised. 6.2.2 The second stage (1979–1991): protected trade policies with limited openness The Third Plenary Session of the Communist Party established a general policy of ‘reform and opening-up’ in December 1978. The aim was to achieve a transformation from the former product economy to a planned commodity economy, followed by a proposed Socialist market economy. During this period, China’s trade policy remained defined by protection, but the economy started to transform from a closed to an open one. The state’s foreign trade management style also underwent certain changes, focusing in particular on a policy of awarding exports and limiting imports. During this period, China established, through a series of reforms, a trade policy characterised by partial openness. These reforms included the delegation of powers and benefits as well as a transformation from centralised to decentralised management. A foreign trade contract system was implemented in which

China: open, confident and booming 123 responsibility for foreign trade rights was decentralised from central foreign trade corporations to a number of foreign trade port branches. In 1985, the State Council decided that Guangdong and Fujian provinces had the approval of the national authorities to manage companies with import and export business in their own provinces. This marked the first time since the founding of the People’s Republic of China that the central government transferred authority to approve foreign trade licenses from central to local authorities. The number of enterprises with foreign trade rights increased substantially. Although the export system was now open, the import regime remained highly protective. Overall, trade policy during this phase changed in the direction of trade liberalisation, which was a necessary change given China’s opening-up process. 6.2.3 The third stage (1992–2001): liberalised trade policy under a market economy Deng Xiaoping’s southern tour, in January 1992, opened a new chapter in China’s reform and opening-up process. In a famous speech, Deng proposed to transform the foreign trade system from a socialist market economic system towards a system built on international trade norms. Overall, this period was critical, as China now strived to join the WTO, which it eventually achieved. Important changes were made during this time, with the adoption of a freer and more open trade policy. During the process of the delegation of powers and benefits in China, the market-based macro-management system was gradually improved, various foreign trade management laws and regulations were formulated, and the RMB exchange rate system was reformed. However, because the model of the planned economy system still existed and continued to be followed for some time, the market-based macro-management system of foreign trade that China established looked better than it was. As late as 1994, China’s import approval system still retained some characteristics of the planned economy. 6.2.4 The fourth phase (2002–present): a managed, but more open free trade policy After 15 years of negotiations, China formally obtained membership of the WTO in November 2001, and successfully fulfilled its commitments. Its trade policy gradually complied with the WTO’s international rules and significantly liberalised foreign trade. China also optimised its export structure, and its accelerated foreign trade enterprise transformation became the main focal point of its foreign trade policy. Looking at the historical development of China’s foreign trade policy, we see that an export-oriented policy has existed since the start of the reform and opening-up process, and that this has been consistently regarded as the fundamental guideline for the government’s policy for foreign trade development. Since the outbreak of the financial crisis in 2007, the basic attitude of the Ministry of Commerce towards global trade has been to promote free trade and

124

N. Jun et al.

oppose protectionism. The Minister of Commerce, Chen Deming, recently presented China’s position through several articles and responses to journalists. During two sessions of the National People’s Congress and the Chinese People’s Political Consultative Conference, he responded to reporters that: solving the problem of declining global trade also needs the broad support of the international community, but first of all, we need to do a good job ourselves in order to make our own foreign trade policy supportive of free trade, aligning with the requirements of the Doha Round negotiations. The common concern of the global community is very important; we should jointly oppose trade protectionism. (China Business News, 20 March 2009) In summary, since the initiation of China’s reform and opening-up process in 1978, foreign trade has formed an important part of domestic state policy. The development of the trade system can be divided into historical stages: the 1980s were marked by transition and a turning around of China’s foreign trade, the 1990s were critical for China achieving rapid development in foreign trade and the beginning of the twenty-first century onwards, has heralded a new period in which China has successfully integrated into the world’s multilateral trading system and entered into the WTO. The early twenty-first century is also the period in which China’s foreign trade achieved its most rapid growth and development (Xia Yingzhu 2009).

6.3 China’s international trade: growth and diversification China’s transformation from a small to a large trade nation is evident from trade statistics. In 1978, China’s total import and export of goods was only 20.6 billion US dollars, ranking it thirty-second in the world. Its share of total world trade was less than 1 per cent. The total value of imports and exports in 2010 reached 2,972 billion US dollars, up by 34.7 per cent over the previous year. Of this, the value of exported goods was 1,577 billion US dollars, an increase of 31.3 per cent, and the value of imported goods was 1,394 billion US dollars, up by 38.7 per cent. The total proportions of China’s total exports and imports to world merchandise exports and imports have increased to 10.4 per cent and 9.1 per cent, respectively, with China becoming the biggest exporter of goods in the world and the second largest importer in two consecutive years. Figure 6.1 details the importing and exporting of goods during the Eleventh Five-Year Plan period. In the early years after the establishment of the ‘New China’ in 1949, more than 80 per cent of China’s exports were primary products. Until the 1970s, primary products still accounted for 50 per cent of China’s total exports. After the reform and opening-up process was initiated in 1978, China’s productivity increased rapidly, and the structure for exports was continuously upgraded and improved by transforming it from primary products to manufactured goods and

China: open, confident and booming 125 35,000 30,000

Export Import

100 million US$

25,000 15,779 20,000

14,307 12,016

12,205

15,000 9,680 10,000 5,000 0

7,915

9,561

2006

2007

13,948

11,326

10,059

2008 Year

2009

2010

Figure 6.1 China’s import and export of goods during the Eleventh Five-Year Plan period (source: National Bureau of Statistics: www.stats.gov.cn/english/newsandcomingevents/t20110228_402705764.htm). Note The figure was completed by the authors and the data in the figure are from the National Bureau of Statistics and carried out by authors.

from light industry, textiles and other labour-intensive products to mechanical, electrical, high-tech and other capital- and technology-intensive products. Industrial products’ share of total exports gradually reached more than 90 per cent, thus reversing the former pattern of exporting primary products in exchange for importing industrial products. In terms of exports, manufactured goods rose from the previous 93.6 per cent (at the end of the tenth five-year plan period) to 94.8 per cent in 2010. The export share of electro-mechanical and high-tech products in terms of total exports rose from 56 and 28.6 per cent, respectively (at the end of the Tenth Five-Year Plan period in 2005), to 59.2 per cent and 31.2 per cent. Regarding imports, imports of advanced technology, equipment and key components have grown continuously, and the scale of imports of bulk resources and energy products has continued to expand. By 2010, the imports of machinery and electrical products, as well as high-tech products, increased by 1.9 and 2.1 times respectively, higher than what was expected by the end of the Twelfth Five-Year Plan period ending in 2015. Prior to 1978, China’s foreign trade pattern was relatively simple. China mainly traded through government agreements signed with the former Soviet Union, Eastern Europe and other socialist countries. Trade was conducted mostly through barters. In some instances, the internationally accepted method of

126

N. Jun et al.

cash-liquidation trade was adopted for both import and export trade with a few Western and some developing countries. After initiating the reform and openingup process, China developed new trade relations with Western and Third World countries. A vigorous general trade policy was adopted, based on flexible trade patterns, such as processing, sample processing, assembly, compensation trade and processing with imported materials. In the import and export of technology, technology licensing, consulting and technical services, cooperative production and other methods were used. Considering the variety of new trade methods, the development of processing trade became especially prominent and is now China’s most important trade method, playing an important role in promoting the country’s foreign trade and economic development. During the Eleventh Five-Year Plan period – and guided by the idea of adjusting its foreign trade structure and transforming and upgrading its strengths – China achieved positive changes in its import and export trade pattern. The average annual growth rate for imports and exports in general has reached 20.1 per cent in the past five years, significantly exceeding the processing trade, which has grown by 10.9 per cent per year. After the reform and opening-up process started, China pursued a market diversification strategy, fully promoting the all-round development of foreign trade. At present, China has more than 220 trading partners and a diversified trade pattern. By 2008, China’s top 10 trading partners were (in order of size) the European Union, the United States, Japan, the Association of Southeast Asian Nations (ASEAN), Hong Kong, South Korea, Taiwan, Germany, Australia and Russia. The bilateral trade volume of all of 10 countries and regions accounted for 78.4 per cent of China’s total import and export volume. During the eleventh five-year plan period, the European Union, the United States and Japan remained China’s top three trading partners, although China decreased its dependence on all three markets. In 2010, the three major trading partners’ bilateral trade volume accounted for 39.1 per cent of China’s total imports and exports, a decrease of 4 percentage points compared with 43.1 per cent in 2005. China has made great progress in opening up to ASEAN, Russia, India, Brazil and other emerging markets, and ASEAN has become China’s fourth largest trading partner. In 2010, China’s bilateral trade volume with ASEAN amounted to 292 billion US dollars, which is 2.2 times higher than in 2005. ASEAN’s share of the total imports and exports increased during this period from 9.2 per cent to 9.8 per cent. Furthermore, China achieved quite rapid growth in trade with other partners as well. The imports and exports to Latin America and Africa increased from 3.5 per cent and 2.8 per cent respectively, in 2005, to 6.2 per cent and 4.3 per cent respectively, in 2010.

6.4 The organisational structure of the political system The introductory chapter of this book emphasises institutions, ideas, interests and actors and how they interrelate as important analytical dimensions in the study of trade policy. In China, the People’s Congress System is an essential

China: open, confident and booming 127 characteristic of the political system. The National People’s Congress is China’s national authority; its executive organ is the Central People’s Government or State Council. The core of China’s political system is the leadership of the Communist Party of China. The Chinese government’s policies and resolutions are all formed in relation to the party programme, which should be highly consistent with the policies of the Central Financial and Economic Leading Group. The implementation and promulgation of the policies are conducted by the Ministries of the State Council administration after the approval of the Financial and Economic Leading Group of the Central Committee of the Communist Party of China. China’s rapid economic development and the subsequent achievements in the growth of trade have benefited from the government’s efficient execution of new policies. The opportunity of the WTO accession was used to accelerate the reform of China’s administrative management system and provided a solid platform for the rapid development of the economy. One of the main drafters of the State Council reform programme in 2003, Zhang Zhuoyuan, a professor of the China Academy of Social Sciences, commented, ‘China’s WTO commitments accelerated the self-generated internal desire for reform’ (Economic Information Daily, 18 December 2006). Since the founding of the New China in 1949, the government has streamlined its personnel and organisation many times in order to establish and improve government and party organs with reasonable structures, capable personnel, flexibility and high efficiency. China has conducted six large-scale institutional reforms of government since the start of the opening and reform era in 1978. These reforms took place in 1982, 1988, 1993, 1998, 2003 and 2008. Figure 6.2 provides a schematic diagram of the Chinese government’s institutional structure. 6.4.1 Trade policies: decision-making factors Trade policy making includes the government’s choices with regard to the method for, and degree of, free versus protected trade. Trade policy-making processes involve a variety of institutions, actors and interests. Central and local government, various sector departments, enterprises, interest groups and organisations (such as trade unions and chambers of commerce), and individuals participate at the domestic level, whereas at the international level, foreign governments, foreign interest groups and international organisations are involved. Three important decision-making factors have an impact on China’s trade policy formation. The first factor is the national government. The government’s goals and national interests have a supreme position and play the most important role in China’s foreign trade policy-making process. At present, China’s fundamental national interest is to maintain sustainable economic development and to improve people’s standards of living. Foreign trade should be seen from this perspective. The main reason for China’s participation in the international division of labour and trade is to develop the national economy and improve the Chinese

128

N. Jun et al.

Office of the State Council

Component departments (27)

Directly established special body (1) Directly established bodies (16)

National bureaus under Ministries Management (16)

Administrative bodies (4) Directly established national bodies (14)

Figure 6.2 A schematic diagram of the Chinese government’s institutional structure. Notes 1 The organisation chart is partly based on the Chinese agencies authorised network and was compiled by the authors (www.scopsr.gov.cn/zlzx/jggk/gwyjg/index.html). 2 Currently, China’s highest authority is the State Council of the People’s Republic of China, that is to say, the Central People’s Government. The General Office of the State Council under the Prime Minister is to be responsible for the specific matters, which consists of 27 component departments, 16 National Bureaus under the ministers’ management, 16 directly established bodies, 4 administrative bodies, 14 directly established national bodies, and 1 directly established special body as seen in this figure.

people’s welfare. However, China must adopt a sustainable development model of foreign trade that can be integrated into its economic development strategy (Lan Yisheng 2010). The basic decision-making criteria that China’s government uses to maintain stability and develop its economy and trade are controls and adjustments of the trade structure and trade volumes, appropriate controls of trade flows, maintenance of balanced international payments and foreign exchange controls of financial projects. Indeed, all these policy-making principles have brought about a certain loss in efficiency, competitiveness and welfare. China has been slowly integrated into the international trading system, and gradually, the external challenges have increased. Deepening the reform process of trade liberalisation in the future has become a very important issue that China’s high-level politicians need to consider. The traditional concept of China’s foreign trade policy also includes the consideration of non-economic objectives and social goals that are reflected in the prohibition of imports of products that might be hazardous to health, environment or national culture. The second decision-making factor involves domestic interests. For China, domestic interests (that affect its trade positions) are mainly expressed by

China: open, confident and booming 129 governmental bodies (i.e. the central administration and local governments) and non-governmental organisations, such as all types of domestic enterprises or companies, foreign-funded enterprises in China, industry associations and other interest groups. Among the administrative departments of the central government, more than a dozen are responsible for the formulation and implementation of trade policy (including the Ministry of Commerce, the National Development and Reform Commission, the Ministry of Finance, the State Administration of Taxation and the General Administration of Customs, the General Administration of Quality Supervision, Inspection and Quarantine, the State Administration of Foreign Exchange, and other functional departments or bureaus specialising in economics). These administrative departments have been given the right to formulate trade policies in their area of responsibility, but many policy-relevant tasks, such as policy research, information collection and programme formation, are fulfilled through cooperation among various administrative departments. The trade policy-making authority belongs to the central administration, but decision-making and implementation processes are affected by local government. With the rapid development of the economy, local governments have become increasingly aware of the role that they may play in relation to both central economic policy and the local economy. The willingness of local governments to interfere and affect the central economic decision-making processes has become increasingly stronger. Other actors interested in trade policy are primarily domestic enterprises, foreign-funded enterprises, industry associations, consumer associations and other interest groups. Of these, the domestic enterprises have the most privileged position and influence over policy making. The interests of, and demands from, domestic enterprises are expressed through trade associations and chambers of commerce. Demands may also be forwarded in more concealed and dispersed ways to obtain support from the government. Foreign-funded enterprises have always been an interest group with a special status in China. Both the central government and local governments work to attract foreign capital, and gradually, foreign-funded enterprises have increased their own political and economic influence. Consumers have little impact on trade policy decisions in the real world, and the same is true of consumer associations. The third factor influencing trade policy formation is international interests. China must face the international trading system and consult and cooperate efficiently with other countries. China’s trade policy is affected by external interests within three areas: its participation in WTO negotiations within the framework of the multilateral trading system; its arrangements in free trade areas, and trade relations between China and other major trading nations. In July 1986, when China achieved initial success in its reform and openingup process, it resumed its GATT application and negotiations. In this sense, its opening-up process has always had the multilateral trading system as its reference (Tan Zuyi 2008). The course of China’s resumption of GATT, and the subsequent efforts to enter the WTO, are important external driving forces for

130

N. Jun et al.

China’s trade management system. The process of reforming China’s trade system also involves aligning the country’s trade policies with international standards. Progress on the Doha Round negotiations has been quite slow in recent years, and major countries have shifted their trade policy focus towards the development of free trade agreements. Following this global trend, China has actively taken part in developing and promoting free trade areas. It has mainly participated in three types of regional economic cooperation: forum-based regional economic cooperation organisations, such as APEC and ASEM; regional economic cooperation organisations with specific mechanisms, such as the 10 + 3 regional economic cooperation and the Shanghai Cooperation Organization; and regional economic cooperation organisations with preferential and substantive arrangements, such as the Bangkok Agreement, the China-ASEAN Free Trade Area, and the China-Chile Free Trade Area. Prior to June 2008, China had discussed regional trade arrangements in 12 areas, including 29 countries in Asia, Oceania, Latin America, Europe and Africa (The Research Institute, Ministry of Commerce 2008); established a total of 163 bilateral trade and economic cooperation mechanisms; signed 129 bilateral investment agreements; and established high-level economic dialogue with countries such as the United States, the EU, Japan, Britain and Russia. Bilateral trade agreements are a powerful strategic tool enabling China to adjust its strategy and balance its interests. The United States, the European Union, Japan, Australia and other developed countries have the strongest impact on China’s foreign trade and bilateral relations. The Sino-US economic and trade relationship is particularly critical and serves as an important external factor affecting China’s trade policy. The US government and political parties’ China strategy, the economic strategy of transnational corporations and the political preferences of social organisations have already infiltrated the policy decisionmaking process, deeply affecting the speed and manner of China’s trade liberalisation (Sheng Bin 2002). 6.4.2 Decision-making characteristics From a political economy perspective, the decision-making processes related to China’s trade policy can be said to contain four characteristics. First, the decision-making process is government-led. China’s trade policy making is driven by the party, meaning that it is a government-led decisionmaking process, with close links between the party and the government. The Central Politburo is the party’s highest decision-making body. As the joint institution of the Politburo and the State Council, the Financial and Economic Leading Group of the Communist Party of the China Central Committee is the highest decision-making organ. The Financial Work Leading Group of the CPC Central Committee, a coordinating and economic work institution under the leadership of the Political Bureau of the CPC Central Committee, is a core leadership and decision-making

China: open, confident and booming 131 body in China’s economy. The members of the Financial Work Leading Group are from the Political Bureau of the CPC Central Committee, the State Council and the comprehensive economic management institutions. The current head is Premier Wen Jiabao. Behind China’s top decision-making is a key think tank that provides policy advice. This key think tank includes the Chinese Academy of Social Sciences, the Development Research Centre of the State Council, the Central Party School, the National School of Administration, and the Chinese Academy of Sciences. These organisations play an important role in the government decision-making process. Thus, the vast majority of these members belong to semi-official bodies under the different government departments. The second characteristic is multiple stakeholder coordination. The administrative bodies managing the Chinese government’s foreign trade are quite complex. There is no single administrative department responsible for the formulation of a unified trade policy. The process of trade policy formation involves several administrative departments, separately managed but coordinating implementation. Trade policy evolves from diverse actors and interests, and policymakers face pressures from different administrative departments with different perspectives and responsibilities. Because work performance evaluations and job promotion considerations are conducted internally, one cannot avoid conflicts over the goals and implementation of measures among these departments. Administrative departments at different levels have different political statuses and varying bargaining power. The taxes and profits that are handed out and the industries’ economic scale and employment are all important bargaining chips. Due to the differences in interests and orientations among the various administrative departments and actors in the decision-making process, policy coordination is a key issue. However, the absence of institutions coordinating industry and trade policy is a core issue in China. For example, the Ministry of Commerce takes part in the trade policy-making process, but it is mainly concerned with industrial damage investigations and trade remedies policy. As industrial policies are made by the corresponding departments or agencies, a policy issued jointly by the various ministries and government agencies should be used to coordinate policies, but there is no mechanism for control or coordination between the various ministries. When ministries have diverging interests, it is difficult to reach compromises and agreements. As a result, the effectiveness of the policies is often greatly reduced (Tian Yuhong 2009). The third characteristic is the limited role of non-administrative interest groups. The central administration and local government’s direct influence on trade policy decision-making is very obvious, whilst the influence from the nonadministrative interest groups is scattered, indirect and marginal. This is not only expressed in the limited scope of non-governmental organisations, but also in non-governmental organisations’ deficient role in policy formulation and adjustment as well as in the coordination between government and enterprises. Although some interest groups such as enterprises and foreign investors have a certain amount of influence, they have to express their interests with discretion, requesting support from the government through legal channels and with

132

N. Jun et al.

reasonable grounds; their requests need to be consistent with the overall goals of the Party and the government, and not threatening to national stability. Consequently, the function of non-governmental organisations is marginal. The fourth characteristic is the increased constraining force of international negotiations. China is integrating further into the world economy, and thus facing the external constraints of international economic relations. Obviously, the multilateral framework of international trade and bilateral trade relations has a strong impact on its trade policy system. Some scholars have argued the following: Restoration of China as a treaty power in GATT and striving to become a founding member of WTO is a big challenge that constitutes a profound impact on China’s economic life. China’s foreign trade policy making and corresponding institutional changes are already under GATT and WTO’s institutional constraints. Therefore, whether evaluating the present state of China’s trade policy, or the direction of its design, one cannot depart from WTO as a frame of reference. (Gu Kejian 1995) Since its accession to the WTO, China has fulfilled its WTO commitments by establishing and improving the trade remedy system. It has also participated actively in the Doha Round of multilateral trade negotiations to promote trade liberalisation and fair trade and to create favourable conditions for trade policy development (Luo Yongguang 2009). It is evident from policy statements that China has become more aware of the possibilities of building free trade areas. The report from the Fifteenth CPC National Congress Party noted the need to ‘[a]ctively participate in the regional economic cooperation and global multilateral trading system’. The Sixteenth Party report noted the need to ‘[a]ctively participate in regional economic exchanges and cooperation’. The Seventeenth Party report clearly noted the aim to ‘[i]mplement Free Trade Area strategy and enhance bilateral and multilateral trade and economic cooperation’. Whilst China was constrained in this process, it also needed to make full use of the mechanism of international trade negotiations, which could positively affect the country’s trade policy formulation. 6.4.3 Central trade topics: the renminbi (RMB) exchange rate The US economy has resumed growth after the subprime mortgage crisis, and most countries of the world have survived the most difficult period of this crisis. During such a critical transition period, the renewed debate concerning the RMB exchange rate between China and the US became a hot topic on the world’s economic stage (Hu Mei 2010). In fact, the RMB exchange rate issue has always been the focus of Sino-US trade disputes, but previous disputes about the RMB seem to have had a component of ‘political theatre’. Consensus among members of Congress has been difficult to achieve, and the latest debates about the RMB

China: open, confident and booming 133 exchange rate indicate that the US now regards RMB appreciation as one of its main global economic and strategic goals (Li Yong 2010). The initiator of the RMB appreciation theory is the economist Paul Krugman, a Nobel Laureate in economics. He proposed that if China stops manipulating the RMB exchange rate and reduces the trade surplus, the global economy will grow by 1.5 percentage points. In his view, China should be considered as a currency manipulator, and he proposes levying a 25 per cent import surtax, forcing a sharp appreciation of the RMB. Krugman’s views represent mainstream theory concerning the appreciation of RMB throughout the US and the world. American politicians regard frequent requests for the appreciation of RMB as a powerful weapon. Seen from a Chinese point of view, the real American interests for demanding RMB appreciation relate to trade surplus, employment and other economic aspects. Most domestic and international scholars have reached the consensus that the RMB exchange rate is not caused by China’s trade surplus; the root cause is the US trade deficit, related to its own structural imbalance and its choice of industrial strategy. Therefore, the US requirements for RMB appreciation are mainly political demands, not economic considerations (Meng Qi 2009; Huang Feixue 2009). Regarding the RMB exchange rate, China has actively carried out exchange rate reforms and is now gradually promoting market orientation and internationalisation of its currency. The RMB exchange rate reform has been ongoing since 2005. It has proven to be a very complex process, evolving from a passive and less effective response to an active, mature and increasingly skilful response. Facing US and international public opinion about RMB appreciation, the characteristics of China’s exchange rate reform are a clear initiative to adjust and reveal a distinct attitude to change. President Hu Jintao remarked that the RMB reform will not submit to external pressure, and Premier Wen Jiabao remarked that the RMB is not undervalued. Such comments set the tone for the status of the RMB. On 19 June 2010, the spokesman of China’s central bank issued an opinion on the exchange rate, stating that the RMB exchange forming mechanism is based on good intentions and not on a biased understanding of the RMB appreciation signal. The RMB exchange rate issue has been complicated by factors including a confusing change in direction of public opinion, requiring China to use its judgement and position to manage its risk and control the rhythm of policy implementation. China needs comprehensive forms of assessment and the introduction of exchange rate models and combinations to achieve a real basket of currencies in order to reach an innovative and effective exchange rate system (Tan Yaling 2010). 6.4.4 Trade balance After the global financial crisis caused by the subprime crisis, several countries started to examine issues such as trade growth and trade balance. China’s

134

N. Jun et al.

economy has a certain degree of internal and external imbalance, which specifically manifests itself in a foreign trade surplus. China’s trade surplus has risen sharply since 2004: from 42 billion US dollars in 2004, to 177.5 billion US dollars in 2006 and a peak of 295.4 billion US dollars in 2008. China achieved 196 billion US dollars in 2009, despite the impact of the international financial crisis (Zhang Guoqing 2010). The China-US trade surplus is most prominent. Although a certain degree of economic imbalance exists in China, it is less serious than that portrayed by some scholars at home and abroad. Looking at economic imbalances from an international perspective, China’s trade surplus issue is not prominent. Whether considering the total surplus, the proportion of surplus to the total trade volume or the surplus compared to GDP; or comparing with the United States, Germany and Japan, which used to have long-term trade surpluses, the level of China’s trade surplus is not serious, and the trade imbalance is at a middle to low level (Wang Zixian 2010). The Sino-US trade imbalance is exaggerated. According to Chinese views, the US trade statistics exaggerate the Sino-US trade imbalance in terms of calibre, range, country of origin, transit trade and value-adding method. Basically, the scale of Sino-US economics and trade is fairly balanced. In regards to trade imbalance, it should be noted that such imbalance is brought about not by China’s RMB exchange rate factors, but by multinational – including American – companies’ pursuit of commercial interests in China under economic globalisation. It is also brought about by the US wanting to maintain the status of the US dollar as the world’s monetary base for the purpose of seeking global hegemony. Finally, the strong complementariness of the Sino-US economic structure also gives rise to an imbalanced relationship (Xia Xianliang 2010). Concerning the trade balance issue, China has proposed implementation of a trade balance strategy, which means achieving trade growth based on maintenance of a basic balance of foreign trade. The primary task of trade balance development is to actively and selectively increase imports and expand imports based on ensuring export growth. Thus, China needs to use the theory of strategic trade policy to guide the formulation of a foreign trade development strategy and develop foreign trade from an export orientation to balanced development (Tang Haiyan 2010). As a large developing country, China can learn from international experience while exploring its own way. It needs to consider the overall balance of foreign trade, exports, exchange rates and imports; complement and balance the difference of goods trade and service trade; balance foreign investments and investments abroad; and balance its own initiatives and coordination (Sun Shilian and Xiong Chai 2010). 6.4.5 China’s implementation of WTO commitments China formally submitted its application for membership in the GATT on 10 July 1986. On 10 November 2001, the Fourth Ministerial Conference of the WTO

China: open, confident and booming 135 accepted China’s accession to the WTO. China had finally become a member after 15 years of struggling with demands and expectations. In this long negotiation process, the toughest ‘wars’ were Sino-US negotiations and Sino-EU negotiations. Altogether, 25 Sino-US negotiation rounds, and 15 Sino-EU negotiation rounds, were carried out during this long negotiation process. China had a bottom line of negotiating principles and emphasised that the speed and intensity of the market opening had to be consistent with its economic development level. Ultimately, all members reached an agreement regarding the extent of the market opening after China’s accession to the WTO. China’s WTO commitments were fulfilled by 2010, and today’s Chinese market is one of the world’s most open. China’s average tariff level for trade in goods has decreased from 15.3 per cent (pre-WTO accession) to 9.8 per cent (2009). It has abolished all import quotas, import licensing and other non-tariff measures and completely liberalised foreign trade operation rights, according to the agreed timetable. Of more than 160 service trade sectors classified according to WTO rules, China has already opened 100 sectors and promised to further open another 11 sub-sectors. These figures are much higher than the average level of developing countries. The sectors involved include banking, insurance, telecommunications, distribution, accounting, education and other important service sectors, thus providing broad market access opportunities for foreign providers of services. From being a new member to becoming a strong supporter and promoter of the multilateral trading system, China has fulfilled its WTO commitments and won broad recognition and appreciation internationally and amongst WTO members. WTO principles such as transparency and non-discrimination have become China’s legislative principles. Global vision, innovation, competition and intellectual property rights concepts are now deeply rooted in its thinking. The competitiveness of enterprises and the populace’s cultivation have been generally improved, which has established an economic and trade system in accordance with international rules and requirements. To establish a legal system in line with WTO requirements, China has cleaned up more than 3,000 laws, regulations and rules and made comprehensive adjustments in its trading system and policies. Thus far, China has received three WTO Trade Policy Reviews and answered more than 3,700 questions from 60 WTO members (Ministry of Commerce 2010).

6.5 The Doha Round On 11 December 2001, China’s official membership of the WTO took the total number of member countries to 143. By joining the WTO, China not only became a participant in the implementation of trade policy and rules, but it also became involved in international trade policy making. Just after China became a WTO member, it started to participate in the first round of multilateral trade negotiations: the Doha Development Round.

136

N. Jun et al.

6.5.1 China in the WTO: balancing international and domestic interests As a developing country as well as a new member, China has actively promoted the Doha negotiations and served in a bridging and deadlock-breaking capacity several times. During the negotiations, it has participated actively in various discussions and international conferences. It participates fully in all areas of negotiations and has joined the G-20 group, with members from developing countries, as well as other important negotiating groups such as the G-33 (Yao Lei 2008). During this period, China has also held many internal, multiple-level joint meetings to discuss various issues, listen to the views of the industry experts, and coordinate negotiating positions. To promote talks at the technical level, China has presented more than 100 proposals and made substantial tariff reduction commitments. It will further reduce agricultural and industrial tariffs by 30 per cent. In 2009, it proposed three negotiating principles: respect accreditation, lock results and use multilateral negotiations as bases (as reflected in the Declaration of the Group of Twenty summit). During the Seventh WTO Ministerial Conference, held at the end of 2009 (following China’s appeal and promotion) the WTO members sent positive signals of openness, forward movement and reform to the world. China believes that the negotiating parties should actively promote the talks, their final outcome being the promotion of the worldwide trade liberalisation process. The negotiations should be conducive to establishing a fair, just and reasonable new international economic order, and balance the interests of both developed and developing countries. Negotiations should effectively address the concerns of the developing countries, give them the necessary special and differential treatment and maintain the policy space for developing countries to promote their development strategy. When the negotiations stalled, China utilised the Asia-Europe summit, the G-20 ministerial meeting, APEC-meetings and other diplomatic occasions to actively call for the early resumption of negotiations and to promote the need to reach agreements on the Doha Round negotiations as soon as possible. Ambassador Sun Zhenyu, China’s permanent representative to the WTO, said in midDecember 2010 in Geneva, that the negotiations should be based on respect for the Doha Development Agenda and the outcome of the negotiations so far. He stressed that it was necessary to complete the revision of the draft agreement in the shortest possible time and that the current round of negotiations should always adhere to the purpose of development. He concluded that China would always support the least developed countries and the concerns of small economies (WTO Advisory Network 2011). 6.5.2 Balancing domestic interests The trade policy formation process is also a process of balancing domestic interests. Multiple domestic interests may collide here. Typical examples are the

China: open, confident and booming 137 domestic conflicts between manufacturing and agricultural interests, between large-scale, commercial agriculture and small-scale, traditional agriculture and the conflicting interests among producers of different agricultural products. Small-scale and traditional agriculture usually have weak international competitiveness and are easily affected by the opening of markets. The competitive strength differs among various sectors of agricultural production. The conflicts of interest are reflected at the government level as well. Disagreements between relevant government departments include, for example, divergences between the business sector and the agricultural sector and between the departments responsible for commercial agriculture and agricultural cooperation. Given this situation, trade policies must be formed with an eye to seeking a political balance, including a balance between offensive and defensive interests. Thus, balancing is a basic feature of trade policy making. The coordination of various interests could be understood on the basis of the negotiation mechanism, tariff policy-making mechanisms and affected interest groups. Agriculture negotiations are key to the trade negotiations in the Doha Round. Therefore, the focus of negotiations is on the decision-making mechanism regarding China’s agricultural positions. 6.5.3 The institutional set-up for agricultural negotiations Agriculture is a special and strategic sector in most countries. In some (especially developed) countries, agriculture in general has been a protected industry. As developed countries have implemented production and export subsidies, international agricultural trade has become highly distorted. The formulation of relevant international trade rules was led by the developed countries for a long time, and thus the strengthening of the negotiating capacity of developing countries in the field of agricultural trade is urgently needed. Before China joined the WTO, and especially during agricultural trade negotiations related to re-joining GATT and then later the WTO, the agricultural trade negotiations were completed by the officials of the Chinese government delegation from the Ministry of Foreign Trade and Economic Cooperation (now the Ministry of Commerce). In addition, people from the Ministry of Agriculture participated in the negotiations and provided technical advice. With the start of the WTO Doha Round negotiations and China’s accession to the WTO, China’s apparatus for agricultural trade negotiations underwent major changes. In April 2002, the State Council decided that the new round of agricultural negotiations should be conducted mainly by the Ministry of Agriculture. The Ministry of Agriculture subsequently established a working team and a working mechanism for the agricultural negotiations, thus laying the necessary foundation for itself as the main negotiator. With the establishment of the new negotiations organisation, the coordination mechanism of the inter-ministerial joint meeting, the technical information support mechanism, the feedback mechanism and the exchange of information became core elements in the Chinese negotiation apparatus.

138

N. Jun et al.

An agricultural products trade office, under the Ministry of Agriculture, was established for specifically addressing the daily affairs of the new round of agricultural negotiations. In early 2004, in order to promote the coordination of domestic agriculture trade research, the Ministry of Agriculture re-integrated resources and established an agricultural trade centre. This created more favourable conditions for agricultural trade negotiations and for the formation of domestic agricultural policies. In addition to direct negotiations, its main functions included agricultural trade analysis, trade information analysis and agricultural trade promotion. One of the trade centre’s most important functions is to carry out research on agricultural trade policy and other related issues to provide technical support for agricultural negotiations and strengthen the negotiators’ bargaining positions. Moreover, because China takes part in negotiations on regional trade agreements, a negotiations team was created to deal specifically with agriculture in the regional free trade negotiations. The relevant departments of the Ministry of Commerce are in charge of the regional trade negotiations, including the World Trade Division, which is in charge of the China-Australian free trade area negotiations, and the International Division, which is in charge of the rest of the work. To meet the requirements of regional trade negotiations, the Agricultural Trade Promotion Centre of the Ministry of Agriculture established an international division responsible for the agricultural trade negotiations of the regional trade agreements. Because the domestic division of work implies that the negotiations are not completely within the purview of the Ministry of Agriculture, China had to establish a strong and effective inter-sectoral coordination mechanism to coordinate national positions. After the State Council’s approval, the inter-ministerial meetings for the new round of agricultural negotiations were composed of members of the Ministry of Agriculture, the Development and Reform Commission, the Ministry of Finance, the Ministry of Commerce and others – altogether 12 organisation leaders. Each organisation appointed a secretary to act as coordinator and developed the rules of procedure for the Inter-Ministerial Joint Liaison. Meanwhile, under the framework of the inter-ministerial meeting, China formed a technical level coordinating council system for the daily work of negotiations. Before every special session of the WTO agriculture committee, the trade office of the Ministry of Agriculture chairs and convenes coordination meetings in which technical staff from the Ministry of Commerce, the Ministry of Finance and the Development and Reform Commission, participate. During the coordination meetings, the trade office of the Ministry of Agriculture informs attendees about the negotiation situation, introduces the technical research on the negotiation topics performed by the trade office of the Ministry of Agriculture, and proposes programmes and levels of participation in meetings. This coordination system, where a unified view is reached through consultation and discussion among the various ministries, has become the basic mechanism of China’s participation in the agricultural negotiations.

China: open, confident and booming 139 The WTO negotiations are highly professional and technical, and without engaging in systematic research as a foundation, targeted participation in them is impossible. To this end, the agricultural trade office organised and completed research of negotiation topics and (as the negotiations progressed) continued to track and improve the related research. The Ministry of Agriculture has determined that the research centre and the information centre of the Ministry are the main technical information supporting units in the new round of negotiations. A specialist’s advisory group covering agricultural policy, WTO negotiations, agricultural economy, agricultural trade and law has also been established. A web page for the new round of WTO negotiations has been set up, collating and releasing information about the progress of the latest round of agricultural negotiations and collecting suggestions about China’s participation in them. Contact with agricultural producers, agricultural trade enterprises and trade associations has been established, and their views are listened to directly. With the support of the industry office of the Ministry of Agriculture, meetings of enterprise representatives are held. In all provinces (regions and municipalities), WTO liaison mechanisms have been established with the agricultural sector. Through research activities, the trade promotion centre publicises information on the agriculture negotiations to the local agricultural sector and agribusiness organisations, and it seeks advice and suggestions for negotiating positions. 6.5.3 Decision-making institutions for tariff policy Since joining the WTO, China has significantly reduced its level of tariffs on agricultural products and changed from a generally high degree of protection to a more effective and focused protection. This development has required tariff decision-making departments to adapt to new situations and adjust accordingly. China has also applied rational and efficient tariff decision-making mechanisms to the extent permitted by WTO rules. The State Council is the highest decision-making body for China’s policy on agricultural tariffs. The Customs Tariff Commission of the State Council is the agency for deliberation and coordination. The Commission does not belong to the constituent departments of the State Council; but is led by the Ministry of Finance. The Minister of Finance is its director, and its membership comprises responsible persons from the National Development and Reform Commission, the Ministry of Commerce, the Ministry of Agriculture, the General Administration of Customs, the State Administration of Taxation, the Ministry of Industry and Information Technology, the Ministry of Land and Resources, the Total Quality Bureau and the Legislative Affairs Office. The State Council Tariff Commission has its office in the customs division of the Ministry of Finance, and the office director is also the director of the tax administration department of the Ministry of Finance. The specific work of the office is performed by the Ministry of Finance, with its main responsibilities being: (1) tariff lines, tariff codes, tariff rate adjustments and interpretations of ‘the import and export tariff of the PRC’ and ‘the import

140

N. Jun et al.

tax rate table of imported goods of the PRC’, which need to be sent to the State Council for approval before implementation; (2) decisions to implement provisional tax rates of goods, tax rates and duration, tariff quota rates and the applicability of tax rates under special circumstances, as well as other duties stipulated by the State Council; (3) decisions to impose anti-dumping duties, countervailing duties, safeguard measures tariffs, retaliatory tariffs and the implementation of other tariff measures; (4) approval of the application of relevant national and regional preferential tax rate programmes; and (5) consideration and reporting of major tariff policies and external tariff negotiation plans to the State Council (Wang Qi 2011). China’s agricultural tariff policy has undergone adjustments under the WTO framework since it joined the WTO. The WTO Division of the Ministry of Commerce leads and organises multilateral and bilateral negotiations under the WTO framework, and undertakes the work of the WTO dispute settlement mechanism. In August 2010, the Ministry of Commerce re-established the Office of International Trade Representative with the approval of the central government. In 2005, China had established this organisation, with Vice Minister of Commerce Gao Hucheng in charge. The organisation played a successful role in the textile trade disputes between China and the US/EU in 2005, but then stopped working in 2007. China appointed three international trade negotiation representatives (one ministerial level and two vice-ministerial level officers), who, in the name of the international trade negotiators’ office, under international negotiations and domestic coordination, are responsible for confronting a new round of international trade disputes and the promotion of China’s bilateral trade with other countries and regions. According to the State Department authorisation, this section is responsible for major multilateral and bilateral negotiations in the areas of foreign trade and economics, and for coordinating the domestic negotiating positions as well as signing relevant documents. The International Trade Representative Office is the coordinating agency for China’s participation in WTO negotiations. 6.5.4 The impact of agricultural interest groups China is now in the process of transforming from a backward agricultural society into an industrial society. With the continuous extension of market economy reforms and the gradual differentiation of social interests, multi-layered conflicts of interest and contradictions are bound to break out. Large-scale agricultural groups in China lack channels through which to express their interests, as well as an approach for participating in public decision-making. With the acceleration of China’s political democracy process, the agricultural interest groups will play an increasingly important role in China’s industrial policy-making process. According to statistics from the Ministry of Agriculture, the total number of China’s farmer-specialised cooperatives and agricultural products industry associations amount to more than 150,000. Their business activities are related to agriculture, forestry, animal husbandry, side-line production, fisheries and other

China: open, confident and booming 141 industries, with services covering information, technology, production, processing, transportation, supply and sales. In areas that are active in exports, local and single category professional associations play a very important role. Through industry self-regulation, the associations coordinate orderly production and trade, and they have achieved rapid development of export bases of agricultural products and export regions of featured products, with strong demands well supported from all levels of government. However, as a whole, China’s agriculture is characterised by scattered, small-scale farmers operating independently, thereby determining the relatively small size, loose structure, non-systematic and non-standardised management, weak marketing competitiveness and lack of legal and regulatory protection of the China Agricultural Cooperation Organization. In recent years, various types of industrially managed agricultural organisations have gradually grown; more than 80,000 are leading enterprises, and they have established the Agricultural Industrialisation Leading Enterprises Association for the purpose of providing technology, information, capital and other services to farmers. Since 2008, investment from the leading enterprises in the agricultural raw materials base amounted to more than 100 billion Yuan, providing processed agricultural products accounting for one-third of the overall market supply. This has become an important supply channel for the agricultural product markets, playing a special role in protecting agricultural production and effective supply. However, the Leading Enterprises Association is still in its infancy, especially in terms of joining forces, lobbying the government and striving for favourable industrial policy for its own development. It needs to clearly define its interest, promote a higher awareness of the importance of agriculture and strengthen the organisation. At this stage, from a practical point of view, leading enterprises, Agricultural Industry Associations, farmer associations and other forms of organisation account for approximately 25 per cent of domestic farmers, whereas the proportion of national farmers who have joined the Agricultural Industry Association is no more than 10 per cent. In recent years, with the development of China’s agriculture industry associations and other organisations, agricultural interest groups have played a more active role. China’s Chamber of Commerce of Foodstuffs and Native Produce (CFNA), through its role in organisation and coordination, effectively responded to pressure applied from US apple juice producers to the US Ministry of Commerce for 91.84 per cent anti-dumping duties on Chinese apple juice exported to the US. In addition, to effectively address the dumping and strengthen the anti-dumping proceedings, China has established the Soybean Association and Apple Association. Under China’s political system, political donations similar to Western countries’ political contributions and lobbying mechanisms do not exist and are not permitted (Sheng Bin 2002). Nearly all of the groups are set up with the approval and promotion of the government, and they all accept the management of the government. Enterprises can, however, use public information and other lawful means to lobby. China’s Agricultural Industry Associations are relatively new

142

N. Jun et al.

and mainly exist in highly commercialised industries, such as vegetables, fruits, beekeeping, poultry, pigs and sericulture. There are relatively few in grains, cotton and other staple agricultural industries.

6.6 Negotiations issues and concerns The Doha Round negotiations have lasted for more than 10 years, and developed and developing countries who are WTO members, have held numerous meetings and consultations. Both agricultural and non-agricultural market access negotiations are among the most critical core issues in the Doha Round. 6.6.1 Agricultural issues China firmly believes that all WTO members will profit from a fair and marketoriented agricultural trading system, and it will consistently support the longterm objectives and tasks of the Doha Round of negotiations. However, trade distortions, high tariff protection and unbalanced regulations still exist. Therefore, China has adopted a combination of offensive and defensive positions in the negotiations, maintaining that its interests are to safeguard a fair competitive market environment, further expand agricultural trade and reach ‘effective cuts’ in trade-distorting domestic support in developed country members. The concerns of specific interests are detailed in this section. Regarding domestic support, it is necessary not only to make ‘effective cuts’ to the domestic support of the distorting trade of developed member countries; China also asks that the standard of the Green Box and Blue Box provisions of developed country members be strict, as developing country members could benefit from this. In addition, it wants members accept a substantive reduction of OTDS (Overall Reduction of Trade-Distorting Domestic Support) and AMS (Aggregate Measure of Support). China supports the G-20 proposal for a tiered formula on AMS and total AMS. In other words, more reductions could be carried out if the AMS of developed country members were further reduced. The trade-distorting effects of domestic support among developed country members suppress the prices of world agricultural products. This situation has a negative impact on farmers in developing countries. China is home to nearly 800 million farmers, and such domestic support among developed country members (especially the large subsidies on bulk products such as wheat, cotton, soybeans and other products) has a significant impact on their livelihood and severely damages their interests. The defence for China’s domestic support includes flexibility and exceptions, with the purpose of maintaining and improving special and differential treatment of developing country members, while also supporting farmers with low incomes and a lack of resources. China also calls for reducing the developing country members’ Blue Box limit and asserts that the Green Box criteria should take into consideration the special situation of developing country members.

China: open, confident and booming 143 Regarding market access, China demands that developed country members carry the tariff reductions and quota expansions to reduce high tariffs and tariff peaks. It also advocates seeking special and differential treatment for developing country members. Unlike many developed country members, China cannot provide adequate protection and subsidies, and consequently tariffs are the only effective way to protect Chinese agriculture. As a new member, the average tariff rate of Chinese agricultural products is just 15.76 per cent, less than onefourth of the world’s average. G-20 has noted that since 1992, China’s commitment to tariff cuts of 72 per cent is higher than the 70 per cent cuts of developed country members and the 53 per cent cuts of the developing country members in the two rounds of Uruguay and Doha negotiations. In fact, any reduction for China is substantial, whereas other members still have room for further cuts. In addition, the WTO accession and unfair trade liberalisation had a comparatively strong negative impact on China’s agriculture and farmers, and, in China’s view, these concerns needs to be effectively addressed. The developed countries should take the lead in eliminating trade distortions and unequal rules in agricultural trade negotiations, including unequal tariff structures, unequal rights and unbalanced obligations of developed and developing countries. As a developing country, China’s position is to request modest tariff reductions and exceptional and flexible provisions. Specifically, the flexible clauses of tiered formula tariff reduction, including special products, sensitive products, the special safeguard mechanism (SSM), and the treatment of new members, should be used for the purpose of minimising the impact of external factors on its agriculture. China is both a developing country and a new member of the WTO. Together with other new members, it has made important contributions to the multilateral negotiations, even though its agriculture is relatively fragile. Therefore, the concerns of new members should be effectively addressed, particularly with regard to the special and differential treatment for special products and special safeguard mechanisms. To alleviate the pressure of being a new member and ensure agricultural development and farmers’ income, China calls for flexible provisions and a longer implementation phase. Overall, China believes that the developed countries should take a leading role in opening agricultural markets and reducing domestic support of trade distortion, while providing special and differential treatment for developing countries. Specifically, the tiered tariff formula should ensure deep cuts to most of the high tariffs. The tiered formula used by the developing country members for tariff reductions should produce cuts of less than one-third of those of developed country members, with a higher tariff rate used as the stratification boundary point. Further, the draft model of the Doha Round made two special and differential treatments for developing countries – namely, special products and the SSM. Developing countries are allowed to define one-third more of their products as sensitive products compared to developed countries, and they are allowed to limit tariff quota expansion to one-third of that of developed countries. Among WTO members, China has comprehensively pushed forward trade

144

N. Jun et al.

liberalisation; during the new round of negotiations, however, further liberalisation in agriculture has been difficult due to food security, rural livelihood and rural development concerns (Tian Zhihong 2009). 6.6.2 Non-agricultural market access issues The most important issue in negotiations on non-agricultural market access (NAMA) is market access for industrial products, and one of the core points of concern has been the coefficient selection in the tariff reduction formula. The differences between developed and developing members are vast, and conflicting views on the coefficient in the tariff reduction formula has serious implications for the possibility of reaching an agreement in the Doha Round negotiations. China’s proposition is to choose numerous coefficients using the Swiss formula, arguing that the latter is conducive to the reduction of high tariffs. Its primary position has been that the coefficients for tariff reduction in the Swiss formula should be higher for developing countries, while providing more flexibility for developing countries. Developing countries should also be given the opportunity to make tariff lines exempt from formula cuts. China has also consistently argued that recently acceded members (RAMs) should be given more flexibility in NAMA. For China in particular, this position reflects the extensive market access commitments it undertook as part of its accession to the WTO, which came at a high price (Gao 2012; Vickers 2012). As part of the accession agreements, China bound all its tariffs. Although many members of the WTO have tariff bindings far above applied tariff rates, the applied MFN (most favoured nation) rates are close to the bound rates, ‘imparting a high degree of predictability to China’s MFN tariff ’ (WTO 2012a). Another important point for China has been to keep the sectoral initiatives non-mandatory. The US in particular, has pushed for sectoral initiatives in sectors where China has great sensitivities. As Ambassador Sun Zhenyu stated at the Informal Trade Negotiations Committee Meeting of 11 August 2008, developed countries are ‘asking China to participate in sectors where we have great sensitivities, particularly in chemicals, in electronics, in machinery. We need some type of protection in those sectors but they want to bring that down to zero or near zero’. Market access for agriculture and non-agricultural products are two of the most critical issues in the Doha Round negotiations. For China, the balance between NAMA and agriculture is crucial. The two sides in the negotiations need to compromise and bridge their differences to reach a comprehensive agreement in the Doha Round on global trade. China’s position is to promote the development goals of the Doha Round negotiations. As Ambassador Sun Zhenyu stated in the same meeting: ‘If they [developed countries] cover all their sensitivities by themselves, and keep on putting pressures on developing countries, I think we are going nowhere’ (ibid.).

China: open, confident and booming 145

6.7 Trade policies: future trends and key issues In April 2012, the Ministry of Commerce issued the Twelfth Five-Year Plan of Foreign Trade and Development, which is the first special five-year plan in history that focuses mainly on foreign trade. The plan provides a clear strategy for how to develop foreign trade in the next five years. The goal is to develop foreign trade in such a way that it includes substantial progress towards the following goals: the achievement of steady growth and financial balance, the securing of further optimisation of import and export structures, the promotion of the spatial layout of developments in China and the increase of the international competitiveness of Chinese industries. The plan can be seen as an attempt to address the intermestic character of trade policy and China’s challenges with regard to the need for closer cooperation between different ministries and agencies to meet its foreign trade goals. In this regard, the plan stresses the need for innovation and comprehensive implementation of institutional mechanisms that can improve policies and measures. The Ministry’s plan identifies five key areas where improvements should be implemented (Ministry of Commerce 2012). First, the foreign trade management system and its policies should be improved. China should try to adapt to the requirements of an open economy and exert foreign trade management mechanisms for the market allocation of resources. The coordination and management of imports and exports should be strengthened, and important and sensitive imports and exports should be standardised to curb unfair competition. The Chamber of Commerce’s institutional reform should be promoted, industrial self-discipline and coordination strengthened and the intermediary organisations should be given an opportunity to play a role. The integration of domestic trading rules and international standards should be promoted, and the establishment of institutional mechanisms for the coordinated development of domestic and foreign trade should be explored. Ultimately, research on the establishment of a foreign trade quality and efficiency evaluation index should be pursued to reform and improve the foreign trade examination and evaluation system. Second, foreign trade-related tax policies should be improved. China should try to adapt to WTO rules and establish and improve the institutional mechanisms of foreign trade with financial support. Relevant agencies should provide public support to companies that want to reach the international markets, including the development of brands, certification of products, establishment of a quality and safety system and formulation of industry standards. To maintain stability in foreign trade, the export tax rebate policy and the export tax rebate mechanism should be improved in a timely and accurate manner. According to domestic economic and social development needs, China will reduce import tariffs on key products such as energy raw materials, key spare parts, advanced technology and equipment, and it will appropriately reduce import tariffs on daily necessities closely tied to people’s standard of living. China will continue to implement a zerotariff treatment of imported goods from the least developed countries, accelerate the tariff reduction process, and further expand the scope of zero-tariff goods.

146

N. Jun et al.

Third, foreign trade-related financial policies should be improved. China should improve the full range of its financial policy support system to become compatible with its level of trade development. This includes encouraging financial institutions to actively carry out import and export credit policies to broaden the financing channels of import and export enterprises. A system of policyoriented export credit insurance should be established to support exports of large-scale equipment and other capital goods, as well as to encourage small and medium-sized enterprises (SMEs) to actively explore the international market. The government should further improve the RMB exchange rate formation mechanism and maintain the basic stability of the RMB exchange rate at a reasonable and balanced level. The use of RMB in cross-border trades and investments should also be expanded. The trade receipt and payment management system should be actively reformed. Ultimately, the government should encourage domestic financial institutions to gradually improve their overseas networks and provide more convenient and reliable financial services for Chinese enterprises to go out and open up new markets. Fourth, approaches for addressing possible trade frictions should be strengthened, and China should try to create a fair and competitive trading environment. Furthermore, the government should improve and perfect the mechanisms that enable the Ministry of Commerce, local commerce departments, business associations and enterprises to cope with trade friction. Efficient use of the WTO dispute settlement mechanism is necessary to improve the response capacity of China, and the government should make full use of bilateral and multilateral intergovernmental consultations and inter-industry dialogue mechanisms to show how industry can effectively counter growing trade friction. China should intensify its efforts to participate in the negotiation of rules and the construction of a fair environment for negotiations. It should follow the prevailing rules of international trade, including anti-dumping, countervailing and safeguard measures, and it should implement trade remedy measures to maintain the safety of the domestic industry and protect fair competition and the legitimate rights and interests of enterprises. Finally, the plan stresses that multilateral and bilateral trade cooperation should be strengthened. China should conscientiously fulfil WTO members’ commitments, actively participate in the formation of international trade rules and push the Doha Round negotiations towards a comprehensive and balanced success at soon as possible. It should take advantage of the multilateral trading system and the G-20 platform, curb all forms of trade protectionism and promote the development of the international economic order in a more fair and rational direction. China should try to accelerate the negotiations of free trade agreements with relevant countries and, at all levels, take full advantage of regional economic cooperation mechanisms to develop cooperation with relevant countries and regions. The mechanism of the intergovernmental consultations and industry dialogue should be strengthened with major trading partners. China should actively promote trade and economic cooperation with neighbouring countries, establish a cross-border economic cooperation zone when the

China: open, confident and booming 147 conditions are ripe, and promote the harmonious development of economic and trade relations with neighbouring countries. Both the global economy and China’s national conditions are currently undergoing profound changes. China is facing great and hitherto unknown development challenges, but also opportunities. In the Party’s Eighteenth Conference, Hu Jintao noted that China will comprehensively improve its open economy and implement a more proactive strategy to further advance and perfect a safe and efficient open economic system, one that will be beneficial not only for China but also for the world.

7

Norway Agricultural exceptionalism and the quest for free trade Arild Aurvåg Farsund

7.1 Introduction Norway is one of the founding members of GATT and the WTO and (as a member of the European Economic Area) has direct access to most of the internal market of the European Union. Mostly through its membership in the European Free Trade Association (EFTA), Norway is also a partner in a number of bilateral trade agreements. The economy is generally open for international trade, and exports and imports constitute more than 50 per cent of the GDP. Norway’s trade balance is positive because of oil and gas exports. The agricultural sector is the major exception to this openness in trade. In this sector, national production is protected by high tariffs. There are hardly any exports and limited import quotas are the only possible form of access for many foreign products. Norway is involved in the Doha Development Round negotiations, and has been described as a ‘friend of the system’. This position illustrates the dependency a small open economy has on the multilateral trade system. Nevertheless, the Norwegian government takes domestic interests into consideration when trade policy positions are formulated and acceptable solutions are negotiated multilaterally and bilaterally. In this chapter we will examine the intermestic character of Norwegian trade politics and discuss how domestic institutions, ideas, interests and actors frame and underpin national strategies and positions in international trade negotiations. It is of special importance to explain why and how agricultural exceptionalism has gained such a strong position in Norwegian trade policy.

7.2 The Norwegian economy and the role of trade Norway is a small country with a population of five million inhabitants, but it covers a large land and sea area with huge natural resources in the form of oil and gas deposits, fish stocks, minerals, forests and hydroelectric power. In this section we will present Norway’s main economic interests in foreign trade. 7.2.1 An open economy Trade has been important for the economic development of Norway since the Middle Ages. As early as the twelfth century, Norway became an exporter of

Norway: agricultural exceptionalism 149 fish and an importer of cereals. Fish was the most important export product until the early part of the twentieth century. Over the last century, new export products came from natural resources like timber and metals, while finished products like textiles and machinery were added to imports. Natural resources in the form of hydroelectric power were important when Norway became industrialized from the late nineteenth century. A global shipping industry was also developed in Norway from the middle of the same century. Today Norway is, according to the Ministry of Finance, a diverse industrial society with a free market economy and generally low trade barriers.1 In 2008, the service sector accounted for approximately 48 per cent of the gross domestic product (GDP); manufacturing accounted for close to 9 per cent of the GDP; and petroleum industries accounted for 26 per cent of the GDP and about 49 per cent of exports. All major manufacturing industries, except for food processing, are highly export oriented. Several industries, like the paper, metal and chemical industries have benefited from the availability of hydroelectric power and, to some extent, of raw materials. Trade (imports and exports) represented more than 55 per cent of the GDP. Close to 80 per cent of imports are manufactured goods. The European Union represented 81 per cent of Norwegian exports and 68 per cent of imports (Ministry of Foreign Affairs 2008: 9). The development in external trade in the period from 2000 to 2011 is illustrated in Table 7.1. The Norwegian dependence on commodities and semi-manufactured products makes the export structure more similar to developing countries than to industrial countries (Austvik et al. 2002). The main reason for this is that in the late 1960s, substantial petroleum deposits were discovered in the Norwegian sector of the North Sea. From the beginning of the 1970s, oil production and related industry has been the predominant growth sector in the Norwegian economy. The exploration and production of petroleum resources on the Norwegian continental shelf has had a major impact on the economy, as we will see later in the discussion on the Norwegian political system. The Norwegian government has gained a large income from the oil and gas industries since the early 1970s onwards. In the early years the income was transferred to the national budget, where it was used to fund public expenditures Table 7.1 External trade in goods and services 2000–2011 (NOK billion)

Exports Goods (of this crude oil/natural gas) Services Imports Goods Services Trade balance Source: Statistic Norway.

2000

2005

2008

2011

689,3 529,4 (321,2) 159,8 435,8 297,2 138,6 +253,4

863,7 666,7 (428,2) 196,9 545,4 364,5 180,9 +318,2

1,197,1 955,6 (622,2) 241,4 755,3 514,6 240,7 +441,7

1,141,3 884,7 (560,1) 256,5 763,8 520,3 243,5 +377,4

150

A. A. Farsund

and investments in the petroleum industry. Increasing income in the late 1980s was seen as a threat to the stability of the general economy and the idea of establishing a sovereign wealth fund gained political approval. The fund was formally established in 1990 and it received its first transfer of money in 1996. The capital is invested abroad, to avoid overheating the Norwegian economy and to shield it from the effects of oil price fluctuations. At the end of 2011, the fund had a marked value of more than NOK 3.2 trillion, or 600 billion US dollars with the current exchange rate. Today, Norway ranks as the world’s fifth largest oil exporter and the third largest natural gas exporter. Since energy more or less sells itself in the world market, oil and gas are not important issue in Norwegian trade policy (Austvik et al. 2002). This makes room for prioritizing other industries politically, and in the next section we will have a closer look at agriculture, an industry in which Norway has natural disadvantages, and aquaculture and fisheries, industries in which Norway has natural advantages. These industries play pivotal roles in Norwegian trade policy making. 7.2.2 Trade in agricultural products and fish Norway is as a mountainous country with long winters and short summers not well suited for agricultural production. A high level of national self-sufficiency has nevertheless been a primary goal in Norwegian politics, and tariffs and public support is used to protect and promote national food production. The Norwegian government uses different measuring methods in calculating the degree of self-sufficiency. If calculations are based on energy, then 50 per cent of food consumption is imported. This is an effect of the lack of domestic sugar production and considerable imports of wheat and processed foods with high energy levels. If the starting point is basic food, then the self-sufficiency rate is high for milk (100 per cent), eggs (98 per cent), meat (95 per cent), butter and cheese (90 per cent), potatoes (79 per cent) and grain (75 per cent), while it is lower for vegetables (50 per cent) and fruit and berries (5 per cent) (SLF 2011: 48). High tariffs on imports and agricultural subsidies are crucial for the degree of national self-sufficiency. Despite a considerable decline in recent years, farming still employed almost 55,000 (and food processing 35,000) persons in 2010, and additional employment is kept up in services and the public sector in rural areas (Meld. St. 9, 2011–2012: 44). Nine out of the ten largest exporters of agricultural products to Norway are members of the EU, with neighbouring Denmark and Sweden as the two dominant countries. Brazil is third place as the only country under the General System of Preferences (GSP) scheme in the top ten, and their main export product is feed to both agriculture and aquaculture. The total share for the countries under the GSP is 20 per cent, while only 1.6 per cent is from 64 countries given zero-tariffs as least developed countries (LDC). The value of imports was at a record level in 2010, with a total of NOK 36 billion. Exports are generally not important for Norwegian agriculture, with the exception of one type of

Norway: agricultural exceptionalism 151 cheese that is exported to the EU, USA, Canada and Australia. This export consumes 10 per cent of the milk produced in Norway, and since this production benefits from national support programmes, it will be affected by a ban on export subsidies in a Doha Round agreement. The situation in fisheries is the opposite of the situation in agriculture. Favourable natural conditions, combined with a large fisheries zone, give the industry access to large stocks of fish. In addition, over the last 40 years, a large aquaculture industry has developed. Norway is therefore an important actor in international trade in fish and seafood. The country is the tenth largest fishing nation in the world in terms of quantity produced, and the world’s second largest exporter of seafood in terms of value (WTO 2008: 80). This industry is less important for employment than agriculture, with fisheries and aquaculture employing 15,000 persons and processing industries 10,000 (Farsund 2009: 65). Historically fishing, and later on fish farming, used to be decentralized industries, but since 1990 both industries have been through major structural changes. Fishing vessels are larger and often owned by companies. The changes are even more dramatic in aquaculture, where almost all fish farms are owned by Norwegian multinationals. A strong focus on profitability has reduced employment in this sector, and thus made it less important for rural settlement along the coast (Trondsen and Ørebech 2012: 90). In 2009, the export value was NOK 44 billion, of which 26 billion was from aquaculture and 18 billion from fisheries. This was 6 per cent of the merchandise exports from Norway that year. Farmed salmon represented 53 per cent of the total export value, while cod, herring and mackerel were the most important products from fisheries. The EU market took 60 per cent of the exports, with Russia, Japan and the US as other large markets. The value of imports of marine products was NOK 7.4 billion in 2009, mostly fish-oils from Peru, the EU and Iceland.2 There are hardly any subsidies for aquaculture and fisheries and no tariffs on fish imports, but fish exports meet tariffs in line with other industrial products. Although the industry currently manages to sell all the fish it wants internationally, it would benefit from higher prices if tariffs would be reduced as part of a NAMA-agreement in the Doha Round, or through tariff reductions negotiated in bilateral trade agreements.

7.3 The political and institutional framework of Norwegian trade policy making Norway is a parliamentarian democracy with an economically strong state. The national ownership and control of the country’s natural resources has been a shared political aim for most political parties. The Norwegian ‘Power and Democracy Study’ (1998–2003) characterized Norway as a society with striking egalitarianism, a strong public sector and a culture of cooperating institutions, which merges private with public interests (Østerud 2005: 705). There is a long-lasting tradition for the integration of organized interests into public policy making processes, and numerous comparative studies rank Norway among the most

152

A. A. Farsund

corporatist countries in the world (e.g. Schmitter 1979; Lijphart and Crepaz 1991; Siaroff 1999). The distinctive features of the economy have made the state the most important participant in the system of corporatist economic policy making (Østerud and Selle 2006: 26). Different governments have pursued their own goals and strategies, but both general developments and national political compromises have led to a stable reform agenda over time. However, more recently, the State has market oriented its policies and corporatist institutions have been significantly downscaled. Organized interests increasingly lobby parliament in order to influence public policy making (Christiansen et al. 2010, Rommetvedt et al. 2012, Østerud 2005: 714–715). 7.3.1 Political cleavages in parliament The Norwegian multiparty system is based on cross cutting cleavages (Rokkan 1966). Two cleavages are of special importance for trade policy making. The first is related to conflicts between the centre and periphery. The Centre Party, formerly the Agrarian Party, has been the dominant party on the rural, periphery side of the centre-periphery cleavage, followed by the Christian People’s Party, the Socialist Left and Liberals. The Conservatives, Progress Party and Labour are positioned on the opposite side, supporting the interests of the urban, central areas. The political system still gives rural interest considerable influence over policy making. This is partly an effect of the rules of representation, where 19 counties are the election districts and large rural counties with few inhabitants have proportionally more representatives than counties with higher populations in larger cities, and partly a consequence of the pivotal role that the Centre Party and Christian People’s Party play in government formation (Rommetvedt 2003; Langhelle and Rommetvedt 2004). The other important cleavage is the left-right axis, where, traditionally, the parties have been positioned as follows from left to right: Socialist Left, Labour, Liberals, Christian People’s Party, Centre Party, Conservatives and Progress Party. The Centre Party, however, has gradually moved towards the left and positioned itself close to the Socialist Left and Labour parties. Since 2005, the three parties have been coalition partners in a majority government. The Progress Party is somewhat difficult to position due to its populist profile. In some issues they place themselves to the left of the Conservatives, in others to the right. In general, all political parties represented in the Norwegian parliament (Stortinget) are positively oriented towards the WTO and free trade agreements, even though Third World concerns are a source for scepticism among leftist politicians. However, the picture is more varied with regard to liberalization of trade in agricultural products. When the latest governmental report on agriculture (Meld. St. 9, 2011) was discussed in the parliament in early 2012, the following picture emerged: The government parties, the Labour Party, Centre Party and Socialist Left Party, defended the existing level of import protection and they

Norway: agricultural exceptionalism 153 were supported by the Christian People’s Party and Liberal Party. The Progress Party in particular, but also the Conservatives, favoured some market opening based on consumer interests, but recognized that Norwegian agriculture still needs some tariff protection.3 The centre-left government that was formed in 2005 was the first majority government in Norway since a centre-right government lost its majority in parliament in 1985. In the period in-between, there were a number of different minority governments, four Labour Party governments, one coalition government (formed by the Christian People’s Party, Centre Party and Liberal Party), and three coalition governments from the Conservatives, Christian People’s Party and either the Centre Party or Liberals. The Centre Party and the Christian People’s Party, defending rural, agricultural interests in the periphery, have played a crucial role in the formation of governments, either as members of a government coalition or as (possible) supporters of minority governments. Consequently, in the WTO and PTA negotiations, the more urban-oriented Labour and Conservative members have been forced to give concessions to protectionist agricultural interests supported primarily by these two parties. 7.3.2 Two crucial issues in the ideational framing of Norwegian trade policy There are two issues of crucial importance for the ideational framing of Norwegian trade policy making. The question of Norwegian membership in the European Union is an issue that challenges different interests and ideas. In both 1972 and 1994, referendums on EU membership ended with the ‘no’ votes in narrow majority. These results represented the triumph of the anti-EU periphery over the pro-EU centre. Important arguments for the ‘no-vote’ included wishes for protection of Norwegian agriculture, national control over fish stocks, protection of the environment and a fear that EU membership would weaken Norway’s relationship with the Third World. The ‘no’ victory was achieved by a broad alliance of organizations and political parties representing this heterogeneity of ideas and interests. Nevertheless, Norway has close ties to the EU through the European Economic Area Agreement (EEA), which represents a national compromise between parties in favour and parties against full EU membership (Østerud 2005: 710). The second issue is the manifestation of the idea that Norway should be seen as a global power in humanitarian work and peace-making (Tvedt 2003). This self-perception is particularly a result of developments in the years after the last EU referendum. It is not an unambiguous development, because Norwegian foreign policy has been a balancing act between national self-assertion and internationalism (Østerud and Selle 2006: 39). The Power and Democracy Study has illustrated this balancing act with the examples of the Oslo Peace Agreement for the Middle East and with Norway’s insistence on a right to limited commercial whaling. Norwegian peace efforts are appreciated internationally, but the position on whaling is disputed by most other nations in the world.

154

A. A. Farsund

Tvedt (2003) identifies a new ‘national corporatism’ built around ‘Third World concerns’ and ‘international peace making’. Although ideology is an important factor in this development, the availability of economic resources is also part of the explanation. Norway was a pioneer in providing 1 per cent of the gross national product (GNP) to foreign aid (Østerud 2005: 713) and, with a rapidly expanding oil economy, there are huge economic resources available for Third World engagement. This has led to a system in which non-governmental organizations (NGOs), research institutes, consultancy firms and government agencies compete for government funding for Third World activities. Norwegian policy makers, supported by corporate interests, developed a national strategy, not so much in terms of economic interests, as in terms of the brand-making of Norway as a champion of humanitarian causes (Østerud and Selle 2006: 44). Norway’s commitment to ‘Third World concerns’ is recognized internationally. In an index made by the Centre for Global Development, Norway is ranked second among 22 of the world’s richest countries on their dedication to policies to benefit people living in poorer nations.4 But Norway is ranked last in trade, due largely to high tariffs on meat, dairy products, sugar and wheat. This observation makes visible a dilemma that the Norwegian government is facing when it tries to balance ‘Third World concerns’ with domestic agricultural interests in trade negotiations. This will be a subject for further discussion later in this chapter. 7.3.3 The institutional basis for agricultural exceptionalism The term ‘agricultural exceptionalism’ has been used to explain the special treatment that this industry has been given in international trade policy making (Skogstad 1998; Daugbjerg and Swinbank 2009). In Norway, the role of agriculture with regard to rural settlements is an important basis for political support and institutionalization of public policy. Even though, in general, Norwegian corporatism is in decline (Rommetvedt 2005), corporatist arrangements and negotiation processes are still a distinctive character of agricultural policy making (Farsund 2004; Haga 2009). Every year, negotiations take place between the Norwegian Farmers’ Union, the Norwegian Farmers and Smallholders’ Union and the State concerning regulations, income, subsidies and domestic prices for food. The parties negotiate an agreement on these issues. The agreement is then turned into a proposition submitted to the parliament. There is a strong tradition in the Norwegian parliament that an agreement between the organizations and the State should be accepted without changes (Farsund 2004). In the latest Report to the Storting on agriculture, the government announced that it would uphold this system for years to come (Meld. St. 9, 2011–2012: 106). The institutionalized negotiations are a forum for the Ministry of Agriculture and farmers’ associations to develop policy instruments and frame what is to be seen as the appropriate agricultural policy. Consumers are not represented in the negotiations and, consequently, agricultural policy emphasizes producer interests before consumer concerns. Increased food imports are seen as a threat to this

Norway: agricultural exceptionalism 155 ‘most Norwegian’ of all industries. Farming is important for food security, rural employment and settlement, and even for the beauty of the landscape. This arrangement has been crucial for securing Norwegian agriculture a level of domestic support at 66 per cent of production value (OECD 2007). The actors in the agricultural segment share the view that trade liberalization will give only small gains to consumers, through price reductions and limited new market access for Third World countries, while the farmers and rural areas will pay the whole price through reduced employment and settlement. Thus, the corporatist system gives the agricultural sector a unique institutional platform for influencing Norwegian policies and positions in trade negotiations. 7.3.4 Trade policy making The responsibility for trade policy making is divided between two government ministries. The Ministry of Foreign Affairs is responsible for multilateral trade negotiations within the WTO and for the relationship with the EU, while the Ministry of Trade and Industry is responsible for bilateral trade issues, free trade agreements and general export promotion. The responsibility for trade issues was transferred to the former Ministry of Industry in 2001, in order to give the new Ministry of Trade and Industry a more overall responsibility for national economic development. The Ministry of Foreign Affairs has a special advisory role in all international negotiations and, since the Norwegian government follows the principal of ministerial responsibility, sector ministries like the Ministry of Agriculture and the Ministry of Fisheries have considerable influence on the formulation of trade policy positions related to their sectors. Foreign policy is normally the prerogative of the government, but this rule is modified by the principle of parliamentarianism, constitutional practice and common law. It is therefore a long lasting tradition for the government to consult the parliament in matters related to international negotiations. Parliament can be consulted at three stages. First, during the preparation of the national negotiating positions, and second, during the negotiation process itself. In periods with minority governments these consultations are crucial. Minority governments need to seek broad political backing, and even a majority government would inform the parliament about international developments. In both instances, governments consult the parliament’s Enlarged Committee on Foreign Affairs (Langhelle and Rommetvedt 2004). The third stage in which parliament is involved is during the ratification or endorsement of a negotiated agreement. Both multilateral and bilateral trade agreements are presented as bills before the Storting. They are submitted to the Standing Committee on Foreign Affairs and Defence, before they are debated and voted over in the plenary assembly. The Storting can either accept it or refuse a trade agreement. Normally, when the government has negotiated and signed a convention or treaty there is little the parliament can do about it. Rejection of ratification could lead to dramatic consequences, and the political parties would hesitate to take the responsibility for such consequences.

156

A. A. Farsund

Other actors, like business associations, trade unions and civil society organizations, are usually consulted by the government on trade issues. There is now a two-tier system for consultations. The Ministry of Foreign Affairs has established a consultative body for the Doha Round negotiations in the WTO. More than 30 organizations are invited to briefings about developments in the negotiations. As a consequence of slow progress in the WTO, meetings are set up irregularly. The meetings are closed and there are no public minutes from them. Furthermore, the Norwegian delegations to WTO ministerial conferences include representatives of industrial organizations and NGOs. The Ministry of Trade and Industry has established an information forum for bilateral trade negotiations. Since there are a number of ongoing negotiations, this forum meets twice a year. Both ministries are, in general, also open for informal contacts with organized interests. Finally, the Ministry of Agriculture and the Ministry of Fisheries have close contacts with organizations in their sectors. They discuss trade issues with them regularly, and use their technical expertise when Norwegian interests are defined in international trade negotiations (author’s interview). These contacts are also useful when the ministries need to consider which concession Norway can give internationally without provoking political actions from these organizations domestically. There are a variety of perspectives on trade among organized interests in Norway. The Confederation of Trade Unions (LO) and the Confederation of Norwegian Businesses and Industry (NHO) are in general positive to an international rule-based system for trade (Melchior 2007: 109–111). However, most of the employees in the food processing industry are organized in the Confederation of Trade Unions, and consequently they are against too much liberalization of trade in agricultural products. Organizations representing fisheries and aquaculture are generally pro-free trade, and the growth of large companies in the latter industry has given them greater clout in trade policy making (Farsund 2009). There are also a number of NGOs that, on the basis of Third World concerns, argue against far-reaching multilateral and bilateral free trade agreements. Their main arguments are that poor countries need development aid to promote economic growth and that free trade will only serve small elites. Protection of domestic agriculture is also important for most of these NGOs, although some organizations, like the Norwegian Church Aid, is considered positive to trade as a development tool (Bilden 2011: 153). Fourteen NGOs and organizations representing farmers have established an umbrella organization called ‘the Norwegian Trade Campaign’. They are critical of Norway’s positions in the Doha Round and in bilateral trade negotiations. This organization represents many of the same interests that ‘won’ the battle over Norwegian EU-membership in 1994. They have limited influence on trade policy making, but they dominate the public debate regarding trade as a development tool. As we can see, there are a variety of interest groups representing different views on trade policy, but there is nevertheless broad support for the Norwegian government’s view that the country’s trade policy is an inseparable part of its

Norway: agricultural exceptionalism 157 economic and foreign policies. The government emphasizes that its trade policy aims at three fundamental goals: a viable multilateral rule-based trading environment based on the WTO; deeper regional integration through the European Economic Area (EEA); and free trade agreements with other trading partners, primarily in cooperation with EFTA partners Iceland, Liechtenstein and Switzerland (St. meld 2008–2009: 5). We will use this threefold aim as a starting point for our discussion of how domestic factors influence Norwegian strategies and positions in international trade negotiations.

7.4 The multilateral dimension: Norway in the WTO Norway was one of the founding members of GATT in 1947, and has been an active participant in every negotiation round since then. Thus, Norway has eased restrictions and lowered tariffs in line with the different GATT Agreements. Before the Uruguay Round, textiles were the only exception. In the early 1980s Norway broke out of the Multifibre Arrangement (MFA) and used the safeguard clause in GATT to introduce a restrictive quota regime. Norway rejoined MFA in the mid 1980s, but the last quota was lifted as late as 2002 (Melchior 2004: 103–104). According to Melchior, the main reason for this policy was the successful lobbying of the textiles and clothing manufacturers’ association, which obtained political support for their opposition to free trade. The example illustrates that occasionally, specific domestic interests have been able to influence Norway’s compliance with international agreements. However, in general, Norway is eager to live up to its international obligations. 7.4.1 Norway and the WTO Since the establishment of the WTO in 1995, the main line in Norwegian trade policy has been to establish a rule-based trading system in accordance with the principles of the WTO Agreement. In general, the strategy has been seen as successful. In the Trade Policy Review that the WTO carried out in 2008,5 the panel emphasized that Norway had established a trade policy framework that grants most favoured nation (MFN) treatment to all its trading partners. The average applied MNF tariff was 6.7 per cent, with applied tariffs on nonagricultural products averaging 0.6 per cent. A total of 95 per cent of all tariff lines were duty free. The exception was tariffs on clothing and textiles, and some fish products used for animal feed. Agricultural products had average tariffs at 35.8 per cent, with 38 per cent of tariff lines duty free. Products produced domestically, like meat and dairy products, had high tariff protection with an average bounded rate of 138 per cent, with the highest at more than 500 per cent. Furthermore, Norway has implemented the Generalized System of Preferences (GSP) scheme that grants duty free access to all imports originating in the 50 countries included in the group of Least Developed Countries (LDC). In 2008, this system expanded to include another 14 low-income developing countries (WTO 2008).

158

A. A. Farsund

These measures are in line with the general political ambition that Norway should pay attention to Third World concerns and support developing countries. However, most of the export products of the LDCs do not live up to the high sanitary standards that the Norwegian authorities have set, and consequently imports from LDCs are still limited. Botswana, Namibia and Swaziland are the only developing countries that managed to achieve some export volumes of meat, but from 2011, Norway implemented a new 400 ton import quota on mutton from these countries. The argument for this was that rising imports displaced national production and challenged the balance in the Norwegian market (Ministry of Finance 2010). Although the intention behind the LDC-policy is in line with the general idea that ‘Third World concerns’ should be taken into consideration, the example illustrates that the government has to balance ideational ambition with domestic agricultural interests. Thus, trade in agricultural products is the main exception from Norway’s broad support for international free trade. When liberalization of trade in agricultural products was introduced as a new topic in the Uruguay Round, this represented a challenge both to the industry and to Norwegian politics. In the negotiations, Norway pursued its domestic interests on the basis of high tariffs and limited restrictions on national policy instruments. The Norwegian government managed to achieve some special safeguards for agriculture, and Norway was one of a few member states that were allowed to have blue box support. This notwithstanding, the implementation of a tariff-based import system with quotas, limitations on export subsidies and the regulation of domestic support through the amber, blue and green box system did lead to changes in the Norwegian food policy regime. At first, the practical implications of the new system were small, and Norway implemented all changes in 1995 without using the five-year transition period allowed in the WTO-agreement. Nevertheless, the Uruguay Round, together with economic concerns, led to conflicts between the agricultural sector and the government. This was reflected in the Norwegian parliament’s discussions of the future agricultural policy in Norway. The farmers and their supporters in the Centre Party, the Christian People’s Party and the Socialist Left Party wanted as few changes as possible, while the Labour government, supported by the Conservatives and the Progress Party, argued that changes were needed in order to meet new challenges (Farsund 2004). The conflicts around the Uruguay Round Agreement (URA) implementation soon faded away and agricultural conflicts played a minor role in Norwegian politics after 1997. The main reason was that a minority government from the Centre Party, the Christian People’s Party and the Liberal Party came to power and during its three years in office, this government managed to prepare a report to parliament on agriculture that emphasized policy goals that were supported by all parties in the Storting. These goals were grouped under the heading ‘non-trade concerns’ in the Norwegian position in the Doha Round, i.e. food security, rural employment and settlement and a living cultural landscape (Farsund 2004: 202).

Norway: agricultural exceptionalism 159 In the years following the implementation of the URA in 1995, changes in Norwegian agricultural policies have been negotiated in the corporatist channel. The most difficult challenge has been to balance demands for increased farmer incomes, the development of policy instruments for safeguarding so called ‘nontrade concerns’, and existing WTO obligations. It is especially the limitations in the amber and blue box support that have necessitated changes. First, in 2004, a considerable part of the blue box support went through a ‘green washing’, which meant that the farmers received support for environmental measures rather than the production of food. This transfer of funds to the green box was notified to the WTO in 2008 and accepted by the Agricultural Committee in 2010 (WTO 2010b). Second, the majority government that was established in 2005 has most specifically used increased food prices as a tool for raising the farmers’ income. This was one of the main goals for the Centre Party when they joined the government. The policy has led to problems with Norway’s obligations in the amber box. The price difference between the world market and the Norwegian market became so high, that it led to increased imports even with high tariffs. Thus the government came under pressure from two sides. The first solution they chose was to introduce a system without target prices for some categories of meat, which reduced the amber box support. The second solution was to change the tariff system for milk, from a standard rate tariff to an ‘ad valorem’ tariff system, which increased market protection for Norwegian products. Norway was able to do this because both types of tariffs were notified as part of the WTO Agreement in 1995 (Farsund 2009). A similar adjustment is planned for some types of cheese and meat in 2013, but this has triggered protest from both fish exporters and politicians, who want to protect consumers against price rises. 7.4.2 Norwegian negotiating positions in the Doha Round The Doha Round represents an excellent illustration of the intermestic character of the process that is how domestic institutions, ideas, interests and actors influence Norwegian positions in the international negotiations, and how international developments influence the domestic situation. The Norwegian negotiating strategy and positions evolved gradually from 1999 to 2002. As we will see, Norwegian negotiators try to reconcile a number of partly conflicting and partly compatible ideas and interests: 1

2

The idea that regulations are needed in a globalizing world is of particular interest to small countries with an open economy such as Norway. Consequently, Norway has an interest in developing the multilateral trade system, and safeguarding the WTO system is a major objective. Within the framework of this system, Norway tries to reconcile different domestic interests, most particularly defensive interests within the negotiations on agriculture and offensive interests of fish exporters and other industries within the negotiations on NAMA.

160 3

A. A. Farsund Norway has a long-lasting tradition for development aid, and support for the idea that a rich country like Norway should pay special attention to Third World concerns, is strong among Norwegian politicians and NGOs.6

The preparations for the new round of WTO negotiations, then called the ‘Millennium Round’ and later the ‘Doha Round’, started in April 1998. The centre government (Christian People’s Party, Centre Party and Liberals) initiated a broad mapping of national interests. The work was led by a State Secretary Group, and involved all relevant ministries and the details were prepared by ten different inter-departmental working groups. In 1999, the State Secretary Group published the report ‘The future WTO negotiations – the charting of Norwegian interests’. The report concluded that Norway, for the most part, had offensive interests in the negotiations. Agriculture was the only area in which the report identified defensive interests. The defensive interests are related to harsh climatic conditions for agriculture and a variety of non-trade concerns, while the offensive interests are related to market access, primarily for various service industries (such as shipping, insurance, energy and telecoms) and seafood. Large stocks of fish and excellent natural conditions for fish farming make these industries highly competitive. Consequently, Norway is positioned close to the protectionist extreme with regard to negotiations on agriculture, and close to the pro-liberalization extreme with regard to negotiations on NAMA and services. The development of transparent rules is a central element in Norwegian positions with regard to the development of the multilateral trade system and the WTO. There are also more practical problems concerning anti-dumping measures, which have been seen primarily as protectionist tools. Norway wants to restrict the use of anti-dumping measures through the Doha Round, since this is of special importance for fish exports. Norway also decided to support the EU standpoint that the Doha Round should be a broad ‘single undertaking’ (Langhelle 2001: 27). Divergent domestic interests, and political and ideational cleavages, were important elements in the process of formulating the Norwegian negotiating position. The decision to support a broad round and single undertaking was approved by the parliament. The basic strategy was to bring all Norwegian interests – both defensive and offensive – into the negotiation process in order to increasing the likelihood of an outcome that would not only be favourable to Norway as a whole, but that would also balance different domestic interests. Concessions to be given in the negotiations should be balanced not only across, but also within each sector of negotiation, especially within agriculture. The strategy and negotiating positions evolved from consultations between the government and the parliament. The government’s ‘mandate’ was informal, but firmly anchored in a broad majority in the parliament (Langhelle and Rommetvedt 2004). In the agricultural negotiations, Non-Trade Concerns (NTCs), or ‘the multifunctional and multifaceted nature of agriculture as a supplier of public goods

Norway: agricultural exceptionalism 161 such as rural settlements, food security and a living cultural landscape’, became the key approach from the outset. This had consequences for Norway’s international alliances. In June 2000, a conference was held in Norway with attendance from 40 countries, including the EU. The final communiqué emphasized that every country had the right to address non-trade concerns. Thus, the EU was important partner for Norway in the early years but, after Cancún, Norway joined the G-10, also known as the friends of multifunctionality. From the start, Norway argued that tariff reductions on key agricultural products should be limited, that a ceiling on tariffs was unacceptable and that only small increases in tariff free quotas were possible for key agricultural products. In addition, Norway wanted to uphold both the blue and green boxes for domestic support. For the amber box, Norway suggested that the Aggregated Measurement of Support (AMS) should be split in two: the first category, with less stringent reduction commitments, would consist of domestic support to agricultural production destined for the domestic market. The second category would consist of AMS support to export-oriented production. This support should be subject to further reductions. Norway also recognized the need for ‘stricter disciplines’ on export subsidies, export credits and food aid (WTO 2001a: 2–3). Gradually, Norway has adjusted its positions. Two ministerial meetings led to important changes in the Norwegian position. First, the Hong Kong 2005 declaration stated that the members agreed to end all export subsidies by 2013. Since Norway has a considerable export of cheese, this could lead to a substantial reduction in the production of milk. However, the declaration included a small victory for Norway, since it mentioned that a final agreement would have to give special treatment to a country with large blue box support (i.e. Norway). Second, the Geneva meeting in 2008 outlined a framework that would limit the level of subsidies in the amber and blue boxes and give larger import quotas than in the original offer given by Norway. In the 2011 Report to Parliament on agriculture, the Norwegian government stated that a Doha deal in line with the December 2008 text would allow NOK 9.5 billion domestic support, a reduction from NOK 11.5 billion in the URA. The official Norwegian view is that this is close to the limit if Norway is to have a national scope of action in agricultural policy making (Meld. St. 9, 2011–2012: 80). On the other hand, Norway and some of the other G-10 countries were to be allowed to define a higher number of sensitive products (6 per cent) and a special category (1 per cent) of products with more than 100 per cent tariffs. The price these countries would have to pay was higher import quotas for the products in this category. According to government sources, this solution would shield between 70 and 80 per cent of Norwegian agricultural production from import competition. The Minister of Agriculture declared that Norway could ‘live with the deal in agriculture’ (Nationen, 25 July 2008). The largest farmers’ association, however, estimated that 40,000 of approximately 60,000 man-labour years would disappear, and protested against the ‘almost deal’. Assurances about compensations through new ‘greenbox’ support were also dismissed, because it would make agriculture even more dependent on changeable political majorities in the parliament.

162

A. A. Farsund

In the NAMA negotiations, Norway started out with clear ambitions for more market access. The goal was to achieve reduction and elimination of tariffs and non-tariff barriers. Norway argued for ‘comprehensive product coverage without a priori exclusions’, and for ‘tariff reductions across-the-board for all nonagricultural products, without excluding any sector or group of products from the initial offers’ (WTO 2002c). The main intention was to secure market access for fish and fish products. Norway also argued strongly against prolonged implementation periods in developing countries. Neither the NAMA negotiations, nor the Norwegian engagement in them, have led to major breakthroughs. The July 2008 NAMA package signalled some positive results for fish and fish products. Although an agreement was not finalized, it seemed that Norway would get tariffs reduced to between 5 and 6 per cent in the EU and Japanese markets. The tariff reductions in developing countries would be substantially lower. The package has been described by the Norwegian Foreign Minister as ‘a satisfactory result’.7 Nevertheless it is acknowledged that the potential economic gains for exporters from a NAMA deal are smaller than the potential costs for farmers from the agricultural deal (Smedshaug 2012: 246). There has not been much progress in the Doha Round since December 2008. Nonetheless, in 2012 it is possible to identify the Norwegian ‘demands’ for a final deal. First, Norway should be allowed to have an agricultural policy in line with its national priorities. Second, Norway is prepared to accept changes according to the following guidelines: support programmes should be related to non-trade concerns, export subsidies could be eliminated and import competition increased, and special treatment of Norway, Iceland and Switzerland when it comes to sensitive products should be allowed. Third, Norway requires a breakthrough for its offensive interests in the NAMA and rules negotiations, including lower tariffs and increased predictability for the export of seafood, restrictions on anti-dumping measures and disciplining of subsidies for fisheries, and more market access in services like shipping, insurance, energy and telecoms. Finally, Norway supports the demands from developing countries regarding increased market access in rich countries. Norway is a small player in the Doha Round, and since, essentially, the round has been about agriculture, the main Norwegian strategy has been to defend its defensive interests. Nevertheless, over the years, the government has adjusted and given up some of its positions on agriculture, seemingly without being able to cash in returns in areas like NAMA, services and rules negotiations where Norway has offensive positions. There are several possible explanations for this. First of all, on the basis of domestic interest, Norway has traded positions within agricultural negotiations. From the start, there was pressure on the rich countries: the EU, the USA and the G-10, for reductions in subsidies and increased marked access for developing countries. During the negotiations Norway has acknowledged the need for reforms in line with this, but at the same time upheld its demand for special arrangements that will give the government the opportunity to support a viable agricultural sector.

Norway: agricultural exceptionalism 163 Second, the Norwegian negotiation strategy has been to appear as a ‘friend of the system’, and to acquire political capital and acceptance for special arrangements for agriculture through cautiousness and support for Third World interests. The argument is that a more aggressive negotiating strategy with strong demands in all areas would have undermined the Norwegian position (author’s interview). Norway has been an active partner in several initiatives taken in order to push the negotiations forward. Two examples illustrate this: In 2006–2007 Norway was one of six countries that worked actively for a revival of the negotiations when they were formally suspended by DirectorGeneral Pascal Lamy; and in 2011, it was one of 12 countries signing a letter that urged the member-states to finalize the Doha Round by the end of the year (WTO 2011f). A more indirect element in the negotiating strategy has been the responsibilities that Norway has undertaken in the daily affairs of the WTO, such as providing the chair of the General Council three times since 2000.8

7.5 The bilateral dimension: EFTA, EEA and free trade agreements Norway, along with Austria, Denmark, Portugal, Sweden, Switzerland and the United Kingdom, was a founding member of the European Free Trade Association (EFTA) in 1960. Originally EFTA was seen as a less binding cooperation than the common market that was initiated by the six member states of the European Community in 1957. The UK government was a central actor in the establishment of EFTA, but, together with most of the other original members, over the years it joined the EU. As of 2012, Norway, Iceland, Lichtenstein and Switzerland are the remaining EFTA members. The three first countries are also closely integrated with the EU through the EEA Agreement, while Switzerland manages its interests through a number of bilateral deals with the EU. 7.5.1 The European Free Trade Association The ambitions of the original EFTA Treaty – the Stockholm Declaration – were to reduce tariffs and eliminate quantitative restrictions and rules of origin to increase trade in goods between the member states. Most of this was achieved in the 1960s and 1970s. In the 1980s and 1990s, the relationship with the EU and the negotiations of free trade agreements with other countries in Europe dominated the agenda of the EFTA. In 2001, the Vaduz Convention was adopted in order to adjust to new developments in the global economy in areas like trade in services, investments, free movement of persons, public procurements, intellectual property rights and other arrangements, and to support an open internal market in the EFTA. The function of the EFTA Council was also strengthened in order to improve the management of internal relations as well as relations with present and potential partner countries (EFTA 2010: 6).

164

A. A. Farsund

EFTA may appear to be a peculiar tool for promoting Norwegian trade interests because at first glance the four member countries seem to have little in common. There are two landlocked central European countries and two northern European countries facing the North Atlantic. Neutrality is the cornerstone in Swiss foreign relations, while both Iceland and Norway are members of NATO. However, the countries share some characteristics that make their cooperation in EFTA reasonable. First, they are small, rich and open economies that depend on foreign trade. Second, they all have agricultural sectors that depend on a high level of economic support and need protection from international competition through tariffs. Third, they have different offensive interests in trade, which makes it easier to make package deals in trade negotiations. Norway may gain market access through Swiss concessions and vice-versa (author’s interview). The cooperation in EFTA is managed at a fairly low level, primarily with administrative contacts. The highest authority in the organization is the EFTA Council, which meets twice a year at the ministerial level, and monthly at the ambassadorial level. There are a number of specialized committees and expert groups that assist and report directly to the Council. There are also two advisory bodies, the EFTA Consultative Committee, comprising representatives of industry and labour, and the EFTA Parliamentary Committee, comprising members from the parliaments of the member states. The EFTA-secretariat has its headquarters in Geneva, a major office in Brussels and a Statistical Office in Luxembourg. The staff is made up mostly of civil servants from Iceland, Norway and Switzerland and is recruited on three-year contracts that can be renewed once. The exchange of personnel between EFTA and the national capitals lays the foundation for close cooperation between the secretariat and the capitals, which is crucial in the handling of domestic interest in trade negotiations (author’s interview). Today, the EFTA-secretariat has three main areas of responsibility. The first is to manage the rules for intra-EFTA trade relations. The second is to assist Norway, Lichtenstein and Iceland in the operation and development of the EEAagreement. The third is to negotiate free trade agreements with other countries or groups of countries. We will discuss the two last topics in the following paragraphs. 7.5.2 The European Economic Area The European Economic Area (EEA) was established in 1994. The agreement was negotiated by an EFTA that was larger and stronger than it is today. However, when an opportunity for membership in the EU opened up, Austria, Finland (EFTA member from 1986) and Sweden opted for that solution from 1995. The EEA Agreement gives Norway, Iceland and Lichtenstein full access to the internal market of the EU. The agreement provides for the incorporation of EU legislation on the free movement of goods, services, capital and persons between member states into the national legislation of the EFTA countries. A number of ‘flanking and horizontal’ policies are also part of the agreement. This

Norway: agricultural exceptionalism 165 gives the three EFTA countries access to various EU programmes in areas like research, regional development, education, social policy, the environment, consumer protection, tourism and culture. Areas excluded from the agreement are the EU policies on external trade, agriculture, fisheries, monetary union and security and foreign affairs. The Agreement is dynamic and common rules are continuously updated according to new EU legislation (St.meld. 15, 2008–2009: 12). This distinguishes it from most other free trade agreements in the world. Another distinctive character is the two-pillar system established to manage the agreement. This includes a set of common political institutions, and two autonomous EFTA institutions, the EFTA Surveillance Authority (ESA) and the EFTA Court. A third difference is the financial mechanism that provides funding from the EFTA states to projects that can reduce economic and social disparities in Europe. This was originally confined to five years, but the EU has insisted on prolongation every fifth year. Most of the funding comes from Norway, but it is managed by EFTA through the Financial Mechanism Office in Brussels. The latest partnership agreement was reached in 2010, and it will function to the end of 2014. It covers funding for projects in 15 countries, mostly in Eastern Europe. Norway is not a participant in the EU’s Common Agricultural Policy (CAP) and Common Fishery Policy (CFP), but the food safety regulation system in the EU is an integrated part of the EEA Agreement (Lie and Veggeland 2010: 87). Some aspects related to trade in products from the agricultural sector, fisheries and fish farming, are also covered by special paragraphs in the EEA Agreement, while other aspects are regulated separately through different bilateral agreements. Trade in agricultural products between Norway and the EU is covered by Protocol 3 and Article 19 of the EEA Agreement. Protocol 3 was originally a part of the 1973 free trade agreement between Norway and the EU. There was considerable disagreement between the two parties when this protocol was renewed, and therefore the new version was first implemented in 2002. Subsequent negotiations resulted in some changes and the prevailing version was implemented from late 2004. The protocol covers trade in certain types of processed food, and the intention is to increase competition between industrial companies. Therefore commodities may be given tariff compensation. There is no formal procedure for re-negotiating Protocol 3, but the EU is pushing for more market access in this area (author’s interview). Article 19 is more ambitious than Protocol 3, since it states that the aim is a progressive liberalization of agricultural trade through negotiations every second year. In principle, there are no limits, but the article states that trade should be balanced. The ambitions behind Article 19 may be described as the only example of ‘agricultural normalism’ in Norway’s international trade relations. Currently Article 19 is seen as potentially more threatening to Norwegian agriculture than the 2008 package in the Doha Round (author’s interview). The Norwegian government has been under pressure from domestic agricultural interests on this, and is very reluctant to negotiate in accordance with the article, which may explain why there have only been two negotiation rounds since 1994.

166

A. A. Farsund

The first negotiation round took place in 2002 and the outcome was implemented in 2003. After strong pressure from the EU, the second round started in 2008 and ended in 2010. The new agreements have given producers in both Norway and the EU tariff-free quotas for selected products. The EU has obtained quotas for meat and cheese, while Norway has prioritized salads and vegetables. One of the main challenges is that only the EU has unused capacity and traditions for the export of agricultural products, so they can use their quotas while Norwegian quotas are not fully utilized. This is the reason why both farmers and the Ministry of Agriculture are sceptical towards the agreement, since it is mainly the EU farmers that benefit from it. Norwegian farmers refer to the premise that trade should be balanced, and since this is not possible, they argue that there is no room for further trade liberalization. However, the extra quotas that the EU gained in the deal from 2010 were supposed to be a part of the quotas that Norway was prepared to give in a Doha agreement. Somewhat paradoxically, The Norwegian perception is that its two neighbouring countries, Denmark and Sweden, are most active when it comes to demanding market access (author’s interview). Trade in fish and fish products are regulated through Protocol 9 in the EEA Agreement, and in bilateral agreements between Norway and the EU. Protocol 9 gives Norway permanent tariff-free quotas for some products (mostly white fish) and defines sensitive products with high tariffs for Norwegian exports to the EU (including salmon and shrimp). The bilateral agreements that were established when previous free trade partners joined the EU gave Norway tariff- free quotas for fish products in the EU market. A number of these quotas were temporary and expired in 2009. When the EU asked for increased social cohesion funding from the EFTA countries in 2009, Norway made it clear that this would depend on satisfactory market access for fish products. The two topics were negotiated in parallel and, in the end, a package deal was struck. Norway agreed to provide 349 million euros per year from 2009 to 2014 in support for social cohesion, while the EU agreed to prolong the existing quotas and provide new quotas for products that are sensitive to the EU (Prop. 160 S 2009–2010; author’s interview). The export of salmon has been a source of repeated conflict between Norway and the European Union. There is a 2 per cent tariff on fresh salmon and a 13 per cent tariff on processed salmon, but the main conflict has been related to the price level and possible Norwegian subsidies to this industry. The EU has introduced minimum prices several times and in 2006, it imposed a definitive antidumping duty on farmed salmon imported from Norway. Previously, Norway had tried to accommodate the EU, but this time it requested consultations at the dispute settlement mechanism (DSM) in the WTO. In November 2007, the Panel found that the EU had acted inconsistently with a number of articles of the AntiDumping Agreement, while it also gave the EU approval for certain provisions. The EU later removed its anti-dumping measures, but the underlying conflict is not resolved and with new marked challenges it may enter the Norway-EU trade agenda again (NOU 2012: 676).

Norway: agricultural exceptionalism 167 So why has there not been ‘grand bargain’, where the EU gains market access in agricultural products and Norway gains it in fish? The short answer is domestic traditions and interests. In interviews with representatives from different ministries there is one story that is repeated: Norway will not try to exchange market access for fish with market access for agricultural products. This builds on a long-established tradition supported by numerous governments that have made it clear that Norwegian agriculture should not pay for the country’s economic interests in other areas (Jacobsen 1965; Veggeland 1999). To this we may add that the relationship with the EU is a highly controversial question in Norwegian politics. The primary industries are strongly integrated in these conflicts. Organizations representing agriculture are against stronger ties, while organizations for fisheries and fish farmers are split between those who fear loss of fishing quotas to EU fishermen and fish farmers who want more market access for their exports, including salmon. All Norwegian governments need to take this into consideration when they handle their relationship with the EU. 7.5.3 Free trade agreements Norwegian preferential trade agreements (PTAs) with other countries or groups of countries are negotiated through EFTA. The first agreement was signed with Spain in 1980, and in 1990, EFTA started to negotiate agreements for free trade in industrial goods with countries in central and Eastern Europe. Central to these initiatives and current negotiations is the principle of parallelism and coherence, with initiative taken by the EU. In 1995, EFTA decided to start negotiations on free trade agreements with countries outside Europe. Parallelism has been upheld, but since 1995 the implementation of the principle has been more relaxed (Melchior 2004: 29). By 2012, EFTA had entered into free trade agreements with 22 different countries and territories; Albania, Canada, Chile, Colombia,9 Croatia, Egypt, Hong Kong, Israel, Jordan, Lebanon, Macedonia, Mexico, Montenegro, Morocco, the Palestinian authorities (PA), Peru, Serbia, Singapore, South Korea, Tunisia, Turkey and Ukraine. In addition, EFTA has signed free trade agreements with the Southern African Customs Union (SACU)10 and the Cooperation Council for the Arab States of the Gulf (GCC).11 EFTA is currently (2012) negotiating with Bosnia-Herzegovina, the Central American States, India, Indonesia, Russia, Belarus and Kazakhstan. Negotiations are planned with Vietnam, while a resumption of negotiations with Algeria and Thailand is pending (EFTA 2012: 12). There are several explanations for why EFTA is engaged in free trade negotiations and agreements. The first is that globally, there is a general increase in these types of agreements, and many countries and free trade alliances seek attractive partners. The second is related to this, because the EFTA area is the world’s tenth largest trade partner for merchandise and the fifth largest for services, and thus an attractive market to gain access to. The third explanation is that EFTA has a well-tested institutional system for negotiating free trade

168

A. A. Farsund

agreements. Since EFTA has negotiated a large number of European agreements, it has the capacities and organizational arrangements suitable for negotiations with partners in other parts of the world. Nevertheless, the time frame can vary considerably from one negotiation to another. The supposedly easy negotiation process with Canada took more than nine years, while what seemed to be a complex negotiation process with South Korea took only nine months.12 The now-suspended free trade negotiations between Norway and China are an exception from this EFTA track. The background for this was that China did not want to negotiate with EFTA as a group, and initiated separate free trade negotiations with each member state instead. The process started in 2007, when the two countries agreed to prepare for bilateral negotiations. A joint feasibility study was prepared the same year (Ministry of Trade and Industry 2008), and this study is the foundation for the negotiations. The process was organized as rounds of negotiations, either in Norway or China. In September 2010, the eighth negotiation round was held in Oslo and a ninth round was planned in Beijing in December. However, this round was cancelled by the Chinese government. The Chinese gave no reasons for the cancellation, but many saw it as a consequence of the Nobel Committee awarding the Peace Prize to a Chinese dissident (author’s interview). 7.5.4 The intermestic character of free trade negotiations Free trade negotiations represent a possibility for the development of a better understanding of how domestic institutions, ideas, interests and actors influence the Norwegian position and actions in international negotiations. In free trade negotiations, both the EFTA-secretariat and the member states have defined tasks and responsibilities. The point of departure for a negotiation process is normally an invitation from EFTA or from the trade partner. Since EFTA has strong economic ties with the EU, there is usually also some form of free trade discussion between the external partner and the EU. Some countries or groups of countries prefer to negotiate with EFTA and the EU at the same time, while others prefer to keep the negotiations apart. There are no ‘rules’ regarding who finishes first. In some cases EFTA, and in other cases the EU, is first. The parallelism makes it possible for EFTA to consult the EU on important questions (author’s interview). It is possible to divide an EFTA free trade negotiation process into three distinct stages.13 The first stage is the development of the Norwegian position. The Ministry of Trade and Industry coordinates discussions and negotiations between different ministries with responsibilities that will be affected by the negotiations. The Ministry of Trade and Industry, The Ministry of Agriculture and The Ministry of Fisheries consult organized interest at this stage. This is described as a ‘routine process’, where different interest groups present their standard points of view. The fishing industry wants zero-tariffs for exports, the agricultural sector prefer zero-imports, and environmental and human rights organisations have a variety of concerns related to trade in general and to the specific country in

Norway: agricultural exceptionalism 169 question. In the end a written, but secret platform for the negotiations is prepared by the Ministry of Trade and Industry. The national negotiation team is also put together on the basis of the interests and competencies of the different ministries (author’s interview). Thus, Norway pursues the same goals and applies the same strategy in these negotiations as in the Doha Round of negotiations in the WTO: more market access for export of fish and services, and limited concessions when it comes to agricultural imports (except that Norway usually offers tariff reductions for fruits and vegetables, flowers and processed foods with the same tariffs as EU industries have in the Norwegian market). The second stage is the internal negotiations among EFTA members. This represents both challenges and opportunities, but in the end a package deal that takes different national considerations into account is made. The main advantage for the EFTA countries is that they have different offensive interests and similar defensive interests in the protection of agriculture. According to the World Bank, the protectionist strategy positions EFTA in an extreme corner regarding the inclusion of agriculture in free trade agreements, which again leads to rather narrow PTAs (Chauffour and Maur 2011: 151). When it comes to fish, Iceland and Norway want zero-tariffs. Switzerland wants market access for selected industries like machinery, chemicals and pharmaceuticals. All members want more free trade in services, while Switzerland has preferences in finance and Norway has preferences in shipping. The third stage is the negotiations between EFTA and the potential trade partners. The EFTA-secretariat and the memberstates have different, but somewhat overlapping responsibilities in the process. The negotiation team is led by a representative from Norway or Switzerland, depending on specific competencies or the importance of the relationship with the particular country. The member states also provide technical expertise in the negotiations, which ensures that different domestic interests are safeguarded through the whole negotiation process. The secretariat functions as an advisor on technical issues and international negotiations in general (author’s interview). When a negotiation process is finalized, a free trade agreement is signed between the EFTA countries and the partner country or group of countries. There will also be bilateral agreements on agriculture signed between the partner and each of the four EFTA states. This is an expression of the special status that agriculture has in free trade negotiations. When the final agreement is concluded and signed by the partners, a system for implementation is established. On the EFTA side, a joint committee is responsible for coordination, while the secretariat is responsible for the practical follow-up work. A new free trade agreement is presented to the Norwegian parliament in a parliamentary bill submitted by the Ministry of Foreign Affairs. The bill gives an overview of the negotiations and detailed descriptions of each paragraph in the agreement. The agricultural agreement is presented separately. For several reasons there is little political conflict and controversy connected to the treatment of free trade agreements in the Storting. First, there is a rather broad political consensus on free trade in general. Second, and most important, the

170

A. A. Farsund

agreements are not controversial because they do not challenge domestic interests. This is partly an effect of the role that different ministries play during the negotiations, where they have control over details, and partly a consequence of the comprehensiveness of already-existing free trade arrangements endorsed earlier by Norwegian authorities (author’s interview). A frequently raised question related to free trade agreements is: do they matter? The Norwegian economist Arne Melchior has analysed the economic potential in PTA’s for Norway (Melchior 2004). His analysis shows that there is a considerable potential for increased market access for Norwegian fish and seafood. The reason is that tariffs are higher for these exports than for other industrial goods. Asian countries are especially promising markets, and this can partly explain why these countries have been prioritized in recent years. Nevertheless, it is acknowledged that preferential margins under the free trade agreements are relatively small. This is a reflection of EFTA’s limited concessions on agricultural products and the generally low tariffs already offered on industrial products. Our review illustrates that agriculture, for a number of reasons, is a special case within free trade negotiations. First, in Norway the Ministry of Agriculture has full control over the formulation of the national position prior to the negotiations, and it has a strong influence on the concessions that are made during the negotiations. Second, since agriculture is negotiated separately, little effort is made to identify potential trade-offs vis-à-vis other products. Furthermore, agricultural interests in the EFTA countries have a decisive influence on which countries EFTA can negotiate agreements with. Large export countries like Argentina, Brazil and the USA are not prioritized due to fear of them making demands for concessions on agriculture. Contrary to the situation in the Doha Round, export of seafood is pushed more aggressively as an offensive interest in EFTA’s free trade negotiations. The ‘protection of exporters’ argument (Dür 2010) is important in this regard. This motive also influences the selection of partners, because it is crucial for Norwegian exporters of salmon to have free trade agreements with the same countries as their main competitors in Chile. Thus, Norway and Iceland seek, and often gain, lower or zero-tariffs in countries with much higher tariffs on industrial products in the WTO. One reason for this is that market opening for exports to the rich Swiss market is part of the deal. Thus, while Norway has been cautious in promoting both defensive and offensive interests in the Doha Round, this is not the case in other free trade negotiations. One reason is that the EFTA countries are the strong element in most of these negotiations in the same way that the EU or the USA, are in their bilateral trade negotiations. Within Norway, it is mainly NGOs claiming to speak for the ‘Third World’ that have been worried about the consequences of EFTA free trade agreements. These organizations argue strongly for restrictions on the offensive demands of the EFTA countries, but it is the Swiss pharmaceutical industry that is criticized. There has been little demand for more access to the Norwegian market for Third World farmers. Again, we have an example that illustrates how Norwegian NGOs indirectly support domestic agricultural interests.

Norway: agricultural exceptionalism 171 Other topics related to EFTA’s free trade negotiations include sustainable development and labour standards. In the period 2008–2010, EFTA had two ad-hoc working groups preparing an arrangement where environmental and labour concerns could be addressed in a specific chapter dedicated to ‘Trade and Sustainable Development’ in all new free trade agreements. This scheme is highly influenced by the EU’s implementation of a similar system, but it is also influenced by demands from political parties and civil society groups in EFTA member states. What is less clear is how potential trade partners will respond to these demands when they are included in EFTA’s negotiating strategy.

7.6 Institutions, ideas, interests and actors in Norwegian trade politics This chapter has illustrated that Norwegian trade policies are formulated within the framework of rather complicated international and domestic institutional systems. The rule-based multilateral system in the WTO is of vital importance to Norwegian interests, but contrary to the other countries analysed in this book, Norway is not a major player in multilateral trade negotiations. Thus, in general, Norway is dependent on what the big international powers agree on. Domestic interests and ideas are nevertheless taken into consideration when Norway formulates national positions on trade-issues in the WTO, the EEA and PTA negotiations. These positions are the product of interactions between actors with different, and sometimes competing, ideas and interests within the framework of national political institutions. In principle, the political parties determine which ideas and interests Norwegian trade negotiators should pursue or defend through deliberations in parliament and the Cabinet. In practice, different government ministries formulate the details in Norway’s trade policies, most often based on consultations with a variety of interest groups and NGOs. In general, the idea that the international trade system can be further developed through the Doha Round and supplementary preferential trade agreements is supported by most political parties, government ministries and interest organizations. However, there is an exception from the dominant position that is widely shared, and that is the need to protect a sizable part of domestic agriculture production from international competition. This is an interest promoted by a number of actors in the industry, but it is also frequently framed as in accordance with the idea that agriculture is an exceptional activity and that, in a country with unfavourable geographical and climatic conditions, agriculture needs to be protected. While Daugbjerg and Swinbank (2009) find an erosion of agricultural exceptionalism in both the USA and the EU, this chapter illustrates that this is not the case in Norway. As we have observed, Norway pursues defensive agricultural aims in the Doha Round, in the relationship with the EU (Article 19), and in the PTA negotiations through EFTA. Three arguments are put forward in support of this position. The first is that agriculture is the only industry that will pay heavy costs from market

172

A. A. Farsund

liberalization, while consumers and fish exporters will only experience narrow gains. The second is that Norwegian agriculture needs protection based on ‘nontrade-concerns’ like food security, rural employment and settlement, and the maintenance of a living cultural landscape. The third is that the trade distortion that may stem from the Norwegian policy is too limited to have an effect on Third World interests and that changes in Norwegian negotiating positions will not make any significant contribution to the fulfilment of the Doha Development Agenda. Add to this that NGO’s working for ‘Third World concerns’ view the protection of agriculture as a shared interest for Norway and Third World countries, and do not usually criticize high agricultural tariffs in Norway. Two inter-related factors explain why this political perception prevails. The first is the corporatist domestic system of agricultural negotiations that ties the Ministry of Agriculture, and thus, indirectly, the government and parliament, to the farmers’ associations. The interaction is highly institutionalized, and although the partners may disagree when it comes to policy instruments and the level of economic support, they have developed a shared interest in protecting Norwegian agriculture against import competition. Second and closely connected, is party cleavages and coalition building in the Storting. While the implementation of the URA resulted in a conflict between ‘reformist’ and ‘traditionalist’ parties in agricultural policy making, this has not been the case over the last 15 years. One reason is that the Centre Party and the Christian People’s Party, who both strongly support agricultural interests, have been pivotal for all government formations since 1997. To some degree all Norwegian parties support the protection of domestic agriculture, but these two parties, and especially the Centre Party in recent years, have been the parliamentarian guarantors against exchanging agricultural interests for concessions in other important trade issues. In this they attend to a ‘principle’ in Norwegian politics that has existed since the early twentieth century, which is against exchanging the interests of domestic agriculture for market access for other industries abroad. In the autumn of 2012, the Norwegian government announced that it would introduce a new tariff system for some categories of cheese and meat in order to protect domestic production. The policy change came about after strong pressure from the industry. This illustrates that although the agricultural sector has a declining economic importance; its political support is still strong. However, reactions from both domestic and international critics indicate that the dominance of ‘agricultural exceptionalism’ is facing new challenges that are profoundly intermestic in character. In the national debate the Conservatives and the Progress Party, as well as most major newspapers, have protested on behalf of consumers. Internationally, Swedish and Danish politicians have demanded countermeasures from the EU. This has mobilized Norwegian fish exporters, who demand that the interests of this growing industry need to be taken into consideration when these types of decisions are made. Nevertheless, as this chapter has illustrated, the resilience of the institutions supporting ‘agricultural exceptionalism’ in Norway should not be underestimated.

Norway: agricultural exceptionalism 173

Notes 1 See www.Regjeringen.no/upload/FIN/rapporter/Norwegian_economy_2009.pdf. 2 Source: Eksportutvalget for fisk, available online at: www.seafood.no. 3 Based on comments made by the political parties when the parliament read the agricultural report (Innst. 234 S 2011–2012). 4 See www.cgdev.org, accessed 4 November 2011. 5 The latest Trade Policy Review from October 2012 states: ‘No significant changes have occurred in Norway’s general framework for trade policy formulation and implementation over the last four years ‘(WTO 2012b: vii). 6 Whether this is a matter of altruism or national branding, may be disputed – cf. Tvedt (2003). 7 See: www.regjeringen.no/nb/dep/ud/aktuelt/taler_artikler/utenriksministeren/2008/wtout valg.html?id= 526057, accessed 8 February 2010. 8 Ambassador Bryn (2000–2001), Ambassador Glenne (2006–2007) and Ambassador Johansen (2012–2013). 9 The Colombia Treaty has not been ratified by Norway due to concern over human rights violations. 10 Botswana, Lesotho, Namibia, South Africa and Swaziland are the members of SACU. 11 Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates are the members of GCC. 12 Source: St.prp. nr. 55 (2005–2006) and St.prp. nr. 60 (2007–2008). 13 This is seen from a Norwegian point of view. The internal situation in Iceland and Switzerland is somewhat different since they have fewer ministries that need to coordinate different positions and interests.

8

The intermestic politics of trade Oluf Langhelle, Arild Aurvåg Farsund, and Hilmar Rommetvedt

8.1 Introduction In the introductory chapter, we posed the question: why is it so difficult to liberalize trade when everyone supposedly benefits? As argued by Narlikar, Dounton and Stern (2012: 3, 5), ‘[t]he case in favour of free trade is theoretically clear and empirically rich. We know that, bar a few exceptions, trade liberalization is a welfare maximizing pursuit.’ Furthermore, ‘[t]he intuition behind the argument of free trade is beautiful and simple’. Comparative advantages and specialization are supposed to provide the gains from trade, and, according to liberal economists, liberalization is beneficial for a country irrespective of what other countries do. As we have seen in the preceding case studies, however, not everyone gains, nor does everyone share this view on the unconditional benefits of free trade. Governments also pursue other important political goals that may conflict with trade liberalization. The case studies in the preceding chapters have traced the manner in which trade policy is determined in different national contexts primarily from a singlecountry/EU perspective. The studies have also addressed the interaction between international trade negotiations and domestic political factors, focusing on the institutions, ideas, interests, and actors that shape trade policies and negotiating positions. In the following, we bring together the material from the singlecountry/EU case studies in a comparative context, with the ‘intermestic’ nature of trade as the point of departure. As noted in the introduction, Bayless Manning coined the word ‘intermestic’ to capture that new economic issues are ‘simultaneously, profoundly and inseparably both domestic and international’ (Manning 1977: 309). How then do the domestic and international levels interact? A complete analysis of foreign economic policy must include politics at both the domestic and international levels (Hiscox 2005). One of the most acknowledged theoretical attempts to link the two analytical levels is Putnam’s two-level games approach (Putnam 1988). The two-level game metaphor invites one to examine the interplay between the factors at the two levels. To ‘capture this interplay better, it is useful to think not in terms of two distinct levels, one domestic and one international, but rather of one field of action that incorporates both’ (Chorev 2007:

The intermestic politics of trade 175 655, 657). Chorev argues that ‘factors from both levels shape a particular outcome’ and that the interplay between these factors is within a ‘unified field of political action’ in which the division between the domestic and international is best imaged as a ‘fluid’ (Chorev 2007: 653). We will draw on both the ‘twolevel game’ and ‘fluid divide’ metaphors in this chapter. The rest of the chapter is structured as follows. The first section briefly recaptures and elaborates the institutional context in which the Doha Development Agenda (DDA) negotiations have taken place, that is, within the multilateral trade regime that has shaped important elements of the intermestic character of international trade. The second section discusses the key ideational conflicts and narratives that have inflicted international trade negotiations in general, and the WTO and Doha negotiations in particular, with a special focus on agriculture and NAMA (non-agricultural market access) as well as preferential trade agreements (PTAs). In these sections, the country/EU cases are positioned and discussed within the above framework. We draw out key elements from the country and EU case studies and establish parallels and contrasts among the various cases in terms of institutions, ideas, interests, and actors as well as the issues and controversies that cut across the units in the study. In the last section, we confront the intermestic character of trade politics and policy and discuss possible implications and future developments that may follow from this perspective. The three research questions raised in the introductory chapter will be answered throughout this chapter: (1) How do the domestic and international factors in our cases interact in trade negotiations? (2) What are the key conflicts that permeate trade policy both at the international and domestic level and how do these conflicts interact? (3) What can our case studies contribute towards explaining the current impasse in the DDA negotiations and the proliferation of PTAs?

8.2 The institutionalization of the international trade regime World trade has become a hallmark of globalization, and preferential or multilateral trade negotiations are the key to further trade liberalization and the regulation of international trade rules. Countries have three alternatives regarding trade liberalization: unilateral liberalization, PTAs, or a new Doha agreement of some sort. The Doha Round negotiations, however, seem to have stretched the multilateral trading regime to its limits. With an increasing number of member states with diverging interests and ideas negotiating a trade agenda with an overwhelming complexity of issues linked together in a single undertaking – where nothing is agreed before everything is agreed – the outcome of the Doha Development Agenda is highly uncertain. This uncertainty has contributed to the proliferation of PTAs, which is also reflected in the case studies included in this book. The establishment of the WTO in 1995 created a membership-driven international organization. As the WTO secretariat ‘has no power to self-initiate action or to make decisions’, what ultimately matters is:

176

O. Langhelle et al. the continued willingness of WTO members to abide by the negotiated rules of the game, and to use the multilateral institution as a mechanism to liberalize trade further and pursue cooperation in areas that gives rise to disputes and friction. (Hoekman and Kostecki 2009: 54)

It is within this institutional setting that the DDA negotiations take place. The establishment of the WTO also created an organization with teeth. The dispute settlement system was substantially revised in the Uruguay Round, and the revised WTO Dispute Settlement Mechanism (DSM) became applicable to all WTO agreements. The DSM makes WTO unique in both the extent of member’s contractual obligations and the enforcement mechanism built into its system for resolving disputes (Jones 2004). According to Esserman and Howse (2003), it entails an increasing ‘judicialization’ and ‘de-politicization’ of the process, which is far more binding than in the past (Goldstein 2012). It is also recognized as the only international body that has ever managed to force the US to change its domestic policies (Rodrik 2011: 79). The use of the DSM has been extensive. From 1995 to November 2012, 452 disputes were filed. The number of disputes was at its highest level in the first five years, with 50 cases in 1996 as the all-time high. In 2010, 17 new complaints were delivered, while only 8 were delivered in 2011. This trend could have been interpreted as a decline in the interest of using the DSM, but the 25 complaints launched in 2012 illustrate a continuous trust in the system. Table 8.1 illustrates to the degree to which the countries in this study have used the DSM as a complainant or a third party, or have been challenged as a respondent. It should be noted that China was not a WTO member in the early period when there were most complaints. One of the special features of the DSM is that its rulings have implications for other related trade topics. Dispute panels and the Appellate Body have created a large body of WTO case law, and they have been criticized for making law instead of administering it (WTO 2007b: 279). The need for ‘improvements and clarifications of the Dispute Settlement Understanding (DSU)’ was recognized in the Doha Ministerial Declaration. The negotiators agreed that finalizing the DSU should not be part of the single undertaking – i.e. that they will not be Table 8.1 The use of the DSM (1995–2012) Country

As complainant

As respondent

As third party

China EU India Norway USA

11 87 21 4 103

29 73 21 – 119

92 125 80 46 97

Source: www.wto.org (accessed 6 December 2012).

The intermestic politics of trade 177 tied to the overall success or failure of the other negotiations mandated by the declaration. Originally set to conclude by May 2003, the negotiations are continuing without a set deadline. There are several ways in which it can be argued that the judicialization of the trade policy regime itself affected the Doha negotiations. Goldstein (2012: 80) argues that an unintended effect of the judicialization is the unwillingness of governments to expand the liberalizing agenda because they may ‘fear having their hands tied in case of some economic problem facing their nation’, a fear that ‘may well explain the limited interest in further expansion of the regime’s reach’. Thus, legalization in combination with liberalization raises the potential costs of a new agreement. In the analysis of Goldstein and Steinberg (2007: 3), the deadlock in the Doha negotiations has led to a ‘legislative paralysis’, which has in turn moved WTO law ‘out of the legislative venue of member states and into the courtroom’. The multilateral trade policy regime has also affected domestic institutions. Domestic institutional changes and policy responses can partly be seen as a consequence of the international trade regime itself. As argued convincingly by Sinha (2007: 1184), the ‘[g]lobalization of trade rules, in fact, creates pressures to strengthen national state agencies and trade policy processes’. It is international institutions such as the WTO, ‘more than market flows’, that ‘interact with political institutions, rulers, and state agencies and by so doing transform the institutional context of domestic responses’ (Sinha 2007: 1185). This effect is visible in all of our cases, but in India and China in particular. Both India and China have undertaken substantial institutional reforms. In India, these reforms took place in the aftermath of the Uruguay Round, and for China, they were linked to the accession process to the WTO. The institutional changes in India and China seem to have improved their institutional capacity to handle trade issues and strengthened their capability to negotiate trade agreements. According to Sina, this reform may also have some important and counterintuitive consequences. On the one hand, ‘[p]aradoxically, global institutions, by the virtue of their interaction with domestic state institutions, empower the state as the negotiating actor vis-à-vis its Society’. At the same time, ‘participation in an international institution established to implement globalization might unintentionally enhance nation-state capacity to delay and modify globalization and to redirect it towards its own ends’. Thus, ‘in subsequent international negotiations’, member states find that domestic administrative reform ‘allows them to defend and articulate their national interests better, leading to stronger negotiating and strategic capacity’ (Sinha 2007: 1185, 1189). Thus, China and India have become stronger players in the WTO. Although this does not completely explain the impasse in the Doha Round negotiations, it is certainly a contributing factor together with the new developing countries’ coalitions and subsequent changes in bargaining power in the Doha Round. Another dimension in the discussion is the two institutional outputs of the WTO: trade liberalization and negotiated rules, where the ‘primary focus’, according to Jones, is on ‘trade liberalization’ (Jones 2010: 15). ‘In essence’,

178

O. Langhelle et al.

Jones argues, ‘the WTO as an institution calls for its members to yield sufficient amount of sovereignty over domestic import market access in order to secure reciprocal export market access’ (Jones 2010: 17). Capling and Low (2010: 332) also highlight the dual role, the multilateral trade regime, liberalization and rule making, but point at the ‘more valuable role that the WTO plays as a system of justiciable rules’. This point is ‘poorly appreciated’, and therefore, ‘more work needs to be done in raising awareness of the value of global rules in a world of multiple venues for defining trade policy’ (Capling and Low 2010: 332). The issue that Capling and Low raise is the question of where the balance should be struck between the WTO as an engine for trade liberalization and the WTO as an organization that guarantees a system of international justiciable trade rules. We will return to this question later in the chapter.

8.3 Conflicting ideas and interests in the DDA negotiations Whether to extend the scope of the multilateral trade regime has been one of the key conflicts in the DDA negotiations. The inclusion of the Singapore Issues (i.e. investment, competition policy, government procurement, and trade facilitation) was contentious from the start, and after the Cancún ministerial, only trade facilitation continued to be part of the DDA negotiations. Although the Singapore Issues were important for the EU and India in particular (for different reasons), other ideational conflicts have been arguably even more important in the DDA negotiations. As we argued in the introductory chapter, ideas include both perceptions of reality, or of how the world is, and norms and values regarding how the world ought to be. Ideas may be general and diffuse, or they may be the building blocks of consciously and systematically developed ideologies with specific understandings of the world, goals, and guidelines for action. Ideas are reflected in narratives and framings of particular issues and may be, but need not be, linked to interests. There is often a close relationship between ideas and more specific material interests. In our opinion, at least three ideational conflicts have impacted the DDA negotiations in substantial ways. The competing narratives and framings of trade liberalization in our study are linked to different conceptions of (1) the benefits of trade, (2) the fairness of trade, and (3) competing conceptions of the requirements for development. The ideational narratives and framings are partly overlapping and tied together, but they can also be seen as distinct expressions of the ideational conflicts in the DDA. We will address these competing ideational narratives and framings in turn and analyse them in relation to the negotiations in agriculture and NAMA first and then discuss them in relation to the single undertaking. One core narrative of the Doha Round negotiations is that of the new round as a development round. The necessity of having a development round was linked to a specific framing of the legacy of the Uruguay Round, fronted by a number of developing countries, and backed by reports and studies from United

The intermestic politics of trade 179 Nations, the World Bank, and others. The main story was that developing countries were more or less the losers in what Ostry (2000) calls the Grand Bargain, where the developing countries took on significant commitments in new areas such as intellectual property rights and services. The developed countries, in exchange, took on areas of particular export interest to developing countries: agriculture and textiles and clothing. The developed countries, however, had not held up their part of the deal. So widespread was this political and ideational framing that former WTO Director-General Peter Sutherland (2010: 8) stated that ‘Doha was founded on a notion of historic unfairness’. It was time to set things straight, which is what the purpose of the Doha Development Agenda should be, at least for developing countries. 8.3.1 Agricultural negotiations Agriculture was the most important of these areas of perceived unfairness. Agriculture was no doubt the most contentious and difficult negotiating area during the Uruguay Round, and it has remained so during the DDA negotiations. The Uruguay Round Agreement on Agriculture struck a balance between agricultural trade liberalization and the governments’ desire to pursue a variety of legitimate agricultural policy goals referred to as non-trade concerns (NTCs) or, in the case of the G-10 coalition (and Norway), the multifunctionality of agriculture. This balance, however, was viewed by many developing countries as heavily favouring developed countries. Not only could developed countries subsidize exports legally, they managed to sustain high tariffs on strategic products to secure domestic support (with limitations on amber box spending, but none on blue and green box spending), and secured ample opportunities to protect their domestic markets through Special Safeguard (SSG) mechanisms for agricultural products. Contrary to the requirements of the GATT Article VI regulating antidumping measures, the SSG allowed member states to impose an additional duty on imports ‘without the need to show either that the product was dumped or that the domestic industry suffered damage’ (Daugbjerg and Swinbank 2009: 56). The EU, Norway, and the US reserved the right to use the SSG for 539, 581, and 189 products, respectively. India and China have no products applicable to the SSG. They are not allowed to subsidize exports, nor can they use the amber box. Instead, they are allowed de minimis support, which restricts domestic support to 10 per cent of the value of agricultural production for developing countries. China, however, had to accept a de minimis support level below that of developing countries: China accepted 8.5 per cent of the value of production, while the figure for developed countries is 5 per cent (Bhat 2009). Therefore, the direction of the new negotiations in agriculture was also essentially set. ‘In-built agenda’ negotiations on agriculture were scheduled to start in 2000. Article 20: Continuation of the Reform Process in the agreement on agriculture states that ‘the long-term objective of substantial progressive reductions in support and protection resulting in fundamental reform is an ongoing process’. The negotiations should furthermore take into account ‘non-trade concerns,

180

O. Langhelle et al.

special and differential treatment to developing countries, and the objective to establish a fair and market-oriented agricultural trading system’ (WTO 2004: 7). When the EU and US delivered a joint proposal for modalities in agriculture as part of the preparation for the Cancun ministerial in 2003, this spurred the creation of the G-20 coalition. It was set up specifically to create a developing country counterweight to the EU-US proposal. The G-20 was also born out of frustration with the Cairns Group, which ‘did not manage to deliver when it was mostly needed in a critical phase in the negotiations’ (interview, Geneva). Moreover, the Cairns Group was conceived of as an ‘exclusive club of rich developed and developing countries’ (interview, Geneva). The importance of the G-20 coalition, therefore, was the way it strategically balanced both offensive and defensive developing country concerns in agriculture (Narlikar and Tussie 2004; Tussie 2004). This instance was China’s first active entry into a coalition in the WTO (interview, Geneva). China also became a member of what was later to become the G-33 coalition. G-33 was initiated by the Philippines and Indonesia and grew into a coalition focusing on Special Products and Special Safeguard Measures (SSMs) for developing countries to enable developing countries to protect their agriculture from tariff reductions and import surges. Both China and India, therefore, were key players in the coordination between G-20 and G-33 and in the development of the main developing country strategy in agriculture: to press for market access, reductions in trade distorting domestic support and the elimination of export subsidies and export credits in developed countries while securing Special and Differential Treatment (SDT) for developing countries. Both G-20 and G-33 are therefore exclusively developing country coalitions organized against developed countries in the name of fairness and to capture the benefits of trade liberalization in agriculture. On the other side, we find the other three cases in our study: the EU, the US, and Norway. Both the EU and Norway feared the issues bound to arise in a new round of agricultural negotiations, with defensive interests for the most part in agriculture. The EU reformed its Common Agricultural Policy (CAP), and Norway joined forces with the members of the G-10 coalition. The US on the other hand, started out quite aggressively in the negotiations, proposing to reduce ‘substantially, or eliminate, all tariffs, including in-quota duties, by reducing them from applied rates through progressive implementation of annual reduction commitments over a fixed period’ (WTO 2000: 2). The US level of ambition for the agricultural negotiations, however, was gradually reduced as the US was unable to rally sufficient domestic support. What was on the table in agriculture in the ‘almost deal’ in July 2008, therefore, was a number of concessions given across developing countries and across developing and developed countries. No one country received exactly what they wanted. The EU and Norway were likely the most satisfied, noting that it was an agreement that they could ‘live with’ (interview, Geneva). India and the US did not agree on the special safeguard mechanism (SSM) for developing countries, and one trade representative claimed that behind India lurked ‘the shadow of China’ (interview, Geneva). Finally, the SSM issue altered everything.

The intermestic politics of trade 181 8.3.2 NAMA negotiations One of the main reasons for both the EU and Norway to push for a broad round of negotiations was the political need to balance concessions in agriculture. A new round of NAMA negotiations (and also services) was one way of doing so. Very little was done in the Uruguay Round ‘by way of binding commitments that affected applied tariff rates’ in developing countries (Low and Santana 2009: 67). Hence, an important challenge handed over from the Uruguay Round was the problem of reaching the applied tariffs. It was to become one of the major issues in the NAMA negotiations in the Doha Round negotiations, and as we argued in Chapter 2, it sparked the larger question of what ‘the appropriate level of market access commitments for developing countries’ should be, a question that lies at ‘the heart of the difficulties over closing the NAMA negotiations’ (Low and Santana 2009: 68). The major conflicts in NAMA are highly present in our cases. The EU, the US, and Norway have all more or less aggressively argued for tariff bindings and tariff reductions in larger developing countries. As in agriculture, the US started out quite radically. In 2002, the US proposed that all WTO members should ‘agree to eliminate all tariffs on all non-agricultural products by 2015’ (WTO 2002b). Throughout the negotiations, the EU, the US, and Norway have also questioned whether China in particular should be treated as a developing country in the NAMA negotiations, arguing that China in many sectors is not ‘truly’ a developing country, but rather a highly competitive country (interviews, Geneva). Underneath this conflict, however, there is also another ideational conflict. Common for the EU, the US, and Norway is the ideational view that tariff reductions and trade liberalization is good also for development. As argued by the EU, Although the relationship between trade and development is a complex one, there is evidence that trade and openness are nevertheless important elements supporting the creation of jobs and prosperity in developing countries. Developing countries that have opened their markets have often seen high growth rates, and many have found that – when combined with sound domestic policies – trade openness can be an important basis for economic growth. (European Commission 2010b: 58) According to a NAMA proposal from Norway, longer implementation periods and staging for developing countries will only make things worse: ‘Trying to soften the consequences of tariff reductions through prolonged or uneven staging, would . . . generally not be a productive way to go (WTO 2002c). These positions, however, are disputed by both India and China, although for somewhat different reasons. For India, tariffs are seen as a key instrument of domestic industrial policy. As argued in a proposal in the NAMA negotiations from India (together with seven other developing countries): ‘The relative level

182

O. Langhelle et al.

of development of their domestic industry and their infrastructural and other handicaps makes it important that tariffs as an instrument of domestic industrial policy is available to them for several years to come’ (WTO 2003a). As such, India has argued that the NAMA negotiations should fully integrate ‘less than full reciprocity in reduction commitments’ and has stressed that tariffs are unbound for a reason: they cover goods that are ‘generally more sensitive’ (WTO 2003b). Underneath India’s position, therefore, are traces of a different conception of how to develop, the infant industry argument. As argued by Akyüz (2005: 13), this is based on the fact that when US per capita income was ‘similar to India today (that is, around the mid-19th century), its average tariff was twice as high’. The question therefore is whether to leave ‘industrial progress, technological upgrading and economic growth to global market forces dominated by large and mature firms from advanced industrial countries’ or to keep ‘a policy space for rapid industrialization’ for developing countries (Akyüz 2005: 13). Similar arguments have been presented by India’s Minister of Commerce and Industry, Shri Kamal Nath (2006: 1): . . . sensitivities of our domestic industry especially our small scale and infant industries must be addressed in the negotiations, bearing in mind that the developed countries took more than 50 years to bring their tariffs down so that their indigenous industry could reach where they are today. Our industry needs similar flexibilities. Although the infant industry argument is disputed, it is nonetheless important in India’s perception of the NAMA negotiations and India’s prominent role in the NAMA-11 coalition. For China, the situation is somewhat different. Vickers (2012: 254–255) argues that China’s accession to the WTO in 2001, ‘preceded by enormous unilateral liberalization in the 1990s, has been the biggest opening of an economy the world has ever seen’. Formal membership came, however, ‘at a very high price for China’ (Vickers 2012: 259). China had to undertake a number of WTOplus commitments (obligations that exceed normal WTO standards) and was not accredited certain rights afforded to other members (Xiaohui Wu 2011). To join, China had to accept full bound tariff coverage and accept low tariffs on industrial goods (at a 9 per cent average) and the removal of import quotas by 2005. China also had to accept several clauses tailored specifically for itself. These clauses include, among others, non-market economy status in anti-dumping investigations, which makes it easier to reach a positive finding because domestic prices cannot be used as a reference point (China has addressed this issue in several PTA negotiations (Jian and Evenett 2010)), a product-specific safeguard mechanism against Chinese exports, and a special safeguard mechanism against Chinese textile and clothing exports (Gao 2012; Bhat 2009). In effect, the accession terms made China ‘a less-than-equal member of the WTO’ (Xiaohui Wu 2011: 239).

The intermestic politics of trade 183 These clauses have various expiration dates; however, the Chinese, according to Gao (2012: 76), ‘resent them as discriminatory treatments’. In fact, Gao (2012: 76) goes as far as to argue that China has ‘lost interest in the normal negotiation process in the WTO’ and that a revision of the accession provisions ‘is of more direct interest to China’ than the Doha negotiations. Given its lessthan-equal membership, China’s insistence on giving recently acceded members (RAMs) flexibilities in the NAMA negotiations and its reluctance to participate in sectoral initiatives is more understandable. China views its accession terms as essentially unfair, hence its slogan of ‘the four L’s’: ‘ “less” [requests], “lower” [obligations], “longer” [transition periods], and “later” [liberalization]’ (Chin and JiangYu 2009: 8; Vickers 2012: 269). What was on the table in the NAMA part of the July 2008 ‘almost deal’ was, in many ways, similar to the situation in agriculture: a number of concessions given across developing countries and across developing and developed countries, attempting to take into account and balance the conflicting offensive and defensive interests in NAMA. As in agriculture, there was a ‘staggering’ complexity, where the Swiss formula approach is only one of many modalities used for different categories of members (Low and Santana 2009: 90). In NAMA, no single member received exactly what they wanted in the ‘almost deal’. The EU and Norway wanted more; however, ultimately, they could ‘live with’ the end product of the ‘almost deal’. For India and China, the balance struck was highly problematic; and for the US, it was completely unacceptable. 8.3.3 The single undertaking – linking agriculture, NAMA and development The single undertaking provides both challenges and opportunities for the Doha negotiation. The challenges associated with a single undertaking are the complexity it creates and the problem of making concessions comparable across issues. Both of these challenges have permeated the Doha negotiations. The opportunities arise from the possibilities to make trade-offs between separate issues that appear on the agenda of negotiators (Haas 1980). As already argued, a broad round of negotiations was important for both the EU and Norway due to a mix of offensive and defensive interests. For the others too, however, the possibility of balanced concessions across issues was the main reason for accepting the DDA as a single undertaking. Thus, the single undertaking plays a crucial role: it is supposed to allow reciprocal concessions across separate issues. Issue linkages are crucial to generating acceptable outcomes, internationally as well as at home. In the Uruguay Round, there was a limitation placed on cross-sectoral demands. The Punta del Este Declaration stated that ‘[b]alanced concessions should be sought within broad trading areas and subjects to be negotiated in order to avoid unwarranted crosssectoral demands’ (GATT 1986).1 The Doha mandate does not contain such a limitation but has the overall goal of securing ‘benefits to all participants and to achieving an overall balance in the outcome of the negotiations’ (WTO 2001b).

184

O. Langhelle et al.

Issue linkages between agriculture and the other negotiating areas, however, were expected prior to the Doha negotiations and were basically sanctioned by the principle of a single undertaking. Wolfe (1998) argues that this principle effectively changes the whole logic of multilateral negotiations. It is an ‘integrative mechanism’ that shows the ‘the interdependencies among “issues” that make them a negotiable “issue-area” ’ (Wolfe 1998: 95). Michalopoulos (1999: 2) argued that a new round: should be a single undertaking in order to maximize the opportunities for trade-offs across issues and for political reasons, i.e. to permit liberalizing forces in both developed and developing countries to exert pressure on governments for a liberalized trade environment world-wide. Specific issue linkages between agriculture and NAMA started to appear in the meeting of the Negotiating Group on Market Access, 26–28 May 2003. Here, several countries spoke about the ‘essential linkage’ and ‘positive linkage’ between agriculture and NAMA (WTO 2003c). As argued by Coskeran et al. (2012: 344), ‘agriculture and NAMA – have collided in the negotiation process, with one issue being held hostage to concessions in the other’. In the negotiations, agriculture has more held the NAMA negotiations hostage than the other way round. This power dynamic has occurred for several reasons: the whole framing of the DDA as a development round; agriculture as the core concern of many developing countries; and the ‘in-built agenda’, wherein negotiations on agriculture were to start already in 2000 and the member states had prepared several years for agriculture negotiations. The fact that the Doha Declaration contained a date for modalities in agriculture but not for NAMA, also implied that agriculture would set the pace and level of ambition in the NAMA negotiations. In our cases, the balance between agriculture and NAMA (and of course the 13 other negotiating areas as well) has been one of the key challenges, and it has been conspicuously difficult to achieve such a balance. As both the EU and Norway were willing to accept the ‘almost deal’ in July 2008, they also judged the balance between agriculture and NAMA as satisfactory. No doubt, both would have preferred to see more liberalization in NAMA, but additional liberalization would – due to the issue linkage with agriculture – risk more concessions in agriculture, something that neither the EU nor Norway were particularly interested in. For Norway in particular, being at the protectionist extreme in agriculture and close to the pro-liberalization extreme in NAMA, it was nonetheless more important to shield agriculture. The same seems to have been the case for the EU. When the US, in the aftermath of the ‘almost deal’, started to push for further concessions in NAMA, particularly by China, both the EU and Norway became deeply concerned that this might lead to a reopening of the negotiations in agriculture (interviews, Geneva). For India, both agriculture and NAMA made the ‘almost deal’ difficult. As Shri Kamal Nath, India’s Minister of Commerce and Industry, stated at the Trade Negotiating Committee (TNC) meeting on 25 July 2008:

The intermestic politics of trade 185 For us, agriculture involves the livelihoods of the poorest farmers who number in the hundreds of millions. We cannot have a development Round without an outcome which provides full comfort to livelihood and food security concerns in developing countries . . . The poor of the world will not forgive us if we compromise on these concerns . . . These concerns are too vital to be the subject of trade-offs . . . Are we expected to standby, see a surge in imports and do nothing? Do we give developed countries the unfettered right to continue subsidizing & then dumping those subsidies on us jeopardizing lives of billions? The position of developed counties is utterly self-righteous: they have enjoyed their SSG (and want to continue it) but our SSM must be subject to all sorts of shackles and restraints. This self-righteousness will not do. If it means no deal, so be it. For China, agriculture was equally problematic. As stated by Ambassador Sun Zhenyu, at the Trade Negotiating Committee (TNC) meeting on 25 July 2008: . . . unfortunately on those important issues such as SPs and SSM, which affect millions of poor farmers, that is an area we can’t really make further concessions . . . the major players, the major developed players, have to show their flexibilities. This is a Development Round. They have to remember that this is a Development Round. If they cover all their sensitivities for themselves, and keeping on putting pressures on developing countries, I think we are going nowhere. Further concessions in NAMA were also difficult for China. Although China could be said to share an interest in NAMA and (with the US, the EU, and Norway) in further trade liberalization in the larger developing countries, it chose not to. China ‘thus adopted a “two-hand” policy, balancing its own interests as a leading importer and exporter’, reflecting ‘ideological legacies’ and a ‘Third Worldist foreign policy self-identification’ (Vickers 2012: 269). For the US, NAMA was the larger problem, together with market access in agriculture, but the US also had problems with accepting further reductions in agricultural domestic support. Seen together, therefore, it seems reasonable to argue that, more than anything else, the impasse in the DDA has been caused by agriculture and the question of how to balance agriculture with other negotiating areas. In four of our cases, agriculture has affected the level of ambition in the other sectors as well. The US is the deviant case. Furthermore, our cases suggest that agricultural exceptionalism (Skogstad 1998) is still alive and well. Although the ‘almost deal’ in agriculture comprised substantial market access, reductions in domestic support, and the elimination of export subsidies (see Chapter 2 for further details), it would liberalize and not dismantle state support in agriculture. It would lead agriculture further towards a market liberal paradigm and further decouple direct support and production; however, essentially, agricultural exceptionalism would, to a large

186

O. Langhelle et al.

extent, still prevail. For the EU, Norway, India, and China, agriculture is where they put their brakes on for reasons of ‘non-trade concerns’ or the ‘multifunctionality’ of agriculture. Food security, livelihood security, and rural development and poverty reduction in the case of India and China, are key concerns beyond trade. Although the exclusion of three of the four Singapore Issues meant that the DDA negotiations turned away from the ‘deep integration agenda’ (Gallagher 2012: 17), it does not mean that agriculture should be seen as something which is not attached to ‘behind-the-border’ measures. As argued by Skogstad (1998: 468), agricultural exceptionalism contains the belief that ‘agriculture contributes to broader national interests and goals. A safe and secure food supply is in the public interest, lending ready justification to government intervention to secure it’. For the believers in agricultural exceptionalism, the market liberal paradigm in agriculture challenges domestic measures adopted to achieve desired public policy objectives. Agricultural liberalization therefore goes way behind the border, which is precisely why it is so disputed. With the EU and Norway tied up in minimizing the adverse effects of agricultural liberalization, India and China pushing for agricultural liberalizations in developed countries through G-20 and defending their own through G-33, and a clear issue linkage established between agriculture and NAMA through the single undertaking, the ‘help’ the US could get in further NAMA liberalization was severely constrained. The US, however, never really adhered to the dominant narrative that the aim of this round was to correct the injustices of the past. For the US, what was on the table was not conceived as a fair deal, and to understand why, we need to turn to domestic politics.

8.4 Domestic trade politics As argued by Goldstein (2012: 80), trade policy ‘has always been and will always remain, a hostage to domestic politics’, and in the following discussion, we delve more deeply into ideas, interests, institutions, and actors at the domestic level. In this discussion, we argue that there is a ‘fluid divide’ between the domestic and the international levels of politics in which trade policy can be perceived as one field of action that incorporates both of these levels. Thus far, we have only looked at issue linkages at the international level. However, issue linkages also occur at the domestic level; within the two-level game approach, these linkages arise between the domestic and international levels. Issue linkages, therefore, are ‘absolutely crucial to understanding how domestic and international politics can become entangled’ (Putnam 1988: 447). According to Putnam, one specific type of issue linkage is crucial: synergistic linkage. Synergistic issue linkages create policy options and feasible outcomes by altering which outcomes are regarded as acceptable at the domestic level (Putnam 1988: 447). Issue linkages connect and entangle ideas and interests across the domestic and international levels.

The intermestic politics of trade 187 8.4.1 Domestic ideas and interests Ideas include both perceptions of reality, which reflect notions of how the world is, and norms and values with respect to how the world ought to be. Domestic ideas about trade are ultimately linked to views on globalization and the benefits of trade. Based on data from the Pew Global Attitudes Project (GAP) from 2007, which surveyed 47 countries, including 26 developing countries, Jäkel and Smolka (2011) find that the countries with the least favourable views towards globalization are middle- and high-income countries, including the United States and France. On average, US citizens ‘hold the least positive opinions towards international trade’ (Jäkel and Smolka 2011: 12). Among the EU member countries that were included in the GAP survey, attitudes are relatively mixed, with ‘Spanish, Swedish, and Bulgarian people expressing relatively positive views, and French and Italian people being less enthusiastic’ (Jäkel and Smolka 2011: 12). Public opinion regarding free trade has ‘significantly changed [for] the worse [during] the last decade, but only in the developed world’ (Jäkel and Smolka 2011: 3). In fact, individuals in the poorest countries, including China and India, ‘exhibit[,] on average[,] the most positive attitudes towards trade’ (Jäkel and Smolka 2011: 3). The United States The recent changes in public opinion on free trade are particularly prominent in the US. As argued by Olson (this volume), the North American Free Trade Act (NAFTA) in 1993 can be regarded as a turning point in the way in which members of Congress perceived trade policy. NAFTA was the first PTA that included a developing country, and the political cleavages that developed as a result of this inclusion are evident in the voting patterns in Congress for subsequent trade agreements. The political controversies surrounding NAFTA were followed by the rise of civil society protests in Canada, Mexico, and the US. In the US, the Citizens Trade Campaign (CTC) attempted to unite labour, environmentalists and social activists against NAFTA. In the interpretation of Ayres (2004), the ‘anti-globalization movement’ should be perceived as ‘a protest movement against contemporary neoliberal globalization processes’ (Ayres 2004: 12). This protest movement was united by a master anti-neoliberal ‘frame’; the sufficiently broad and flexible interpretative scope of this master anti-neoliberal frame allowed it to function similarly to a master ‘injustice frame’ (Carroll and Ratner 1996; Ayres 2004: 20) in which neo-liberal global institutions, such as the IMF, the World Bank, and eventually the WTO, were viewed as the root cause of global ills. The American political parties have changed their trade policy views over the course of the past century; Republicans have increasingly advocated free trade, whereas Democrats have increasingly opposed free trade. The Democratic Party is particularly divided on the issue of trade. A portion of this division is related to the aforementioned master frames and specifically relates to concerns

188

O. Langhelle et al.

regarding working rights and the environment; however, there is an additional ideational change that cuts across both the Democratic and the Republican Parties. This ideational change, which occurred prior to the development of the aforementioned master frames, has been described by Allee as a ‘shift from a belief in free trade to an espousal of “fair” trade’ (Allee 2012: 242). According to Allee, this ‘striking’ ideational change began during the mid to late 1970s, and it ‘gave the US justification to use retaliatory protectionism against allegedly “unfair” foreign trade practices’ (Allee 2012: 242). The primary tools of this protectionism were section 301 of the Trade Act of 1974 and the 1988 omnibus trade bill, which was directed towards alleged ‘unfair’ trade, or unfair competition in the global market. Between 1975 and 1995, the US pursued section 301 investigations against a number of entities, including the EU, India, and Norway. Although the establishment of the WTO and the Dispute Settlement Mechanism (DSM) in 1995 resulted in a change in the US from a policy of ‘aggressive unilateralism’ to a policy of ‘aggressive multilateralism’ (Bayard and Elliott 1994: 2–3), the fair competition logic is ‘still evident today in US pronouncements towards current WTO members such as China’ (Allee 2012: 243). Although it can be argued that there remains a strong conviction within portions of the Democratic Party and large factions of the Republican Party that free trade is inherently good for not only the US but also the world, the political cleavages between Democrats and Republicans and within the Democratic Party have hampered the possibility of bipartisan trade policy processes in the US. One indicator of the lack of agreement in Congress on the issues of trade is that Congress has periodically refused to grant fast track negotiating authority to US presidents (Olson, this volume). As stated by Destler (2005: 305): [c]onsensus on trade policy has become difficult to attain. Thus, within the current political and economic situation[,] the only politically viable option seem[s] to be to advocate ‘market access’, or in the terms of the ‘fair’ trade perception, ‘balanced access’ or ‘meaningful access’. As argued by Olson, the BRIC countries, namely, Brazil, Russia, India, and, above all, China, are frequently the objects of these ‘fair’ terms of trade. In particular, the US has expressed the sentiment that the markets of these countries should become increasingly open to American products in agriculture, industry, and services. Furthermore, this export emphasis also deflects attention from continuing trade imbalances. The long-term complaints regarding these imbalances may be more readily addressed by increasing exports than by limiting imports. An emphasis on exports directs business and political action toward positive accomplishments, including job creation in the US (Olson, this volume; Dür 2010). Given this domestic situation, it was practically impossible for any synergistic issue linkages to be formed between the ‘almost deal’ and any conditions that a majority in the US Congress would have been likely to accept.

The intermestic politics of trade 189 The European Union Although the EU shares certain of the political concerns of the US in terms of ‘unfair’ trade in its external trade relationships, there are also remarkable differences between the US and the EU. As argued by Daugbjerg (this volume), the EU has assumed a new role in the WTO that has been ‘facilitated by a general shift to a more liberal trade agenda. The EU’s own experience of market opening in the European single market project generated positive experiences with market integration’. This new emphasis on market liberalism has also included a position espousing ‘gradual market opening to ease the transition to more free trade for[,] in particular[,] developing countries’. Another important priority for the EU is ‘the recognition of states’ legitimate right to pursue public policy objectives through domestic regulation, provided that such regulation complies with international trade rules’. This vision of the global trading regime is ‘promoted as managed globalism’; managed globalism was pursued within the WTO’s Doha Round of negotiations ‘but [was] more profoundly [featured] in the EU’s recent bilateral free trade agreements’ (Daugbjerg, this volume). In the EU, in contrast to the US, there has been a clear shift in trade policies towards greater support for multilateralism and a rule-based system since the mid 1980s (Daugbjerg, this volume); in fact, the EU has been the key player driving the deep trade agenda in the WTO. According to Young and Peterson (2006: 804), the deep trade agenda reflected EU experiences with the internal market and was basically an attempt to diffuse the Single European Market model into the WTO. As Young and Peterson (2006: 804) argue, ‘the most compelling explanation for the shape and direction of the EU’s new trade policy is its own experience as a market integration project’. At the EU level, there is also a relatively coherent ideational story that supports trade liberalization through both PTAs and multilateral agreements. Economic growth, consumer benefits, and labour effects are perceived as the triple benefits that arise from the opening of trade (European Commission for Trade 2010a: 5, 2010b: 3). Trade is viewed as crucial to job creation and long-term jobs. The core message is to ‘trade our way out of the current economic crisis’, which directly or indirectly affects 36 million jobs in the EU (European Commission 2010a: 2). In addition, among the member states of the EU, there appears to be broad support for further liberalization in the EU’s external trade. However, depending on the issue at stake, there are extensively reported cleavages between the more liberal Northern EU member states and the more protectionist Southern EU member states. As Baldwin notes, the reality can differ from these reports: Italy and other southern member states can be vociferously ‘liberal’, particularly with regard to sectors where they have strong commercial interests. The Netherlands or the UK can be equally vociferously ‘protectionist’ in defense of their own suppliers of cut flowers or salmon. (Baldwin 2006: 931)

190

O. Langhelle et al.

The EU must balance the trade interests and concerns of its different member states; this management primarily occurs under the auspices of a managed trade regime. However, within the EU, the single market is itself an aspect of an ideational conflict over trade. The single market has been the source of a great deal of political contention in Europe, and in the aftermath of the recent financial crisis and the current monetary crisis, there appears to have been a negative shift in opinion towards the internal market. According to survey data, more individuals believed that the internal market produces a negative impact in 2011 than in 2009, whereas fewer individuals believed that the internal market produces positive effects in 2011 than in 2009. Moreover, in 2011, 62 per cent of individuals thought that the internal market only benefitted large companies, whereas only 32 per cent of individals thought that the internal market benefitted poor or disadvantaged citizens (Eurobarometer 2011). Thus, certain tensions and issues that impact the external relationships of the US are internally contained within the EU. In a report to the president of the European Commission, Monti (2010) expresses a deep concern regarding the erosion of the political and social support for market integration in Europe, stating that the ‘single market is seen by many Europeans – citizens as well as political leaders – with suspicion, fear and sometimes open hostility’. It is ‘undeniable’ that the single market ‘does contribute to creating, at least temporarily, winners and losers, in the context of a positive overall process of growth and job-creation’ (Monti 2010: 26). As a result, umbrella civil society organizations in the EU, which consist of networks of nationally-based NGOs, largely share the same ideational frame that is exhibited by their counterparts in the US. Despite internal tensions, the EU has managed to unite around a set of shared negotiating positions in the Doha negotiations. However, the exclusion of three out of four of the Singapore Issues reduced the material with which the EU could bargain. The notion of defending the EU’s agricultural policy and reducing levels of ambition in NAMA and services provided a sufficiently synergistic issue linkage for the EU to accept the ‘almost deal’. It can also be argued that the EU, somewhat reluctantly, partially acknowledged the dominant narrative that the aim of the Doha Round of negotiations was to redress injustices of the past. Thus, the important concern for the EU was, and remains, the goal of completing the Doha negotiations, which would allow the multilateral system to proceed to other issues of great importance for the multilateral trade regime, including the remainder of the Singapore Issues. Norway As argued by Farsund (this volume), the further development of the multilateral trade system through the Doha Round of negotiations and supplementary preferential trade agreements is supported by most political parties, government ministries and interest organizations in Norway. However, one notable exception from

The intermestic politics of trade 191 this dominant position is widely shared: ‘the need to protect a sizable part of domestic agriculture production from international competition’. As Farsund argues, this is an interest promoted by a number of actors in the industry, but it is also frequently framed as in accordance with the idea that agriculture is an exceptional activity and that in a country with unfavourable geographical and climatic conditions, agriculture needs to be protected. For Norway, the situation in the Doha negotiations has been challenging for two main reasons. First, Norway’s defensive interests in agriculture, which position this nation at the protectionist extreme, and its offensive interests in NAMA, which position it near the pro-liberalization extreme, have been the source of domestic struggles within the Norwegian parliament (Langhelle and Rommetvedt 2004). Trade politics follow the traditional left–right axis in politics; the factions that are the most sceptical towards trade are the Socialist-Left Party, followed by the Centre Party, which is the former agrarian party. The Centre Party, however, is generally favourable to trade liberalization, except with respect to agriculture. Throughout the DDA negotiations, the Centre Party was a member of the coalition government; therefore, the achievement of maximal protection for agriculture became the most important concern. It was on this issue that the most intense battles were fought internationally, and it was on this issue that possible concessions had to be offered. Second, Norwegian determination to be perceived as a nation that prioritized ‘Third World concerns’ became more difficult as events unfolded in the DDA. The formation of the G-20 coalition, and the demands of this coalition for market access in developed countries, certainly represented extremely demanding challenges to Norway’s ambitions to be viewed as a true friend of the developing world. However, in Norway, there was never a legitimate question regarding a possible synergistic issue linkage between agriculture and NAMA. Although this issue was raised in parliamentary debates, and the Norwegian government was accused of following a synergistic strategy in which concessions in agriculture were to be granted in exchange for benefits in NAMA and the promotion of Norwegian interests in fish and fish products, this type of strategy was never followed because of domestic politics. There has been a general consensus that Norwegian agriculture should not ‘pay’ for the country’s economic interests in other sectors. However, certain actors in fisheries may believe that they are currently paying for Norwegian agricultural interests (Farsund, this volume). The lack of a synergistic issue linkage in Norway’s positions is also linked to a consideration that can be regarded as a first-order interest in Norwegian trade policy: Norway’s fundamental political interest in upholding the multilateral trade regime and the multilateral trade rules. This issue may be the most important ideational underpinning of Norway’s multilateral trade policy, and this concern unites all of the country’s political parties. As a small country, Norway perceives itself to be particularly vulnerable to discriminatory trade policies. Therefore, in the words of former Minister of Foreign Affairs Jan Petersen, a

192

O. Langhelle et al.

binding, rule-based multilateral system constitutes ‘the best instrument against arbitrariness, protectionism, and the right of the strongest’ (Langhelle 2005: 164). In essence, the WTO is viewed as a guardian of international trade rules, securing predictability and protection for a small country with an open economy. India As argued by Narlikar (this volume), Indian trade policy ‘espouses the cause[s] of development, fairness, and poverty reduction’. Domestic ideas, interests, and a specific negotiating culture are, in combination with the skewed nature of India’s economic growth, the main explanatory variables underlying India’s willingness ‘to hold up the negotiating process and contribute to the recurrence of deadlock in the WTO’. These variables are also the keys ‘to understand[ing] the long-standing consistencies in India’s trade behavior’. Although India has followed a cautious and gradual policy of liberalization at home, there is still a widespread ‘suspicion of liberalization’ in this nation (Narlikar, this volume; Kumar and Nair 2009). According to Narlikar, this suspicion is partially derived from India’s post-colonial development, which was based on models of importsubstituted industrialization and an emphasis on self-sufficiency. These ideas continue to be highly present in Indian politics, and there remains ‘a very strong colonial mindset’ in which the WTO is viewed as an ‘instrument of neocolonialism’. India is a country for which ‘the spirit of liberalization has simply not seeped in’ (Narlikar, this volume). However, India has ‘always favored multilateralism to bilateralism’ (Kumar and Nair 2009: 13); as one of the initial signatories and founders of the GATT, India has played an active role in the WTO. Development concerns and fairness have been central elements of the ideational underpinnings of India’s approach. India has pushed for, articulated, and advocated Third World concerns ‘since the heyday of the GATT’ (Vickers 2012: 261). In the WTO, India has defended ‘special and differentiated treatment’ (SDT) and ‘less than full reciprocity’ (LTFR) in the Doha negotiations (Narlikar, this volume). To a greater extent than any other nation, India has championed what it conceives as the interests of developing countries (Vickers 2012). The main priority for India in the Doha negotiations has been to retain a ‘policy space to protect the small and marginal farmers/industries’ (Kumar and Nair 2009: 14). There appears to be widespread support for this priority in India. As argued by Narlikar, the ‘Congress party in power today under Dr Manmohan Singh represents perhaps the most liberal face of India’s economic power’. However, even under this government regime, India is not giving in easily to ‘pressures from the North’, and India’s ‘caution in trade negotiations transcends party politics’. Indian governments from the right to the left of the political spectrum have ‘adopted a broadly similar stance in the GATT and the WTO’. India’s negotiation position on trade is therefore perceived as a reflection of the ‘suspicions of its populace’ (Narlikar, this volume).

The intermestic politics of trade 193 Thus, for India, agricultural interests and concerns regarding small industries created difficulties in both the agriculture and the NAMA negotiations. Concessions in agriculture, which employs nearly 60 per cent of the Indian population, would be ‘hard to sell for any government’, and with few alternative employment avenues for farmers to explore, India’s resistance to concessions in NAMA and agriculture becomes ‘clearer in this light’ (Narlikar, this volume). This context also helps to elucidate India’s distributive negotiating strategies (i.e. the value-claiming strategy, amongst others, including the tactics of refusing to give any concessions; Narlikar 2003; Vickers 2012); its leadership of coalitions of developing countries; and its commitment to developmentalism (Narlikar, this volume). Thus, few synergistic linkages across the domestic and international levels existed that could provide new domestic policy options in India. China As argued by Ning et al. (this volume), China’s ‘fundamental national interest is to maintain sustainable economic development and the improvement of people’s standard of living’. Foreign trade should be viewed from this perspective, and ‘the main reason for China’s participation in the international division of labour and trade is to develop the national economy and improve people’s welfare’. In the Doha negotiations, China has argued for a ‘fair, just and reasonable new international economic order [that balances] the interests of both developed and developing countries’. This balance should ‘effectively address the concerns of the developing countries, give them the necessary special and differential treatment, and maintain the policy space for developing countries to promote their development strategy’ (Ning et al., this volume). Consequently, similarly to India, China has taken a stance that aligns itself with the developing countries of the world. As indicated by Ning et al., the ideational underpinning of China’s trade policy has undergone remarkable changes since the start of the reform and opening up process in 1978, which caused China to shift from a closed economy to an open economy during a relatively short time period. China’s trade liberalization and the integration of the Chinese economy into the global economy have been unprecedented; these phenomena have provided a strong impetus to the global economy and have stimulated economic development throughout the world. However, relative to the other cases of our study, China features domestic politics that are less transparent and more difficult to follow. There is a ‘high concentration of power in the ruling party in China’; in particular, power is ‘concentrated in the top leaders. Yet even in China, political elites must be consulted and public opinion must be taken into consideration’ (Chin and JiangYu 2009: 12). As Wang (2011: 450) argues, ‘Chinese political leaders, including top elites and bureaucrats, define and redefine their interests and political power not just in material terms but also in ideational terms in the face of the ideological flux.’ As

194

O. Langhelle et al.

such, Wang argues that trade liberalization was ‘a result of top Chinese leaders’ embrace of neoclassical economic ideas’ (Wang 2011: 451). However, the ‘almost deal’ in agriculture, pushed China close to its domestic political limits. The negotiations in agriculture took centre stage for China; this prominence did not primarily arise because of the sector’s economic importance but rather ‘because of the importance of the political stability of the farming population to Chinese society’ (Chin and JiangYu 2009: 3). According to Tian Zhihong (2009: 16), Chinese agriculture is ‘one of the least protected markets for agricultural products in the developing world’. Given China’s enormous farming population of approximately 740 million, food security, rural development, livelihood security, farm income, and perceived constraints on the possibility of supporting farmers in the future caused this nation to be reluctant to extend any further concessions than it already had in negotiations. ‘China’s support for the SSM, as part of the G-33, was therefore intended to send a strong signal to Chinese farmers that Beijing had not left them behind in [the] WTO’ (Vickers 2012: 264; Chin and JiangYu 2009: 15).

8.5 Domestic institutions and actors Domestic institutions are of key importance in handling and coping with intermestic policy issues. Institutions structure the interactions not only among different domestic actors, including policy-makers, bureaucracies, and non-state actors (NSAs), but also between the domestic and international levels of politics. Domestic institutions can impact international concerns. However, to achieve this impact, these institutions must have the power to influence proceedings at the international level. The US, the EU, India, and China have this type of influence; by contrast, Norway’s influence is highly limited. In the following section, we will first examine several general similarities and differences among the examined cases and subsequently investigate the interplay between the domestic and the international levels of politics. In all of our cases, globalization, increasing volumes of trade, and a deeper trade agenda have been accompanied by institutional changes and adaptations to the changing trade agenda. This situation has resulted in increasing domestic complexity in the handling of trade issues. The number of state actors (i.e. governmental authorities and agencies) that are involved in the creation of trade policy has grown in recent years. In addition, the number of NSAs that are involved and consulted in trade policy-making, including business associations, NGOs, and civil society organizations, has grown. Although the role of NSAs appears to be more developed in the US, the EU, and Norway than in India and China, India is increasingly beginning to involve NSAs in consultation processes. China is the exception to this trend. Interest group and civil society participation are limited in China, but Chinese authorities are gradually involving business actors in negotiating processes and encouraging the institutionalization of business links (Yoshimatsu 2010). There are also other major differences

The intermestic politics of trade 195 between the examined cases, and in the following discussion, we highlight several of the most important institutional features in each case. The United States There are two institutional features in the US system of creating trade policy that have played important roles in this policy: the fast track procedure and the role of the United States Trade Representative (USTR). In the US, the Trade Act of 1974 introduced the so-called ‘fast track’ procedure. As noted by Olson (this volume), the Trade Act also introduced the requirement of widespread reporting activities and consultation between Congress and the president during the course of trade negotiations. The long and extensive struggle between Congress and President Bush and within Congress regarding the free trade agreement between the US and Colombia partially occurred because this free trade agreement was not based on an informal bipartisan agreement that had been reached through congressional consideration, revision, and joint drafting in the Ways and Means Committee in the House and the Finance Committee in the Senate. This type of informal agreement is needed before Congress authorizes fast track authority for a president, and the process of achieving this agreement may require months or years. It is only after this type of an informal agreement is reached that the ‘fast track’ 90-day clock begins as the second step. This clock requires Congress to vote on a negotiated trade bill without amendments and leads to either the adoption or the rejection of the bill in question within the 90-day time window (Olson, this volume). The primary reason for the introduction of the 1974 Trade Act was to allow for the negotiation of non-trade barriers (NTBs) without the fear that Congress would undermine international negotiations by rejecting concessions that had been offered by an administration (Chorev 2007: 669). However, in the years that followed the passage of this act, the ‘most notable change was the periodic withholding’ of fast track authority from the president by Congress (Allee 2012: 244). Between 1995 and 2001, the president lacked fast track authority. This authority was renewed by a ‘margin [that was] razor[-]thin’ in 2001 (Destler 2005: 305) but withdrawn once again in 2007; according to Allee, this withdrawal ‘dealt a near-fatal blow to the Doha Round’ of negotiations (Allee 2012: 244). Another important recent change in US trade policy that has been described by Allee (2012: 243) involves the role of the Unites States Trade Representative (USTR). The USTR played an important role in supporting trade liberalization in the US in the 1960s. However, in the 1970s, the role of the US shifted ‘in ways undesirable to the multilateral trade regime’. Thus, the USTR, which had primarily advocated free trade through tariff reductions throughout the 1950s and 1960s, became more concerned with trade restrictions and section 301 of the Trade Act of 1974. Subsequently, in 1988, ‘super’ 301 provisions were enacted that granted the executive branch the authority to engage in retaliatory traderelated actions to discipline countries with ‘unfair’ trade practices. Thus, the

196

O. Langhelle et al.

protection of US industries and the moderation of imports became equally important to trade liberalization in the overall function of the USTR (Allee 2012; Destler 2005); through this development, authority over protectionist measures was delegated from Congress to the presidential administration (Chorev 2007: 668). The European Union Compared with the other units that are examined in this book, the EU institutions are somewhat special in terms of their intermestic character. In one sense, the construction of the EU can itself be regarded as an attempt to handle and delimit intermestic issues amongst the European countries. As argued by Daugbjerg (this volume), the EU is essentially an ‘intermestic’ political system; in this system, policy making is a two-level game in which member state negotiators in Brussels are simultaneously involved in negotiations in their national capitals. As Holmes (2006: 815) claims, the EU has developed ‘a sophisticated approach to balancing sovereignty and liberalization within the single market’. In the area of international trade policy, the EU is granted the exclusive authority to negotiate and conclude trade agreements on behalf of all of the EU member states within the limits of the treaties of the EU. As observed by Baldwin (2006: 928), the Treaty of Rome is a ‘model of clarity and simplicity in this area’; this treaty specifies that ‘the Commission makes proposals, member states decide, and the Commission executes’. However, in practice, the Commission negotiates within a negotiating mandate that is the result of an iterative and complex political process. This process involves not only the Commission, but also member governments, business, and civil society. Any negotiated agreement must be ratified by the General Affairs and External Relations Council and the European Parliament. Since the Lisbon Treaty came into force in 2009, the European Parliament (EP) has held equal legislative power to the General Affairs and External Relations Council under the auspices of a process that is known as the co-decision procedure, which incorporates both trade policy and agricultural policy. The EP has the right to ratify or reject trade agreements by a simple majority vote. The Lisbon Treaty thus strengthened the European Parliament vis-à-vis the European Commission and the General Affairs and External Relations Council (Daugbjerg, this volume). Different opinions exist regarding the level of power over trade issues that the European Commission actually possesses in practice (for a discussion, see Daugbjerg, this volume). However, compared with the situation in the US, Baldwin (2006: 929) argues that the Treaty of Rome ‘effectively grants a permanent “fast track” negotiating authority’ to the Commission and that this treaty ‘sidesteps difficult questions about who ultimately “owns” trade policy’. The Treaty of Rome is viewed by Baldwin ‘as a flexible mechanism that ensures that member states decide on the policy both at the start and [at] its conclusion, and that they are fully consulted throughout’ (Baldwin 2006: 929). As noted by Daugbjerg (this volume), the ministers of the General Affairs and External Relations

The intermestic politics of trade 197 Council also have at their disposal the combined government expertise of 27 national bureaucracies; these bureaucracies not only provide essential input regarding national interests but also monitor the negotiations of the European Commission. Norway In Norway, trade policy is the prerogative of the government within the confines of the principles of parliamentarianism, constitutional practice, and common law. In a parliamentary system, the government receives its legitimacy from and is accountable to parliament, thus ensuring that the executive and legislative branches are intertwined. It is therefore common for governments to consult the Norwegian parliament (the Stortinget) before and during international negotiations. The institutional framework for the creation of trade policy divides the responsibility for this process between two ministries. The Ministry of Foreign Affairs is responsible for multilateral trade policy in the WTO and the relationship between Norway and the EU, whereas the Ministry of Trade and Industry is responsible for bilateral trade issues, free trade agreements, and general export promotion (see Farsund, this volume). Similarly to the policy-making situations in the other examined entities, in Norway, the preparations of national negotiation positions are the result of iterative and complex political processes that involve the government, the parliament, ministries, businesses, and civil society. From an intermestic perspective, the simultaneous domestic and international aspects of trade have increased the involvement of diverse ministries in the crafting of trade policy. Much of the coordination is therefore among various ministries, and different ministries have their own consultation processes with interest groups in their particular sectors. As argued by Farsund (this volume), sector ministries, such as the Ministry of Agriculture and the Ministry of Fisheries, exert considerable influence on the formulation of trade policy positions that relate to their own sectors. The aforementioned ministries, for instance, advocate defensive interests in agriculture and offensive interests in fish and fish products in the context of NAMA. However, one key institutional factor reflects the importance of agriculture in Norway: corporatist arrangements and negotiation processes are a distinctive characteristic of the creation of agricultural policy. In particular, negotiations occur among the Norwegian Farmers’ Union, the Norwegian Farmers and Smallholders’ Union, and the state with respect to regulations, income, subsidies, and domestic prices for food. No other sector in Norway features similar arrangements. However, these arrangements enjoy widespread support; notably, the NGO community in Norway holds the ideational view of agricultural exceptionalism. Many Norwegian NGOs joined the international anti-globalization movement and adopted frames of the ills of multilateral organizations that are similar to the frames of other anti-globalization entities throughout the world. However, in contrast to many European Union NGOs, which fiercely attacked the US and the

198

O. Langhelle et al.

EU agricultural positions in the Doha negotiations, Norwegian NGOs, with a few exceptions, supported the protectionist positions of the Norwegian government with respect to agriculture. This support arose for the same reasons that these Norwegian NGOs sympathized with the G-33 coalition during agricultural negotiations: non-trade concerns, or the ‘multifunctionality’ of agriculture. To these NGOs, there is no difference in principle between Norway (one of the richest countries in the world) and developing countries. India India is the world’s largest democracy with a parliamentary system. The central government exercises its broad administrative powers in the name of the president. The executive power is centred in the Indian Council of Ministers, which is led by the prime minister of India. The coordination of trade policy has produced inter-ministerial disputes in India. Currently, the Ministry of Commerce is the ‘nodal agency’ that is responsible for negotiating at the international level, but the Ministry of Finance and the Ministry of Foreign Affairs are also involved in negotiations (Sinha 2007: 1193). As argued by Sinha (2007), since 1998, a number of institutional changes and institutional innovations have been enacted in India. In particular, during this time, the Ministry of Commerce was strengthened, new institutions of compliance were created, and policy processes that are related to trade were radically reformed to secure better coordination across ministries. Moreover, the size of the Indian WTO staff in Geneva was increased, and the aforementioned ‘expansion of political community and state structures was accompanied by a creation and institutionalization of policy-expert networks’ (Sinha 2007: 1195). Thus, ‘in just a few years, the cognitive capacity of the state on international trade and WTO issues was enhanced’ (Sinha 2007: 1195). However, as noted by Narlikar (this volume), the Indian parliament plays a very limited role in the creation of trade policy, as there are ‘limited inputs of the Indian Parliament in the international obligations that India takes on’. This limitation ‘translates into considerable leeway for the executive arm of the government via the Ministry of Commerce and Industry (MOCI)’, and India’s traditional negotiating skills in trade matters have been based in Geneva, i.e. negotiations have been principally managed by diplomats and technical experts who are located in Geneva rather than in governmental bodies in India. China In China, the decision-making processes regarding trade policy are led and controlled by the Communist Party of China (CPC). The leadership of the CPC is affirmed in the preamble to the Chinese Constitution; moreover, as an aspect of its single-party rule, the CPC has ‘parallel party organs and cadres who operate parallel to almost every governmental body and position, to buttress the CPC’s

The intermestic politics of trade 199 influence both at policy formulation and implementation levels’ (Lam 2009: 43; see also Ning et al., this volume). The Leading Group for Financial and Economic Affairs is an inner group of the Central Committee of the CPC that is reliant on the CPC Politburo, which is in charge of leading and supervising the economic policies of both the CPC Central Committee and the State Council. The State Council is synonymous with the Central People’s Government and wields the chief administrative authority of China. For China, the period between its official bid to enter the GATT in July 1986 and its accession to the WTO in 2001 represented a huge escalation in intermestic trade policy processes. With respect to the creation of trade policy, China has established several inter-ministerial committees and working and expert groups to develop and coordinate trade policies across sectors; Ning et al. refer to these policies as ‘the policies from different departments’. China’s state agencies underwent significant reorganizations after the accession of China to the WTO. In 2003, the former Ministry of Foreign Trade and Economic Co-operation (MOFTEC) underwent reorganization, and was renamed the Ministry of Commerce; this ministry featured various new departments, such as the Department of WTO Affairs (Sinha, 2007). However, according to Ning et al. (this volume), there remains a lack of policy coordination in the state bureaucracy, particularly with respect to the coordination between industry and trade policy in situations involving diverging interests, and a lack of effective coordinating mechanisms among the various ministries. The Ministry of Commerce participates in the process of creating trade policy, but this ministry is primarily concerned with industrial damage investigations and trade remedy policies rather than industrial policies. Because industrial policies are developed by their associated departments or agencies, coordination between these agencies has become an issue of concern in China.

8.6 International-level implications of domestic institutions To what extent do the particular institutional features above produce spillover effects on the international level with respect to both PTAs and the WTO negotiations? The most frequently identified domestic institutional mechanism that affects international trade negotiations is certainly the ‘fast track’ negotiating authority, which is also known as the Trade Promotion Authority (TPA), of the US president. The possession of a TPA by the US president affects the manner in which other negotiating parties view the US. As argued by Deese (2008: 33), US negotiators ‘wield less negotiating credibility among the GATT-WTO membership if they do not have a specific grant of negotiating authority from the Congress’. President Obama currently has no fast track authority (or TPA) for the Doha Round negotiations, and it is uncertain whether he seeks this authority or whether he would receive a TPA if he sought it. Thus, President Obama’s anticipated lack of support from the US Congress plays an important role in the Doha negotiations.

200

O. Langhelle et al.

Another institutional feature concerning the US that has been addressed by Allee (2012: 247), is the decentralization of US trade policy-making, which has decreased the power of committee chairs and granted power to individual members ‘to advance the narrow interests of their constituents’. An illustrative example that was mentioned in our interviews in Washington DC, and also described by Allee (2012: 246), refers to the Kentucky senator who blocked nominees for the positions of the US trade representative to the WTO and the chief agricultural negotiator in the Senate to protest a Canadian anti-smoking law that could harm tobacco farmers in his own state. As a result, despite unanimous support for these nominees in the Senate Finance Committee, the Obama administration featured neither a US trade representative to the WTO nor a chief agricultural negotiator in the Senate during the President’s first 14 months in office. This situation exemplifies the number of veto points and veto players that can influence US trade policy (O’Reilly 2005; Henisz and Mansfield 2006). One important institutional feature in the EU concerns the competencies of the EU and the scope of the European Commission’s negotiating mandate. As shown by Daugbjerg (this volume), the interpretation of the European Commission’s negotiating mandate has sometimes created tensions between the Council of the EU and the European Commission; moreover, the European Commission only obtained negotiating competences that extended beyond trade in goods following the adoption of the Nice Treaty in 2003. In the Nice Treaty, however, the member states retained control of the most sensitive trade issues. Thus, the European Commission obtained new competences only on trade issues for which the EU, for the most part, has offensive interests. In effect, this treaty may lead to more extensive negotiating mandates and offensive trade positions in these areas (Daugbjerg, this volume). Another institutional peculiarity in the EU is the manner in which the negotiating mandate for agriculture is resolved. Because agriculture is the negotiating area in which the EU features the most defensive interests, the practical solution to the creation of trade policy has been to reform the Common Agricultural Policy (CAP) prior to negotiations and to translate this policy into the negotiating mandate that is granted to the Commission (Daugbjerg, this volume). In effect, this behaviour can be perceived as a practice that slows external trade negotiating processes by increasing the difficulty of obtaining EU concessions in agriculture that extend beyond existing reforms to the CAP. The parties that negotiate with the EU know that these additional concessions must be reviewed by the EU institutions, and that reformations to the CAP require a timeconsuming process that is contested within the EU. Pascal Lamy, in his role as the EU Trade Commissioner, has stated that ‘the chicken is the CAP, the egg is the WTO’, an observation that implies that CAP reforms are inherently linked to WTO negotiations (cited from Paugam 2003). As Daugbjerg notes (this volume), the EU’s limited ability to proceed beyond the concessions that have been authorized in CAP reforms has constrained its ability to be more offensive in other negotiating areas, such as NAMA and services.

The intermestic politics of trade 201 In India, the parliament has a ‘quite minimal’ role in the entering and signing of international treaties and international obligations, despite its constitutional power to perform these tasks. The ‘de facto experience’ of entering into treaties is that these matters have been left ‘solely to the executive’ (Kapur and Mehta 2006: 27). The composition and negotiating strategies of the Indian executive branch are therefore more important to trade policy than the composition and negotiating strategies of parliament. Institutional features thus have less prominent impacts on trade policy in India than in the US or the EU. In China, the dual structure of the CPC and governmental bodies creates an institutional complexity that differs greatly from the institutional environment of most other countries. This institutional complexity renders it difficult for other countries to fully understand China’s needs, negotiating strategies, and positions.

8.7 When multilateralism fails: the rise of plurilateral trade agreements The country chapters of this book illustrate that PTA negotiations are currently higher on the political agenda than the finalization of the Doha Round of negotiations. China, the EU, India, and Norway (through the European Free Trade Association (EFTA)) are negotiating a number of new trade agreements, whereas the US is primarily directing its attention towards concluding an ambitious Trans-Pacific Partnership (TPP) trade pact. This situation raises a number of questions that relate to the intermestic character of these types of trade deals. We first discuss the characteristics of these trade deals for each examined country in this study and then address differences and similarities among these countries. Subsequently, the consequences of this situation for the multilateral trade system are elaborated. In the US, the TPP negotiations are framed as an ambitious agreement in which the negotiating partners seek to integrate a number of new topics, such as competition policy, intellectual property, technical barriers, and government procurement. Other issues, such as labour and environmental standards, services, and investments, are also discussed. The US has an ambivalent relationship with PTAs. NAFTA is one of the most wide-ranging trade agreements in the world; after 20 years, NAFTA remains controversial in US politics. The ways in which the Colombian and South Korean deals were addressed under the Bush and Obama administrations illustrates the complexity of the American situation with respect to PTAs; in particular, exporters face different domestic interests that wish to stop or limit these agreements (see Olson in this volume). The high level of conflict among various American factions in recent years has limited the US government’s engagement with these types of negotiations. The EU formulated a new strategy for negotiating PTAs with countries in all portions of the world in 2006. The expansion of markets in Asia and Latin America was granted the highest priority on the agenda because the main driving force underlying this strategy involved increasing exports to these countries. The deep trade agenda of the EU is at the core of this strategy, and the EU seeks the

202

O. Langhelle et al.

highest possible degree of trade liberalization, including the far-reaching liberalization of services and investments (see Daugbjerg in this volume). A fear of losing exports to other countries (especially the US) that are negotiating PTAs with ‘potential partners’ has also been a driving force behind EU trade agreements with certain countries, such as South Korea and Colombia. This expansion of scope has produced certain internal challenges. Industries that are facing increased competition in their home markets, such as the car industry with respect to South Korea and potentially Japan, or the agricultural sector with respect to Canada and the Mercosur, have been critical of the EU policy of trade liberalization. NGOs that advocate for Third World concerns have also criticised the EU’s quest for PTAs with poorer countries. To counter this criticism from domestic interests, the European Commission has requested that the EU PTAs should include standards that govern sustainable development, labour, and human rights. China has traditionally negotiated its PTAs in the Asia-Pacific region and has agreements with ASEAN, New Zealand, and Chile. A portion of the motivation for these agreements has been ‘to gain formal recognition from its partners of its market economy’ (Stoler 2011: 226). China, a latecomer to free trade agreements, is increasingly negotiating PTAs with countries in distant regions of the world. These agreements include separate negotiations with the three EFTA countries of Iceland, Norway, and Switzerland. Domestically, China addresses PTAs in the same manner in which it addresses multilateral trade negotiations (Ning et al., this volume), but the limited scope of the negotiations that China has engaged in to date reflects its need to consider industries and provinces that may not profit from free trade. India has been more active in entering into PTAs than either China or the US, but has fewer agreements than the EU and the EFTA. Not all of India’s PTAs are deep integration agreements, nor is India guilty of the all-too-familiar tactic employed by the US and the EU of stomping out of the multilateral room into the regional room if multilateral negotiations become overly difficult. However, insofar as the pursuit of regional routes can serve as a signal of the availability of attractive BATNAs (best alternatives to negotiated agreements), India’s participation in PTAs is another indicator of its potential to resort to more distributive strategies (Narlikar in this volume). India is currently negotiating PTAs with both the EU and EFTA, but there has been limited progress in these negotiations thus far. One reason for this lack of progress may be the fact that certain reservations remain in India regarding free trade agreements because these agreements are complex and may contribute to trade diversion (WTO 2011c). The EFTA, which includes Norway as one of its two dominant members, employs parallelism with the EU as one of its criteria for negotiating PTAs. Because of its prosperity and spending power, the EFTA is an attractive partner for countries and regional trade blocs; thus, the EFTA has recently included a large number of PTAs on its agenda. However, domestic interests represent important constraints on PTAs, as the EFTA emphasizes the importance of defensive agricultural interests in these negotiations and only promotes narrow

The intermestic politics of trade 203 export interests that are largely limited to industrial goods (including fish) and services (Farsund, this volume). This limitation narrows possible trade-offs and restricts the countries with which it is possible to negotiate. Thus, there are very few domestic conflicts with respect to PTA negotiations in Norway. The EFTA has also prepared a platform for integrating sustainable development, environmental issues, and labour standards into its PTAs, but this system is not yet fully implemented. The PTAs that were initiated and partially finalized during the Doha round of negotiations indicate both an ambition for increased market access abroad and uneasiness with respect to how trade agreements may influence domestic interests. Thus, the economic motivations for PTAs are relatively clear, whereas the political motivations for these agreements are more nuanced. It is easier to accommodate domestic interests in PTAs than in multilateral negotiations, and it is reasonable to argue that this consideration is an important motivation, particularly for the wealthier entities that are addressed in this study. To illustrate this principle, consider that the EU and EFTA have introduced sustainable development as a premise for new agreements, whereas labour standards and human rights are frequently topics of discussion in the US with respect to free trade agreements. This issue may be presented as a shared interest for both parties in the negotiations, but these demands have the potential to reduce competition from poor countries if an agreement is finalized and are thus beneficial for domestic interests in the wealthier nations. Another example of how wealthy countries attempt to utilize PTAs involves the introduction of competition policy, intellectual property rights, and government procurement into PTAs by the EU and the US. In contrast, India and China are more sceptical of certain new elements introduced by rich countries because low wages and less ambitious environmental standards are comparative advantages that these countries must utilize to become rich. Other political motivations that underlie PTAs include competition between exporters in different markets, which constituted a crucial element of the US–South Korea and EU–South Korea trade deals; cooperation between strongly integrated countries, as demonstrated by the parallelism between the EU and EFTA and by Mexico and Canada’s participation in the TPP negotiations; and finally south– south alliances, which are important for both India and China. Because the entities in this study all appear to put more emphasis on PTAs than on finalizing the Doha Round of negotiations, it is reasonable to discuss how PTAs affect the multilateral system. In 2011, both the World Bank and the WTO presented comprehensive assessments of the current situation. In the World Bank study (Chauffour and Maur 2011), Richard Baldwin presents an analysis of existing PTAs; this analysis reveals that there is little evidence that regionalism is overwhelmingly bad for the multilateral trade system and that there are certain indications that regionalism is associated with general liberalization (Baldwin and Freund 2011: 137). These benefits are elaborated in the World Bank report. The main arguments in favour of PTAs are that these agreements create larger and more competitive markets and benefit producers

204

O. Langhelle et al.

and consumers through economies of scale and lower prices. A further argument is that PTAs are increasingly being used as engines of change in developing countries that promote, implement, and institutionalize reforms in a wide range of policy areas. Thus, PTAs have become a key tool for promoting economic growth and combatting poverty in developing countries (Chauffour and Maur 2011: 1). A second question regarding PTAs is what effect these agreements have on world trade. The World Trade Report 2011 provides several answers. The first observation from this report is that intra-PTA trade represented approximately 35 per cent of total world merchandized trade in 2008 but only 18 per cent of this trade in 1990. However, the WTO numbers reveal that only 16 per cent of this trade qualified as preferential trade, implying that most of the world merchandize trade (84 per cent) occurs on a non-discriminatory most-favourednation basis (WTO 2011c: 7). This finding may be explained by the facts that preference margins are small, significant tariff barriers exist in certain sectors, and most sensitive sectors remain sensitive to higher tariffs. In contrast, certain PTAs address many more policy areas than tariffs. For instance, specific PTAs have gone well beyond commitments in the GATS agreement and Doha negotiations with respect to services; the investment aspects of particular PTAs contain many provisions and guarantees that are important to international production networks; and increasing numbers of PTAs have begun to include provisions that address technical barriers to trade (WTO 2011c: 11). However, the proliferation of regional trade agreements may complicate the international trading environment. PTAs create webs of incoherent rules and intricate rules of origin, and this ‘spaghetti bowl’ is frequently criticized by various economists, such as Jagdish Bhagwati (2008). The political challenges that follow from an increased focus on PTAs have also been raised in discussions of this topic. Pascal Lamy criticizes these agreements because they can divert negotiating energy and resources from multilateral forums; this effect is particularly serious for developing countries with limited negotiation capacities. The most fundamental problems arise if on-going negotiations on regional trade agreements induce certain WTO members to make minimal offers in multilateral negotiations to preserve additional negotiating chips for various regional trade agreement negotiations (Lamy 2006). Another warning has been issued by Richard Baldwin, who emphasises that PTAs ‘are decided outside the WTO, in a setting of massive power asymmetries and without basic principles of non-discrimination and reciprocity of concessions’ (Baldwin 2012: 650).

8.8 Towards a new politics of trade? As we have observed in this chapter, there are numerous explanations for the current situation regarding the creation of international trade policy. There are substantial differences among nations and factions at the ideational level. These ideational differences are linked to a variety of issues, such as who benefits, what

The intermestic politics of trade 205 constitutes fairness, and what the best roads to development may be. There is also substantial divergence among actors in terms of economic interests, how these interests are perceived, and how offensive and defensive interests may be balanced. The institutions in which this balancing occurs determine nations’ bargaining positions and the outcomes that are considered to be acceptable, and spillover effects are observed both from the global to the domestic level and from the domestic to the international level. As we have argued, this situation can be viewed as a variety of intermestic policy processes in which trade politics become ‘simultaneously, profoundly and inseparably both domestic and international’ (Manning 1977: 309). Moving towards an endgame and identifying a landing zone have proven to be conspicuously difficult in the DDA negotiations. As we have stated, the challenges associated with a single undertaking are the complexity that this philosophy creates and the problem of ensuring that concessions are comparable across issues. This last concern should not be underestimated. How does one account for a concession in agriculture compared with a concession given in rules or in another negotiating area? As one trade representative notes in an interview in Geneva, ‘there is no neat and easy way to keep the records; there is no Excel sheet where all equations are put in and an answer pops out[;] this is basically politics’. Politics, therefore, as we have tried to illustrate, is the key to understanding the failure of the Doha negotiations. Numerous proposals have been set forth to resuscitate these negotiations. These proposals include institutional reforms of the WTO, changes in the ways in which member states negotiate, concrete proposals for issues that must be changed or corrected in the ‘almost deal’ from 2008, and various other suggestions. Most commentators agree that it is of outmost importance to conclude the Doha Round; however, it is unclear how this goal may be accomplished. In the analysis of Martin and Mattoo (2011: 4), the proposals on the table in December 2008 implied three key benefits: access to new markets in agriculture and manufacturing; greater security for markets that are accessed in agriculture, manufacturing, and services; and expanded opportunities for the Least Developed Countries (LDCs). Bhagwati and Sutherland (2011: 1) argue that ‘what is already on offer is a package that would provide a global economic stimulus of hundreds of billions of dollars in new trade annually. Everyone would gain – both developed and developing countries alike[,] and the latter particularly so’. The broad issues that are currently blocking an agreement include the extent of the actual liberalization of merchandise trade, whether there should be free (or freer) trade in specific sectors that are addressed by the NAMA negotiations, disagreement about the design of a special safeguard mechanism (SSM) for developing countries in agriculture, and the US use of zeroing in antidumping procedures (Martin and Mattoo 2011: 15). Hubauer et al. (2010: 2) argue that the overall Doha package is workable but that it is ‘still not ambitious enough and does not adequately balance the interests of the major trading nation[s]’; thus, these researchers claim that the Doha package is ‘unlikely to garner the necessary political support in national

206

O. Langhelle et al.

legislatures’. Bhagwati and Sutherland (2011) argue in the same manner, claiming that the proposals that are already on the table need to be sweetened, particularly with respect to services and NAMA, to reach a balanced outcome. These positions, however, are not neutral assessments of the notions that were on the table in 2008. Instead, these views can be regarded as proposals that are aimed at further liberalization, and these perspectives are largely consistent with US positions. It might be true that the aforementioned package is required to pique US interest in a Doha deal (and without the US, there will be no deal); however, this reasoning raises the question of whether the other WTO members would be interested in the package in question. The quest for obtaining more leadership from India and China in a manner that respects their vast development challenges is more easily stated than accomplished (Vickers 2012: 256). In many ways, it appears that China and particularly India are in no hurry to reach an agreement on the Doha deal. Moreover, for China, the elimination of the China-specific clauses from a deal may be as important as the DDA itself. Moreover, both India and China ‘live’ well within the existing framework that regulates world trade. Another method of advancing the DDA would entail focusing on the ‘more valuable role that the WTO plays as a system of justiciable rules’, which is ‘poorly appreciated’ (Capling and Low 2010: 332). Gallagher (2012: 19) argues that ‘the WTO has been undersold as a legitimate global economic governance institution’. Gallagher (2012) outlines a vision of the WTO as a more modest, but more legitimate, global institution than the current incarnation of the WTO; in this vision, the WTO would possess a stronger mandate to regulate and govern world trade. The alternative that is advocated by Gallagher is not necessarily to stop liberalizing global trade, but to lower overall ambitions and provide a greater focus on building the WTO’s ‘institutional capabilities in order to serve as the global governance structure for world trade’ (Gallagher 2012: 19). Regardless of the vision of the WTO to which one subscribes and what action one believes is necessary to finalize the DDA negotiations, our study demonstrates that there are domestic political reasons for the unwillingness to relinquish more sovereignty to the multilateral trade system. Instead, there is a growing tendency to seek market access through PTAs. This approach may provide benefits in the short term, but to meet various global challenges, such as climate change, food security, and economic interdependence, there appears to be no realistic alternative to increased multilateralism. In our opinion, with respect to trade, the WTO and the multilateral rule-based trade system should be the preferred option for implementing and governing international trade policies.

Note 1 Our italics.

Asia Pacific Economic Cooperation forum. Nature: regional Issues: general www.apec.org

European Union, in the WTO officially called the European Communities. Nature: customs union Issues: general ec.europa.eu African Group + ACP + least-developed countries. Issues: general

APEC

EU

G-90

Description/issues

Groups

Groups in the WTO

Appendix 1

continued

WTO members (20): Australia, Brunei Darussalam, Canada, Chile, China, Hong Kong China, Indonesia, Japan, Rep. Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, Philippines, Singapore, Chinese Taipei, Thailand, US, Viet Nam. WTO observers (1): Russia. WTO members (28): Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovak Republic, Slovenia, Spain, Sweden, United Kingdom + European Union. WTO members (65): Angola, Antigua and Barbuda, Bangladesh, Barbados, Belize, Benin, Botswana, Burkina Faso, Burundi, Cambodia, Cameroon, Cape Verde, Central African Rep., Chad, Congo, Côte d’Ivoire, Cuba, Congo (Democratic Rep.), Djibouti, Dominica, Dominican Rep., Egypt, Fiji, Gabon, Gambia, Ghana, Grenada, Guinea, Guinea Bissau, Guyana, Haiti, Jamaica, Kenya, Lesotho, Madagascar, Malawi, Maldives, Mali, Mauritania, Mauritius, Morocco, Mozambique, Myanmar, Namibia, Nepal, Niger, Nigeria, Papua New Guinea, Rwanda, St Kitts and Nevis, St Lucia, St Vincent and the Grenadines, Senegal, Sierra Leone, Solomon Islands, South Africa, Suriname, Swaziland, Tanzania, Togo, Trinidad and Tobago, Tunisia, Uganda, Zambia, Zimbabwe. WTO observers (14): Afghanistan, Bahamas, Bhutan, Comoros, Equatorial Guinea, Ethiopia, Laos, Liberia, Samoa, São Tomé & Principe, Seychelles, Sudan, Vanuatu, Yemen Not WTO members or observers (11): Cook Islands, Eritrea, Kiribati, Marshall Islands, Micronesia, Nauru, Niue, Palau, Somalia, Timor-Lesté, Tuvalu.

Countries

This list is based on sponsors of proposals. See also: list in Annex I of the 10 July 2008 revised draft agriculture modalities, and footnote 9 (paragraph 65) and paragraph 151. Issues: agriculture Small, vulnerable This list is based on sponsors of proposals. See also: definition in paragraph 13 of the 10 July economies 2008 revised draft NAMA modalities (SVEs) – nonIssues: NAMA agricultural market access (NAMA) Recently acceded Recently acceded members (RAMs), i.e., members (RAMs) countries that negotiated and joined the WTO after 1995, seeking lesser commitments in the negotiations because of the liberalization they have undertaken as part of their membership agreements. Excludes least-developed countries because they will make no new commitments, and EU members. Issues: general

Least developed countries: the world’s poorest countries. The WTO uses the UN list, www. un.org/special-rep/ohrlls/ldc/list.htm. Issues: general Official website: www.ldcgroups.org

Least developed countries (LDCs)

Small, vulnerable economies (SVEs) – agriculture

Description/issues

Groups

Appendix 1 Continued

WTO members (19): Albania, Armenia, Cape Verde, China, Croatia, Ecuador, FYR Macedonia, Georgia, Jordan, Kyrgyz Rep., Moldova, Mongolia, Oman, Panama, Saudi Arabia, Chinese Taipei, Tonga, Ukraine, Viet Nam.

WTO members (20): Antigua and Barbuda, Barbados, Bolivia, Dominca, Dominican Rep., El Salvador, Fiji, Grenada, Guatemala, Honduras, Jamaica, Maldives, Mongolia, Nicaragua, Papua New Guinea, Paraguay, St Kitts and Nevis, St Lucia, St Vincent and the Grenadines, Trinidad and Tobago.

WTO members (31): Angola, Bangladesh, Benin, Burkina Faso, Burundi, Cambodia, Central African Rep., Chad, Congo (Democratic Rep.), Djibouti, Gambia, Guinea, Guinea Bissau, Haiti, Lesotho, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar, Nepal, Niger, Rwanda, Senegal, Sierra Leone, Solomon Islands, Tanzania, Togo, Uganda, Zambia. WTO observers (12): Afghanistan, Bhutan, Comoros, Equatorial Guinea, Ethiopia, Laos, Liberia, Samoa, São Tomé and Principe, Sudan, Vanuatu, Yemen. WTO members (15): Barbados, Bolivia, Cuba, Dominican Rep., El Salvador, Fiji, Guatemala, Honduras, Maldives, Mauritius, Mongolia, Nicaragua, Papua New Guinea, Paraguay, Trinidad and Tobago.

Countries

Seeking to secure the same treatment as leastdeveloped countries. (Georgia formally withdrew, but in the agriculture draft the full list is: Albania, Armenia, Georgia, Kyrgyz Rep, Moldova). Issues: Agriculture Cairns Group Coalition of agricultural exporting nations lobbying for agricultural trade liberalization. Issues: agriculture www.cairnsgroup.org Tropical products Coalition of developing countries seeking group greater market access for tropical products. Issues: Agriculture G-10 Coalition of countries lobbying for agriculture to be treated as diverse and special because of non-trade concerns (not to be confused with the Group of Ten Central Bankers). Issues: agriculture G-20 Coalition of developing countries pressing for ambitious reforms of agriculture in developed countries with some flexibility for developing countries (not to be confused with the G-20 group of finance ministers and central bank governors, and its recent summit meetings). Issues: agriculture www.g-20.mre.gov.br

Low-income economies in transition

continued

WTO members (23): Argentina, Bolivia, Brazil, Chile, China, Cuba, Ecuador, Egypt, Guatemala, India, Indonesia, Mexico, Nigeria, Pakistan, Paraguay, Peru, Philippines, South Africa, Tanzania, Thailand, Uruguay, Venezuela, Zimbabwe.

WTO members (9): Chinese Taipei, Rep. Korea, Iceland, Israel, Japan, Liechtenstein, Mauritius, Norway, Switzerland.

WTO members (8): Bolivia, Colombia, Costa Rica, Ecuador, Guatemala, Nicaragua, Panama, Peru.

WTO members (19): Argentina, Australia, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Guatemala, Indonesia, Malaysia, New Zealand, Pakistan, Paraguay, Peru, Philippines, South Africa, Thailand, Uruguay.

WTO members (3): Armenia, Kyrgyz Rep., Moldova.

Also called ‘Friends of Special Products’ in agriculture. Coalition of developing countries pressing for flexibility for developing countries to undertake limited market opening in agriculture. Issues: agriculture

West African coalition seeking cuts in cotton subsidies and tariffs. Issues: agriculture (cotton) Coalition of developing countries seeking flexibilities to limit market opening in industrial goods trade. Issues: NAMA Group of countries with less than 35% of nonagricultural products covered by legally bound tariff ceilings. They have agreed to increase their binding coverage substantially, but want to exempt some products. (In paragraph 6 of the first version of the NAMA text, later paragraph 8.) Issues: NAMA

G-33

Cotton-4

‘Paragraph 6’ countries

NAMA 11

Description/issues

Groups

Appendix 1 Continued

WTO members (12): Cameroon, Congo, Côte d’Ivoire, Cuba, Ghana, Kenya, Macao China, Mauritius, Nigeria, Sri Lanka, Suriname, Zimbabwe.

WTO members (10): Argentina, Brazil, Egypt, India, Indonesia, Namibia, Philippines, South Africa, Tunisia, Venezuela.

WTO members (46): Antigua and Barbuda, Barbados, Belize, Benin, Bolivia, Botswana, China, Congo, Côte d’Ivoire, Cuba, Dominica, Dominican Rep., El Salvador, Grenada, Guatemala, Guyana, Haiti, Honduras, India, Indonesia, Jamaica, Kenya, Rep. Korea, Madagascar, Mauritius, Mongolia, Mozambique, Nicaragua, Nigeria, Pakistan, Panama, Peru, Philippines, St Kitts and Nevis, St Lucia, St Vincent and the Grenadines, Senegal, Sri Lanka, Suriname, Tanzania, Trinidad and Tobago, Turkey, Uganda, Venezuela, Zambia, Zimbabwe. WTO members (4): Benin, Burkina Faso, Chad, Mali.

Countries

Informal coalition seeking to significantly reduce fisheries subsidies. From time to time other WTO members also identify themselves as ‘Friends of Fish’. Issues: Rules (subsidies)

WTO members (11): Argentina, Australia, Chile, Colombia, Ecuador, Iceland, New Zealand, Norway, Pakistan, Peru, US.

WTO members (35): Australia, Austria, Belgium, Bulgaria, Canada, Cyprus, Czech Rep., Denmark, Estonia, EU, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Malta, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Slovak Rep., Slovenia, Spain, Sweden, Switzerland, UK, US. Coalition seeking more disciplines on the use of WTO members (15): Brazil, Chile, Colombia, Costa Rica, Hong Kong China, anti-dumping measures. Israel, Japan, Rep. of Korea, Mexico, Norway, Singapore, Switzerland, Issues: Rules (anti-dumping) Chinese Taipei, Thailand, Turkey

Seeking to maximize tariff reductions and achieve real market access in NAMA. (Some nuanced differences in positions.) Issues: NAMA

Source: WTO 2012. Updated 18 April 2011. See: www.wto.org/english/tratop_e/dda_e/negotiating_groups_e.htm (Accessed 21 February 2012). WTO disclaimer: ‘The texts and materials published on this site serve a purely informative purpose, and have no official or legal status in the form they are published here.’

Friends of AntiDumping Negotiations (FANs) Friends of Fish (FoFs)

Friends of Ambition (NAMA)

Place

Oslo

Geneva

Year

2000

2000

Interviews

Appendix 2

Leader, Norwegian Seafood Federation Leader, Federation of Norwegian Fishers Leader, the Norwegian Seafood Association Leader, the Federation of Norwegian Agricultural Co-operatives Leader, TINE (The dairy cooperative) Leader, NOTURA (The meat cooperative) Advisor, the Association of Norwegian Meat Industry (KIFF) Advisor, the Association of Norwegian Food Industry (NBL) Head of Department, ORKLA Foods Leader, Meat and Poultry Association (KLF) Head of department, The Confederation of Norwegian Enterprise (NHO) Leader, Norwegian Farmers and Smallholders Union Leader, the Norwegian Farmers’ Union Two advisors, The Ministry of Fisheries and Coastal Affairs Advisor, the Ministry of Agriculture and Food Head of Department, Ministry of Foreign Affairs State Secretary, Ministry of Foreign Affairs Advisor, International Centre for Trade and Sustainable Development Member, Permanent Delegation of Uruguay Member, Permanent Mission of Canada Member, Permanent Mission of Japan Member, Permanent Mission of Norway Leader, Permanent Mission of Norway Advisor, Agriculture and Commodities Division, WTO Advisor, Market Access Division, WTO Advisor, Trade and Environment Division, WTO

Position and organizational affiliation

Oslo

Geneva New Delhi Geneva

Brussels

2002

2003 2004 2004

2008

Member of Parliament, Labour Member of Parliament, The Conservative Party Member of Parliament, The Progressive Party Member of Parliament, The Socialist Left Party Member of Parliament, The Christian People’s Party Head of Department, Ministry of Foreign Affairs Head of Department, The Confederation of Norwegian Enterprise (NHO) Advisor, Norwegian Seafood Federation Leader, Virke, the Enterprise Federation of Norway Member of Indian delegation Head of a think tank Member, Permanent Mission of Norway (Agriculture) Member, Permanent Mission of Norway (Fish) Member, Permanent Mission of Norway (NAMA) Two members, Permanent Mission of the US (agriculture) Member, Permanent. Mission of the US (NAMA) Member, Permanent Mission of the People’s Republic of China Member, Permanent Mission of Chile Two members, Permanent Mission of Brazil Two members, Permanent Mission of the Philippines Two members, Permanent Mission of Japan Member, Permanent Mission of Mauritius Member of Cabinet, DG Trade Member of staff, DG Trade Member of staff, DG Trade Deputy Director, DG Trade continued

Place

Oslo

Geneva

Beijing

Washington

Year

2008

2008

2009

2009

Appendix 2 Continued

Member of Parliament, the Progressive Party Member of Parliament, the Centre Party Assistant Leader, the Norwegian Farmers’ Union Head of department, the Ministry of Agriculture and Food Advisor, the Ministry of Trade and Industry Head of department, the Ministry of Foreign Affairs Head of department, the Ministry of Fisheries and Coastal Affairs Leader and advisor, Norwegian Seafood Federation Head of department, the Confederation of Norwegian Enterprise (NHO) Leader, the Norwegian Trade Campaign Advisor, the Norwegian Council for Africa Member, Permanent Mission of Norway Leader, Permanent Mission of Norway Deputy Chief of Mission, Permanent Mission of the US Leader, Permanent Mission of Lesotho Member, Permanent Mission of Brazil Member, Permanent Mission of India Advisor, Norwegian Seafood Council Two members of the staff, the Norwegian Embassy Director and two staff members from the Agricultural Trade Office, Ministry of Agriculture Professor and assistant from China’s Agricultural University Member, House of Representatives, Republican Two Members, House of Representatives, Democratic Staff, Republican, House of Representatives Two Staff, Democratic, House of Representatives Staff, Democratic, House of Representatives Trade Subcommittee Staff, Democratic, Senate Staff, Republican, Senate Staff, trade interest group

Position and organizational affiliation

India

Washington

2010

2010

continued

The Norwegian ambassador to India, New Delhi Director for Research and Information System for Developing Countries (RIS), New Delhi Assistant Secretary General for Federation of Indian Chambers for Commerce and Industry, New Delhi Joint Commissioner of Income Tax, New Delhi Four members of the Indian NGO Community, Indore Professor and two assistants, University of Indore Staff for Republican member of the Senate Democratic staff House of Representative Trade Subcommittee Republican staff House of Representative Trade Subcommittee Two Deputy Assistants, Intergovernmental Affairs, United States Trade Representative (USTR) Deputy Assistant for WTO and Multilateral Affairs, USTR Vice President, National Association of Manufacturers Director, Department of Agriculture Director of Trade Policy Analysis and Deputy Assistant Secretary Trade Agreements and Compliance, Department of Commerce Staff Democratic member of House of Representative Two members of staff, Democratic member of the Senate Staff Republican member of the Senate Two members of staff, Norwegian Embassy Member, House of Representatives, Republican Two Members, House of Representatives, Democratic Two staff, Democratic, House of Representatives Staff, Republican, Senate Finance Committee Former US Department of Commerce official Assistant USTR, Office of United States Trade Representative Officer, manufacturing company

Place

Oslo

Geneva

USA

Year

2010

2010

2011

Appendix 2 Continued

Head of department, the Ministry of Foreign Affairs Head of department, the Ministry of Agriculture and Food Head of department, the Ministry of Trade and Industry Three members of staff, the Ministry of Agriculture and Food Advisor, the Ministry of Fisheries and Coastal Affairs Advisor, Norwegian Seafood Federation Advisor, the Norwegian Farmers’ Union Director, Economic Research and Statistics Division, WTO Deputy Chief of Mission, Permanent Mission of the US Member, Permanent Mission of the EU (NAMA) Member, Permanent Mission of the EU (Agriculture) Member, Permanent Mission of India Member, Permanent Mission of the People’s Republic of China Leader, Permanent Mission of Norway Deputy leader, the EFTA-secretariat Member, the EFTA-secretariat Former Member, Democratic, House of Representatives Two staff, US Congressional Research Service Three staff, Republican, House of Representatives Two staff, Democratic, House of Representatives Staff, Republican, House of Representatives Trade committee Staff, Democratic, Senate

Position and organizational affiliation

2011

Brussels

Staff, Republican, Senate Two staff, Democratic, Senate Finance Committee US Embassy official Former US Department of Commerce official Ambassador to US Economist, Washington DC research foundation Economist, international finance organization Staff, trade interest group Former official, USTR Three North Carolina trade officials Deputy head of Unit, DG Trade Advisor, Business Europe Director and staff member, DG Trade Deputy Director, DG Agriculture Chief Policy Advisor, COPA-COGECA Director, DG Trade Member, Permanent Mission of Norway (Agriculture) Member, Permanent Mission of Norway (Fish)

References

Abernathy, F. H., Dunlop, J. T., Hammond, J. H. and Weil, D. (1999) A Stitch in Time: Lean Retailing and the Transformation of Manufacturing – Lessons From The Apparel and Textile Industries, Oxford: Oxford University Press. Ackrill, R. (2005) ‘The Common Agricultural Policy’, in P.v.d. Hoek (ed.) Handbook on Public Administration and Policy in the European Union, Baco Raton: Taylor & Francis. AFL-CIO (2011) ‘AFL-CIO Remains Opposed to Columbia Trade Deal’, 6 April, available online at: blog.aflcio.org. (accessed 16 April 2011). Ahearn, R. J. (2011) International Trade and Finance: Key Policy Issues for the 112th Congress, Washington DC: Congressional Research Service, R41553, 4 January. Akyüz, Y. (2005) The WTO Negotiations on Industrial Tariffs: What is at Stake for Developing Countries, Penang: Third World Network (TWN), TWN Trade and Development Series 24. Allee, T. (2012) ‘The Role of the United States: A Multilevel Explanation for Decreased Support over Time’, in A. Narlikar, M. Daunton and R. M. Stern (eds) The Oxford Handbook on the World Trade Organization, Oxford: Oxford University Press. American Farm Bureau Federation (2011) ‘Statement’, July 8, available online at: www. fb.org/index. (accessed 12 July 2011). Athreye, S. (2004) ‘Trade Policy, Industrialization and Growth in India’, in S. Bromley, M. Mackintosh, W. Brown and M. Wuyts (eds) Making the International: Economic Interdependence and Political Order, London: Open University, Pluto Press. Austvik, O. G, Bredesen, I. and Vårdal, E. (2002) Internasjonal handel og økonomisk integrasjon, Oslo: Gyldendal Akademisk. Ayres, J. M. (2004) ‘Framing Collective Action Against Neoliberalism: The Case of the “Anti-Globalization” Movement’, Journal of World-Systems Research, X(1): 11–34. Baldwin, E. and Evenett, S. (2011) Why World Leaders Must Resist the False Promise of Another Day, A VoxEU.org eBook. Baldwin, M. (2006) ‘EU Trade Politics – Heaven or Hell?’, Journal of European Public Policy, 13(6): 926–942. Baldwin, R. (2012) ‘Preferential Trading Arrangements’, in A. Narlikar, M. Daunton and R. M. Stern (eds) The Oxford Handbook on the World Trade Organization, Oxford: Oxford University Press. Baldwin, R. and Freund, C. (2011) ‘Preferential Trade Agreements and Multilateral Liberalization’, in J.-P. Chauffour and J.-C. Maur (eds) Preferential Trade Agreement and Policies for Development: A Handbook, Washington DC: The World Bank. Baldwin, R. E. and Magee, C. S. (2000) ‘Is Trade Policy for Sale? Congressional Voting on Recent Trade Bills’, Public Choice, 105: 79–101.

References 219 Barton, J. H., Goldstein, J. L., Josling, T. E. and Steinberg, R. H. (2006) The Evolution of the Trade Regime, Princeton: Princeton University Press. Bauer, R. A., Pool I.-de S. and Dexter, L. A. (1963) American Business and Public Policy: The Politics of Foreign Trade, New York: Atherton Press. Bayard, T. O. and Elliot, K. A. (1994) Reciprocity and Retaliation in U.S. Trade Policy, Washington DC: Institute for International Economics. Beattie, A. (2008) ‘Expectations Low as Doha Trade Talks Commence’, The Financial Times, 22 July. Bernal, L. E. (2004) South-South Cooperation in the Multilateral Trading System: Cancun and Beyond, South Centre: Working Papers, Trade-Related Agenda, Development, and Equity (TRADE). Berry, J. M. and Wilcox, C. (2009) The Interest Group Society; 5th edn, New York: Pearson/Longman. Bhagwati, J. (d.d.) (1977) The New International Economic Order: The North-South Debate, Boston: MIT Press. Bhagwati, J. (1991) The World Trading System at Risk, Princeton: Princeton University Press. Bhagwati, J. (2008) Termites in the Trading System: How Preferential Agreements Undermine Free Trade, Oxford: Oxford University Press. Bhagwati, J. and Sutherland, P. (2011) The Doha Round: Setting a Deadline, Defining a Final Deal, Interim Report from a High Level Trade Experts Group. Bhat, T. P. (2009) ‘Assessing China’s Compliance with WTO Commitments’, India Quarterly: A Journal of International Affairs, 65(3): 215–235. Biggs, J. R. and Foley, T. S. (1999) Honor in the House: Speaker Thom Foley, Pullman, WA: Washington State University Press. Bilden, K. M. (2011) Mat er makt. Myter og muligheter i matens storpolitikk, Oslo: Aschehoug. Binswanger, H. and Lutz, E. (2000) Agricultural Trade Barriers, Trade Negotiations, and the Interests of Developing Countries, Washington DC: The World Bank. Blustein, P. (2009) Misadventures of the Most Favored Nations, New York: Public Affairs. Brümmer, J. (2005) India’s Negotiating Positions at the WTO, Briefing Papers, Geneva: Friedrich Ebert Stiftung (FES). Buckley, R. P. (2003) ‘Introduction: The Changing Face of World Trade and the Greatest Challenge Facing the WTO and the World Today’, in R. P. Buckley (ed.) The WTO and the Doha Round: The Changing Face of World Trade, New York: Kluwer Law International. Capling, A. and Low, P. (eds) (2010) Governments, Non-State Actors and Trade PolicyMaking, Cambridge: Cambridge University Press. Caporaso, J. A. (1997) ‘Across the Great Divide: Integrating Comparative and International Politics’, International Studies Quarterly, 41: 563–592. Carroll, W. K. and Ratner, R. S. (1996) ‘Master Frames and Counter-Hegemony: Political Sensibilities in Contemporary Social Movements’, Canadian Review of Sociology & Anthropology, 33(4): 407–435. Chauffour J.-P. and Maur, J.-C. (eds) (2011) Preferential Trade Agreement and Policies for Development: A Handbook, Washington DC: The World Bank. Chin, L. L. and JiangYu, W. (2009) ‘China and the Doha Development Agenda’, Working Paper prepared for presentation at the 2009 World Trade Organization Forum, Geneva, 28 September.

220

References

Chorev, N. (2007) ‘A Fluid Divide: Domestic and International Factors in US Trade Policy Formation’, Review of International Political Economy, 14(4): 653–689. Christiansen, P. M., Nørgaard, A. S, Rommetvedt, H., Svensson, T., Thesen, G. and Öberg, P. (2010) ‘Varieties of Democracy: Interest Groups and Corporatist Committees in Scandinavian Policy Making’, Voluntas: International Journal of Voluntary and Nonprofit Organizations, (21)1: 22–40. Cigler, A. J. and Loomis, B. A. (eds) (2012) Interest Group Politics; 8th edn, Washington DC: CQ Press. Clark, I. (1999) Globalization and International Relations Theory, Oxford: Oxford University Press. Clinton, B. (2004) My Life, New York: Knopf. Cohen, S. (2001) India: Emerging Power, Washington DC: Brookings Institution. Cohen, S. D. (2000) The Making of United States International Economic Policy: Principles, Problems and Proposals for Reform, 5th edn, Westport CN: Praeger. Commission of the European Communities (1999) Communication from the Commission to the Council, the European Parliament: The EU Approach to the Millennium Round, Brussels: CEC. Commission of the European Communities (2003) Communication from the Commission to the Council, the European Parliament and the European Economic and Social Committee: Reviving the DDA Negotiations – the EU Perspective, Brussels: CEC. Commission of the European Communities (2006) Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions: Global Europe: Competing in the World: a Contribution to the EU’s Growth and Jobs Strategy, Com (2006) 567 Final, Brussels: CEC. Conceicão, E. (2010) ‘Who Controls Whom? Dynamics of Power Delegation And Agency Losses in EU Trade Politics’, Journal of Common Market Studies, 48(4): 1107–1126. Conceicão-Heldt, E. (2011) Negotiating Trade Liberalization at the WTO: Domestic Politics and Bargaining Dynamics, Basingstoke: Palgrave Macmillan. Cooper, W. H., Manyin, M. E., Jurenas, R. and Platzer, M. D. (2011) The Proposed U.S.South Korea Free Trade Agreement (KORUS FTA): Provisions and Implications, Washington DC: Congressional Research Service, RL 34330, 9 August. Coskeran, H., Kim D. and Narlikar, A. (2012) ‘Trade in Manufactures and Agricultural Products: The Dangerous Link?’, in A. Narlikar, M. Daunton and R. Stern (eds) The Oxford Handbook on the World Trade Organization, Oxford: Oxford University Press. Cribb, Julian (2010) The Coming Famine, Berkeley: University of California Press. Damro, C. (2007) ‘EU Delegation and Agency in International Trade Negotiations: A Cautionary Comparison’, Journal of Common Market Studies, 45(4): 883–903. Das, A. (2006) WTO’s Negotiations and India’s Stand: Agriculture, NAMA and Services, Infochange, May. Daugbjerg, C. (1998) Policy Networks Under Pressure: Pollution Control, Policy Reform, and the Power of Farmers, Aldershot: Ashgate. Daugbjerg, C. (2009) ‘Ideas in Two-level Games: The EC-US Dispute over Agriculture in the GATT Uruguay Round’, Comparative Political Studies, 41(9): 1266–1289. Daugbjerg, C. and Swinbank, A. (2009) Ideas, Institutions and Trade: The WTO and the Curious Role of EU Farm Policy in Trade Liberalization, Oxford: Oxford University Press. Deese, D. A. (2008) World Trade Politics: Power, Principles and Leadership, London: Routledge.

References 221 Destler, I. M. (2005) American Trade Politics, 4th edn, Washington DC: Institute for International Economics. Diego-Fernández, M. (2008) ‘Trade Negotiations Make Strange Bedfellows’, World Trade Review, 7(2): 423–453. Dolan, C. J. and Rosati J. A. (2006) ‘U.S. Foreign Economic Policy and the Significance of the National Economic Council’, International Studies Perspective, 7: 102–128. Druckman, D., Benton, A. A., Ali, F. and Bagur, J. S (1976) ‘Cultural Differences in Bargaining Behavior: India, Argentina, and the United States’, The Journal of Conflict Resolution, 20(3): 413–452. Drutman, L. (2012) ‘Trade Associations, the Collective Action dilemma and the Problem of Cohesion’, in A. J. Cigler and B. A. Loomis (eds) Interest Group Politics, 8th edn, Washington DC: CQ Press: 74–96. Dür, A. (2007) ‘EU Trade Policy as Protection for Exporters: the Agreements with Mexico and Chile’, Journal of Common Market Studies, 45(4): 833–855. Dür, A. (2008) ‘Bringing Economic Interests Back into the Study of EU Trade PolicyMaking’, British Journal of Politics and International Relations, 10(1): 27–45. Dür, A. (2010) Protection for Exporters: Power and Discrimination in Transatlantic Trade Relations 1930–2010, Ithaca: Cornell University Press. Dür, A. (2012) ‘The EU’s foreign economic policies: limits to delegation, in J. Richardson (ed.) Constructing a Policy-Making State? Policy Dynamics in the EU, Oxford: Oxford University Press, forthcoming. Dür, A. and de Biévre, D. (2007) ‘Inclusion Without Influence? NGOs in the European Trade Policy’, Journal of Public Policy, 27(1): 79–101. Dür, A. and Zimmermann, H. (2007) ‘Introduction: The EU in International Trade Negotiations’, Journal of Common Market Studies, 45(4): 771–787. Economic Times (2008) India Upset over New WTO Proposals, 23 May, available online at: http://articles.economictimes.indiatimes.com/2008–05–21/news/28475434_1_namatext-draft-text-services-and-rules (accessed 29 September 2011). EFTA (2010) This is EFTA – 2010, Efta 50 years Anniversary Edition, Geneva: EFTA. EFTA (2012) This is EFTA – 2012, Geneva: EFTA. Elsig, M. (2007) ‘The EU’s Choice of Regulatory Venues for Trade Negotiations: A Tale of Agency Power?’, Journal of Common Market Studies, 45(4): 927–948. Elsig, M. (2009) ‘The EU in the Doha Negotiations: A Conflicted Sponsor?’ in A. Narlikar and B. Vickers (eds) Leadership and Change in the Doha Negotiations, Dordrecht: Martinus Nijhoff. Elsig, M. and Dupont, C. (2010) ‘European Union Meets South Korea: Bureaucratic Interests, Exporter Discrimination and the Negotiations of New Trade Agreements’, Paper presented at the Conference ‘Diverging paradigms in EU trade policy’, Leuven, December 2010. Essermann, S. and Howse, R. (2003) ‘The WTO on Trial’, Foreign Affairs, 82(1): 130–140. Eurobarometer (2011) Internal market: Awareness, Perceptions and Impacts, Report, Special Eurobarometer 363, available online at: http://ec.europa.eu/public_opinion/ archives/ebs/ebs_363_en.pdf> (accessed 18 April 2012). European Commission (2004) Trade Policy in the Prodi Commission 1999–2004: An Assessment, Brussels: CEC. European Commission (2010a) Trade, Growth and World Affairs: Trade Policy as a Core Component of the EU’s 2020 Strategy, COM (2010) 612, Brussels: CEC. European Commission (2010b) Trade as a Driver of Prosperity, Commission Staff

222

References

working document accompanying the Commission’s Communication on ‘Trade, Growth and World affairs’, Brussels: European Commission. Evans, P. B. (1993) ‘Building an Integrative Approach to International and Domestic Politics: Reflections and Projections’, in P. B. Evans, H. K. Jacobson and R. D. Putnam (eds) Double-Edged Diplomacy: International Bargaining and Domestic Politics, Berkeley: University of California Press: 397–430. Farsund, A. A. (2004) Stabilitet og ending i norsk landbrukspolitikk, Stavanger: Rapport RF 2004/72. Farsund, A. A. (2009) Doha-runden i WTO: Effekter for norsk fiskeri-, havbruks- og landbrukspolitikk, Stavanger: Rapport IRIS – 2009/289. Fergusson, I. F. (2011) The World Trade Organization: The Non-Agricultural Market Access (NAMA) Negotiations, Washington DC: Congressional Research Service, RL 33634, 11 January. Fergusson, I. F. and Vaughn, B. (2011) The Trans-Pacific Partnership Agreement, Washington DC: Congressional Research Service, R40502, 10 January. Findlay, R. and O’Rourke, K. H. (2007) Power and Plenty: Trade, War and the World Economy in the Second Millennium, Princeton: Princeton University Press. Finger, J. M. and Nogues, J. J. (2002) ‘The Unbalanced Uruguay Round Outcome: The New Areas in Future WTO Negotiations’, The World Economy, 25(3): 321–340. Frankel, J. (1970) National Interest, London: Macmillan. Frieden, J. and Martin, L. L. (2002) ‘International Political Economy: Global and Domestic Interactions’, in I. Katznelson and H. V. Milner (eds) Political Science: The State of the Discipline, New York: W. W. Norton & Company. Frieden, J. and Rogowski, R. (1996) ‘The Impact of the International Economy on National Policies: An Analytical Overview, in R. O. Keohane and H. V. Milner (eds) Internationalisation and Domestic Politics, Cambridge: Cambridge University Press. Gallagher, K. P. (2012) ‘Challenging Opportunities for the Multilateral Trade Regime’, in R. Meléndez-Ortiz, C. Bellmann and M. R. Mendoza (eds) The Future of the WTO: Confronting the Challenges. A Collection of Short Essays, Geneva: International Centre for Trade and Sustainable Development (ICTSD). Gao, H. (2012) ‘The Shifting Stars: The Rise of China, Emerging Economies and the Future of World Trade Governance’, in R. Meléndez-Ortiz, C. Bellmann and M. R. Mendoza (eds) The Future of the WTO: Confronting the Challenges. A Collection of Short Essays, Geneva: International Centre for Trade and Sustainable Development (ICTSD). Garcia, M. (2011) ‘Incidents Along the Path: Understanding the Rationale Behind the EU–Chile Association Agreement’, Journal of Common Market Studies, 49(3): 501–524. Garrett, G. and Lange, P. (1996) ‘Internationalization, Institutions, and Political Change’, in R. O. Keohane and H. V. Milner (eds) Internationalization and Domestic Politics, New York: Cambridge University Press. GATT (1954) Speech by Sir N. Raghavan Pillai (India) delivered in Plenary Session on 9 November: 9th Session of the Contracting Parties, Press Release/185, 11 November. GATT (1986) Punta Del Este Declaration, available online at: www.wto.org/gatt_docs/ English/SULPDF/91220049.pdf (accessed 23 August 2012). GATT (1994) The Results of the Uruguay Round of Multilateral Negotiations: Market Access for Goods and Services, Geneva: GATT. Gillon, S. M. (2008) The Pact: Bill Clinton, Newt Gingrich, and the Rivalry that Defined a Generation, Oxford: Oxford University Press.

References 223 Goldstein, J. (2002) ‘International Forces and Domestic Politics: Trade Policy and Institution Building in the United States’, in I. Katznelson and M. Shefter (eds) Shaped by War and Trade: International Influences on American Political Development, Princeton: Princeton University Press. 211–235. Goldstein, J. (2012) ‘Trade Liberalization and Domestic Politics’, in A. Narlikar, M. Daunton and R. Stern (eds) The Oxford Handbook on the WTO, Oxford: Oxford University Press. Goldstein, J. and Steinberg, R. H. (2007) Regulatory Shift: The Rise of Judicial Liberalization at the WTO, UCLA School of Law, Law and Economics Research Paper Series, Research Paper No. 07–15. Green, M. N. (2010) The Speaker of the House, New Haven: Yale University Press. Gu Kejian (1995) Institutional Change and the International Market, Wuhan: Hubei People’s publishing House. Haas, E. B. (1980) ‘Issue-Linkage and International Regimes’, World Politics, 32(3): 357–405. Haga, G. (2009) ‘Jordbruket: Korporativ pluralisme intakt’, Nytt Norsk Tidsskrift, 26(2): 170–178. Hanegraaff, M., Beyers, J. and Braun, C. (2011) ‘Open the Door to More of the Same? The Development of Interest Group Representation at the WTO’, World Trade Review, 10(4): 447–472. Hansen, R. (1979) Beyond the North South Stalemate, McGraw Hill Press. Heclo, H. (1978) ‘Issue Networks and the Executive Establishment’, in A. King (ed.) The New American Political System, Washington DC: American Enterprise Institute: 87–124. Heinz, J. P., Laumann, E. O. Nelson, R. L. and Salisbury, R. H. (1993) The Hollow Core: Private Interests in National Policy Making, Cambridge MA: Harvard University Press. Heisenberg, D. (2005) ‘The Institution of “consensus” in the European Council: Formal Versus Informal Decision-making in the Council’, European Journal of Political Science, 44(1): 65–90. Henisz, W. J. and Mansfield, E. D. (2006) ‘Votes and Vetoes: The Political Determinants of Comercial Openness’, International Studies Quarterly, 50: 189–211. Herring. E. P. (1936) Group Representation Before Congress: Public Administration and the Public Interest, New York: McGraw-Hill. Hilf, M. (1995) ‘The ECJ’s Opinion 1/94 on the WTO – No Surprise, But Wise?’, European Journal of International Law, 6(1): 245–259. Hiscox, M. H. (2002) ‘Commerce, Coalitions, and Factor Mobility: Evidence from Congressional Votes on Trade Legislation’, American Political Science Review, 96(3): 593–608. Hiscox, M. J. (2005) ‘The Domestic Source of Foreign Economic Policies’, in J. Ravenhill (ed.) Global Political Economy, Oxford: Oxford University Press: 51–83. Hoekman, B. M. and Kostecki, M. M. (2001) The Political Economy of the World Trading System: The WTO and Beyond, 2nd edn, Oxford: Oxford University Press. Hoekman, B. M. and Kostecki, M. (2009) The Political Economy of the World Trading System – The WTO and Beyond, Oxford: Oxford University Press. Holmes, P. (2006) ‘Trade and “Domestic” Policies: The European Mix’, Journal of European Public Policy, 13(6): 815–831. Hornbeck, J. F. and Cooper, W. H. (2008) Trade Promotion Authority (TPA): Issues, Options, and Prospects for Renewal, Washington DC: Congressional Research Service, RL 33743, 7 January.

224

References

Hornbeck, J. F. and Rover, L. E. (2011) Trade Adjustment Assistance (TAA) and its Role in U.S. Trade Policy, Washington DC: Congressional Research Service, R 41922, 19 July. Hoven, van den, A. (2002) Interest Group Influence on Trade Policy Making in a Multilevel Polity: Analysing the EU Position at the Doha WTO Ministerial Conference, EUI Working Papers RSC No. 2002/67, Florence: European University Institute. Hoven, van den, A. (2004) ‘Assuming Leadership in Multilateral Economic Institutions: The EU’s “Development Round” Discourse and Strategy’, West European Politics, 27(2): 256–283. Hrebenar R. J. and Thomas C. S. (2012) ‘The Rise and Fall of the China Lobby in the United States’, in A. J. Cigler and B. A. Loomis (eds) Interest Group Politics, 8th edn, Washington DC: CQ Press, 297–316. Huang Feixue, Kou Ling (2009) ‘Could RMB Revaluation Change the Trade Surplus and Foreign Exchange Reserves Increase?’, International Trade, 11: 103–113. Hubauer, G. C., Schott, J. J. and Wong, W. F. (2010) Figuring Out the Doha Round, Report 91, Washington: The Peterson Institute for International Economics. Hu Mei (2010) ‘Reflection and Thinking of RMB Exchange Rate Under Revaluation Pressure’, International Trade, 6: 34–37. Inglehart, R. (1990) Cultural Shift in Advanced Industrial Society, Princeton: Princeton University Press. Innst. 234 S (2011–2012) Innstilling fra næringskomiteen om landbruks- og matpolitikken, Velkommen til bords. Ismail, F. (2009) ‘An Assessment of the WTO Doha Round July-December 2008 Collapse’, World Trade Review, 8(4): 579–605. Ismail, F. (2011) Developing Country Coalitions in the WTO Round: NAMA 11, CRP Working Paper No. 2, available online at: www.polis.cam.ac.uk/crp/research/workingpapers/index.html (accessed 29 September 2011). Jackson, J. H. (1998) ‘Designing and Implementing Effective Dispute Settlement Procedures: WTO Dispute Settlement, Appraisal and Prospects’, in A. O. Krueger (ed.) The WTO as an International Organization, Chicago: The University of Chicago Press. Jackson, J. H. and Sykes, A. O. (eds) (1997) Implementing the Uruguay Round, Oxford: Oxford University Press. Jacobsen, K. D. (1965) ‘Informasjonstilgang og likebehandling’, Tidsskrift for Samfunnsforskning, 6(2): 147–160. Jäkel, I. C. and Smolka, M. (2011) Individual Attitudes Towards Trade: StolperSamuelson Revisited, University of Tübingen, Working Papers in Economics and Finance, No. 11. Jenkins, R. (2006) Democratic Politics and Economic Reform in India, Cambridge: Cambridge University Press. Jian, L. and Evenett, S. J. (2010) ‘What Commercial Policies Can Promote China’s Sustainable Trade Strategy?’, Winnipeg: International Institute for Sustainable Development (IISD). Jones, E. (2006) ‘Europe’s Market Liberalization is a Bad Model for a Global Trade Agenda’, Journal of European Public Policy, 13(6): 943–957. Jones, K. (2004) Who’s Afraid of the WTO?, Oxford: Oxford University Press. Jones, K. (2010) The Doha Blues: Institutional Crisis and Reform in the WTO, Oxford: Oxford University Press. Kapur, D. and Mehta, P. B. (2006) ‘The Indian Parliament as an Institution of Accountability’, Democracy, Governance and Human Rights Programme, Paper No. 23, January, United Nations Research Institute for Social Development.

References 225 Keeler, J. T. S. (1996) ‘Agricultural Power in the European Community: Explaining the Fate of CAP and GATT Negotiations’, Comparative Politics, 28(2): 127–149. Keohane, R. and Milner, H. V. (eds) (1996) Internationalization and Domestic Politics, Cambridge: Cambridge University Press. Khor, M. (2002) The WTO, the Post-Doha Agenda and the Future of the Trade System: A Development Perspective, Penang: Third World Network. Khor, M. (2007) The ‘Singapore Issues’ in the WTO: Evolution and Implications for Developing Countries, Penang: Third World Network. King, A. (1976) ‘Modes of Executive-Legislative Relations: Great Britain, France and West Germany’, Legislative Studies Quarterly, 1(1): 11–36. King, A. (1978) ‘The American Polity in the Late 1970’s: Building Coalitions in the Sand’, in A. King (ed.) The New American Political System, Washington DC: American Enterprise Institute: 371–395. Kohli, A. (2004) State-Directed Development: Political Power and Industrialization in the Global Periphery, Cambridge: Cambridge University Press. Krueger, A. O. (ed.) (1998) The WTO as an International Organization, Chicago: Chicago University Press. Krueger, A. O. (1999) Developing Countries and the Next Round of Multilateral Trade Negotiations, Policy Research Working Paper 218, Washington DC: The World Bank. Kumar, R. and Nair, S. (2009) India: Strategies at the Doha Development Agenda – July and Beyond, Working Paper prepared for presentation at the 2009 World Trade Organization Forum, Geneva, 28/09/09, Indian Council for Research on International Economic Relations. Lam, E. (2009) China and the WTO. A long March towards the Rule of Law, The Netherlands: Kluwer Law International. Lamy, P. (2006) ‘Lamy Warns Bilateral Agreements are not the “Easy Way Out” from the Suspended Talks’, available online at: www.wto.org/english/news_e/sppl_e/ sppl46_e.htm (accessed 7 November 2012). Lan Yisheng (2010) China’s New Trade Policy as a Great Power, Shanghai: Shanghai University of Finance and Economics Press. Langhelle, O. (2001) WTO-forhandlingene – et utenrikspolitisk møtested for norsk innenrikspolitikk? Avveiningen mellom landbrukets defensive og fiskerinæringens offensive interesser [The WTO-Negotiations: A Foreign Policy Meeting-Place for Norwegian Domestic Politics? The Trade-off between the Defensive Interests in Agriculture and the Offense Offensive Interests in Fisheries], Stavanger: RF Rapport 2001/232. Langhelle, O. (2005) WTO-forhandlingene: Norske fiskeri- og landbruksinteresser i skyggen av utviklingslandene [The WTO-Negotiations: In the Shadow of Developing Countries. Norwegian Interests in Fisheries and Agriculture], Stavanger: RF Rapport 2005/088. Langhelle, O. and Rommetvedt, H. (2004) ‘The Role of Parliament in International Relations and WTO Negotiations: The Case of Norway’, World Trade Review, 3(2): 189–223. Larsén, M. F. (2007) ‘Trade Negotiations Between the EU and South Africa: A Three-Level Game’, Journal of Common Market Studies, 45(4): 857–881. Le Yong (2010) ‘The Analysis of U.S. Global Economic Strategy Behind the RMB Exchange Rate’, International Trade, 10: 64–66. Lie, A. and Veggeland, F. (2010) Globalisering og matpolitikk, Oslo: Universitetsforlaget. Lijphart, A. and Crepaz, M. M. L. (1991) ‘Corporatism and Consensus Democracy in Eighteen Countries: Conceptual and Empirical Linkages’, British Journal of Political Science: 235–256.

226

References

Lindström, P. (2010) Change of Power in the WTO: Reality or Illusion? A study of developing countries’ bargaining power in the GATT/WTO negotiations from the Tokyo Round to the Doha Round, Saarbrücken: VDM Verlag Dr. Müller. Lipset, S. M. and Rokkan, S. (eds) (1967) Party Systems and Voter Alignments, New York: Free Press. Li Wenfeng (2001) Trade Policy Formation Research, Beijing: the Graduate School of China Social Sciences Research Institute. Lou Zhui (2010) The Transformation and the Path of the Practice of China’s Foreign Trade Policy, Zhejiang: Zhejiang Normal University. Low, P. and Santana, R. (2009) ‘Trade Liberalization in Manufactures: What is Left after the Doha Round?’, The Journal of International Trade and Diplomacy, 3(1): 63–126. Luo Yongguang (2009) Major National Policy, Beijing: People’s Daily Press. Manning, B. (1977) ‘The Congress, the Executive and Intermestic Affairs: Three Proposals’, Foreign Affairs, 55: 306–324. McGuire, S. (2006) ‘No More Euro-Champions? The Interaction of EU Industrial and Trade Policies’, Journal of European Public Policy, 13(6): 887–905. March, J. G. and Olsen, J. P. (1989) Rediscovering Institutions, New York: Free Press. Margalit, Y. (2011) ‘Costly Jobs: Trade-related Layoffs, Government Compensation, and Voting in U.S. Elections,’ American Political Science Review, 105(1): 166–188. Martin, W. and Mattoo, A. (2011) Unfinished Business? The WTO’s Doha Agenda, Washington: IBRD/World Bank. Melchior, A. (2004) EFTAs frihandelsavtaler: Betydningen for Norge, NUPI Notat 658. Melchior, A. (2007) ‘Trade Policy Democracy: The Norwegian Experience’, in M. Halle and R. Wolfe (eds) Process Matters – Sustainable Development and Domestic Trade Transparency, Winnipeg: International Institute for Sustainable Development. Meld. St. (2011–2012) Landbruks- og matpolitikken: Velkommen til bords. Nummer 9 (2011–2012). Meng Qi, Wang Feibo (2009) ‘The Research of the Relation Between the Exchange Rate and Sino-Us Trade Imbalance’, International Trade, 11: 97–102. Meunier, S. (2005) Trading Voices: The European Union in International Commercial Negotiations, Princeton: Princeton University Press. Meunier, S. (2007) ‘Managing globalization? The EU in International Trade Negotiations’, Journal of Common Market Studies, 45(4): 905–926. Meunier, S. and Nicolaïdis, S. (1999) ‘Who Speaks for Europe? The Delegation of Trade Authority in the European Union’, Journal of Common Market Studies, 37(3): 477–501. Michalopoulos, C. (1999) Developing Country Goals and Strategies for the Millennium Round, Policy Research Paper 2147, Washington DC: The World Bank. Milner, H. (1997) Interests, Institutions and Information: Domestic Politics and International Relations, Princeton: Princeton University Press. Milner, H. V. and Judkins, B. (2004) ‘Partisanship, Trade Policy, and Globalization: Is There a Left-Right Divide on Trade Policy?’, International Studies Quarterly, 48(1): 95–119. Ministry of Commerce (2010) Available online at: http://sms.mofcom.gov.cn/ article/u/201102/20110207412150.shtml. Ministry of Commerce (2012) Available online at: www.mofcom.gov.cn/article/ zhengcejd/bl/bx/201204/20120408091422.html. Ministry of Finance (2010) Proposisjon 1 LS: Skatter og avgifter for 2011. Ministry of Foreign Affairs (2008) Trade Policy Review – Report by Norway, WT/ TPR/G/205.

References 227 Ministry of Trade and Industry (2008) Norway – China: Free Trade Agreement – Joint Feasibility Study. Moon, B. E. (1999) ‘Ideas and Policies’, in B. Hocking and S. McGuire (eds) Trade Politics: Actors, Issues and Processes, London: Routledge. Monti, M. (2010) A New Strategy for the Single Market. At the Service of Europe’s Economy and Society, available online at: http://ec.europa.eu/bepa/pdf/monti_report_ final_10-05_2010_en.pdf (accessed 20 September 2012). Moravcsik, A. (1993) ‘Introduction: Integrating International and Domestic Theories of International Bargaining’, in P. B. Evans, H. K. Jacobson and R. D. Putnam (eds) Double-Edged Diplomacy: International Bargaining and Domestic Politics, Berkeley: University of California Press. Moyer, H. W. and Josling, T. E. (2002) Agricultural Policy Reform: Politics and Policy Process in the EC and the US in the 1990s, Aldershot: Ashgate. Narlikar, A. (2003) International Trade and Developing Countries: Bargaining Coalitions in the GATT and WTO, London: Routledge. Narlikar, A. (2005) The World Trade Organisation: A Very Short Introduction, Oxford: Oxford University Press. Narlikar, A. (2010) ‘Reforming Institutions, Unreformed India?’, in A. Alexandroff and A. Cooper (eds) Rising States, Rising Institutions: Challenges for Global Governance, Washington DC: Brookings. Narlikar, A. (2010a) New Powers: How to Become One and How to Manage Them, New York: Columbia University Press. Narlikar, A. (2012) ‘Collective Agency, Systemic Consequences: Bargaining Coalitions in the WTO’, in A. Narlikar, M. Daunton and R. Stern (eds) The Oxford Handbook on the WTO, Oxford: Oxford University Press. Narlikar, A. and Hurrell, A. (2007) Negotiating Trade as Emerging Powers, Stavanger: IRIS, 2007/023. Narlikar, A. and Narlikar, A. (2013) Bargaining with a Rising India: Lessons from the Mahabharata, Oxford: Oxford University Press. Forthcoming. Narlikar, A. and Odell, J. (2006) ‘The Strict Distributive Strategy for a Bargaining Coalition: The Like Minded Group in the World Trade Organization’, in J. Odell (ed.) Negotiating Trade: Developing Countries in the WTO and NAFTA, Cambridge: Cambridge University Press. Narlikar, A. and Tussie, D. (2004) ‘The G20 at the Cancun Ministerial: Developing Countries and Their Evolving Coalitions in the WTO’, World Economy 27(7): 947–966. Narlikar, A., Daunton, M. and Stern, R. (2012) ‘Introduction’, in A. Narlikar, M. Daunton and R. Stern (eds) The Oxford Handbook on the WTO, Oxford: Oxford University Press. Nath, S. K. (2008) ‘No Compromise on Agriculture or Industry Interests’, Press realease, available online at: http://commerce.nic.in/pressrelease/pressrelease_detail.asp?id=314 (accessed 20 April 2012). Nath, S. K. (2008) Statement by Kamal Nath on the Outcome of the WTO MiniMinisterial Meeting at Geneva, New Dehli, 31 July 2008. Naughton, B. (2007) The Chinese Economy: Transitions and growth, Cambridge: MIT Press. Nilekani, N. (2009) Imaging India: The Idea of a Renewed Nation, New York: The Penguin Press. Norwegian State Secretary Group (1999) The future WTO negotiations – the charting of Norwegian interests, Report.

228

References

NOU (2012) Utenfor og innenfor – Norges avtaler med EU, No. 2. Öberg, P., Svensson, T., Christiansen, P. M., Nørgaard, A. S., Rommetvedt, H. and Thesen, G. (2011) ‘Disrupted Exchange and Declining Corporatism: Government Authority and Interest Group Capability in Scandinavia, Government and Opposition, 46(3): 365–391. Odegard, P. H. (1928) Pressure Politics, the Story of the anti-saloon League, New York: Colombia University Press. OECD (2007) Agricultural Policies in OECD Countries: Monitoring and Evaluation 2007, Chapter 12: Norway, Paris: OECD. Olson, D. M., Davidson, R. and Kephart, T. (1991) ‘Industrial Policy Agenda and Options in Congress and the Executive in the United States’, in D. M. Olson and M. Mezey (eds) Legislatures in the Policy Process, Cambridge: Cambridge University Press, 81–102. O’Reilly, R. F. (2005) ‘Veto Points, Veto Players, and International Trade Policy’, Comparative Political Studies, 38: 652–675. Østerud, Ø. (2005) ‘Introduction: The Peculiarities of Norway’, West European Politics, 28(4): 705–720. Østerud, Ø. and Selle, P. (2006) ‘Power and Democracy in Norway: The Transformation of Norwegian Politics’, Scandinavian Political Studies, 29 (1): 25–46. Ostry, S. (2000) The Uruguay Round North-South Grand Bargain: Implications for Future Negotiations, The Political Economy of International Trade Law, University of Minnesota. Ostry, S. (2001) ‘The Multilateral Trading System’, in A. M. Ryman and T. L. Brewer (eds) The Oxford Handbook of International Business, Oxford: Oxford University Press. Paarlberg, R. (2010) Food Politics, Oxford: Oxford University Press. Panagariya, A. (2008) India: Emerging Giant, Oxford: Oxford University Press. Pastor, R. A. (1980) Congress and the Politics of U.S. Foreign Economic Policy 1929–1976, Berkeley: University of California Press. Paugam, J.-M. (2003) Is the Transatlantic Economic Dialogue Beside the Point?, Policy paper 6, Paris: IFRI. Peters, B. G. (1999) Institutional Theory in Political Science: The ‘New Institutionalism’, London: Pinter. Poletti, A. (2010) ‘Drowning Protection in the Multilateral Bath: WTO Judicialisation and European Agriculture in the Doha Round’, British Journal of Politics and International Relations, 12(4): 615–633. Pomfret, R. (2006) Is Regionalism an Increasing Feature of the World Economy? Working Paper, University of Adelaide. Priyadarshi, S. (2006) ‘Decision-making Processes in India: The Case of the Agricultural Negotiations’, in P. Gallagher, P. Low, and A. Stoler (eds) Managing the Challenges of WTO Participation: 45 Case Studies, Cambridge: Cambridge University Press. Prop. 160 S (2009–10) Samtykke til ratifikasjon av avtale mellom EØS/EFTA-statene og EU om EØS-finansieringsordning 2009–2014 og tilleggsprotokoll til frihandelsavtalen mellom Norge og Det europeiske økonomiske fellesskap om handel med fisk, alle av 28, juli 2010. Public Citizen (2012) ‘About Public Citizen’s Global Trade Watch’, available online at: www.citizen.org/Page.aspx?pid=3147 (accessed 20 April 2012). Public Citizen’s Global Trade Watch (2010–2011) www.citizen.org/trade (accessed 25 June 2011)

References 229 Punke, M. (2011a) ‘Statement’, WTO Trade Negotiation Committee, Geneva, Switzerland July 26, USTR Press Office, available online at: www.ustr.gov (accessed 28 July 2011). Punke, M. (2011b) ‘Remarks by Ambassador Punke in the Trade Negotiations Committee’, April 29, available online at: www.geneva.usmission.gov/2011/04/29 (accessed 28 July 2011). Putnam, R. D. (1988) ‘Diplomacy and Domestic Politics: The Logic of Two-Level Games’, International Organization, 42(3): 429–460. Research Institute of the Ministry of Commerce (2008) 30 Years of China’s Foreign Trade, Beijing: China Business Press. Rhodes, R. A. W., Binder, S. A. and Rockman, B. A. (2006) The Oxford Handbook of Political Institutions, Oxford: Oxford University Press. Rodman, P. W. (2009) Presidential Command: Power, Leadership, and the Making of Foreign Policy from Richard Nixon to George W. Bush, NY: Knopf. Rodrik, D. (2011) The Globalization Paradox: Democracy and the Future of the World Economy, New York: W. W. Norton & Company. Rogowski, R. (2002) ‘Trade and Representation: How Diminishing Geographic Concentration Augments Protectionist Pressures in the U.S. House of Representatives’, in I. Katznelson and M. Shefter (eds) Sharped by War and Trade: International Influences on American Political Development, Princeton: Princeton University Press. Rokkan, S. (1966) ‘Norway: Numerical Democracy and Corporate Pluralism’, in R. A. Dahl (ed.) Political Oppositions in Western Democracies, New Haven: Yale University Press. Rommetvedt, H. (2003) The Rise of the Norwegian Parliament, London: Frank Cass. Rommetvedt, H. (2005) ‘Norway: Resources Count, but Votes Decide? From Neocorporatist Representation to Neo-pluralist Parliamentarism’, West European Politics, 28: 740–763. Rommetvedt, H. (2011) ‘The Institutionalization of a Parliamentary Dimension of an Intergovernmental Organization: The WTO’, World Trade Review, 10:(4): 423–446. Rommetvedt, H., Thesen, G., Christiansen, P. M. and Nørgaard, A. S. (2012) ‘Coping with Corporatism in Decline and the Revival of Parliament: Interest Group Lobbyism in Denmark and Norway, 1980–2005’, Comparative Political Studies, 46(4): 457–485. Rommetvedt, H., Zajc, D. and Langhelle, O. (2009) ‘The Internationalisation of National Parliaments: The Norwegian Storting and the Slovene Državni zbor’, Politics in Central Europe, 5:(1): 55–85. Rosen, H. F. (2008) ‘Strengthening Trade Adjustment Assistance’, Peterson Institute for International Economics Policy Brief, January. Rothgeb Jr., J. M. (2001) U.S. Trade Policy: Balancing Economic Dreams and Political Realities, Washington DC: CQ Press. Sait, E. M. (1927) American Parties and Elections, New York: The Century Co. Schattscheider, E. E. (1935) Politics, Pressures and the Tariff, New York: Prentice-Hall. Schmitter, P. (1979) ‘Modes of Interest Intermediation and Modes of Societal Change in Western Europe’, in P. Schmitter and G. Lembruch (eds) Trends Towards Corporatist Intermediation, London: Sage. Schott, J. J. (2011a) ‘What Should the United States Do about Doha?’ Peterson Institute for International Economics Policy Brief, PB11–8, June. Schott, J. J. (2011b) ‘Why the Korea-United States Free Trade Agreement is a Big Deal,’ SERI Quarterly, July: 23–29. Schwab, S. (2011) ‘After Doha,’ Foreign Affairs, Winter, 104–117. Sen, J. (2003) Lessons Not Learned: India’s Trade Policymaking Process from Uruguay to Doha, Working Paper, Globalization and Poverty, August.

230

References

Sen, J. (2004) ‘Negotiating Free Trade Agreements with India: The Reality Below the Water Line’, Trade Policy Briefing, No. 8, November 2004, pp. 1–4. Sheng Bin (2002) The Political and Economic Analysis of China’s Foreign Trade Policy, Shanghai: Shanghai Joint Publishing Company and Shanghai People’s Publishing House. Siaroff, A. (1999) ‘Corporatism in 24 Industrial Democracies: Meaning and Measurement’, European Journal of Political Research, 36: 175–205. Sinha, A. (2007) ‘Global Linkages and Domestic Politics: Trade Reform and InstitutionBuilding in India in Comparative Perspective’, Comparative Political Studies, 40(10): 1183–1210. Skogstad, G. (1998) ‘Ideas, Paradigms, and Institutions: Agricultural Exceptionalism in the European Union and the United States’, Governance, 11(4): 463–490. Smedshaug, C. A. (2012) Kan Jordbruket fø verden? Oslo: Universitetsforlaget. Statens landbruksforvaltning (SLF ) (2011) Omverdenen til norsk landbruk og matindustri 2010, Rapport No. 11. Steinberg, R. H. (2002) ‘In the Shadow of Law or Power? Consensus-based Bargaining and Outcomes in the GATT/WTO’, International Organisation, 56(2): 339–374. Steinberg, R. H. and Josling, T. E. (2003) ‘When the Peace Ends: The Vulnerability of EC and US Agricultural Subsidies to WTO Legal Challenge’, Journal of International Economic Law, 6(2): 369–417. Steinfeld, E. S. (2010) Playing Our Game: Why China’s Rise Doesn’t Threaten the West, Oxford: Oxford University Press. Stokes, B. (2010) ‘The Elusive Obama Trade Policy,’ National Journal, May 22, 56. Stoler, A. L. (2011) ‘TBT and SPS Measures in Practice’, in J.-P. Chauffour and J.-C. Maur (eds) Preferential Trade Agreement: Policy for Development. A Handbook, Washington DC: The World Bank. St.prp. nr. 55 (2005–2006) Om samtykke til ratifikasjon av en frihandelsavtale mellom EFTA-statene og Republikken Korea og en bilateral landbruksavtale mellom Kongeriket Norge og Republikken Korea, begge av 15, desember 2005. St.prp. nr. 60 (2007–2008) Om samtykke til ratifikasjon av en frihandelsavtale mellom EFTA-statene og Canada, og en bilateral landbruksavtale mellom Norge og Canada, begge av 26, januar 2008. St.meld. nr. 15 (2008–2009) Interesser, ansvar og muligheter. Hovedlinjer i norsk utenrikspolitikk. Sun Qiying (2007) ‘The Analysis of China’s Foreign Trade Policy Under the New Environment’, Xiamen: Xiamen University. Sun Shilian and Xiong Chai (2010) ‘China: the Consolidation of Trading Nation and the Pushing of the Process of Trade Powers ‘, International Trade, 8: 20–23. Sutherland, P. (2010) A Future for the World Trade Organization? The 2010 Jan Tumlir Lecture, Jan Tumlir Policy Essays, No. 1, Brussels: European Centre for International Political Economy (ECIPE). Swinbank, A. and Tanner, C. (1996) Farm Policy and Trade Conflict: The Uruguay Round and CAP Reform, Ann Arbor: The University of Michigan Press. Tang Haiyan (2010) ‘Strategic Thinking Concerning on Speeding up the Transformation of Foreign Economic Development after Financial Crisis’, International Trade, 10: 1–11. Tan Yaling (2010) ‘The Foundation and Steps of the Exchange Rate Reform’, International Trade, 7: 51–55. Tan Zuyi (2008) Trade Policy Choices in the Process of the Evolution of China’s Economic Structure, Beijing: People’s Publishing House.

References 231 Tian Yuhong (2009) The Coordination Between China’s Trade Policy and Industrial Policy under the WTO Framework, Beijing: People’s Publishing House. Tian Zhihong (2009) Implications for China of the December 2008 Draft Agricultural Modalities, ICTSD Programme on Agricultural Trade and Sustainable Development, International Centre for Trade and Sustainable Development, Geneva: Switzerland. Trondsen, T. and Ørebech, P. (2012) Rettsøkonomi for fornybare ressurser, Oslo: Universitetsforlaget. Trubowitz, P. (1998) Defining the National Interest: Conflict and Change in American Foreign Policy, Chicago: The University of Chicago University Press. Truman, D. (1951) The Governmental Process, New York: Alfred A. Knopf. Tussie, D. (2004) Agriculture Subsidies and the Doha Round: A Role for the G20, Argentina: Latin American Trade Network (LATN), FLACSO. Tvedt, T. (2003) Utviklingshjelp, utenrikspolitikk og makt: Den norske modellen, Oslo: Gyldendal Akademiske. United Auto Workers (2011) ‘UAW opposes U.S.-Colombia Free Trade Agreement’, 23 June, available online at: www.uaw.org/articles (accessed 25 June 2011). United Nations (2001) Report of the High Level Panel on Financing for Development to the UN Secretary General, United Nations, General Assembly, A/55/1000/S.18, available online at: www.un.org/ga/search/view_doc.asp?symbol=A/55/100)&Lang=E (accessed 2 January 2012). United Nations (2001) ‘Letter dated 25 June 2001 from the Secretary-General to the President of the General Assembly’, United Nations, A/55/1000, available online at: www.un. org/ga/search/view_doc.asp?symbol=A/55/1000&Lang=E (accessed 2 January 2012). US Chamber of Commerce (2010) ‘Obama Administration Strengthens Enforcement of U.S. Trade Laws in Support of President’s National Export Initiative’ 26 August, Department of Commerce News website. US Chamber of Commerce (2011) ‘Trade Supports Jobs Website’, June 15, available online at: www.tradesupportsjobs.com (accessed 20 June 2011). US Congress (2008–2012) Congressional Record. US Congress House of Representatives Committee on Ways and Means (HR WM) (2009) Report on the Legislative and Oversight Activities of the Committee on Ways and Means During the 110th Congress, Washington: USGPO, 2 January. US Congress House of Representatives Committee on Ways and Means (HR WM) (2011a) ‘Camp Sets Deadline’, Committee website, 11 February. US Congress House of Representatives Committee on Ways and Means (HR WM) (2011b) ‘Levin: Colombia FTA Implementing Bill Fatally Flawed’, 27 June, available online at: http://democrats.waysandmeans.house.gov/press (accessed 28 June 2011). US Congress House of Representatives Committee on Ways and Means (HR WM) (2011c) ‘Dems call on USTR’, Minority website, 26 July, available at: http://democrats.waysandmeans.house.gov/press-releases (accessed 29 July 2011). US Congress House of Representatives Committee on Ways and Means (HR WM) (2011d) ‘Japan Big 4 Letter’, 8 November, website. US Congress House of Representatives Committee on Ways and Means (HR WM) (2011e) ‘Next Step’, 22 September, Press Release, Website. US Congress House of Representatives Committee on Ways and Means (HR WM) (2011f ) ‘Camp, Brady Applaud Passage. . . .’, 12 October, website. US Congress House of Representatives Committee on Ways and Means, Minority (HR WM) (2011g) ‘Levin, McDermmott Applaud Decision to Enforce CAFTA Labor Provisions’, Minority website, 9 August.

232

References

US Congress House of Representatives Committee on Ways and Means, Minority (HR WM) (2011h) ‘Fact Sheet: HR 2832 – Extending the Generalized System of Preferences Program’, available online at: www.democrats.waysandmeans.house.gov/press (accessed 12 August 2011). US Congress House of Representatives, Speaker (2011) ‘I look forward’, available online at: www.speaker.gov/News, 3 August (accessed 12 August 2011). US Congress Senate Committee on Finance (Sen Fin) (2011a) ‘In Letter to President, Hatch Demands Full Consultation,’ August 24, available online at: http://finance. senate.gov/newsroom/ranking/release/?id=37515ea2-a0f3–44a0–84b9–1ed791657ab7 (accessed 20 May 2013). US Congress Senate Committee on Finance (Sen Fin) (2011b) ‘Hatch, Kerry Call for Strong IP Standards’, website 12 September, available online at: www.finance.senate. gov/newsroom/ranking/release/?id=9fc0a1bb-e420-418a-835c-14512434a436e (Accessed 20 May 2013). US Congress Senate, Democrats (2011) ‘Statement,’ 3 August, available online at: http:// Democrats.senate.gov.pdfs/08032011-reid-mcconnell-statement.pdf. US Department of Commerce (2010) ‘Obama Administration Strengthens Enforcement of US Trade Laws in Support of President’s Export Initiative’, 26 August, available online at: www.commerce.gov/print/news. ??? US President (2010) The White House, Office of Press Secretary, ‘Remarks by the President in State of the Union Address,’ 27 January. US President (2011) ‘Government Reform for competitiveness and Innovation,’ Federal Register, 16 March 76:51 14273–14274. US Statement (2011) US Statement at the WTO Trade Policy Review of India: Statement by Ambassador Michael Punke, 14 September, available online at: http://geneva.usmission.gov/2011/09/14/u-s-statement-at-the-wto-trade-policy-review-of-india/ (accessed 1 October 2011). United Steel Workers (2011) ‘Oppose the Free Trade Agreements’, Letter from Leo W. Gerard, International Vice President to Senate and House, 20 June, available online at: www. usw.org/releases (accessed 25 June 2011). USTR (2009–2011) United States Trade Representative Office, www.ustr.gov (accessed 4 December 2011). USTR (2011) ‘Remarks by Ambassador Ron Kirk,’ Washington International Trade Association, 28 April, available online at: www. geneva.usmission.gov (accessed 3 May 2011). USTR (2012) ‘Non-Agricultural Market Access (NAMA)’, available online at: www.ustr. gov/trade-topics/industry-manufacturing/non-agricultural-market-access (accessed 12 November 2012). US White House (2012a) ‘Government Reorganization Fact Sheet’, Office of the Press Secretary, 13 January. US White House (2012b) ‘Executive Order – Establishment of the Interagency Trade Enforcement Center’, 28 February. Veggeland, F. (1999) ‘Matpolitikk i Norge: Fra et beskyttet landbruk til frihandel og forbrukervern’, I D. H. Claes og B. S. Tranøy (eds) Utenfor, annerledes og suveren? Norge under EØS-avtalen, Bergen: Fagbokforlaget. Verdier, D. (1993) ‘The Politics of Trade Preference Formation: The United States from the Civil War to the New Deal,’ Politics Society, 21: 365–392. Vickers, B. (2012) ‘The Role of the Brics in the WTO: System Supporters or Change Agents in Multilateral Trade?’, in A. Narlikar, M. Daunton and R. Stern (eds) The Oxford Handbook on the WTO, Oxford: Oxford University Press.

References 233 Villarreal, M. A. (2008) The U.S.-Colombia Free Trade Agreement: Economic and Political Implications, Washington DC: Congressional Research Service, RL 34470. May 1. Wagner, C. (2005) ‘The Parliament of India’, in A. Maurer (ed.) The role of Parliaments in Scrutinising and Influencing Trade Policy: A Comparative Analysis, Study for the European Parliament, Policy Department External Policies, Berlin: German Institute for International and Security Affairs. Wang Qi (2011) The Endogeneity of Agricultural Tariff Policy, Beijing: China Agricultural University. Wang, Q. K. (2011) ‘The Rise of Neoclassical Economics and China’s WTO Agreement with the United States in 1999’, Journal of Contemporary China, 20:(70): 449–465. Wang Zixian (2010a) ‘Economic Mode Transition and China’s External Imbalance Under Globalization-One’, International Trade, 8: 13–19. Wang Zixian (2010b) ‘Economic Mode Transition and China’s External Imbalance Under Globalization-Two’, International Trade, 9: 9–17. Warwick Commission (2007) ‘The Multilateral Trade Regime: Which way Forward?’ The Report of the first Warwick Commission: The University of Warwick. Wei Jianping (2007) The Adaptability in China of the Political and Economic Analysis of Trade Policy, Xiamen: Xiamen University. Wolfe, R. (1998) Farm Wars: The Political Economy of Agriculture and the International Trade Regime, Basingstoke: MacMillan Press LTD. Woll, C. (2009) ‘Trade Policy Lobbying in the European Union’, in D. Coen and J. Richardson (eds) Lobbying in the European Union: Institutions, Actors and Issues, Oxford: Oxford University Press. Woolcock, S. (2005a) ‘European Union Trade Policy: Domestic Institutions and Systemic Factors’, in D. Kelly and W. Grant (eds) The Politics of International Trade in the 21st Century: Actors, Issues and Regional Dynamics, Basingstoke: Palgrave Macmillan. Woolcock, S. (2005b), ‘Trade Policy: From Uruguay to Doha and Beyond’, in H. Wallace, W. Wallace and M. Pollack (eds) Policy-Making in the European Union 5th edn, Oxford: Oxford University Press. Woolcock, S. (2010) ‘Trade Policy: A Further Shift Towards Brussels’, in H. Wallace, M. Pollack and A. R. Young (eds), Policy-Making in the European Union 6th edn, Oxford: Oxford University Press. WTO (1998) Ministerial Declaration, Geneva: WTO, Adopted on 20 May 1998, available online at: www.wto.org/english/thewto_e/minist_e/min98_e/mindec_e.htm (accessed 20 September 2012). WTO (2000) Proposal for Comprehensive Long-term Agricultural Trade Reform. Submission from the United States, WTO G/AG/NG/W/15, 23 June 2000. WTO (2001a) WTO Agriculture Negotiations: Proposal by Norway, Geneva: WTO, G/ AG/NG/W/101, 16 January. WTO (2001b) Doha Ministerial Declaration, WTO: WT/MIN(01)/DEC/1, 14 November. WTO (2002a) Negotiations on Agriculture: Overview, TN/AG/6, 18 December 2002. WTO (2002b) TN/MA/W/18, 5 December. WTO (2002c) Market Access for Non-Agricultural Products: Contribution from Norway, WTO: TN/MA/W/7, 4 September. WTO (2003a) TN/MA/W/31, 25 March. WTO (2003b) TN/MA/W/10/Add.1, 8 January. WTO (2003c) TN/MA/M8, available online at: https://docs.wto.org/dol2fe/Pages/FE_ Search/FE_S_S0091.aspx?language=E&CatalogueIdList=70383,56373,97926,73134,7

234

References

2568,39960,53941,49968,35835,2826&CurrentCatalogueIdIndex=5&FullTextSearch= (accessed 20 June 2010). WTO (2004) WTO Agriculture Negotiations: The issues, and Where we are Now, Geneva: WTO, available oline at: www.wto.org/english/tratop_e/agric_e/agnegs_ bkgrnd_e.pdf (accessed 15 December 2012). WTO (2007a): Trade Policy Review – India, Geneva: WTO. WTO (2007b) World Trade Report 2007: Six Decades of Multilateral Trade Cooperation: What Have we Learned? Geneva: WTO. WTO (2008) Trade Policy Review – Norway, Geneva: WTO. WTO (2010) International Trade Staistics, Geneva: WTO WTO (2010a) Understanding the WTO, Geneva: WTO. WTO (2010b) Notification to the Committee on Agriculture, G/AG/N/NOR/59. WTO (2011) Advisory Network, available online at http://news.xinhuanet.com/ world/2010-12/01c_12833700.htm. WTO (2011a) Elements for Political Guidance, WT/MIN(11)/W/2, Geneva: WTO. WTO (2011b) Eighth Ministerial Conference: Chairman’s concluding Statement, WT/ MIN(11)/11, Geneva: WTO, available online at: http://wto.org/english/thewto_e/ minist_e/min11_e/min11_11_e.doc (accessed 19 December 2011). WTO (2011c) World Trade Report 2011: The WTO and Preferential Trade Agreements: From Co-Existence To Coherence, Geneva: WTO. WTO (2011d) Chairman’s Opening Remarks, Informal Trade Negotiations Committee Meeting, 29 April 2011, WTO: Geneva, available online at: www.wto.org/english/ news_e/news11_e/tnc_dg_infstat_29apr11_e.htm (accessed 20 March 2012). WTO (2011e) Trade Policy Review – India, Geneva: WTO. WTO (2011f ) Open Letter on the WTO Doha Negotiations, TN/C/W/58, 15 April, Geneva: WTO. WTO (2012a) Trade Policy Review – China, Geneva: WTO. WTO (2012b) Trade Policy Review – Norway, Geneva: WTO. Wu Xianbin (2002) The Research Of China’s Trade Policy, Beijing: Central Party School. Xiaohui Wu (2011) ‘No Longer Outside, Not Yet Equal: Rethinking China’s Membership in the World Trade Organization, Chinese Journal of International Law: 227–270. Xia Xianliang (2010) ‘Sino-US Trade Imbalance, RMB Exchange Rate and Global Economic Rebalance’, International Trade, 7: 11–21. Xia Yingzhu (ed.) (2009) China Foreign Trade Research, Anhui: Anhui University Press. Xu Heimei (2007) The Research Of China’s Foreign Trade Policy Research, Xiamen: Xiamen University. Yao Lei (2008) The Research of National Interest Groups of Multilateral Trade Negotiations in Agriculture, Beijing: Science Press. Yin XiangShuo (1998) The Reform Process and the Effect Of China’s Foreign Trade, Shanxi: Shanxi Economic Press. Yoshimatsu, H. (2010) ‘Domestic Political Institutions, Diplomatic Style and Trade Agereements: A Comparative Study of China and Japan’, New Political Economy, 15(3): 395–419. Young, A. R. (2007) ‘Trade Politics ain’t What it Used to be: the European Union in the Doha Round’, Journal of Common Market Studies, 45(4): 789–811. Young, A. and Peterson, J. (2006) ‘The EU and the New Trade Politics’, Journal of European Public Policy, 13(6): 795–814.

References 235 Zahrnt, V. (2008) ‘Domestic Constituents and the Formulation of WTO Negotiating Positions: What the Delegates Say’, World Trade Review, 7(2): 393–421. Zhang Guoqing (2010) ‘Trade Growth And Trade Balance’, International Trade, 7: 1–10. Zhihong, T. (2009) Implications for China of the December 2008 Draft Agricultural Modalities, Geneva: International Centre for Trade and Sustainable Development (ICTSD).

Index

Page numbers in italics denote tables, those in bold denote figures. 9/11 86 agricultural exceptionalism 5–6, 10, 32, 34, 148, 154, 171–2, 185–6, 197 agricultural protectionism 32 agricultural subsidies 32, 59, 150 Allee, T. 188, 200 Amber box see domestic support boxes American trade policy: bipartisan compromise on FTAs 66–8; Bush trade agreements 61–2; chronology 62; Colombia FTA 63–4; and CongressPresident fast-track procedure 62–3; Congressional committees 55; Congressional votes on FTA bills 69; and the Doha Round 59–61; dual negotiations 73–4; Executive branch 53–5 (see also USTR); formal advisory committees 57–8; free trade agreements legislation chronology 68; interest groups 56–7; NAFTA 50–3 (see also North American Free Trade Agreement); negotiations and votes 68–70; Obama and the partydivided Congress 65–6; Obama Export Initiative 71–3; participants 54; and President-Congress relationship 62; public and legislative attention 58–9; reorganisation 55–6; Trans-Pacific Partnership 70–1; see also United States anti-dumping 34, 37, 43, 46, 140–1, 146, 160, 162, 166, 182 ASEAN countries, EU bilateral negotiations 99 Asian crisis 35 Ayres, J. M. 187 Baldwin, M. 189, 196

Baldwin, R. 203–4 Bhagwati, J. 46–7, 204–6 Blair House agreement 32–3, 38–9, 82 Blue Box see domestic support boxes Blustein, P. 37, 43 Brittan, Leon 84 Bush, George W. 41 Cairns Group 13, 39, 92–3, 180 Cancún Ministerial 3, 38–9, 59, 89–91, 95–6, 110, 161, 178, 180 Capling, A. 14 Chen Deming 44, 124 China: accession to the WTO 135, 143; alliance with India and Brazil 39; characteristics of decision-making in trade policy 130–2; constraining force of international negotiations 132; and the Doha Round 135–42 (see also Chinese perspective of Doha); domestic institutions/actors 198–9; domestic support boxes 142; domestic trade policies 193–4; future trends and key issues in trade policy 145–7; growth and diversification in international trade 124, 126; import and export of goods 125; institutional structure 128; limited role of non-administrative interest groups 131–2; multiple stakeholder coordination 131; Norway’s free trade negotiations with 168; political organisational structure 126–35 (see also Chinese political structure); and RMB appreciation theory 132–3; share of total world trade 124; tariff binding 31, 144; top 10 trading partners 126; trade balance 133–4; trade policy

Index 237 decision-making factors 127–30; trade policy evolution 121–4; WTO accession 121, 123, 135; WTO implementation 134–5 Chinese perspective of Doha: agricultural interest groups’ impact 140–2; agricultural negotiation issues 142–4; agriculture 137–9; balancing domestic interests 136; balancing international and domestic interests 136–7; NAMA issues 144; tariff policy decision-making 139–40 Chorev, N. 175 Clinton, Bill 51 coalitions 10, 13, 81, 107–11, 114, 180, 191 Common Agricultural Policy (CAP) 28, 79, 81, 83, 92–4, 97, 165, 180, 200 Daugbjerg, C. 32, 34 Daunton, M. 174 Deng Xiaoping 123 Destler, I. M. 188 developing countries: EU philosophy 88–90; India’s involvement in coalitions of 110; resistance to free trade 106 developing country exceptionalism 106 Dispute Settlement Mechanism (DSM), use of the 176 distributive justice, Third World demand for 106 distributive strategy, India’s use of the 111, 113 Doha Round: achievability 46; agricultural negotiations 179–80; American trade policy and the 59–61; Cancún and the rising powers 38–9; China and the 135–42 (see also Chinese perspective of Doha); conflicting ideas and interests 178–86; deadlock 44–6; declared aims 37; disagreements 38–9; the EU pushes for trade liberalisation 96; EU/US ‘joint text’ proposal 38–9; EU’s flexibility on agriculture 97; EU’s policy ideas and 86–92; FIP’s package 40; Geneva meeting 42–4; Indian recalcitrance and 109; July package for the G-7 countries 42–3; launched 37; the mandate 37; most contentious agricultural issue 34; NAMA negotiations 37–8, 181–3; Norway and the 156, 159–63; postCancún progress 39–42; Punke’s complaint 45; renewed interest 42; the single undertaking 183–6; unresolved conflicts 43

domestic institutions, international-level implications 199–201 domestic support boxes 33–4, 40, 41, 93–4, 97, 142, 158–9, 161, 179 Dür, A. 85, 99 Elsig, M. 80, 90 Esserman, R. 176 European Economic Area (EEA) 148, 153, 157, 163–4; Norway and the 164–7 European Free Trade Association (EFTA): ambitions of the original treaty 163; Norway and 167; Norway’s membership 148; participating countries 167; secretariat’s main areas of responsibility 164; stages of negotiation process 168–9; Third World concerns 170 European Union (EU): agricultural interests 92, 94; CAP reform 81; defensive interests 96, 98; and the Doha Round 86–92, 96–7; domestic institutions/actors 196–7; and domestic support boxes 93–4, 97; domestic trade policies 189–90; founding members 77; free trade agreements 98–9; Global Europe document 98; interest groups 83–5; intermestic nature 78; most important institutions 77–8; and NAFTA 99; NAMA 94–5; negotiating authority delegating system 80; policy ideas and Doha engagement 86–92; power relationship debate 80; role in the WTO 76; services trading 95–6; tariff binding 31; trade institutions 77–83; and the Uruguay Round 78–9, 82–4, 92–3, 95, 97; WTO negotiations procedure 79 Everything-But-Arms Initiative (EBA) 89 export competition 34 export subsidies: agreements on 41; and CAP reform 92–4, 97; and developing country strategy 180; Indian perspective 106; Norwegian perspective 161–2; permitted WTO members 34; US 40 Fischer Boel, Mariann 79 Fischler, Franz 37, 79 food security 32, 39, 144, 155, 158, 161, 185–6, 194, 206 Frieden, J. 16 G-7 17, 42–4, 109 G-10 13, 17, 38–40, 107, 161–2, 179–80 G-20 17, 39–41, 72, 110, 143, 180, 186

238

Index

G-33 13, 17, 39–41, 110, 113, 136, 180, 186, 194, 198 G-90 39 Gallagher, K. P. 206 Gandhi, Mahatma 105 General Agreement on Tariffs and Trade (GATT): and the EU 77–8; Enabling Clause 106; Green Room 108; Indian activism 103–7; Most Favoured Nation rule 104; Norway’s participation 157; Principal Supplier Principle 104 Generalized System of Preferences (GSP) 68, 150, 157 Geneva Ministerial 3, 14, 40, 42, 44, 46, 86, 161 global financial crisis 24, 42, 44, 108, 113–14, 123, 132–4, 189–90 global trade agenda: Doha development agenda see Doha Round; international trade developments 24–6; international trade politics and policy 27; multilateral trade regime development 27–9; the Uruguay Round see Uruguay Round globalisation 11, 37, 87–9, 187, 194 Goldstein, J. L. 177, 186 ‘Grand Bargain’ 29–30, 36, 167, 179 Green Box see domestic support boxes Green Room 107–8 Harbinson, Stuart 38 Heisenberg, D. 81 Hoekman, B. M. 31 Hong Kong Ministerial 97, 114 Howse, R. 176 Hu Jintao 71, 147 Hubauer, G. C. 46, 205 India: agriculture negotiations 112–13; coalition behaviour 110–11, 114; and the Doha Round 109; domestic institutions/actors 198; domestic trade policies 192–3; explanations for persistent recalcitrance 114–19 (see also Indian recalcitrance); GATT activism 103–7; NAMA negotiations 113–14; participation in PTAs 110; postindependence growth phases 104–5; WTO veto-player status 107–11 Indian recalcitrance: domestic interests in a developing country and 114–15; role of domestic institutions and societal interests 116–19; role of ideas in trade negotiations 116 Indonesia, alliance with the Philippines 39

intellectual property rights 28–9, 82, 93, 98–9, 107, 117, 163, 179, 203 ‘intermestic’ definition 1 international trade developments 24–6 international trade regime, institutionalisation 175–8 Jackson, J. H. 29 Jäkel, I. C. 187 Jones, E. 178 Kamal, Yousef Hussain 37 Kirk, Ron 44 Kostecki, M. M. 31 Krugman, Paul 133 Lamy, Pascal 40–2, 44, 46, 79, 84, 86–8, 98, 108, 163, 200, 204 liberalisation: benefits of 174; and binding commitments 31; Chinese perspective 143–4; distribution of costs 7; and the European service industry 87–8, 96; EU’s pursuit of 96; Frieden and Rogowski’s argument 16; and the ‘Grand Bargain’ 30; ideological perspective 11; Indian perspective 105–7, 116; Norwegian perspective 155–6, 158; and Seattle 35; WTO progress 1 Low, P. 14 Maastricht Treaty 82 MacSharry, Ray 79, 93 MacSharry reform 93, 97 Mandelson, Peter 79, 98 Manning, B. 1 Martin, W. 46, 205 Mattoo, A. 46, 205 Melchior, A. 157, 170 Mercusor, founding members 100 Meunier, S. 80 Millennium Round see Doha Round Moore, Mike 37 Most Favoured Nation (MFN) 77, 104, 144, 157 Multifibre Arrangement (MFA) 30, 157 multilateral trade negotiations 17, 31, 35, 102, 132, 135, 155, 202 multilateral trade regime development 27–9 multilateralism: definition 27; EU support 86, 91; Indian perspective 103, 109–10 Narlikar, A. 37, 174

Index 239 Nath, Kamal 44, 109, 114 Nehru, Jawaharlal 105 Non-Agricultural Market Access (NAMA): areas covered by 113; Chinese perspective 144; Doha negotiations 37–8, 181–3; EU perspective 94–5; Indian negotiations 113–14; Norwegian negotiations 162; term analysis 30; Uruguay Round 30–1 North American Free Trade Agreement (NAFTA): American trade policy and 50–3; and the Coalition for Trade Expansion 56; establishment 35; Europe and 99; and the formation of advocacy organisations 56 Norway: agricultural exceptionalism 154–5; agriculture and fisheries 150–1; and the Doha Round 156, 159–63; domestic institutions/actors 197–8; domestic support boxes 159, 161; domestic trade policies 190–2; and the EEA 164–7; and EFTA 163–4, 167; EU membership issues 153; external trade in goods and services 149; free trade agreements 167–8; free trade negotiations with China 168; and the Geneva meeting 161; global institution membership 148; humanitarian/peacemaking status issues 153–4; intermestic character of free trade negotiations 168–71; MFN tariff 157; NAMA negotiations 162; natural resources 148; new tariff system 172; Nobel Peace Prize award to Chinese dissident 168; oil and gas industries 148, 149–50; open economy 148–50; parliamentary cleavages 152–3; policymaking framework 151–7; population 148; self-sufficiency calculations 150; sovereign wealth fund 150; trade policy making responsibilities 155–7; and the Uruguay Round 158; WTO membership 157–63 Panagariya, A. 104–6, 108 Peterson, J. 86, 189 the Philippines, alliance with Indonesia 39 Pillai, Raghavan 103–5 plurilateral trade agreements, the rise of 201–4 politics of trade, towards a new 204–6 Portman, Robert 59 Preferential Trade Agreements (PTAs): legal foundation 47n7; participation in 110; three waves 35

protectionism: China’s position 124; Europe’s position 87; financial crisis and 113; India and 104, 106; levels of in Indian agriculture 112 public opinion 133, 187, 193 Punke, M. 45, 60 Putnam, R. D. 174, 186 Reagan, Ronald 32 reform and opening-up process 121 Rogowski, R. 16 Schwab, Susan 44, 60 Seattle Ministerial 35–6, 84, 86, 89, 117 Shama, Anand 44 Singapore Issues: Cancún and 39; developing countries’ reluctance to negotiate 96; EU’s initiative 40; EU’s position 91; exclusion from negotiations 40, 90; India’s acceptance 37; the issues 36, 88; opposing countries 36 Singh, Manmohan 116, 192 Sinha, A. 177 Smolka, M. 187 Smoot-Hawley tariff bill 74 Special and Differential Treatment (SDT), roots of India’s role 104 Special Safeguards 4, 34, 39–40, 43, 46, 112–13, 115, 143, 158, 179–80, 182, 185, 194, 205 Stern, R. M. 174 Stockholm Declaration 163 Sun Zhenyu 144 Sutherland, P. 46–7, 205–6 Swaminathan, S.T. 105 Swinbank, A. 32, 34 Swiss formula 38, 94, 144 Sykes, A. O. 29 tariff binding 30–1, 112, 144, 181 Tian Zhihong 194 Tokyo Round 28, 30, 63 Trade-Related Intellectual Property Measures (TRIPs) 29, 117 Trans-Pacific Partnership (TPP) 49, 61, 70–2, 201 Treaty of Rome 78–9, 81–2, 196 Tvedt, T. 154 United Nations Conference on Trade and Development (UNCTAD), creation of 106 United States (US): domestic institutions/ actors 195–6; domestic trade policies

240

Index

United States continued 187–8; open trade leadership 49; political parties’ trade views 51, 52; tariff binding 31; trade policy see American trade policy Uruguay Round: agreed reductions in agricultural subsidies and protection 32; agreement contents 29; agriculture 31–4; bound tariff rates 31; ‘box’ agreements 33–4; concluded 29; the EU and 78–9, 82–4, 92–3, 95, 97; India’s resistance 107; Jackson and Sykes’ summing up 29; launched 29; lead EU negotiator in agricultural trade issues 79; NAMA 30–1; North–South bargain 29; Norway and the 158; participating countries 29; peace clause 96; pre- and post- tariff bindings 31; PTAs and the legacy of 34–6; scope 29

Woolcock, S. 86 World Trade Organization (WTO) 79; creation 3, 29; deadlock 102; developing countries’ role 98; developing countries’ status 13; enforcement mechanisms 6; establishment 29, 157; expanding mandate 117; free-trade agenda 102; importance 9; inclusion of agriculture 5–6; India’s veto-player status 107–11; membership criteria 3; number of member countries 135; number of regional trade agreements notified 35; parliamentary dimension 7; protests against 3; regional trade agreements notified 35; sensitivity to development concerns 37; see also Doha Round; General Agreement on Tariffs and Trade; Uruguay Round) Young, A. 86, 189

Vaduz Convention 163 Wang, Q. K. 193–4

Zhang Zhuoyuan 127 Zoellick, Robert 40