WTO DOHA NEGOTIATIONS: DO DEVELOPED COUNTRIES WANT TO HAVE THEIR CAKE AND EAT IT?

By Michelle Pressend -
Policy, Advocacy, and Research Coordinator,Biowatch,
Trade Strategy Group
Economic Justice Network
Cape Town
26 August 2009

Since the last World Trade Organisation (WTO) Ministerial meeting took place in Hong Kong in 2005, the WTO Doha negotiations have remained at an impasse. Attempts to revive negotiations last year during the July 2008 mini Ministerial meeting failed.

In principle what the Doha Declaration agreed to in 2001 was meant to foster ‘development’ in developing countries and address the adverse impact of trade liberalization and deregulation.

Since then, Doha negotiations have been dragging on for almost a decade with developing nations rightly remaining cautious about concluding a ‘bad deal’. Negotiations continue to be unbalanced with developing countries still being offered a raw deal.

The stalemate is largely over developed countries’ reluctance to make considerable reductions in their trade distorting agricultural subsidies and unbalanced proposals for further reductions in industrial tariffs.

Developed countries are only prepared to make meagre concessions to reduce their trade distorting subsidies. However, developing countries are being asked to make trade-offs to gain market access for their agricultural goods in exchange for opening up access to their industrial and service sectors.

In a sense developed countries want to "have their cake and eat it."

“An outcome that differentially hurts developing countries or benefits developed countries more should be seen as failing the Doha development promise of enhanced market access for developing countries,” argues Rashid S. Kaubab, author of the book Benchmarking Development for Hong Kong and Beyond: Strengthening Africa in World Trade.

From 30 November to 2 December 2009, after a spate of failed attempts to revive the WTO Doha Negotiations, a WTO Ministerial conference will take place in Geneva. It's a much-anticipated event given American President Barack Obama’s enthusiastic endorsement of the G20 statement in April this year, calling for a conclusion of the Doha talks.

To create new impetus for the WTO Doha negotiations, a mini Ministerial meeting is planned to take place from 3-4 September 2009 in Delhi, India. According to sources, the meeting is not meant to have real negotiations and will simply be a general meeting where statements are made.

South Africa is one of 36 countries invited to the meeting either as coordinators or representatives of various WTO groups. Zimbabwe, Tanzania, Nigeria and Burkina Faso constitute the balance of invited African countries.

Pascal Lamy, the WTO Director General, has been meeting various governments to encourage the conclusion of these negotiations. He is confidant that all the recent discussions point towards the conclusion of the Doha Round in 2010.

Lamy recently visited South Africa, which is in a very precarious situation with regard to further industrial tariff cuts. In the WTO, South Africa is classified as a developed country and further tariff cuts under the proposed WTO formula will not only have implications for our industrial sector and further job losses, but also affect the Southern African Customs Union (SACU), which consists of small and vulnerable economies.

Lamy's key message is concern about signs of protectionism during this global economic crisis. In a recent report to the WTO Trade Negotiations committee at a meeting of ministers and heads of states and governments, he stressed: "(i) We need to keep trade open and resist protectionist measures. (ii) The best way to keep trade open is to keep opening trade, hence the need to conclude the Doha Round as soon as possible."

The alarming aspect about urgency to conclude the Doha round is the lack of recognition that the very rules and policies espoused by the WTO are at the core of the global economic and planetary ecological crisis, i.e. to prioritise growth based on standard economic models.

This entails integration into the global economy based on neo-liberal policies that enforce global privatisation, deregulation, trade liberalization and the opening of financial markets and institutions with the aim of preventing regulated capital flows and generally promoting more market driven economies that continue to have a devastating impact on jobs, poor peoples quality of life and the planet's resources.

Developing countries are faced with a number of challenges to meet their development needs. These include growing their economies, addressing high levels of poverty, ensuring job creation, expanding their manufacturing bases and managing their resources.

The question is, in the context of the global economic and planetary crisis, will the WTO negotiations seek the opportunity to question unbalanced trade rules or continue negotiations within the current economic paradigm that essentially perpetuates underdevelopment in developing countries?

The current state of play amongst the WTO members - more so from developing countries - is that unless agreement is reached on agriculture and non-agricultural market access (NAMA), no negotiations will take place on other issues such as services, trade in environmental goods/services, trade facilitation and geographical indicators, amongst other issues.

The stalemate in the negotiations questions the legitimacy of the WTO to promote fair and balanced multilateral trades rules that will addresses the past and current inequities, which developing countries are faced with.

On agriculture, points of contestation are the elimination and/or reduction of trade distorting subsidies and substantial market access opportunities for developing countries’ agricultural goods.

Developing countries that belong to the G20 and also happen to be big industrial agricultural producers have formed a coalition. These countries have a proactive interest in greater market access in the developed world.

South Africa is part of the G20, but South Africa, like many industrialized developing nations has huge inequities in the productive capacity of agricultural goods. Countries like South Africa have to address land access and redistribution as well as provide productive support for small-scale and subsistence farmers before throwing their lot in with the globalised industrial agricultural sector.

Within the WTO's Group of 33 (G33) countries, there are also countries that have huge peasant, family, subsistence and small-scale farming communities. Vitally, these countries are calling for special safeguard measures to protect their small-scale and emerging farmers from the adverse effects of trade liberalization. India, for example, belongs to both the G33 and G20.

So while the G20 is calling for greater market access, it will mostly benefit large-scale agriculture farmers and businesses, if at all.

Furthermore, the WTO perpetuates the current permissive industrial agricultural production and trade system in genetically modified organisms and agrofuels (biofuels) that contribute significantly to climate change.

On NAMA, developing countries want guaranteed policy space. In other words, the right to develop policy through experimentation, in addition to the flexibility to design industrial, trade, technology and social policies unique to their respective situations.

The challenge for developing countries is how they use the policy space if they get it.

Certain economic instruments are necessary, such as the flexibility to raise or drop industrial tariffs when necessary, particularly to protect industries and jobs from import surges as well as to allow subsidies to support infant industries and build domestic capacities and assets.

The current WTO negotiations curtail these instruments and subject countries to binding commitments. At the same time, past and current industrial development is having a significant impact on the physical environment, the use of natural resources and the socio-economic rights of workers.

At the same time, developed countries' demands are accommodated to protect their sensitive sectors. In the December 2008 WTO NAMA text an "anti-concentration" clause, proposed by developed countries, was included.

Martin Khor former Director of Third World Network explains that the clause "is designed to prevent developing countries from excluding an entire sector, or close to an entire sector from full formula tariff cuts."

Current trade policies and agreements do not serve people's development rights and needs as well as national development aims -- especially the goals of poverty eradication, job creation and socio-economic and environmental justice. Such instruments and policies should not just be questioned, but challenged.