WTO overcomes the Doha Round

Umberto Mazzei

25/05/2011

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WTO’s Director General, Pascal Lamy, finally sheared the same conclusion reached by most of WTO Members: the Doha Round will not be completed in 2011. That did happen, but after intense efforts trying to revive the negotiation, trying to comply with the schedule imposed by the Financial G-20.

On April 21, an “Easter Package” was presented to WTO Members. It consisted in a compendium of 2008 texts and the reports from Presidents of the Negotiation Groups on the negotiation progress in each. On April 29, there was a meeting of the Trade Negotiations Committee, were it was obvious that negotiation positions are as far apart as in 2008, or even more, because the US has increased its market access demands. This latter particular is a “escape forward”, by feigning that the US wants a bigger trade opening while knowing that it can not be accepted, so the US & Cº can “blame” the talks failure on other countries. The US most always play the righteous victim part, but the truth is that Washington’s present political climate is not at all favourable to international trade deals.

The report of the Director General, on the status of the negotiation, attempts to distort realities by omission. Here are some observations:

It only mentions the interests of some groups and focuses on the industrial goods negotiation, which, according to him, is the issue that prevents an agreement. He doesn’t seem to note the absence of any content related to development, either in texts or proposals, as required by the Doha mandate.
He makes an Olympian Class jump over the disagreements on agriculture, which is the key driver of the negotiations
He fails to mention that the United States Representative for Trade has not even received the authorization to negotiate or that President Obama does not have now a majority in Congress.
The report seems to ignore that the actors of the negotiation are the Member countries. The last consensus on the texts go back to December 2008. Since then, all the proposed texts and personal evaluations presented by the Group Presidents and the Director General tend to manipulate realities in order to force an agreement. It is about time some one reminded Mr. Lamy that the WTO 153 sovereign Members are the ones which should decide the way forward and not some administrative official.

The gaps in all negotiating issues remain big. It is an admitted fact by Members with independent policies, by the coordinators of the various groups of countries (G-20, G-33, PMA, PVEs, UE, et al.) and now by the Director General. The gaps grew while the Doha Round moved away from its original purpose of eliminating the agricultural subsidies in Developed Countries that distort international agricultural prices. The situation now is that those subsidies remain, and the proposed cuts are on consolidated figures (theoretical lies) and not on the subsidies actually applied. In exchange for this "nothing", the Developed Countries demand from Emerging Countries an almost total opening not only in industrial goods -NAMA (chemical, electronic, electrical and machinery), but also in services (financial services included ) and Agriculture (agricultural subsidies included).

These conditions do not help efforts aimed at concluding the Doha Round in 2011, all in order to comply with rhetoric remarks by the kingpins of the Financial G-20, which seem to be instructing otherwise their WTO negotiators. The awareness of glaring reality pushes now the Members and also the WTO Secretariat to get involved in more concrete things, such as the Agenda for the Eighth Ministerial Conference to be held on December of this year. In anticipation to the event, the President of the General Council requested proposals to be included in the Agenda, in order to create a small package that can be agreed upon in order to raise the prestige of the WTO.

During the Eighth Ministerial Meeting, particular attention should be given to the principle of the "Single Undertaking of the Negotiation”, which means that nothing is agreed on until everything is not agreed upon.

There is talk about an “early harvest” of those points on which there is agreement. The fact is that there is lack of agreement on all groups of issues, so those hints could be aimed at dividing the multilateral framework that protects those unable to resist powerful pressures.

Nearing the end of the game

When the director general of the WTO recognized that the Doha Round can not be completed this year, he put the blame on Developing Countries, but also acknowledged that the United States are unreasonable when pretending from countries like Argentina, Brazil, China, India or South Africa, that they reduce their tariffs to zero for certain industrial sectors such as chemicals, electronics and industrial machinery[1]. The dialogue became comical when US Ambassador, Mike Punke. intervened to protest because been under interpreted. The US -he said- not only calls for full access in industrial goods, but also for full access in services and agriculture.

Mr. Lamy’ Report got several other commentaries from Developing Countries Delegations, some reminding him about Developing Countries proposals to compensate dismantling agricultural subsidies and opening agricultural markets of Developed Countries with a drop of industrial tariffs ranging from 30 to 50 percent. Among them, that of Brazilian Ambassador, Roberto Acevedo, stood out because of a lapidary phrase: "I want to remind you that we are not in the final game, we are nearing the end of the game."

Acevedo’s phrase underscores the disparity of views or approaches that make imperative that the game be finished now. Not least because in the course of negotiation the original goal was sneaked away and nothing remains of its early promise: Development. It must end also because there is a lucid awareness of new threats and that old standards inherited from GATT are inadequate under new international economic and ethical perspectives. A couple of examples.

Today we know that to open markets in the financial sector is not a market opening similar to that of other services. It is proven and admitted that the removal of controls to financial sector activities in the United States is the cause and origin of the present economic crisis, which is certainly not over. A crisis which reached an unprecedented contaminating scale because of the freedom for intimate contact between financial players. If when there is threat of pandemics controls are erected, mobility is restricted and preventive measures are taken, the same thing must be done to prevent financial pandemics that can be quite deadly. The UN and the Financial G-20 have already recommended reforms that contradict the provisions of the WTO Services Agreement.

At the other end of the spectrum, we have the case of a natural resource: water. According to the WTO, water is a commodity, to be bought and sold like any other, under market’s inspired dictatorship: give it to the highest bidder. This approach contradicts modern international standards, that have a social and environmental content. Those standards treat water as a "common good" that transcends the market, as something that can not be appropriated. That is the criterion governing the Statement 292 of the UN General Assembly in August 2010 and Resolution 9 of the Human Rights Council UN in October 2010.

Proposals for the future

The WTO has more useful matters to get involved with, than to keep in the trap that the Doha Round turned out to be. Not only there is much work to do on interpretation of texts from the Uruguay Round, but it is good time to present concrete proposals, practical and modern ones, for areas yet to be developed in the founding WTO agreements.

Two Members of the ALBA Group: Cuba and Ecuador, with the support of Nicaragua and Bolivia, presented for the Ministerial Agenda an excellent proposal on Electronic Commerce. The proposal would mitigate the digital gap between developed and developing countries. A digital divide that "limits the production and circulation of knowledge, emphasizes economic backwardness and dangerously intensifies misunderstanding between peoples."

The proposal analyzes the present situation over an unobjectionable statistical basis and its aims are inspired by studies presented at the World Summit on the Information Society (WSIS) of the International Telecommunication Union (ITU) at Geneva (2003) and Tunis (2008). It also includes studies presented at the World Assembly of Telecommunication Standardization held in Johannesburg in October 2008 and the report "Information Economy" presented by UNCTAD in October 2010. It aims to improve the information conditions for micro, small and medium enterprises, which are predominant in developing countries.

The idea is to create at the WTO a Working Group, open to all Members, to examine the relationship between E-Commerce and Development, under the auspices of the Committee on Trade and Development. The Working Group would contact organizations such as UNCTAD, ITU and WIPO to learn about the technical means and would submit monthly reports to the Committee on Trade and Development. The Electronic Commerce issue would be included in the Trade Related Technical Assistance Programs that are run by the Institute for Training and Technical Cooperation of the WTO.

On its own, Cuba, with the support of the Like-Minded Group and Ecuador, Nicaragua and Bolivia, also submitted a proposal to improve the functioning of the Dispute Settlement Understanding Body - DSU-whose decisions and recommendations can suffer such delays in their application as to become irrelevant, even if its own regulations (Article 21.1) recognizes the need for early implementation. Such state of affairs undermines confidence in the effectiveness of the DSU and causes further damage to the injured party. Today, at the May meeting of the DSU, the United States suffered its 102 reprimand, for its refusal -for nine consecutive years- to comply with the recommendations over a counterfeit brand of Cuba and over the international lawlessness of its "Section 211" Specifically, Cuba proposes adding to Article 21.1 a text that limits the reasonable period for compliance with the recommendations of the DSU, to a maximum of 48 months and in case of continued disregard, to apply administrative measures to the guilty Member.

Conclusion

The Doha Round turned out to be an attempt to perpetuate colonial conditions in favor of big international corporations. That shameful past must be left behind, because if the WTO is to have a future in the twenty-first century it is by assimilating new economic and social realities, that are here to stay.

- Umberto Mazzei has a PhD in political science from the University of Florence. He has taught international economics at universities in Colombia, Venezuela and Guatemala. He is Director of the Institute of International Economic Relations in Geneva.

[1] It is suggestive that the US is not a main exporter in these areas, but Big International Corporations are exporting them, from other countries.

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