The WTO: Where is the Doha round?

Umberto Mazzei

14/09/2012

Opinión

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The Doha Round, as an attempt to improve development with fairer trade died very young, I think it was stillborn. Since its inception it was nothing but a fight against proposals to deliver world markets to large transnational corporations.

Looking at the past you can see the future, because the coherence in actions clarifies the actors' goals and the balancing dynamics. In the 80s the IMF and World Bank forced poor countries to subscribe to the GATT. The Uruguay Round was negotiated, incorporating agriculture into the GATT while there were also agreements in services trade and intellectual property. The WTO was created to manage the package.

The Uruguay Round left unfair rules in agriculture – the economic base of poor countries - as well as other anti-development rules in intellectual property and services. The Doha Round was sold as the way to correct all that. In fact, the Doha Declaration instructs members to negotiate rules that will improve the level of development and in agriculture it mandates "reductions, with a view to phasing out, of all forms of export subsidies, and substantial reductions in trade distorting domestic support". A very important mandate because subsidies create artificially low prices that ruin local farmers.

The mandate was disregarded and the Doha Round negotiations turned into a negotiation to open markets in all areas, agriculture, industrial goods, services and expand intellectual property monopolies. The US increased agricultural subsidies and rich countries had tariffs of 200 – 300% ad-valorem, or specific tariffs and tariff quotas for agricultural imports.

Developing countries also have to face two trade concerns with developed countries: a) tariff peaks (very high tariffs) and tariff escalation (higher tariffs on further elaboration) in products on which developing countries had export potential; b) non-tariff barriers such as anti- dumping, technical and sanitary standards.

When negotiating positions hardened, the negotiation process became more exclusive. Deliberation in the "Green Room" (groups of 20 -30 influential countries) became very frequent. The Secretariat managed negotiations with increasing lack of transparency and procedural rules are now frequently disregarded.

The global financial crisis and trade

World Trade in Goods 2007 – 2011. (€ billions) Source : IREI with ITC Trade Map data
Goods	2007	2008	2009	2010	2011
Export. €	10.155	10.927	8.887	11.382	12.621
Import. €	10.323	11.194	9.067	11.603	12.793
Commerce €	20.478	21.121	17.954	22.985	24.414

In 2008 there was the Wall Street Financial Crisis which spread to Europe and affected the flow of commerce. Trade fall and recovery was not homogeneous and there was a significant change in trade pattern: emerging and developing countries are now growth leaders.

The table shows how much the crisis lowered figures for trade in goods worldwide. It was not an immediate reflection, the crisis had its most acute moment in 2008 and trade was most affected in 2009. There is a global recovery, but speed has been unequal across countries. The most obvious hypothesis is that the financial crisis affected more businesses credit and consumer purchasing power in the countries more directly exposed.

Trade in services recovery was different from trade in goods. The second table shows how trade in services recovery is not alike in all countries. There is a general lag in the recovery that can be due to the fact that the intangible nature of services made it easier to show false growth until 2009, a bubble driven by speculation in the financial services sector.

The four main actors in services trade are the U.S., UK, Germany and China. The crisis did not affect them to the same extent. In the United States and Germany the impact was limited to 2009. China rebounded and grew 40%. The UK has not yet recovered. This discrepancy has some effect on the approach by value chains of which we shall speak later.

The Singapore issues and regional agreements

World Services Trade 2007 -2011 Exports and Main Partners (€ billions) Source: IREI with ITC Trade Map data
Year	World	US	UK	Germ.	China
2007	3,752	356	210	166	89
2008	3,914	363	194	177	100
2009	2,539	360	166	165	93
2010	3,129	410	189	179	128
2011	2,941	431	200	185	131

There are four issues that for years, when they are shown the door, they return through the window. The first attempt to bring them in was at the WTO Ministerial Conference in Singapore, in 1996. It was proposed then to negotiate Investment Rules, Competition Policy, Government Procurement and Trade Facilitation. There was no consensus to include them in the agenda, but they were still somehow discussed. Pressure intensified latter in Seattle and Cancun, unsuccessfully. In Doha their inclusion was discussed in a Green Room with 24 countries that lasted the whole of the last night, without success.

Resistance is due to the fact that Investment Rules, Competition Policy and Government Procurement all have the same goal: to expand the rights of transnational corporations with rules that prevent governments from implementing national policies to support domestic companies and hinder a trade policy favorable to local economic actors.

At the Mini-ministerial of July 2004, it was agreed to definitely discard the issues about investment, competition and government procurement. It was agreed instead to negotiate over Trade Facilitation, something that regards customs rules and procedures and that will facilitate international marketing. As with all the aspirations on trade rules that fail to be successful at the WTO, the other three Singapore issues were imposed on regional and bilateral agreements signed with developing countries that for one reason or another can not or will not resist.

There are hints that those three issues officially left outside the WTO will be back, under the pretext of harmonizing the WTO multilateral rules - that have more international standing and range - with those of regional agreements and networks of bilateral free trade agreements.

The Ministerial Conference of 2012

The outcome for the Doha Round of the Eighth Ministerial Conference was summarized by the South African minister Rob Davies when he said that "If the world can not now perform the particular task of negotiating a development mandate, we will wait for the right time." It is the same Rob Davies that at yet another meeting that repeated the same failed approaches, reminded Pascal Lamy that Einstein defined insanity as "doing the same thing over and over again but expecting different results." The WTO is so schizophrenic that this policy of insisting on what has already been rejected is a deliberate one and the worst is that ... sometimes it wins!

The failure of the VIII Ministerial Conference, whose only significant asset was Russia’s admission, has made it possible to stop simulating obedience to the Doha mandate. From the Doha Round the only thing left is the mandate to negotiate, but under the guise of updating negotiations to new realities, there are attempts to introduce very dangerous subjects.

Looking at the future

There are issues that can be very dangerous for developing countries and developed countries alike, under the unattractive Americanism of Global Governance, where the WTO has an important role.

a) Singapore Issues

There is no doubt that a return to the Singapore issues will be attempted. The only one accepted for negotiation was Trade Facilitation and the U.S. already said that it was the topic they were most interested in. At the negotiation table there is a text with over 700 brackets (disagreements) after four years of negotiation and the Swiss-Guatemalan that chairs the negotiating group may leave the WTO because his family is involved in a criminal scandal. Trade Facilitation must be monitored closely because a lot of pressure will be exerted.

b) Plurilateral Agreements

There is insistence on the WTO accepting plurilateral agreements because that would allow for replicating at the WTO, and with the same partners, the rules imposed on regional or bilateral free trade or association agreements. Once admitted into the WTO it will be argued that they are standard rules because they are in use among many countries. That explains the proliferation of regional and bilateral agreements.

There are already three plurilateral agreements at WTO:

1. The agreement on technology products, which exempts high-tech products, such as computer inputs, from tariffs. There are efforts to expand it over a long list of products. It was signed in Singapore in 1996 with 29 countries and now has 70.

2. A Government Procurement Agreement –inherited from GATT and also a Singapore issue that is returning - signed by 41 countries after 10 years of discussion, on December 2011.

3. An Agreement on Trade in Civil Aircraft, with 30 countries, inherited from GATT.

c) At the order of the G-20

The G-20 tries to rule the world in a "small committee". It gives orders to the WTO, forgetting that there are still another 139 votes to gather. Their statements sound like an international corporations' wish list. For example, the G-20 seems obsessed with the right and duty of governments to curb exports to prevent a lack of supplies for the people or for the national industry. What really worries the G-20 is that it is an obstacle to total resource control by transnational corporations. One wonders about the role there of Argentina, Brazil, China and India. At the last G-20 meeting in Mexico, there was talk about use of value chains for economic measuring.

d) The value chains

The WTO Chilean Deputy DG, Alejandro Jara, recently explained, in Brussels, the WIOD project (World Input / Output Database) which is linked to the WTO. Such a database will be helpful for measuring the international dimension of global supply chains, rather than measuring nominal trade flows. The issue involves the division of labor and benefits along the chains. To view trade by its import and export components prepares the way for the "Made in the World" label, a hazy European project that was explained to the press by a WTO Indian Deputy DG, Harsha Singh. When will we see "Made on Mars"?

Conclusion

Doha died and the immediate future will bring dangerous initiatives at the WTO that should be monitored. Lamy already announced a "complexification of the game" (Knowledge Wharton interview on 12/09/2012). As my father used to say: assume bad intentions and you will be right.

Recommendation

In diplomacy silence means consent. Countries should train WTO negotiators with a patriotic and social approach, and only send people there who have the technical and cultural skills that will make them effective in a multilateral setting. In Latin America, Argentina, Bolivia, Brazil, Cuba and Ecuador already have such a policy.

- 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.

www.ventanaglobal.info

The Spanish version of this article is published in issue 478 of ALAI's Spanish language magazine América Latina en Movimiento.http://alainet.org/publica/478.phtml, titled " En la ruleta de los TLCs".

https://www.alainet.org/en/articulo/161097