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A new trade round, with ‘development agenda’ for US-EC corporations

by Chakravarthi Raghavan

Geneva, 27 Sep 2001 - A draft ministerial declaration for WTO’s Doha Ministerial meeting appears to be a cleverly worded, but highly imbalanced text, one weighted against the developing world, for the launch of an open-ended new round of WTO trade negotiations, whose mandate, scope and  modalities could be constantly shaped to the advantage of the majors - in short, a massive, Uruguay Round-plus type of negotiations and an agenda for ‘development and welfare’ of US and EC corporations.

The chairman of the General Council, Mr. Stuart Harbinson of Hong Kong, put forward Wednesday night a draft ministerial declaration for Doha and, along with it, a separate document prepared by Harbinson and the WTO Director-General Mike Moore of draft decision on implementation-related issues which, viewed against the background of four years of discussions and two years of active ‘talks’ on them, has even less for developing countries in terms of operational decisions, but full of pious intent and promises a continuance of the ‘talkathons’ in the WTO bodies.

There are some ‘sweeteners’ of sorts in some areas of the proposed agenda, but even they on closer scrutiny are more in the realm of promises, more vaguely formulated than in 1986 at Punta del Este, when the Uruguay Round was launched.

The two texts, distributed to delegations Wednesday night (but already on some US official websites), are intended to be the basis on which further work is to be done at the General Council from next week.

With the United States talking of a ‘global war on terrorism’, and with very unclear ‘targets’ of US retaliation, and with the US Trade Representative, Mr. Robert Zoellick, linking ‘fast track’ trade authority for the administration with the war on terrorism, there are still some uncertainties about the Doha meeting and its timing. And with some statements Wednesday out of Washington that a retaliatory attack on Afghanistan or elsewhere may not be imminent, there are concerns that a Doha meeting may be sought to be staged under the shadow of an imminent attack and stampeding the WTO membership to agree on a trade round and an open-ended agenda.

With developing countries divided, and with some in the western hemisphere particularly, having decided to throw in their lot with either the US or the EU (both of whom have joined hands against the developing world), trade negotiators  are going to have a tough time in the days and weeks ahead.

However, in many of the countries, the governments and their negotiators will find major problems in selling this agenda to their domestic enterprises, parliaments and civil society groups.

Two of the new issues, the socalled ‘Singapore’ items promoted by the EU (and now embraced by the US), investment and competition policy, are presented in a seemingly neutral way with options (to negotiate or continue studies); but read with the provisions for the organization and management of this work programme, in fact enable the launch of negotiations at the 5th ministerial conference.

Even the final part of the text - paragraphs 36-42 of Job(01)140 - on the organization and management of the work programme, and which provides for the conduct, conclusion and entry into force to be treated as a single undertaking, when read carefully with the socalled alternative options on the investment and competition issues, leaves little doubt that the intention is to force negotiations on them (even if only a continuation of the study programme is accepted at Doha), through the 5th ministerial conference and force through the  agreements as a ‘single undertaking’.

If the options on the new issues are not being foreclosed, and the negotiations in the round are only about agriculture, services, mandated reviews and on existing rules of the WTO in various agreements, the mention of a single undertaking in that context is meaningless and superfluous. It has a meaning  only in terms of the hidden agendas of the US and EU. Some of their supporters (at the Abuja African trade ministers meeting for e.g.) reformulated the compromise ‘Seattle bridging language’ - put forward by South African and Egyptian Trade Ministers on the night of 2-3 December 1999 – for automatic  negotiations at end of a two-year study - by using, as now, language of the study  programme to prepare for ‘future work’ at the WTO. In this context it could only mean negotiations.

But Africans rejected it at Abuja. The Harbinson draft text has now eight preliminary paragraphs of overall evaluation and assessment by Ministers which are overloaded with the ideological baggage about free trade and alleviation of poverty that are not even being pushed openly by the main institutions that promoted the Washington consensus of the early 1990s.

However, the appointment of Anne Krueger - “orthodoxy’s high priestess” (as former World Bank Vice-President Joe Stiglitz calls her), and the policies of the Washington Consensus that she promoted but have proved to be an “utter failure in promoting growth and stability in developing and transition  economies”, to cite Stiglitz again - to the Number two post at the IMF ought to be a cause of worry not only of what the IMF would promote in developing world, but through the WTO and the paragraph 4 of the Harbinson text for coherence.

The first opening para of the draft declaration text talks of the multilateral trading system embodied in the WTO “has promoted economic growth, development and employment throughout the past 50 years” Except for the claims of ‘free trade policy economists’ - those no longer researching but trying to lobby policy-makers in governments - who cite each other, there is no empirical evidence for this in the developing world’s experience.

From this premise however, the para also commits ministers, “particularly in the light of the global economic slowdown” to maintain process of “reform and liberalization of trade policies” thus ensuring that the system plays its full  part in promoting recovery and growth.

No one looking objectively, and using common sense, at history and economic experience can show any close or proximate causative or associative nexus between trade liberalization and restoring global economic growth in the current situation. Only the macro-economic policy of the majors and which, in today’s inter-dependent world means better coordination of expansionary fiscal and monetary measures in leading industrial countries, and enough international liquidity and aid to the Third World can deliver growth.

There is talk of commitment to the principles and objectives of the WTO and the “pledge to reject” use of protectionist measures, without any reference to what is already being  one or those put in place - the voluntary steel quota arrangements between Brazil and the US, and the US-led drive for restrictions on steel production, issues clearly not in accord with the spirit, if not letter of the WTO rules, but on which the WTO has so far said nothing.

The third opening para, though seemingly worded to posit the WTO vs regional trade agreements, indirectly expands, in violation of Art. III of the WTO which only makes WTO as “the forum” for multilateral trade negotiations in matters dealt with in its annexed agreements, and not an open-ended “unique forum for global trade rule-making and liberalization.”

The fourth paragraph about working with Bretton Woods for greater coherence in economic policy making, given the very different decision-making and power structures of the BW institutions, could only result in continuance of the IMF and World Bank using the WTO to influence and change trade policies of developing countries. They have had no effect or influence on trade policies of the developed and their G-7 or rather G-3 countries.

The paragraph 8 about confirming collective responsibility to ensure “internal transparency and effective participation” of all Members, considering the two years of efforts after Seattle under the ‘confidence-building’ measures, is in fact empty of operational content, more so when even in the current preparatory process (as Jamaica complained in the General Council before the summer break this year), there has been a lack of transparency and participation in decision-making of all Members.

The paragraph 9, in part the operative paragraph for the rest of the declaration, provides (without any alternative formulations, despite the widespread contrary views at the General Council itself) of “an expanded negotiating agenda and other important decisions and activities necessary to address the challenges facing the multilateral trading system.

Paragraph 10 of the declaration makes a reference to the separate implementation text, but has no meaning since the implementation text itself, except for some one or two points, has in fact no operational content of immediate benefits.

That text, has an Annex I of immediate actions (to be taken perhaps before Doha by the General Council) and an Annex II of recommendations for Ministers at Doha, identified in terms of ‘tirets’ in what seems to be a consolidated text of implementation actions (out of the Seattle Mchumo text paragraphs 21 and 22) that remained to be acted upon - apart from the few marginal ones on which some actions were taken in the General Council in December 2000.

These ‘benefits’ from the ministerial declaration, if operationalised, would include calculating quota levels for ‘small suppliers’ in the remaining years of the ATC (end 2004) by applying the most favourable methodology available in respect of them under the growth-on-growth provisions, and extending the same provisions to the LDCs and, where possible, to eliminate quota restrictions.

It is not very clear how much additional benefit in fact would accrue to the LDCs in Africa who are covered by the EC’s Lome-Cotonou agreements and those under the US Africa Trade Growth Act, and some of the various permutations and combinations.

There is also a great deal of room for subjective judgements and best endeavours.

Similarly, for other exporters (including such countries like India, Pakistan, Indonesia etc, but all others too) there is a recommendation for calculating quota levels till end of the ATC as if the ‘growth-on-growth’ provisions for stage 3 (which technically begins in 2002) had been advanced to 1 January 2000. Depending on how in fact it is implemented and calculated, it could mean about five percent more growth of quotas in volume terms for some of them.

At best it is a lollipop to some of the developing countries, honey-coating on top of poison pills in the negotiating agenda and scope of the new round.

Some of the others, though seemingly couched in mandatory ‘shall’ are still nothing more than exhortatory - such as in relation to anti-dumping investigation which talks of examining ‘with special care’ applications for initiation of anti-dumping investigations in respect of the same product from the same member that has resulted in a negative finding within the prior 365 days. Though it talks of investigation ‘shall not proceed’ unless pre-initiation examination indicates circumstances have changed, in fact it is very much a subjective one, in what is clearly a trade harassment move without any WTO remedies that have been indulged in, raising doubts about their bona fides.

Others in respect of anti-dumping merely provide for the subordinate body to draw up appropriate recommendations within 12 months on issues that have been bottled up in them at least since Seattle.

Faced with strong pressures from the majors for the launch of a new round with new issues, some developing countries might try to sell back home to the other parts of their governments, their parliaments and other constituencies that they have gained something in implementation.

However if the past be any guide, the gains may be a trifle, and will not compensate even in the short-term the major commitments, obligations and burdens that will have been undertaken - perhaps not even the costs of the extensive staff they would need at Geneva to staff the future negotiations. – SUNS4976

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

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