Global Trends by Martin Khor
Monday 25 June 2007
Last week’s spectacular
collapse of the WTO’s G4 Ministers’ meeting in
The World Trade Organisation suffered another blow last week to its Doha Round when the Ministerial meeting of the Group of 4 – the United States, European Union, India and Brazil – collapsed on Day 3 of what was to supposed be a six-day marathon of talks.
It was not only one more failure in the troubled history of this Round, but probably a fatal one. It now seems impossible that the “modalities” (key frameworks and figures) for agriculture and industrial products will be completed by the end of July, since four of the key players are unable to agree.
The G4 chose
Perhaps they thought the
There were many factors for the G4 failure.
First, the configuration
in relations between the four changed. The
Before, the EU had been pushing
The EU and US were agreeable
to each other’s “lowering of ambition”, or to “forgive each other’s
sins.” And then they combined to be tough on
It was a repeat of the past. At critical moments in trade talks (such as in the Uruguay Round and before the WTO’s 2003 Cancun Ministerial meeting) the US and EU would get together, forgive each other’s sins, and then together go after the developing countries.
Second, it became clear that with the US-EU rapprochement, the developing countries were going to benefit very little or nothing.
The heart of the
He remarked: “And the offer is $17 billion, which is more than 50% of the current applied level. There is no equity, there is no logic in this. We can’t correct the flaws.”
Third, the US and EU are now wrongly portraying the G4 collapse as the fault of two inflexible developing countries that are not willing to give anything in return for their own generous offers.
But the EU and US offers are anything but generous. They had already claimed to have liberalised agriculture in the Uruguay Round, but this was bluff because the many loopholes in the WTO’s agriculture rules have allowed their domestic subsidies not only to continue but also increase.
One loophole is that they can continue to use so-called non-distorting subsidies without limit in a “Green Box”. But many of these are now found to be trade-distorting after all.
“In effect, the EU and US are offering nothing, and for their offer of zero they are trying to extract blood from the developing countries in cutting their industrial and agricultural tariffs and also in services,” said Chakravarthi Raghavan, a long-time analyst of WTO developments.
The two developing countries were outraged by this demand, on top of the little or nothing that the two developed countries had offered to do on agricultural subsidies.
As they put it: “The rate of exchange was unfair.”
Fourth, the four parties
were operating under two contrasting paradigms. The
But this cannot be equated with development or the Development Round. The developing countries are instead worried that deep tariff cuts would threaten the survival of local industries and farmers that cannot compete with cheaper imports. That would be anti-development and not development and would defeat the purpose of the “Development Round”.
The Indian Commerce Minister Kamal Nath said that a Development Round implies new trade flows for developing countries, into markets of developed countries, and not the other way round.
“Development content clearly specifies who are the givers and takers in this Development Round. Now (with the demands of the rich countries), the givers become the takers and the takers have become the givers.”
All the above leads to the conclusion that the developed countries were never interested in development or the interests of the developing countries when they launched the Doha Work Programme in 2001.
They had to call it a Development Round to entice the developing countries to join in its launch. Now the developing countries are calling their bluff, asking that the talks really have a development content.
And in answer the
The US Trade Representative Susan Schwab had to resort to saying that “new trade flows” (read significant cuts to applied rates of developing countries) is what lifts poor countries out of poverty.
But the poor countries think otherwise, which is why the great majority of them are fighting to limit the degree of liberalisation they have to undertake.
In the end, the clash of
perceptions of what is development and what is anti-development in the
proposals of this “Development Round” is what led to this new crisis
and impasse in the