Global Trends by Martin
Monday 31 July 2006
Lebanon and WTO breakdown hog the news
Last week’s two major
events were the continuing bombing and destruction of Lebanon while
the world watched and waited for action to stop this (that never came),
and the breakdown of talks at the World Trade Organisation, which called
into question the future of the whole Doha Round.
Two momentous sets of events
took place last week. First, the Israeli bombardment of Lebanon continued
for a full week, with world public opinion becoming more outraged at
the large scale destruction of the country’s buildings, the loss of
lives and massive displacement of close to a million civilians.
What was equally unacceptable
is that big powers such as the United States and Britain refused to
call for a ceasefire and gave open approval to Israel to continue its
actions. This seems to have paralysed others, such as the European
Union, from taking their own measures to stop the bombings and killings.
Even more astonishing was
the refusal of the United Nations Security Council to condemn the bombing
of a UN observation post in Lebanon which killed four UN personnel.
Due mainly to the insistence of the US, the Council merely expressed
“shock” at the event!
It was left to the UN’s chief
emergency relief official, Jan Egeland, to call the Israeli actions
a violation of international humanitarian law and to call for a three-day
ceasefire to allow for food supplies and medical treatment. That call
fell on deaf ears.
Seldom has such a spectacle
of the destruction of a country and the displacement of a million people
in a few days been seen across the world’s TV screens, accompanied by
the deliberate withholding of criticism and indeed with the encouragement
of the leaders of the grossly misplaced term, the “international community.”
Demonstrations across the
world, including in Kuala Lumpur, showed the increasingly passionate
feelings of the public, to this tragic turn of events.
The US and UK leaders last
Friday announced they would come up with a plan. Many analysts believe
the plan is aimed at destroying Hezbollah and at pleasing Israel, and
it remains to be seen if it is acceptable, including to the Lebanese.
Meanwhile, many around the
world wait for the bombings to stop and wonder who will compensate the
Lebanese for their losses and who will pay for the cost of emergency
aid and reconstruction.
The second major event was
the collapse of efforts to reach an interim agreement at the World Trade
Organisation on a package of issues in the Doha negotiations, named
after the Qatari capital which hosted the meeting that launched the
Round in 2001.
The failure of the “big six”
members (US, European Union, Brazil, India, Japan, Australia) to make
progress on trade liberalization of agricultural and industrial goods
let to the suspension of all negotiations across the board.
The talks had been facing
many obstacles for some time. Still, the decision to suspend all talks
indefinitely came as a big shock.
Although much of the world
media proclaimed the death of the Doha Round, in fact the negotiations
have only been “suspended” and could revive at any time when the time
The WTO and its predecessor,
the General Agreement on Tariffs and Trade, have had many “collapses”
before, with dire predictions of doom, but in each case the trade negotiations
The immediate cause of last
week’s breakdown was the refusal of the US to improve its current offer
to cut its allowable amount of trade-distorting agricultural domestic
The US proposed that this
level be a maximum of US$22.7 billion. But other WTO members argued
it had to go down much further since the US spent slightly below US$20
billion on these subsidies last year. The G20 developing countries
want the US to reduce it to $12 billion.
It was expected that the
US would agree to cut the $22.7 billion level by at least a few billion
dollars, as a gesture if nothing else.
But it did not offer to cut
by any amount, and this angered the other five WTO members which decided
to call not only the meeting off but to suspend talks on the entire
spectrum of issues.
The blame game then began,
with most countries blaming the US, while the US blamed the European
Union and the developing countries for not agreeing to open their markets
enough to make it worthwhile for the US to do more on subsidies.
Meanwhile the Indian Commerce
Minister Kamal Nath said the breakdown showed a gap not only of numbers
(of how much to cut subsidies and tariffs) but more importantly a gap
in mindset between developed and developing countries on what the Round
means for development.
While there are the predictions
of doom for the WTO, in fact the talks could revive at any time, especially
if the US can announce an intention to make a new subsidies offer. This
could happen after the US Congressional elections on 7 November, or
Thus while the WTO talks
have ceased being in the “active” mode, it is on “standby”. A few more
months of inaction could change the mode to “hibernation”, and that
could last many months or even years.
It is unlikely there will
be a switch to a “shut down” mode. In any case, the regular work of
the WTO (including its trade review process and the dispute cases) will
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