Info Service on WTO and Trade Issues (Feb09/02)
Geneva, 20 Jan (Chakravarthi Raghavan*) -- Early in 2004, at a meeting at Chatham House, the then UNCTAD Secretary-General, Mr. Rubens Ricupero, compared the WTO's Doha Round of Negotiations to the fate of the first Austrian Republic founded after the first world war, and said the Doha Round should be called "The Round that no one wanted."
Five years down the line, with the Doha negotiations at an impasse, a financial and economic crisis sweeping across the world and needing Keynesian solutions of an active government role and intervention (all contrary to the WTO philosophy and agreements that discipline governments), and trade issues having a very low priority for the Obama administration, the Round has become one that no one knows how to end.
his remarks of February 2004, in a recent communication to this writer,
Mr. Ricupero recalled that after the first world war, all the non-German
speaking parts of the Austrian Empire had been assigned to the new ethnic
countries being created at the time. The German-speaking part of that
Empire had been told that they could not join
The Austrian historians have called that first republic, "the country that no one wanted."
The Agreements under the Marrakesh treaty provided for gradual implementation of some of the reforms, and this included principally, at the end of the initial six-year implementation period of the Agreement on Agriculture (AoA), that there should be further negotiations to carry forward the Agriculture reform process by the developed countries (for eliminating domestic subsidies, reduction of the border protection measures, and phasing out of export subsidies).
Even at Singapore, Argentina served notice on the mandate for further agriculture negotiations at the end of the implementation period (that is beginning 2001), and wanted the launch of a work programme towards that end including gathering the necessary data on the initial implementation and its effects. However, the EU and its trade commissioner, Sir Leon Brittan, knowing that the EU would be isolated and would face considerable pressures to drastically reform its Common Agriculture Policy (CAP) and reduce its protections, put on the agenda of the WTO four items (that later came to be known as the Singapore issues) on a study programme.
And at the next 1998 Geneva Ministerial Conference (to commemorate 50 years of the GATT trading system), the EU called for a "Millennium Round", and set in motion at the WTO a preparatory process that would lead to decisions in 1999 for negotiations for "sufficiently broad-based" trade liberalisation to "respond to the range of interests and concerns" of all Members, within the WTO framework.
The EU (along with Japan and other agriculture protectionists) privately told some of the agriculture exporters, in particular the Latin American countries (that had already liberalised their financial and other sectors under the Washington Consensus, and had opened up their capital accounts) that the EU needed to get investment etc on the agenda to be able to get domestic support for undertaking further agriculture reforms. And the EU commission told the EU industry and business that they needed a round with these new issues in order to get for EU investors a level playing field with the Americans who could bilaterally negotiate and get investment treaties.
in the preparatory process, the EU encouraged all members to put anything
they wanted on the agenda - so that they could disarm opposition to
the EU's own items. And the EU also persuaded the
Through such Machiavellian manouverings and playing one group of countries against another, the EU sought to put on the agenda for the Seattle Ministerial meeting in 1999 (by then Mr. Pascal Lamy had become the EC trade commissioner, replacing Brittan), all the mandated and built-in areas of negotiations (agriculture, services and implementation issues raised by developing countries) but also the four Singapore items. The EC's idea was to get a new round with so many complicated new issues as a single undertaking - and thus put off for as long as possible further agriculture reforms.
shell-shocked WTO leadership came back to
There were also other cheerleaders - the WTO head Mike Moore, former WTO head Peter Sutherland and free trade theologians - who tried to sell the round as a solution to a possible global recession at that time in the wake of the bursting of the dotcom bubble.
a coercive "green room" process at Doha (helped from behind
the scenes by some facilitators, including Brazil's Celso Lafer, foreign
minister under President Cardoso, and South Africa's Alec Irwin), the
Doha negotiations on agriculture, non-agricultural market access, services,
and the four Singapore issues, among others, was launched as a Single
as Mr. Ricupero, speaking for UN Secretary-General Kofi Annan, said
After the collapse of the Cancun Ministerial Conference of 2003, where the EU was forced to abandon its Singapore issues, in particular investment and competition policy, the EU official trade negotiators at an informal meeting in Ouchy (near Geneva) said that the EU was not a demandeur in the Doha Round!
Ricupero said in his communication to this writer, had prompted him
to declare at the Chatham House meeting that
"And what we are witnessing today at the WTO," Ricupero added, is that "an artificial round, for which there had been no real and genuine need, is difficult to conduct and even more difficult to kill."
after the launch of the Doha Round, Lamy as EC Commissioner had gone
he became the WTO Director-General, and after the Hong Kong Ministerial
in 2005, Lamy has gradually tried to change the focus of the
Peter Mandelson, Lamy's successor at the EU Commission and now UK Business Secretary, has also been pushing in the same direction.
And if ever there was a point when the negotiations were lost to Lamy, it was at the meeting convened of a few key countries, following the St. Petersburg G-8 summit. When it became clear to him at that June 2006 meeting that USTR Susan Schwab could not make any concessions on US domestic agricultural subsidies or things like cotton, he abruptly adjourned the meeting, announced it to the media, then came to Geneva, convened an informal Trade Negotiations Committee meeting at level of Heads of Delegation and recommended suspension of the talks and got it endorsed. He had planned to resume the talks after the mid-term Congressional elections, but when the Republicans lost those elections, with the Democrats emerging as the majority in the House, and the Congressional "fast track authority" expired on 30 June 2007, the administration of George W Bush (the most unpopular President in recent US history) lost the ability to conclude any agreement and carry it through Congress.
Instead of realising this, through the better part of 2007, and all of 2008, the Doha Round and its conclusions were presented as a solution for everything:
In March 2008 at the Fund-Bank meeting, Lamy presented the
As a matter of fact, if the demands on developing countries by the US and EC etc - for liberalising financial services according to the 1998 Financial Services Understanding (which was only "a modality"), including the provision to enable foreign banks (branches or subsidiaries) to introduce any kind of derivatives, and to restrict the scope for "prudential regulations" - had been agreed to, the major developing countries which escaped the financial meltdown in the US and EU would have been hit - and the global financial crisis would be worse.
At the FAO Summit in
UN Assistant Secretary-General at DESA, Mr. Jomo Kwame Sundaram, challenged
this at a presentation at
* At the Doha Financing for Development (FfD) meeting last December, Lamy tried selling the Round as the best way to avoid a global recession as it became apparent that the financial crisis was beginning to impact on the real economy.
The entire exercise of Lamy and other trade officials, as well as some of the trade ministers, in trying to "sell" the Doha Round as a solution to several of the ongoing or unfolding crises, sounds more like Mark Twain's story of the "snake-oil salesman".
oil, called sheyou in traditional Chinese medicine, is prepared out
of the fat of the poisonous water snake, and used as a remedy for inflammation
and pain in rheumatoid arthritis, bursitis, and other similar conditions.
Fats and oils from the poisonous water-snakes have a higher content
of eicosapentaenoic acid (EPA) than from other sources, so snake oil
was actually a plausible remedy for joint pain as these are thought
to have inflammation-reducing properties. Chinese labourers on railroad
gangs - involved in building the Transcontinental Railroad to link
a similar way, Free Trade theories and theologies, and their promise
of win-win benefits from rapid liberalisation have been invoked to sell
Failure to do this has meant that some of the most malignant features of the international trading system in recent years have gone undiscussed. In particular, as promoted at the WTO, under the banner of "free trade", the neo-mercantilist interests of the US and EU have been sought to be advanced, and has repeatedly met with rebuffs from the majority of the membership.
With the US and the EU unwilling to reduce their heavy subsidies to the agriculture sector, but wanting market opening in developing countries for their agriculture products and exports, as well as drastic tariff cuts in industrial tariffs in the major developing countries, and on top of it for "zero tariffs" in sectors where the US has the dominant advantage, the Doha negotiations have reached an impasse.
with the financial crisis and meltdown, governments in the
Arguably, some of these and other measures could be claimed to be prudential measures, but on some others (like the 80% ownership of AIG), the US action may be contrary to its commitments at the WTO, or as in the case of aid to the auto-industry, may fall foul of the WTO SCM agreement.
And many of the "reforms" in the financial sector that have been recommended by a task force of the Group of 30, led by Mr. Paul Volcker (see SUNS #6621of 20 January 2009) would certainly require a revisiting of the Marrakesh agreements, including those in the area of trade in goods and under GATS.
(* Chakravarthi Raghavan is the Editor Emeritus of the SUNS. He contributed this commentary.) +