TWN Info Service on WTO and Trade Issues (Oct18/06)
9 October 2018
Third World Network

Azevedo's pitch for WTO rules in new areas countered at CSO event
Published in SUNS #8768 dated 8 October 2018

Geneva, 5 Oct (D. Ravi Kanth) - The World Trade Organization's director-general Roberto Azevedo, along with business and corporate lobbyists, has made an aggressive pitch for negotiating new rules in electronic commerce, disciplines for micro, small, and medium enterprises (MSMEs), investment facilitation and services.

At the just-concluded WTO Public Forum under the banner "Trade 2030" on Thursday (4 October), Azevedo left no stone unturned in sending a message loud and clear that the WTO, which is an inter-governmental trade body of 164 countries, works solely for advancing new rules in areas which are not part of the Doha work program.

At a time when the global economy is mired in serious crisis and worsening trade wars launched by the world's largest economic power - i.e., the United States -, Azevedo did not address the systemic crisis at the WTO's Dispute Settlement Body, nor pointed a finger at the US which is causing the grave crisis.

The Public Forum is aimed at showcasing how the trade body under the leadership of Azevedo is attempting to advance new rules in areas where a large majority of developing countries have opposed time and time again.

Using the Penelope-ruse of "inclusive" strategies, Azevedo said "we know th at four billion people do not have internet access - and of course, this is concentrated in developing and least-developed economies."

"So if we want this digital revolution to be inclusive, we have to work on all of these areas [right policy infrastructure, such as regulatory and payment systems as well as appropriate skills and expertise]."

In contrast, the director-general remained deafeningly silent on the problems faced by the developing and poorest countries who want to address the unresolved issues of the Doha Development Agenda, including food security.

During one session on "the crisis in multilateralism: solutions for inclusive and sustainable growth" organized by the Our World Is Not for Sale (OWINFS) network, speakers exposed the inherent hypocrisy and attempts to bury the existential issues that need to be addressed on a war footing.

The OWINFS, which represents hundreds of millions of workers, farmers, and environmental, development and public interest advocates, maintained that " trade can help promote development and shared prosperity around the world."

"But it depends on the policy environment in which it occurs," the OWINFS argued.

"And so we are also more honest than many of the people who work in this building in acknowledging that the current set of rules of globalization that have been implemented by the WTO over the last 23 years have utterly failed," said Deborah James, Director of International Programs at the Center for Economic and Policy Research.

She said that "many world leaders and advocates of the model of globalization embodied in the WTO, will give credit to "globalization"."

By this they mean, according to James, developments such as:

* rationalization of tariffs, such as in the GATT;

* liberalization (privatization, deregulation and foreign presence) in services, under the GATS [General Agreement on Trade in Services];

* liberalization of agriculture, in which the US and EU are still allowed to subsidize agricultural products that are exported, while developing countries are restricted for implementing their developmental policies to address the concerns of their poor farmers;

* extreme government protectionism in the form of patent monopolies, in which the government intervenes in the economy to stifle competition, promote monopolies and drive prices upwards, which is the opposite of free trade [that resulted in the net transfer of wealth from South to North].

And now we see attempts to achieve a full liberalization of the future digital economy with the attempt to push aside the development agenda and the urgent need for agricultural reform, and instead launch new negotiations on digital trade (e-commerce), she said.

"It is as if the people advancing this agenda are not living in the same world as the rest of us," she said, pointing out that the reality is something different.

Despite a vast reduction in poverty in the world in the last 25 years, "two-thirds of the net reduction in extreme poverty in the world since 1990 has been in China," she suggested.

"Much of the remaining third was helped by the vast increase in China's imp orts from other developing countries, as well as hundreds of billions of dollars of Chinese foreign investment, loans, and aid," James pointed out.

While "Chinese globalization has done very well, the same is not so clear for the other kind of globalization that has been advocated by Washington-led institutions such as the IMF, World Bank, including the WTO."

"China notably was one of the few developing countries that decidedly did not follow a neoliberal path since 1980," and "multiplied its per capita income by a factor of 21 by 2017, became the largest economy in the world, and played a major role in pulling dozens of other countries out of their long slump," she said.

"There is a sharp contrast between Chinese development policy, which included state control over most investment, the financial system, central bank, and much of manufacturing - as well as a gradual transition from a planned to a mixed economy - versus the neoliberal reforms in most of the world during the 198 0s and 1990s," she said.

"We are now seeing the negative impacts of "globalization" in high-income countries, which have contributed to political upheaval," she said. However, it is a stark reality that "globalization has not benefited the majority of people in developing countries."

According to this year's UNCTAD Trade and Development Report, "it's going to the top 1%, to the superstar vampire corporations who are sucking ever more wealth out of the vast majority of people around the world," she argued.

"And this corporate takeover is the predictable result of those firms using their wealth to intervene in the economy to rewrite the rules, through the WTO and also bilateral and regional "trade" agreements, and through electing austerity-focused national governments," she maintained.

"So now we have a crisis in the multilateral debates, where countries are blaming China and India, the US is attacking the WTO (for the wrong reasons) and many people in this house are shocked that there has been a popular backlash against an entire economic model that has failed them miserably," James pointed out.

She said, "trade can be good for development, but this particular model of trade in the WTO has failed and impoverished workers and farmers in developed, developing, and LDCs, while exacerbating inequality (I note that Africa - a continent of 54 countries - is not converging!)."

Hence, there is an urgent need for "a transformation of the existing system, to prioritize food, jobs, sustainable development, access to medicines, financial stability, quality accessible public services, technology transfer, and priority of climate over "trade"," she suggested.

She said developing countries need "policies of digital industrialization to foment development" but not policies that bring about "digital colonization."

Speaking for South Africa's trade envoy Ambassador Xavier Carim, a South African trade official Ms Vahini Naidu said there are attempts to undercut rules and principles of the WTO, particularly at the DSU (dispute settlement understanding).

She spoke about the current attempts being made for adjusting the rules on special and differential treatment, on the consensus principle, on plurilaterals, on tightening rules on industrial subsidies and state-owned enterprises, on transparency and notification procedures, and on enhancing the role of the Secretariat.

South Africa said there was no agreement for advancing these new issues at the WTO's eleventh ministerial meeting in Buenos Aires in December 2017, cautioning that "if these issues are pushed, we will have more divergence, conflict, and deadlock."

Naidu said members "should focus on one issue that has traction - fisheries subsidies, and resolve the AB impasse."

Without convergence on these two issues - fisheries subsidies and resolving the AB impasse - it is redundant to talk about reform of rules, and new rules, Naidu said.

She called for "strengthening S&DT, for addressing the imbalances in rules in agriculture domestic subsidies, and for enhancing food security."

South Africa, according to Naidu, does not want the existing WTO rules to constrain industrial policy.

Therefore, it is a prerequisite that members must have "inclusive multilateralism" as against "flexible multilateralism" advanced by the European Union, she said.

Prerna Bomzan from Third World Network, Nepal, offered a graphic account of the issues faced by the least- developed countries, particularly the low level of social and economic development.

Other problems include weak institutional capacities, scarcity of financial resources, and internal and external conflicts, she said.

She said the Doha work program mandated members at the WTO to conclude the duty-free, quota-free market access for LDC products, simplification of preferential rules of origin, and the services waiver for LDCs.

But there has been no progress in concluding the LDC package, she said.

Prerna said that developed countries are still trying to erode the key principles of equity.

She said the LDCs still find it difficult to participate in the global value chains and electronic commerce because of their weak infrastructure.

Richard Kozul-Wright, director of the UNCTAD Division on Globalization and Development Strategies, spoke about the continued turmoil in the world economy because of the 2008 financial crisis.

He said that the rules that were created after the second world war, particularly after the Havana Charter, were broken.

Kozul-Wright pointed out that the multilateral system died following the hyper-globalization that came after the Uruguay Round.

He said the "ideological component with the rise of neoliberalism as the dominant economic narrative" is about "setting rules that allow business to do what it wants, when it wants, how it wants, without encumbrance by other factors such as democracy and trade unions and other contenders."

Kozul-Wright said that Quinn Slobodian, an American historian, laid out how the neoliberalism that began with Hayek and the International Chamber of Commerce last century led to consumer sovereignty while eroding national sovereignty.

He said that the neoliberal economic model led to "the financialization of corporate life, shaping the way IP [intellectual property] is central for economic development, and corporate governance."

Neoliberalism accentuated "[financialization] and rent-seeking" globally, he argued.

Kozul-Wright said the Trade and Development Report (TDR) for 2018, which was issued by his division, suggested "growing dependence on indebtedness as a driving feature of the growth path of many countries."

The indebtedness during this phase of hyperglobalization include both house hold debt and corporate debt.

He argued that "inequality is hard-wired in a hyperglobalized world," suggesting that "it's not just inequality across households, but also functional inequality - inequality between capital and labour."

Kozul-Wright said last year the TDR called for a "Global New Deal" which includes reflationary policies, regulation of corporate rent-seeking and financialization policies, redistribution, and guaranteeing economic rights .

"This year we've opted to recall the importance of the Havana Charter," he said, which offered a credible blueprint for economic development.

D. Ravi Kanth, who writes for the SUNS, argued that the crisis in multilateralism, particularly on the trade front, has different sources.

One among them is at the WTO where lawlessness and impunity have become the order of the day, Kanth argued.

In all three areas such as the negotiating function, the functioning of the dispute settlement system, and the Secretariat's functioning, there is growing lawlessness.

Kanth said the lawlessness in negotiations involves setting aside the ministerial mandates for pursuing new issues that have no multilateral mandate, while the lawlessness in the Dispute Settlement Body's functioning is due to the crisis at the Appellate Body which has been reduced to three members now.

The lawlessness in the Secretariat's functioning is largely due to the director-general's controversial actions, such as accepting funds for technical projects to promote issues that have no prior multilateral approval.

The recent actions of the DG on investment facilitation have violated the conduct of business rules as set out in the Marrakesh Agreement, he said.

Little wonder that the WTO, which does not address the issues of the developing and poorest countries, is now pursuing new issues which only suit a small set of powerful countries, Kanth argued.

[When the Marrakesh Agreement was being finalised at Geneva in Nov-Dec 1993, despite then GATT DG Peter Sutherland's plea twice, the negotiators refused to give the WTO DG the kind of role that executive heads of other U N system organisations have, namely, the ability to make proposals to members. It is for WTO members, at Ministerial Conferences, the General Council and Budget Committee to discipline Azevedo for abusing his position, and acting to further the interests of a small group of members. - SUNS]