Celebrate, Don't Mourn, Collapse of WTO Talks

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Celebrate, Don't Mourn, Collapse of WTO Talks
By Robert Weissman
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Predictably, the cheerleaders for corporate globalization are bemoaning the collapse of World Trade Organization negotiations.

"This is a very painful failure and a real setback for the global economy when we really needed some good news," said Peter Mandelson, the European Union's trade commissioner.

Even worse, says the corporate globalization rah-rah crowd, the talks' failure will hurt the developing world. After all, these negotiations were named the Doha Development Round.

"The breakdown of these talks is bad news for the world's businesses, workers, farmers and most importantly the poor," laments U.S. Chamber of Commerce President Tom Donohue.

But don't shed any tears for the purported beneficiaries of the WTO talks. If truth-in-advertising rules applied, this might have been called the Doha Anti-Development Round.

The alleged upside of the deal for developing countries -- increased access to rich country markets -- would have been of tiny benefit, even according to the World Bank. The Research and Information System for Developing Countries points out that Bank analyses showed a successful conclusion of the Doha Round would, by 2015, increase developing country income in total by $16 billion a year -- less than a penny a day for every person in the developing world.

The World Bank study, however, includes numerous questionable assumptions, without which developing countries would emerge as net losers. One unrealistic assumption is that governments will make up for lost tariff revenues by other forms of taxes. Another is that countries easily adjust to import surges by depreciating their currencies and increasing exports.

In any case, the important point is that there was very little to gain for developing countries.

By contrast, there was a lot to lose.

The promise to developing countries was that they would benefit from reduced agricultural tariffs and subsidies in the rich countries. Among developing nations, these gains would have been narrowly concentrated among Argentina, Brazil and a few other countries with industrial agriculture.

What the spike in food prices has made clear to developing countries is that their food security depends fundamentally not on cheap imports, but on enhancing their capacity to feed themselves. The Doha rules would have further undermined this capacity.

"Opening of markets, removal of tariffs and withdrawal of state intervention in agriculture has turned developing countries from net food exporters to net food importers and burdened them with huge import bills," explains food analyst Anuradha Mittal of the Oakland Institute. "This process, which leaves the poor dependent on uncertain and volatile global markets for their food supply, has wiped out millions of livelihoods and placed nearly half of humanity at the brink of hunger and starvation."

Farmers' movements around the world delivered this message to government negotiators, and the negotiators refused to cave to the aggressive demands made by rich countries on behalf of agricultural commodity-trading multinationals. Kamal Nath, India's Minister for Commerce and Industry, pointed out that the Doha Development Round was supposed to give benefits to developing countries -- especially in agriculture -- not extract new concessions.

The immediately proximate cause of the negotiations' collapse was a demand by developing countries that they maintain effective tools to protect themselves from agricultural import surges. Rich countries refused the overly modest demand.

And agriculture was the area where developing countries were going to benefit.

The rough trade at the heart of the deal was supposed to be that rich countries reduce market barriers to developing country agricultural exports, and developing countries further open up to rich country manufacturing and service exports and investment.

Such a deal "basically suggests that the poor countries should remain agricultural forever," says Ha-Joon Chang, an economics professor at the University of Cambridge and author of Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism. "In order to receive the agricultural concession, the developing countries basically have to abolish their industrial tariffs and other means to promote industrialization." In other words, he says, developing countries are supposed to forfeit the tools that almost every industrialized country (and the successful Asian manufacturing exporters) has used to build their industrial capacity.

In sum, says Deborah James, director of international programs for the Washington, D.C.-based Center for Economic and Policy Research, this was a lose-lose deal for developing countries. "The tariff cuts demanded of developing countries would have caused massive job loss, and countries would have lost the ability to protect farmers from dumping, further impoverishing millions on the verge of survival," she says.

By the way, it's not as if this is a North vs. South, rich country vs. poor country issue. Although there have been multiple lines of fragmentation in the Doha negotiations, the best way to understand what's going on is that the rich country governments are driving the agenda to advance corporate interests, not those of their populations. That's why there is so little public support for the Doha trade agenda, in both rich and poor countries.

Says Lori Wallach of Public Citizen's Global Trade Watch: "Now that WTO expansion has been again rejected at this 'make or break' meeting, elected officials and those on the campaign trail in nations around the world -- including U.S. presidential candidates -- will be asked what they intend to do to replace the failed WTO model and its version of corporate globalization with something that benefits the majority of people worldwide."

Robert Weissman is editor of the Washington, D.C.-based Multinational Monitor, and director of Essential Action.

Sustainers can comment on this article here: http://www.zcommunications.org/zspace/commentaries/3571

And now the second sample commentary...



WTO Talks, A Tsunami Averted
By Devinder Sharma
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It was a close call. Till the last minute, suspense became overbearing. Glued to our seats and teetering on the brink of fear, with abated breath we awaited the outcome of the last minute efforts to save an unjust an inequitable "Doha round" deal. And as news started to trickle in signaling the collapse of the WTO mini-Ministerial, a sigh of relief emerged.

After all, a tsunami has been averted.

The talks failed to bridge differences over adequate measures to protect poor farmers in developing countries against import surges. Technical dubbed as "Special Safeguard Mechanism (SSM) - the provisions that protect developing countries from the disastrous consequences of a flood of food imports - had finally driven the nail in the coffin of "Doha round."

But all is not yet over. The tyrants of the food trade will surely launch a renewed assault to arm-twist, coerce and lure developing countries into submission. US President George Bush will certainly have an uphill task before he quits. Three phone calls to Prime Minister Manmohan Singh in a matter of three days failed to get India sign on the dotted line. He must be disillusioned. Perhaps he is angry. How can the two emerging economies - India and China - refuse to accept the US hegemony? Is the developing world waking up to a new dawn of economic and political independence?

I am not sure whether the developing countries have emerged from the shadows of the colonial past. But what is clearly evident is that at least some countries are picking up the courage and standing up to the two bullies - the United States and European Union. All along an impression had been given - and thanks to the western media for misguiding the world - as if the US and EU have made a huge 'sacrifice' offering drastic cuts in their trade-distorting farm subsides.

In reality, the US proposal of reducing its trade-distorting subsidies by 70 per cent (and the EU following with a promise of 80 per net cut) was simply an eye-wash. These were merely paper cuts, and behind this smokescreen, both the rich trading blocks had actually ensured provisions to double their trade-distorting subsidies. The US presently pays between $ 7-9 billion as trade distorting subsidies, and what it had offered as a 'sacrifice" was to enable it to increase these subsidies further to a maximum of $ 14.5 billion.

For making these paper cuts, the US and EU wanted the developing countries to pay a corresponding price by way of providing more market access in agriculture and industry. While the Shylocks of international trade were keen to extract their pound of flesh from poor countries, look what the United Nation says. In its latest "World Economic and Social Survey 2008," the UN makes it clear that the developing countries have already paid a price in advance at Marrakesh (where the WTO formation was agreed upon in 1994). There is therefore no need for the developing countries to open up their markets still further to imports.

Very cleverly and astutely, the developed countries had managed to divert focus from their burgeoning agricultural subsidies that have inherently distorted global trade. Apart from what is dubbed as trade-distorting subsidies, the richest trading block - the Organisation for Economic Cooperation and Development (OECD) provides annually $ 374 billion as farm subsidies. On top of it, the latest US Farm Bill 2008 makes a provision for $ 307 billion support for agriculture in the next five years.

Unless these subsidies are removed, there is no protective shied strong enough to stop the import surges into the developing world. And if you think that import surges are not a real threat you need to rethink. These are no less devastating than the trail of human destruction left behind by a powerful tsunami. Between 1980 and 2003, the United Nations Food and Agricultural Organisation (FAO) recorded 12,167 import surges hitting 102 developing countries. On an average, each of these developing countries experienced 120 import surges a year wherein the flood of imports exceeded 30 per cent in term of volume of imports.

To put a cap at 40 per cent in import surge volumes therefore as a SSM provision for developing countries renders the entire mechanism redundant. And this is where the talks broke down. By the time 40 per cent import surges are recorded, millions of farmers are pushed out of agriculture. It has happened in the past in numerous instances. In Kenya, for instance, flood of sugar imports between 1984 and 2004 had resulted in 32,000 job losses in the domestic sugar industry. Employment levels were reduced by a whopping 79 per cent. The impact on farm livelihoods was still worse.

In the past 30 years, and thanks to the trade liberalization polices being perpetuated, 105 of the 149 Third World Countries have turned food importers. Some 40 years ago, developing countries were actually exporting food and had a surplus of US $ 7 billion in food trade. Now the developing countries food deficit has grown to a record US $ 11 billion a year. A successful completion of the ongoing "Doha round" in its present form would turn the entire Third World into a food dump. If that is what will emerge from the successful completion of the "Doha round", the question that arises is as to whom is it going to benefit?

Whether it is Special Products - the farm products which do not require any cuts in import duties - in the name of food security, livelihood concerns and rural development or its is the provision of SSM, nothing can save developing country agriculture unless the massive domestic subsidies of the OECD countries are removed. What is conveniently forgotten are the remarks of the WTO director general Pascal Lamy at the Hong Kong Ministerial in 2005: "SP is a carrot that I am dangling before the developing countries to bring them to the negotiating table."�

Sadly, the developing countries have failed to see through the game. SP is merely a temporary measure. For India, where a total of 697 tariff lines in agriculture are being negotiated, only 84 lines can be partially covered under the SP category. Several studies have however shown that Indian agriculture will need at least 57 per cent of the tariff lines being protected. After all, each tariff line is linked to millions of livelihoods. What is therefore urgently needed is to scrap the present deal, and start afresh. Come to think of it, there is no other way out.

At a time when the world is faced with a terrible food crisis there is no escape but to refocus energies on maintaining food self-sufficiency. Food security is essentially linked to food self-sufficiency. The challenge for developing countries therefore is to resist any and every move to open up the domestic markets to a flood of cheap and highly subsidized food imports. Food imports spell death-knell for the farming communities. There is no bigger crime than to sacrifice the livelihoods of an estimated three billion small farmers in the developing world for the sake of higher profits to a handful of agribusiness companies.

Sustainers can comment on this commentary here: http://www.zcommunications.org/zspace/commentaries/3570