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What does it mean for the WTO that the global economy is heading towards a prolonged slowdown? Is the WTO evoking the connection between free trade and economic growth, and thus making a case for the launch of further initiatives in trade liberalization at its upcoming ministerial conference in Qatar?
These were just some of the questions we sought to clarify in August's WTO Impact Lists.
Economists have not been able to agree on the existence of a positive correlation between free trade and economic growth. Nonetheless, this has not stopped the trade body and its predecessor GATT from evoking it from time to time.
In WTOIL 8 August, we posted an article that quoted WTO General Council Chairperson Stuart Harbinson: "As long as WTO members have the feeling that the organization is moving forward in a way that's comfortable for all -- that's key for me," he said. "To say that not having a round at Doha is considered a failure is a bit too stark."
This bland approach indeed highlights how little the connection is being made in order to get liberalization-sceptic countries to agree to a new trade round. One can speculate on various reasons for this. Could there perhaps be tacit realisation in the WTO that its rules are decisively weighted in favour of developed countries, and that urging developing countries to agree to further liberalization as the best way to boost their exports, totally disregards their overall low export capacity, as well as the weakening demand for imports in the North in a time of slowdown? After all, why else would the WTO forgo such a seemingly scientific weapon in making its case in favour of a new round?
Or maybe they have invested all their soliciting efforts of developing countries into arguing for the potential trade-offs they can gain in agriculture and textiles in exchange for agreeing to see Northern subsidy-regimes and investor-protection deals protracted? The more the WTO and its richest members are engaged in such a campaign of diversion and misinformation, so will they have lost the ability to make the above reasoned judgement.
Or maybe they have retreated to the indecision of most economists on the matter.
Or further, maybe the WTO has accepted that political reaction during an economic slowdown tends to pull rather in the opposite direction, namely protectionism: "Some rich countries now say they want a new round of talks to tackle the concerns of (some) protesters about the impact of free trade on the environment and labour, and they know they can ill afford to lose any momentum behind increased trade liberalization as the global economy slows."
Here then, the WTO seems to acknowledge that, in order for governments to sell free trade to their electorates, they have to buffer its social effects with auxiliary protectionist measures, such as tougher environmental and social standards. This will spell trouble for EU-like agendas in Doha, also supported by the WTO, which are open-ended and ambitious in what this round is hoped to initiate. The logic of the effects of the business cycle and democratic governments seeking to please their constituencies - while still maintaining an overriding commitment to efforts of trade liberalization, points more towards limited and precise proposals carrying the day.
In Europe, however, little is known of what Commission operatives, with a standing mandate from the Council to negotiate in the WTO on the EU's behalf, are intending to trade off in exchange for keeping other parts of their open agenda. European electorates may well find, that come Doha, their fortunes and sources of comfort in times of economic hardship, are in distant and unreachable hands. That this may result in real benefits for developing countries, if for instance the EU agrees to reduce its export subsidies without insisting on hardening TRIMs in exchange, would be a significant victory for them - but it would come at a dubious cost to European democracy.
Thus, a limited, precise and realistic agenda - one weighted decisively in favour of developing countries from the outset - will be the most potent and useful in Doha, considering current political and economic realities.
Source: WTOIL 1 August
WTOIL August 1 also raised some of the aspects of EU and US agricultural policy which are responsible for the impasse in the WTO - namely their comfortable and distorting subsidies regimes.
"David Roberts, deputy director-general for international affairs with the EU's agriculture directorate, said there was a "concern that internal support could turn out to be the most difficult issue in the negotiations, like export subsidies were the most difficult issue in the Uruguay Round."
According to a report issued by the Organization for Economic Cooperation and Development last April, domestic support provided by OECD governments to their farmers totals $360 billion per year, of which 90 percent is provided by the European Union, Japan, and the United States. Of that amount, more than 60 percent of the support qualifies as "green box" or "blue box" subsidies which fall outside of the Agreement on Agriculture's disciplines on subsidy use."
Examples of green box subsidies include spending on agricultural research, pest control, marketing, and promotional services; income insurance and income "safety-net" programs; payments for natural disasters; structural adjustment assistance; and payments for environmental and regional assistance programs.
Blue box subsidies cover direct payments to farmers by governments under production-limiting programs. Such payments, which are based on fixed areas or yields, or (for livestock) on fixed numbers of heads, are also exempt from subsidy-reduction commitments.
Source: WTOIL 1 August
Having obtained Noam Chomsky's take on the "rising tide" of anti-globalisation activism we could hardly avoid posting his biting criticism of attempts to label this civil society resurgence anarchical and of treating it as a threat to democracy. His remarks indicate how movements against ungoverned and unfettered global economic liberalization, in fact stand for the exact opposite - a kind of "rescue operation" of democracy.
"The protestors generally understand very well that the primary thrust of the "neoliberal programmes" that are instituted in the international agreements, with their complex array of liberalisation and protectionism, are a device to restrict the public arena -- the arena of democratic participation, to the extent that countries enjoy a measure of meaningful democracy -- and to transfer decisions over human affairs into the hands of unaccountable private concentrations of power, linked to one another and to the most powerful states.
The demonstrations are only the froth on the rising tide of popular protest against this attack on fundamental human rights, a tide that is becoming increasingly difficult to resist."
Source: WTOIL August 1
The quotes below featured in Martin Kohr's account of the WTO's "reality check" in late July - the clarification of the state of play with respect to the launch of a new round in Qatar. It's nothing new, but it's concise and straight to point. Ditto the brief quote underneath.
"The truth is that a majority of WTO Members are opposed to or are not prepared to agree that the Doha meeting initiate negotiations towards new rules or agreements on new issues. They are against the WTO increasing its mandate and through new rules that would land them with new burdens of obligations that could well block their development prospects further. … The lesson from this "stocktaking exercise" is that many developing countries (in fact the majority) are very uncomfortable with the New Round idea, and the developed countries should not cause more consternation and anxiety by intensifying the pressure on them, as this will lead to even more polarisation and frustration. However it is also unlikely that this is the lesson the trade policy makers of the developed countries will take. Thus there will be a big battle in the next three months before Doha. If in the end there is a new round, it would mean that the pressures applied would have been tremendous.
Source: WTOIL 8 August
The poorest nations are reluctant to make new agreements because they maintain the WTO system is weighted against them. Decisions favouring the richest nations are enforced, but undertakings which would benefit them, such as the opening up of markets in textiles, are being blocked.
Source: WTOIL August 8
Vindicating Mike Moore's frequent warnings that failure to launch further liberalization on a multilateral basis would lead to the marginalisation of WTO "rules based trade" in the face of bilateral pressure initiatives, this outline of USTR Zoellick's policy in relation to the decisive India vote pays little ear to the fact - mentioned above - that many developing countries don't want to burden themselves with more liberalization commitments. Of course, there may be a number of advantages in bilateral deals, such as technical assistance transfers, but they are historically further from the ideals of being consensual, balanced and "rules-based".
"The USTR said that the US would manage just fine even if the new round was not launched. He said that the US represented 20-25% of World trade and has moved ahead with numerous bilateral and regional arrangements. India is not party to any of these and quite bluntly stated that if some countries are not keen to proceed with trade liberalisation the US will proceed with those who are. Mr. Zoellick said that the new round was more likely than not to be launched at Qatar and warned that India's opposition to the new round will clearly leave it isolated at the negotiations in Qatar."
Source: WTOIL 22 August
And just so we don't end on anything akin to a praise of the current WTO regime, the following rather lengthy compilation of comments brings back to mind how much both balance and respect for consent were in fact lacking at the trade body's inception.
"The WTO was almost a dream come true for the business community, a set of rules for resolving international trade conflicts written by businessmen for businessmen with no public debate and a poor understanding of the consequences by the general public and by our political leaders. It was a historical opportunity and the business community took full advantage of it. Today, the ability of nation states to control events, even domestic events in their own countries is substantially less than in the past."
The result of this has been civil society -led, pro-democracy, "anti-globalisation."
"Civil Society activists perform a critical function as guardians of the non-commercial aspects of our world, such as the environment, local culture, and the harmonious functioning of local communities. As it is specifically these aspects which are omitted entirely from the framework of the WTO, they feel very threatened. Therefore, we can expect to see increasing resistance to the WTO from Civil Society as a form of countervailing power, partially filling the vacuum being left by the nation states, whose political leadership is now very much synonymous with commercial interests."
"The WTO should begin a dialogue with Civil Society representatives, with the objective of defining additional exceptions to the normal WTO rules where there are legitimate concerns of a nation state involved. Two primary tasks of a nation state are (i) to protect its citizens from exploitation by foreign powers, whether they use military or economic means, and (ii) to ensure public health. Besides national security and the cautionary principle in health matters, both of which are now recognized exceptions to the WTO scientific proof argument, additional exceptions might recognize such legitimate concerns as food security, preservation of local culture, environmental protection, and the survival of viable local communities. However, we must not allow a return to the days of abuse of trade tariffs to protect inefficient local industries when not justified by one of the recognized exceptions."
Source: WTOIL 22 August
[ENDS]
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