Rare victory for South at WTO

Kalinga SENEVIRATNE

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 and inequitable Doha Round deal.

And as news started to trickle in signalling the collapse of the WTO mini-Ministerial, a sigh of relief emerged. After all, a tsunami has been averted observed Devinder Sharma, a New Delhi based food and trade policy analyst reflecting on the collapse of the World Trade Organisation (WTO) talks in July to liberalise world trade.

It has become a tradition among the Western media outlets in recent years to blame India, China and sometimes Brazil and South Africa for the failure of yet another round so-called trade liberalisation talks.

This was the third time in seven years that the WTO talks failed. Started in the Qatar capital of Doha in 2001, this round was dubbed as the development round by the WTO, to deflect criticisms from the developing countries of the South that WTO is only interested in opening up market for rich nations in developing countries, irrespective of whether these help their development or not.

WTO indicated that the failure of the talks would cost the world $ 130 billion in lost trade opportunities. As usual they never say how and who would have benefited by how much.

However, such fortune-teller yarns are all too willingly disseminated by Western news agencies and find their way into the newspapers of the South, whereas comments such as India’s Commerce Minister Kamal Nath are rarely given the prominence it deserves.

He stated that the U.S. wanted to enhance the commercial interests of its large agri-business corporations whereas developing countries like India wanted to ensure that the livelihood of its farmers are protected.

Nath told journalists upon his return to New Delhi that, the U.S. created the deadlock on an issue, which was not trade but related to livelihood of farmers. I can negotiate commerce but I cannot negotiate livelihood security which concern poor farmers not only of India, but 100 other developing countries he said.

The breaking point in the Geneva talks came on the exact modalities of devising the Special Safeguards Mechanism (SSM) in the Agreement on Agriculture that allows a country to temporarily increase customs tariffs in response to a surge in import volumes or a sharp decline in prices. India and China wanted a 10 percent surge to be a cut-off point whereas the U.S. wanted the proportion to be 40 per cent.

A coalition of 46 developing countries known as G33 have proposed that the SSM be made available to all the developing countries rather than the 22 proposed in the original WTO document. Developing countries argued that they needed to use this to facilitate the development of their own agricultural capacities and to increase domestic food production.

According to FAO statistics, import surges that is sudden and rapid price rises on imports has been a major development problem for a myriad of developing countries. Between 1980 and 2003 there have been 12,167 import surges which have effected 102 developing countries with the poorest hit the most.

Writing for the South-North Development Monitor (SUNS), Sharma points out that the Western media has misled the world by reporting that the US and EU have made a huge sacrifice by offering drastic cuts to their trade-distorting farm subsidies.

In reality, the US proposal of reducing its trade-distorting subsidies by 70% (and the EU following with a promise of 80% cut) was simply an eye-wash argues Sharma.

These were merely paper cuts, and behind this smokescreen, both the rich trading blocks had actually ensured provisions that enable them to keep or increase the actual levels of their trade-distorting subsidies.

:The US presently pays US$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 high price by way of providing more market access in agriculture and industry he added.

Yash Tandon, executive director of the Geneva-based South Centre noted that these negotiations have been flawed in both process and substance, and the undemocratic nature of WTO negotiations, where a privileged few countries are invited to hammer out a deal has not ceased.

As long as the development component of the Doha Round does not become its central concern and focus, it will continue to fail. Trade is not an end; it is a means to development.

If the WTO continues to remain a neo-liberal institution promoting trade liberalisation for its own sake, it stands to lose credibility and legitimacy. The WTO must reform itself to become a development agency and put trade to the service of development argues Tandon.

Many advocates for greater democracy within WTO sees the collapse of the Doha Round talks as a victory for the South countries. As the South Centre put it: Even if the developed countries were not hearing well, developing countries did not let their development issues slip off the table. This has only been possible due to the strong developing country coalitions that have been built up.

Thanks for India and China taking a strong stand and as Sharma observed picking up the courage and standing up to the two bullies — the United States and European Union, the exclusive processes of negotiations are now outmoded. What G33 should ensure in future is that WTO follows the more transparent process, as done at the UN, in negotiating texts, more in line with openness, transparency and democracy.

We have missed the chance to seal the first global pact of a reshaped world order lamented EU Trade Commissioner Peter Mandelson in a statement released after the collapse of the talks.

We have never sought to be paid for reform of our farm subsidies in Europe by receiving market access in developing country farm markets. We have always accepted that the gains for us in this round would be found in new industrial and service sector trade in the developed and bigger, fast-growing developing countries, he added.

But, this is a familiar mantra of the EU ever since the WTO came into being in the early 1990s and the EU or even for that matter WTO has failed to provide any hard credible facts to back up their argument that opening up of markets have helped developing countries, especially the poorest ones.

Thus, Sharma tends to agree with the view of the Indian Trade Minister. 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 he argues.

The writer is a Singapore-based journalist, media analyst and international communications lecturer.