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Debate
Interview with Simon Maxwell: "It makes sense to channel money through the EU”
Comment 1: The true meaning of good governance
Comment 2: Doha: The trade of unbelievers
8-9/2006 |
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The trade round of unbelievers
The Doha round of global trade talks is teetering on the brink of collapse. After last-ditch talks between six major trading powers broke down in late July, the World Trade Organisation (WTO) suspended talks, with no near-term prospects of restarting them. The biggest obstacle to a deal is that the major trading powers appear determined to act like all-out mercantilists, rather than “free trade” advocates.
[ By Ricardo Meléndez-Ortiz ]
Under the terms brilliantly concocted by WTO Director General Pascal Lamy it would be simple to point an accusing finger at major trading nations for the seemingly insurmountable impasse: the EU for failing to offer to slash farm tariffs deeply, the US for refusing to do the same to agricultural subsidies, and the pretended Brazil-India duet for resisting on duties on industrial goods. Indeed, since this triangular dance was set last year as a sine qua non for success, each flank has been criticising the other two’s unwillingness to initiate concessions. Progress at this level would have been possible only via lowering expectations on all fronts. However, this has proved impossible to attain politically.
More fundamental then is elucidating the ethics and values that drove governments to this impasse. The so-called trade liberalisation negotiations remain unabashedly mercantilist. They have not been about free trade and certainly not about broader developmental concerns; definitely not about a modern conception of development beyond export revenue, national income and growth. Indeed, even on its restricted terms, the negotiations have been taking place among unbelievers. What else can one say when Brussels argues that it is a “concession” to take money away from inefficient sugar beet producers and get serious about structural reform, even though it is falling well short of the Lisbon goals for education, science, and research?
The Doha round was launched in 2001 with the explicit purpose of redressing the effects of past trade agreements, which most developing countries felt were unfairly tilted against them. As the talks got bogged down, some began to suggest that calling the ongoing talks a “development round” was a mistake, since it led developing countries to believe that they would have to make no politically uncomfortable sacrifices in return for the reforms they are seeking. The simple fact is, however, that developing countries would simply not have agreed to start negotiations unless they were assured that their concerns would receive attention.
Thus the ministerial agreement reached in the Qatari capital vowed that in the new round rich countries would accept that poor ones should have to make systematically smaller liberalisation commitments. Since 2001, these notions have faded, even though developing countries’ influence has increased. The mercantilist dynamic – when push comes to shove, my subsidy dollar for your tariff – rendered the negotiations incapable of fulfilling their developmental potential. Negotiations on restructuring multilateral trade rules had been languishing even before the newest crisis.
The EU made clear that it would not step beyond its 2003 reform of the common agricultural policy. Washington offered to cap trade-distorting subsidies at a level higher than what it actually spends on them. In return, both wanted poor countries with no social welfare nets to accept industrial tariff cuts – and job losses – that would have dwarfed any changes they themselves found politically tolerable.
Should governments decide to resurrect the negotiations, the way to a deal remains a sort of “distorted triangle”: the US and the EU would have to sweeten their offers more than the developing countries. This could be accompanied by product-specific negotiations that would allow major economies to safeguard commercial interests by ensuring that their key exports to each other do not all end up subject to various liberalisation exemptions. A “peace clause” – a temporary moratorium on WTO disputes against farm subsidies – may be the price that other nations will have to pay to get Washington to yield on farm payments. For any agreement to be possible, a new sense of pragmatism from all and a spirit of generosity from the rich will be necessary. What such an outcome will mean for development remains an open question.
Ricardo Meléndez-Ortiz
is executive director of the Geneva-based International Centre for Trade and Sustainable Development (ICTSD).
rmelendez@ictsd.ch
http://www.ictsd.org
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