Tuesday, October 20, 2009

WTO forum shows why change is so slow

By Ann Crotty

In less than an hour after the start of a session at the World Trade Organisation's (WTO's) open forum, it is clear why the chances of finalising the Doha development round of talks by next year are very slim.

In the session on domestic support for agriculture, each speaker gets the chance to address the room and deliver with great conviction his or her view of the best way forward for world trade. There is evidence of some agreement about what should be done - scope perhaps to take issues forward.

But then the discussion is opened up to all the delegates in attendance - an array of people from the corporate world, NGOs and academia. Suddenly the areas of agreement disappear in the haze of heated discussion and it is evident that there is little, if any, common ground; it is equally evident that any move forward will be a desperately slow, hard-fought process.

A retired agricultural economist from France, who has spent much of the past eight years in retirement poring over the minutiae of trade-related statistics, explains how the US and EU are cheating on their agricultural subsidies.

Not for Monsieur Berthelot the arcane subtleties of WTO-speak; after eight years of detailed research he has no patience with polite exhortations for countries "to make their notification process more transparent".

Berthelot states emphatically that the EU and the US are cheating and are not notifying the WTO about swathes of subsidies, worth tens of billions of dollars and euros, that they provide to their farmers.

"The difficulty is that the WTO is just a structure that enables member states to discuss issues but does not regulate them," says Berthelot.

Another French delegate - a wine farmer - demands the suppression of agricultural subsidies and points out that on the WTO's watch, the world has moved backwards on the millennium development goals.

A delegate from England then criticises the Brazilians for understating their farm subsidies, noting the enormous subsidies their farmers enjoy in the form of cheap loans.

A Mexican delegate stresses how much Mexico approves of the WTO disciplines. "We like them and we adhere to them but many countries do not adhere to these disciplines."

But a day later, at a session entitled Promoting global governance by strengthening the rule of law, an EU delegate points out that Mexico has not made any notifications to the WTO since 1995.

And, as several delegates point out, the WTO has not been informed of the details of any of the multibillion-dollar rescue packages that have been implemented by the US and EU governments in the past 12 months.

Then there's the issue of the environment-related support that an increasing number of developed countries have been providing to their large industrial companies in a bid to reduce carbon emissions. These are likely to become an increasing source of tension between the 155 members of the organisation.

At a later session Gary Hufbauer, a senior fellow at the Peter G Peterson Institute for International Economics in Washington, tells delegates that the WTO has failed to monitor individual government actions that have been taken to deal with the global financial crisis.

"There are governments that are cancelling visas for foreign workers and also governments that are telling their national banks to focus on domestic customers. This is wrong and these governments should be named and shamed," says Hufbauer.

By the end of the fascinating three-day forum, it is evident that not only is there widespread disenchantment about whether or not the WTO is actually able to enforce its disciplines in an even-handed manner, but there is also a palpable sense of frustration among developing and least-developed countries about the benefits of membership of the WTO.

"Developing countries are losing considerably more than they stand to gain from the Doha round," remarks one NGO activist.

The major complaint of the developing countries relates to the enormous protection that the developed world provides for its farm goods and basic industrial products. This not only closes these markets to producers from the developing world but often results in surpluses being dumped on the global market, pushing world prices down.

As these goods are primarily the ones produced by developing countries, they suffer a double whammy: they are excluded from exporting to potentially valuable First World markets and the value of their output is artificially suppressed.

Estrella Penunia, the secretary-general of Philippines-based Asia Adhra, says that 10 years ago small farmers were promised that WTO membership would bring much development "but a decade later we have seen no benefits, the WTO kills farmers, liberalisation of agricultural trade results in increased dumping, which threatens our livelihood. No Doha deal is better than a bad deal".

Phillip Kiriro, the president of the East African Farmers' Federation in Kenya, echoes the frustrations of farmers in developing countries.

"Agriculture is our primary activity, it isn't just another economic activity, it is everything to us, it is the base of general economic growth."

Ndiogou Fall, the president of the Network of West African Farmer and Producer Organisations in Senegal, says the WTO is part of the problem facing developing countries.

"The WTO can't change and it is time to say Africa can't continue to support a bad system. We have no reason to continue to support this system, which focuses on the interests of the liberal minority of the world."

But as an academic from the London School of Economics remarks: "If the WTO is so bad, why do so many developing countries want to join and so many want to complete the Doha round?"

At the end of the forum, Sanya Reid Smith, a legal adviser and senior researcher at Third World Network, says that despite all the WTO's problems, pulling out is not an option. "We are dealing with global trading imbalances. If the EU or US is flouting WTO principles, we need to find mechanisms within the WTO to correct this."

The reality, it seems, is that the WTO attempts to create the rules of the road for global trade. If you want to be on the highway of global trade then you have to pay lip service to those rules or chaos ensues.

The guys in the huge juggernauts - the US, the EU, China - don't have to pay quite as much attention to the rules because, given their size, their reckless behaviour is likely to damage others more than themselves. So the best the smaller road users can do is ensure that the rules are appropriate and that everybody adheres to them.