Trading illusions

At Doha the major powers scripted an agreement that created the mirage of a triumph for an equitable global trading system. They did so by weaving an illusion that all countries, rich and poor, gained something. 

by Rammanohar Reddy

MUCH like the characters in the Japanese film classic, Rashomon, there have been as many verdicts delivered on the Doha conference of the World Trade Organisation as there were participating governments. One interpretation is that there is a little bit of a gain and a bit of a loss for every country, which is why all governments have claimed a victory about what their critics say is a disaster. A bolder interpretation would be that at Doha the major powers scripted an agreement that created the mirage of a triumph for an equitable global trading system. They did so by weaving an illusion that all countries, rich and poor, gained something.

Of all the issues thrashed out at Doha, three are pointers to the future. First, the agenda for the new WTO round that has been drawn up is huge. There will be negotiations in as many as 12 distinct areas and there will be work programmes in four, perhaps seven, issues - large enough to tax the resources of all but the biggest countries in the world. The 10-page declaration that lists the agenda does refer to the concerns of the developing countries - in agriculture, import duties on industrial products, protection of traditional knowledge and many more. But for these concerns to be inscribed in WTO treaties they have to be negotiated, they will not be given as charity. (There is no better example of this than the way a decision on the more important of the implementation issues, first raised by the developing countries in 1998, has once again been postponed by pushing them on to the agenda of the Doha round.)

The developing countries will have to match the negotiating skills of the armies of officials, lawyers and lobbyists deployed by the EU and the US, in a war of attrition that will most likely extend beyond the scheduled deadline of 2005. India can just about keep pace with such negotiations, but how many other developing countries have the financial and human resources to be able to do so? The Doha declaration does promise the world’s poorest economies technical assistance for negotiations, but such capacities cannot be acquired overnight. The least developed countries, with neither the capacity to negotiate nor the staying power, may in the end find that there was no oasis in Doha.

Essentially semantic

Second, India did stand firm in resisting the inclusion of new issues in the negotiating agenda. But time and distance suggest this ‘victory’ was essentially semantic. The fine print quite unambiguously points to a ‘focussed’ work programme that will draw up the framework of future WTO treaties on global rules for foreign investment, competition policies, transparency in government procurement and trade facilitation. In 1996, at Singapore, it was merely a question of agreeing to ‘study’ these four issues. In 1999, at Seattle, the EU tried but failed to go from a study to negotiations. However, in 2001, the EU and the US have been successful in taking the first steps to negotiated agreements. It is now just a question of time - may not be before 2005, but it will be done - before three non-trade issues (trade facilitation is the exception) are brought within the ambit of the WTO. The lessons then of the agreement on trade-related aspects of intellectual property rights (TRIPS) have not been learnt. Intellectual property rights, which are not connected to trade, were placed on the GATT agenda in 1986. Now it is the turn of three more non-trade issues to be covered by the WTO, only because it is the only international organisation with the powers of global economic enforcement. Clearly, a larger process which stalled at Seattle has picked up momentum at Doha.

This picture is made more complex by the declaration on TRIPS and Public Health, the third important issue, that has been interpreted as a sign of the developing countries exerting their influence on an all-powerful WTO. In an organisation where agreements take years to negotiate, this declaration was drawn up in less than six months and entirely on the initiative of the developing countries. For the first time, the WTO has been able to explicitly outline the conditions under which governments can over-ride drug patents.

Yet, it must be seen in its context. First, it is an important, but limited, political declaration whose legal value is uncertain. Second, the WTO has postponed a decision where it really matters Đ in allowing Indian and Brazilian producers to export the larger part of their production of ‘patented’ drugs to the world’s poorest countries. Third, the US in the end tied its adoption of the TRIPS declaration to the developing countries approving the agenda for a new round. With the tide of global opinion turning against the multinational pharmaceutical giants, both the US and the EU decided that these companies were, for the moment, expendable: A non-binding and limited decision on softening TRIPS was a small price to pay for the consensus on an agenda for wide-ranging negotiations on trade liberalisation.

Potential undoing

The WTO has emerged stronger from last week’s meeting, but this strength is derived from the enlargement of its role as an overseer of globalisation in everything from trade to environment to foreign investment and more. But this widening of its remit may also contain its potential undoing, because the foundations of the institution are not designed to support more than a structure of rules to facilitate trade between countries. Overloading the negotiating agenda with new issues also means overloading the system.

Another source of potential vulnerability is that the expansion of the WTO’s powers has had to be purchased by giving the smaller members the illusion that they are equal partners in the system. At Doha, this ruse worked with the declaration on TRIPS; the trick may not always work during the years of negotiations that lie ahead. So the success of last week may well contain the seeds of a future failure.

The statement on TRIPS is one example of the major powers showing that they had learnt the lessons of Seattle. It is no longer possible to take decisions peremptorily or be insensitive to the concerns of the majority of the WTO membership. But that does not mean the WTO is now a more inclusive organisation. Symbols are more important than substance.

Hence the political declaration on TRIPS, hence the last-minute concessions to the African, Caribbean and Pacific countries on banana exports, hence the token representation to Tanzania, as the leader of the least developed countries, in the closed-door negotiations. In all this, the members of Quad - the US, the EU, Canada and Japan, never lost sight of the larger objective - a comprehensive negotiating agenda that would expand the role of the WTO in the world economy.

In the end, developing country unity crumbled at Doha. But the TRIPS declaration showed small advances were possible. Brazil brought to the negotiating table a social argument with its successful HIV/AIDS programme, India brought an economic one with its low-cost domestic drug industry, Africa brought a moral one with millions of HIV/AIDS patients in need of inexpensive treatment. They were joined by the global NGOs who had moulded public opinion with their campaigns on patents and high drug prices.

This was the first such broad-based alliance at the WTO; and it was successful. Therein perhaps lies a message for those who want to reform the WTO. But it is also disturbing that a coalition of North-South interests with all the political, economic, social and moral arguments on its side, could finally wrest from the world’s richest countries only a limited softening of the TRIPS agreement. That is perhaps the real message from Doha.