Global Trends by Martin Khor
Monday 28 February 2011
Little progress in WTO’s Doha talks
World leaders pledge to finish the WTO’s Doha
talks this year, but this goal is difficult to meet because of the unfair
and extreme demands being made on developing countries.
Few really wanted it started, and now no one knows
how to end it. In between there’s been almost a decade of roller-coaster
of the Doha
negotiations at the World Trade Organisation.
Many political leaders have now proclaimed that the “Doha Round” must
really be completed this year. Otherwise it may have to be abandoned
altogether, some have predicted.
But there is not a lot of chance the deal will be done now. Although
the main proposals on the table are already so imbalanced against the
developing countries, the developed countries want even more from them.
It is not likely that the big developing countries will give in to these
unfair demands. However in the blame game that has been a significant
part of the Doha
talks, the rich countries have prepared the ground to pin the blame
of a possible collapse on the developing countries.
The latest set of talks were held in Geneva in the last fortnight, among
11 WTO members called the G11 -- United States, European Union, Japan,
Canada, Australia, China, India, Brazil, Argentina, South Africa and
In fact, much of the negotiations took place not among the 11, but in
bilateral talks between the United States
on one hand, and China,
India and Brazil.
As is well known among those in the negotiations, the major block to
Doha’s completion is the United States. The President and
his trade team has limited real negotiating authority because Congress
has to approve any trade deal, and the Congress is not in the mood to
cooperate with the Obama administration.
In order to avoid a fight with Congress even on a draft WTO deal, the
US officials have
to show that they haven’t given up anything.
Otherwise there would be opposition from the influential
farm, union and business lobbies, afraid they would lose ground to imports.
This is especially problematic during the economic slowdown and with
They also have to show that US companies and farms are going to get
new business through increased exports. Since there are limited gains
from other rich countries, the US is
insisting on the bigger developing countries to open their markets in
both goods and services.
But the developing countries have their own story. The draft deal (put
forward in texts in December 2008) do not require developed countries
to make any significant concessions.
In particular, they will be able to maintain their high agricultural
subsidies because of the peculiar WTO system requiring some subsidies
(known as the red box) to be reduced while allowing others (green) to
continue without limits.
The US and EU have shifted boxes from red to green, while maintaining
or even increasing total subsidies. The OECD countries’ total support
to agriculture in 2009 was US$384 billion in 2009 compared to US$326
billion in 2007.
Real cuts in agricultural subsidies in rich countries were supposed
to be the priority aim of the Doha
talks, when they started in 2001. It’s quite clear that is not going
to happen, given their entrenched farm interests.
The rich countries are also unwilling or unable to open up in labour
services, to allow more skilled personnel from developing countries
to enter and work. This was one of the key demands of developing countries,
but has become almost a hopeless cause.
Meanwhile, the 2008 drafts require developing countries to drastically
cut their industrial tariffs on industrial goods, in some countries
by an average of 50-60 per cent. They also have to cut their agricultural
tariffs by up to 36%.
Least developed countries are exempted, but most of them are asked to
cut 80% of all their tariffs in free trade agreements outside the WTO.
These tariff cuts mean cheaper imports, damaging the markets and even
survival of local firms and farms of developing countries.
Thus the developing countries will potentially suffer losses in production
and jobs, while gaining little in new exports to the rich countries.
But that’s only part of the story. The US is demanding that the major
developing countries do even more, by cutting tariffs to zero in three
large industrial sectors (chemicals, industrial machinery and electrical
goods), or at least in two of them. And that they also open up their
service sectors even more that already offered to foreign ownership
This is where Brazil,
China and India have objected. The December
2008 texts are already imbalanced, but these new demands (which not
only the US but also EU, Japan and others are making) are really
too much. Especially since the rich countries are not offering anything
So the talks have been stuck so far. But the countries are still trying.
By April, new drafts of all the issues are expected to be ready, for
a meeting of some Ministers to add the finishing touches in July. Schedules
of commitments will then be worked on, for a final deal in December.
Of course these are all timelines, and as of now no one is willing to
bet they will be fulfilled, since there have been so many broken deadlines
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