Global Trends by Martin Khor

Monday 1 October 2012

WTO’s present impasse and future role

At a lively session last week, a panel of developing country Ambassadors discussed why the WTO talks are at an impasse and what the future holds.


Many world leaders are still calling for the successful conclusion of the stalled Doha negotiations at the World Trade Organisation.  But these calls have not succeeded and a debate is growing on the WTO’s future role.

Last week these issues were aired at a session that I chaired at the WTO’s Public Forum held in Geneva.

The session, on "Doha and the Multilateral Trade System: From Impasse to Development?", was organised by the Our World is Not for Sale (OWINFS) network, the International Trade Union Confederation, the Third World Network, and the South Centre, on 26 September as part of the WTO’s three-day annual Forum that debates topical issues in many panel discussions.

In my introduction, I commented that the impasse in the Doha talks, launched in 2001, has been due to a fundamental conflict since the birth of the WTO in 1995.

The developing countries felt at the end of the Uruguay Round (which led to the WTO’s formation) that the WTO rules were unfairly tilted in favour of the developed countries and they wanted to review and reform them to make the WTO to more development-friendly as well as to get the developed countries to cut their heavy protection in agriculture.

However the developed countries which had succeeded in bringing non-trade issues like intellectual property and services into the trading system were not interested in the proposed reform. 

They wanted to push the WTO into taking on even more treaties and rules on new issues such as investment, competition and government procurement, as well as to continue opening the markets in developing countries while protecting their own agricultural sector.

Although the Doha Round was supposed to promote the developing countries’ interests, most development aspects had been eliminated or marginalised in the past decade, while developed countries keep insisting on opening the markets of developing countries especially in industrial products and services, while allowing themselves to continue their protection in agriculture.

In recent years, the United States made increasingly extreme demands that could not be accepted to key developing countries, resulting in the present deadlock.

The WTO is now at a crossroads, as to whether it should focus on the unfinished agriculture and development issues, or ignore these and instead create new rules on yet more new issues that would make the system even more imbalanced.

India’s Ambassador to the WTO, Jayant Dasgupta, said that the developed countries were now aggressively pushing new rules in trade facilitation which would result mainly in facilitating more imports into rather than exports for developing countries. That would also be costly and the promised funding is not forthcoming.   

The developed countries were also pushing for other new ways to open up developing countries’ industrial markets through a second Information Technology Agreement and tariff elimination of what is termed environmental goods, with a wide definition of both, thus involving many sectors and goods.

And after that, we can expect more pressures to negotiate new issues in the agenda for a new round, he said.  At the same time, the developed countries will not accept cuts in their agricultural subsidies nor in providing greater market access, thus their proposals would lead to even more unfair balance.

Dasgupta stressed that the WTO really faces a crisis of reconciling the different demands and ambitions of countries which have up to $80,000 per capita income and those with as low as $500 per capita income.

"How do we reconcile these? How do we reconcile the development needs, the aspirations, the pressing need of providing employment? ... We need to look at trade not only from the mercantilist angle of more profits but through the prism of social justice," he said.

Ambassador Angelica Navarro of Bolivia advocated a fair, balanced multilateralism where everyone has a say on an equal footing, but the reality is different.

We started this century with a mirage, the idea of development and re-balancing the trade system at the centre of the WTO but now we realise that those promises were nothing more than a means to ensure greater opening of our markets, she said.

In her view, the impasse is due to the lack of a political will to ensure the multilateral trade system is adjusted in favour of the poorest. Trade agreements must not impose conditions that have adverse effects on human rights and the environment, and must not bring an end to the values of our societies.

Ambassador Faizel Ismail of South Africa gave a critique of the concept of Global Value Chains that was being advocated in the WTO by those who want to promote further trade liberalisation in developing countries. 

He said this argument is flawed and does not offer a way out of the current crisis.  He proposed a different dialogue, to base the system on fair trade, equal opportunities, and building the developing countries” capacity to produce and export. 

The rules should be fair and allow for development. It should not close off opportunities for development and policy space. It should be inclusive and allow for the participation of countries.

He criticised the promotion of the plurilateral route, where some countries negotiate new rules and then try to impose these on to the rest. This is not a correct principle for multilateralism, he stressed.

Other speakers on the panel were Andrew Cornford, a finance expert who was concerned about how the WTO’s services rules may hinder countries from having stronger financial regulations that are needed in the crisis, and Deborah James of the OWISFS network, who called for mechanisms for developing countries and development oriented NGOs to participate in the discussions on the future of the trade system, instead of giving opportunities mainly to the leaders of big business concerns.