[DEBATE] : The Death of Doha; The WTO model has collapsed., What's next?
Riaz K Tayob
riazt at iafrica.com
Fri Sep 1 12:45:42 BST 2006
Copyright 2006 Institute for Public Affairs
In These Times
The Death of Doha; The WTO model has collapsed. What's next?
BYLINE: BY DAVID MOBERG
ELITE EDITORIALISTS AND FREE-TRADE devotees gnashed their teeth in
when the latest round of World Trade Organization (WTO) negotiations
collapsed in late July. But amidst the hand-wringing, many advocates
poor cheered. Walden Bello, executive director of Focus on the
said flatly, "The collapse of the Doha Round is good for the poor."
How could that be? Frustrated with what they saw as original WTO rules
skewed to benefit the rich, the world's poor countries wanted to win a
trade deal that would help them this time around. The rich countries had
promised to make it easier for them to export their agricultural goods.
But in reality, the failed talks were never about helping the poor or
about development. Even if the rich countries had cut tariffs,
other protection for their farmers -- as everyone from free-trade
to many developing nations urged them to do -- the big winners still
have been corporations. Cargill, ADM and others that trade and
farmers produce stood to profit, not the poor, urban or rural, who
gained on average less than a penny a day in income over a decade.
The Doha collapse is good for the poor mainly because it thwarts an
expansion of a global economy built around opening markets for
corporations and protecting their interests. As a result, the
turning point for regulation of the global economy, even if it
tangible gain for the poor.
Bits and pieces of an alternative that promotes a broader vision of
social and economic development have emerged, but there is still no
example, over ways to protect workers' rights), let alone enough powerful
governments willing to push for it. Until governments -- especially the
United States -- accept the need for a alternative, perhaps developed
confines of the WTO, the best that can be achieved is gridlock.
Although the comatose WTO talks may eventually be revived, in the
meantime countries will accelerate negotiation of bilateral trade
the pending agreements between the United States and both Peru and
In most cases, developing countries and especially their poor will likely
suffer more in such lopsided negotiations than they would in the
"I'm cheered by the collapse because I didn't see anything good coming
out of this round," says Larry Weiss, executive director of the Citizens
Campaign, a fair trade coalition. "That doesn't mean that the collapse
presages anything better. One of the things it will lead to is a
bilateral and regional deals. The terms imposed on poorer countries
The biggest multinational corporations, which wanted a new agreement,
especially with expanded WTO rules over trade in services (from financial
services to water systems), will not be slowed significantly by this
failure. But they do face a rockier political road.
There's overt rebellion against the "Washington Consensus" of free
trade, privatization and minimal government from leaders in countries
and Venezuela. There's hard-nosed bargaining about the terms of trade in
countries like Brazil. And despite lingering influence of big business
ideology, there is growing, if tentative, resistance to the old model
Democratic politicians in the United States, who believe that trade deals
have to protect labor and the environment and not give special legal
to multinational corporations (See "The Prairie Populist: Byron
Congress approved the Central American Free Trade Agreement (CAFTA) last
year by just two votes (with 15 House Democrats supporting Bush), but
has not yet ratified the treaty, and the Dominican Republic has not fully
implemented it. The free trade agreement with Oman also narrowly
July, following exposes of Oman's weak record on labor rights and of the
widespread abuse of migrant garment workers in Jordan, whose 2001 free
trade agreement had slightly improved labor rights language. If
majority in either house of Congress this fall, President Bush will
particularly tough time next year renewing the "fast track" trade
negotiating authority that restricts opposition to trade deals.
National negotiators disagreed over many issues in the Doha talks, but
the biggest stumbling block was agricultural trade. The United
European Union were supposed to reduce tariffs and subsidies to permit
developing nations to sell their agricultural products without unfair
competition or obstacles. But the developed countries retained loopholes
that could have preserved most subsidies.
At the same time, the United States insisted on freer access to
developing countries' markets for industrial goods and services,
efforts to protect infant industries. The final straw came when the
bowing to lobbies from the big domestic agricultural producers, insisted
that developing countries give up nearly all powers to protect
products, including such staple crops as rice that sustain vast
But even if the United States had played a completely honest,
well-intentioned role in the talks, the Doha round would have been a
failure for the poor. That's simply because the dominant free trade
promote development in poor countries (just as it fails to promote
Over the past year, several different economists working for the United
Nations and the Carnegie Endowment for International Peace have
projections of the likely outcome of any Doha scenarios. The results are
striking: The gains from trade would be extremely modest, with the rich
countries capturing roughly four-fifths of any benefits, and many of the
world's poorest countries actually losing ground. Even if rich
eliminated all agricultural subsidies and tariffs, developing countries
would enjoy a
one-time gain of less than a penny per person per day.
But just a few countries, such as China, Vietnam, Argentina, Brazil and
India, would capture most of the developing countries' benefits. Many
others -- including most of sub-Saharan Africa -- would be worse off.
If Doha talks had succeeded, the results might have reduced global
poverty by only 0.3 percent, or 6 million people. And typically that
involve moving incomes from a few pennies less than $ 2 a day to a few
And even this dismal picture overstates the benefits: it does not take
into account the losses that the Doha Agreement would have imposed --
vital government revenue from tariffs, new constraints on government
policies, new intellectual property rights requirements that would raise
medical costs, and accelerate displacement of poor peasants into
the urban unemployed, further depressing wage levels.
Critics from left and right heap blame for the plight of poor peasants
on subsidies to rich countries' farmers, whose exports lower world
But George Naylor, an Iowa farmer and president of the National
Coalition (NFFC), argues that American agricultural subsidies are
primarily to maintain production of cheap commodities for
to help farmers.
Dumping farm products on the world market below the cost of production
does harm competing farmers and should be prevented. But simply
subsidies in the United States would bring "very little change in
production and very little boost in prices," according to Tim Wise,
director of the
Global Development and Environment Institute at Tufts University.
Agribusiness multinationals want to expand trade and exploit low-cost
commodities. But advocates for small farmers from both poor and rich
countries, such as the NFFC, argue for "food sovereignty," or the
to fashion its own food strategy to strike a balance between urban
incomes. Both at national and international levels, they want to allow
governments to manage supply to prevent ruinous competition, to maintain
incomes for the half of humanity still living in rural areas and to
economy of independent producers.
In this view, development is at odds with an unregulated market. But
domination of global agriculture by a few big corporations doesn't
market utopias either. And the WTO's narrow focus on trade and anarchic
markets has a track record of failure. In a review of the leading
trade and growth, economists Dani Rodrik of Harvard and Francisco
University of Maryland concluded there is "little evidence that open
policies. . . are significantly associated with economic growth."
that trade is bad, but in order to grow quickly and equitably
employ a wide range of policies, including government regulation,
tailored to their own distinctive needs.
The WTO model has failed. But its replacement as a framework for the
global economy is not yet in sight.
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