GTW will be heading to Geneva next week to join the global civil society response to the World Trade Organization's 8th Ministerial Conference. Our colleague Deborah James from Our World Is Not For Sale Network wrote this informative piece, published in Common Dreams, which explains the current complexities facing the multilateral trading system and our global call from civil society for a "WTO Turnaround".
WTO Turnaround: Food, Jobs and Sustainable Development First!
December 15-17, 2011, Trade Ministers will convene in Geneva, Switzerland for an 8th WTO Ministerial Meeting. After many failed Ministerial meetings and nearly ten years of negotiations, the Doha Round of WTO expansion is at a crossroads. Increasingly, developed countries have tried to push aside agreements to negotiate on key developing country issues intended to correct the imbalances within the existing WTO, which formed the basis of the development mandate of Doha. Instead, rich-country governments appear to be re-packaging the old liberalization and market access demands of their corporate interests as so-called “21st century” issues. This Ministerial will determine the future path of WTO negotiations, and the global Our World Is Not for Sale (OWINFS) network is calling for a fundamental transformation.
November 30 marked the 12th anniversary of the massive protests against the World Trade Organization (WTO) in Seattle, Washington, which succeeded in preventing the launch of the so-called “Millennium Round” of WTO expansion negotiations. Developing countries, led by African ministers and buoyed by massive street protests, opposed the launching of a new round of liberalization, focusing instead on their demands to fix the problems left over from the last round. Two years later, after receiving promises from rich countries that the next round would focus on development, these same countries acquiesced to a new “Doha Round.”
Throughout the last ten years, negotiations have collapsed several times, but have always been re-started. Unfortunately, the development mandate has been all but abandoned, with negotiations shifting to focus on the desires of corporations in rich countries, in services, agriculture, and manufactured goods, to achieve greater access to markets in developing countries. Nevertheless, they came perilously close to concluding in the summer of 2008. Since then, the emergence of the economic crises has resulted in a global re-think of the neoliberal economic model by citizens around the world, with resulting domestic pressure against governments to further entrench such a calamitous economic paradigm.
In many countries – such as Brazil, India, South Africa, and China – leaders are no longer willing to roll over to U.S. and EU demands, as their geopolitical power has grown along with their economies. A key demand of the United States, roiling under the surface of the negotiations, is that these countries should no longer be treated as developing countries – although they have far more poor people than all of the Least Developed Countries (LDCs) combined. The Obama administration decided that since it could not get much of a stimulus package through the Republican-controlled House, the U.S. would focus on increasing exports to these “emerging markets” as a way to boost U.S. economic recovery. But since many of these countries did enact stimulus programs adequate to the size of their economies, and were thus faster on the road to recovery after the crisis than the United States, they are understandably reluctant to bail out the U.S. economy at the expense of their own jobs and development potential. (Unfortunately, past experience with WTO and bilateral trade agreements demonstrates that they are net job losers, thus exposing the jobs claim as a cover-up for pushing the trade agenda of corporate donors.)
Given the current Doha stalemate, the keystones of the Round – Services, Agriculture, and trade in goods (called Non-Agricultural Market Access, or NAMA, in WTO parlance) are on hold for now. So what will happen in Geneva in two weeks? And more importantly, what does this impasse say about the future of the multilateral trade agenda?
Ministerial Agenda: New Members, Yes; Financial Reform, No; LDC market access, Sort of
One item on the agenda at this month’s ministerial will be accepting new members, a process called accession. The tiny island nation of Vanuatu joined the WTO last month, and the acceptance packages of Samoa and Russia will likely be touted as major “deliverables” of the meeting (even though these accessions can be accepted at any routine WTO General Council meeting.) The spin that will emerge from the WTO Secretariat – that this somehow proves the continued relevance of the WTO – should be cause for laughter.
Vanuatu’s population is less than that of Norfolk, Virginia, while Samoa’s barely exceeds that of Worcester, Massachusetts. Nonetheless, Samoa – which suffers from one of the world’s worse obesity epidemics – is being forced to lift its ban on super-fatty turkey scraps as part of its accession package (the U.S. poultry exporters’ lobby is ecstatic.) And a wide coalition of local communities, NGOs, churches, tribal Chiefs and business leaders in Vanuatu organized in the “Say No to WTO campaign” recently slammed the undemocratic way the accession agreement was passed by the parliament without citizens’ knowledge of the content of the deal, particularly after organizers were threatened with arrest if they engaged in planned anti-WTO protests. And while Russia is currently the largest economy outside of the WTO, its joining now reflects more of Obama’s desire to “reset” relations with that country, as well as U.S. leverage over Georgia to pressure it to withhold its opposition, than any WTO achievement.
What does actually reflect on the WTO’s legitimacy is that throughout the economic crisis of the last three years, the rhetoric within the WTO has remained unbelievably deaf to the way the WTO’s own deregulation and liberalization rules, particularly in the financial services sector, helped to set the stage for the financial crisis and subsequent global recession. The WTO Secretariat has repeatedly tried to sell an image of the WTO as a “savior” in the crises, because countries did not use as many measures to protect their economies as neoliberal ideologues had feared. But the fact remains that efforts to remove financial sector safeguards have only increased in the last three years within the WTO – despite the fact that nearly every national government and international body, from the United Nations to the G20, has acknowledged the need for increased regulation of the out-of-control financial sector that helped cause the collapse of the housing bubble in the United States to metastasize into global economic crises of historical proportions.
Uncontrolled speculation in European financial markets has also played a significant role in the current crisis in the eurozone, as bond traders have pushed up interest rates – sometimes deliberately – in the weaker eurozone economies to unsustainable levels. Although the policies of the European Central Bank and European authorities are still the main problem, financial markets and speculators have contributed greatly to several acute crises over the last year and a half. And the crisis in Europe has already slowed world economic growth, and could push the world economy into recession if it gets worse.
Fortunately, some countries have realized the danger of further financial sector liberalization, and are seeking to assess whether the WTO shouldn’t take up the global call for increased public oversight of financial markets instead. Ecuador, supported strongly by India, Argentina, Barbados, Bolivia, Brazil, Cuba, the Dominican Republic, South Africa, Turkey, and many civil society groups, put forth a proposal for the WTO to merely review “the WTO rules so as to promote and ensure the preservation of policy space for macro-prudential regulations and the integrity and stability of the financial system.” But this modest language was nonetheless opposed by the U.S. and the E.U., along with Australia, South Korea, Canada, Taiwan, and Norway, and thus is unlikely to be reflected in any Ministerial outcomes.
Other less headline-grabbing issues will be on the agenda, according to a summary of “Elements for Political Guidance” released on December 1st. A few changes will be approved regarding the TRIPS (Trade-Related Aspects of Intellectual Property Rights) agreement, which is the most trade-distorting of all the WTO agreements in that it codifies a transfer of wealth from South to North, and from consumers to patent-holders, based on patent and copyright monopolies – ironically the opposite of the “free trade” agenda that the WTO uses to promote itself in the media. The proposed changes include an extension for LDCs to implement the TRIPS agreement – that is, to protect the patents and copyrights that generally belong to corporations in rich countries. It also extends a moratorium on bringing “non-violation” complaints based on TRIPS. These are complaints in which the country is not accused of actually violating the agreement, but a patent or copyright holder claims that they lost some economic gain anyway.
But these issues are only a shadow of the small, concessionary package of proposals for the LDCs (comprised of 33 African and 14 Asian countries and Haiti), that the United States spent a greater part of this year tanking, despite near-universal support from the other 152 members of the WTO. While the rest of the world agreed that the poorest countries (with an average per capita income of under $2.50 a day) should not pay the price for the stalemate between the middle income and the rich countries at the WTO, the U.S. refused to offer the poorest nations a leg up if the Brazils of the world would not have to do the same. This LDC package was intended to be an “Early Harvest,” indicating that the proposals could be separated from the “single undertaking” under which all Doha Round agreements were to be concluded simultaneously. (Early Harvest is, of course, a hilarious misnomer, given that the original target date for the Doha Round’s conclusion was January 1, 2005.)
According to the Third World Network, the LDC package would have included: duty-free quota-free (DFQF) market access for LDC exports; simplified rules of origin (which would allow LDCs to increase their exports); cotton (meaning a major reduction in subsidies from U.S. taxpayers to the powerful U.S. cotton industry, which undercut world market prices and have had a devastating impact on millions of poor cotton producers in West Africa); and the LDC services waiver (allowing WTO members to provide better treatment to services and service providers from LDCs, without having to grant the same treatment to other WTO members). Unfortunately, the modest plan was shelved due to U.S. opposition, although some reduced elements of the package will still appear at the December Ministerial.
In advance of the Ministerial, it is important to note that the outsized claimed projections of potential gains from a Doha conclusion are gone by the wayside. In advance of other Ministerial meetings, WTO proponents have published grandiose projections of the increases to global GDP that would allegedly accrue as a result of a Doha conclusion. These projections have time and time again been exposed as tiny, shrinking, and unevenly distributed. This time, only a French think tank (CIREM-CEPII) published a study – commissioned by the EU – that used a modeling exercise to try to measure the global effects of the implementation of various Doha proposals. According to the study, the proposals on goods and services liberalization will actually cause the economies of Sub-Saharan Africa, Mexico, and the Caribbean to shrink (something which previous studies had also projected, a result which WTO proponents have sought to sweep under the rug).
In a review of this study, Public Citizen also noted that it was based on a seriously flawed methodology that included: failing to adjust for losses in tariff revenue; failing to “take into account the costs of adjustment when workers are displaced from employment in sectors harmed by greater imports”, and that the gains touted by the EU, and replicated in the Reuters coverage, were far beyond those contemplated in current proposals, and did not even appear in the actual study. In the end, the study’s predictions amounted to a paltry $152 billion in additional global GDP growth over the implementation of the agreement, a tiny sum given the long time horizon and global population. Even if it were divided equally across countries and people, Public Citizen quipped: “So, you can get the Doha Round and risk losing your job or you can get a Coke. Your choice.”
Post-Doha “New Issues”
But the major decision that will be decided at the Ministerial is the future of the WTO negotiations writ large. And here, things get a little complicated. While the Doha Round is currenltly at an impasse, governments have yet to officially abandon the Round – meaning that at any time, such as after suspensions in 2003, 2006, and earlier this year – negotiations could start again. Since a permanent shelving of the Round is by no means a foregone conclusion, civil society should remain vigilant.
Strangely, while the current proposals for the Doha Round are decidedly anti-development, it is the United States that has now become the primary opponent to concluding the Round. This is because the services, agriculture, and manufactured goods exporting corporations don’t think they’re getting quite enough out of developing countries, particularly from the “emerging market” countries.
Thus, the United States and other developed countries are instead putting forth a different set of issues for discussion at the Ministerial and beyond. Perhaps unsurprisingly, these so-called New Issues largely reflect the profit interests of the 1%. This includes “trade facilitation”, which is likely to facilitate more imports into developing countries than exports out of them. It also includes “environmental goods and services (EGS)” under the rubric of tackling the issue of “climate and trade.” Unfortunately, rather than focusing on removing WTO barriers to reducing climate change (such as excessive patent monopolies on green technologies), negotiating EGS has simply become another method through which major exporters can claim to be addressing climate change while actually just increasing trade, itself major cause of climate change.
One of the more pernicious proposals, put forward by Australia, would be a “standstill” commitment, under which countries commit to refraining from raising tariff levels above current levels, even within the increases currently allowed by the WTO. This standstill would be a devastating blow to those countries that have maintained the “policy space” of keeping a certain amount of flexibility that they currently have to protect their jobs and industries from import surges in a time of economic crisis.
And the EU, knee-deep in promoting investment agreements (those deals which give foreign investors “rights” in countries that in some cases exceed the rights of domestic companies) has also been working to include investment as an new issue – even though it was already dropped from the agenda in 2003 due to massive opposition by developing countries.
None of these proposals represent the development concerns of poor countries. Nor do they reflect the “Implementation agenda,” the list of 100+ fixes to existing WTO rules that developing countries fought hard to get on the agenda at the beginning of the Doha Round. Nor will they address the global crises of unemployment or food insecurity. Instead, rich countries have sought to “reframe” the future of the WTO negotiations around what US Trade Representative Ron Kirk euphemistically calls “21st Century issues.” Does this mean fixing the inadequate financial services disciplines? Or reining in subsidies to agribusiness which devastate small farmers? Of course not. It means dressing up all of the existing more-opportunities-for-corporate-profit wish lists of the 1% into a shiny new package.
Thus, when you hear developing countries calling for the continued negotiation of the Round, and a development-based conclusion to the negotiations, now you have the backstory. Better to keep in place a framework for negotiations that includes at least a mandate for development – even if that framework offers no possibility for a fair deal – and hope perhaps that it will never be concluded, than to veer completely off the rails to a “21st Century” deal so blatantly engineered solely for corporate profit.
The Future of the WTO
As negotiations for further expansion of WTO disciplines falter, cases being brought up by governments have increased. Many of these cases strike down popular consumer information, health, and safety laws that were passed by legislative bodies after consumer activism. Just in the last two months, the WTO ruled that American labeling of tuna as dolphin-safe was a violation of the WTO; that some U.S. rules designed to curb teen smoking are WTO-illegal; and that Country of Origin Labeling (COOL) of meat in the United States, passed by Congress to reduce exposure to contaminated food, is illegal under WTO rules. And these are just cases against the United States, the largest and most powerful economy in the world. Across the globe, research has showed that the WTO rules against challenged policies, including public interest regulations, 90 percent of the time. And now, both China and the United States are using the WTO to bring cases against each other’s green energy subsidies, at a time when human survival on this planet seems to depend on both countries radically transforming energy production.
And whatever the future of WTO expansion talks, it is the current WTO that still governs world trade. The emergence of the global financial, food, economic, climate, and other crises – which the WTO’s privatization and liberalization rules contributed to, and failed to prevent – provides an opportunity to reflect on the serious problems endemic to the particular model of globalization that the WTO has consolidated globally.
Thus, the OWINFS network has asserted that the global trade framework should provide countries sufficient policy space to pursue a positive agenda for development and job-creation, and that trade rules must facilitate, rather than hinder, global efforts to ensure food security, sustainable economic development, global access to health and medicines, and global financial stability.
In order to achieve these goals, many current WTO policies must be corrected and many aspects of any future negotiations agenda must be completely transformed. The network brought many of these proposals together in a Call to Action that was released in advance of the Ministerial meeting. The document calls on governments to protect jobs and industrial policy space by focusing on expanding employment rather than just cutting tariffs; to ensure that LDCs are able to utilize trade in pursuit of their development; to ensure greater flexibility within TRIPS for developing countries to address public health needs and access to sustainable technologies; to assess and then modify existing restrictions on financial regulation to ensure financial stability, and to forego demands for increased financial liberalization; to ensure that trade rules support food security and sovereignty, rather than continuing to treat food as a commodity to be manipulated by speculators; and many other demands.
These proposals would amount to a fundamental transformation of the WTO from an institution focused on codifying corporate “rights” to profit from trade, deregulation, and patent/copyright monopolies, to a rules-based system that disciplines corporate activity, in which countries would have the right and the ability to harness the benefits of trade for their own sustainable development.
Of course, this fundamental transformation of the framework of rules to discipline global trading corporations is a long way off in the current political climate. But the decision about whether the WTO will adopt a package of changes to help the poorest countries, move towards removing some WTO constraints on financial regulation, and begin to reflect on a transformed role for trade rules in the context of the global economic crises – or merely continue its 16-year agenda of consolidating a global corporate rights regime – will depend on the outcome of the decisions made by governments during this Ministerial. Civil society should help ensure that they make the right choice.
To ensure that governments understand the seriousness of the issues at stake, and the opportunity for alternatives to the narrow range of policy options currently being considered, a delegation of about 60 different trade unionists, farmers, church leaders, and consumer advocates from Argentina and Peru to South Africa and Zambia; from Belgium and the United States and Russia, to India and the Philippines, and yes, even Vanuatu, will travel to Geneva next week to work together through OWINFS and with the African Trade Network and the International Trade Union Confederation. They will be joined by local activists who will be setting up an Occupy the WTO tent during the conference, highlighting the importance of the negotiations for the 99% of the global population. Wish them luck.