Wto Seems Intent On Self-Destruction

It’s hard to imagine a more blatant provocation than the draft ministerial text produced by the Chair of the ministerial meeting of the World Trade Organization in Cancun, Mexico today. The organization is already reeling under allegations of bullying and bias, and challenges from poorer countries to the negotiating agenda that was set down through a similarly undemocratic process in Doha in 2001.

That meeting launched the so-called Doha ‘Development’ Round of talks that aims to extend the World Trade Organization's free trade rules. The round came unstuck long ago. By the time the Cancun meeting began on 10 September all the deadlines set at the Doha ministerial in 2001 had been missed. This included issues of concern to poorer countries that were supposed to have priority.

The US and European Union, supported by the WTO Secretariat and chairs of various negotiating committees, continued to assume they had the right to dictate the trade rules for the world. By Cancun, the level of anger among poorer governments over the substance and process of the negotiations had reached boiling point. But it was not clear how this would translate into action.

That became clear early on the first day. A press conference called by the Group of 20 ‘developing’ and ‘least developed’ countries to present their farm proposals had to be shifted from a small briefing room to the main auditorium to accommodate everyone. Brazil, as the rotating chair, firmly staked out their challenge to a draft ministerial text that the Chair and Director General had prepared, based on a self-serving paper tabled by the EU and US. The air was electric. At the end, journalists applauded. After years of being humiliated, intimidated and marginalized, the poorer countries were fighting back.

Next day came equally vehement opposition to negotiations on the ‘Singapore issues’ of investment, competition, government procurement and trade facilitation. At the end of the Doha ministerial meeting in 2001, India had resolutely insisted on an explicit consensus at Cancun before any negotiations could begin. This time, standing alongside India were 71 of the WTO’s 146 member countries, including China, India, the Carribean Community and the Least Developed Countries. Reporting from their meeting, Malaysia’s forthright trade minister Rafidah Aziz insisted that “there is no consensus.”

As the days passed it became clear that the US and EU were no longer dictating the shots, and they did not like it. Governments they saw as recalcitrant were threatened with loss of trade preferences, cancellation of bilateral negotiations and cuts to aid funding. Larger governments, such as India, China and Brazil, were accused of promoting their own interests at the expense of poorer countries, in a brazen attempt to divide and rule. The US launched an extraordinary attack on Brazil for leading a “coalition of paralysers”, saying it was wasting its time in revitalizing the struggle of the seventies and creating a north-south divide. Brazilian President Lula reportedly received four calls from US President Bush yesterday. Brazil’s short dignified response affirmed that: “We are reaching the final days of the Cancun Ministerial. It is even more important, at this stage, that we concentrate our efforts in trying to negotiate and not direct our energies at attacking countries or groups of countries.”

Against this backdrop, today’s draft text and the remainder of the meeting was always going to be critical to the long term prospects of the WTO. If it failed to recognize the concerns of the majority of WTO members and yet again favoured the interests of the richer industrialized countries, there was a risk of a major backlash, a further loss of legitimacy and even a walkout from the ministerial. Yet that is precisely the approach that was taken.

The draft ministerial text on agriculture did nothing to address the two primary demands for reduction of domestic supports and export subsidies called for by the majority of poorer countries. Instead, it would allow richer countries to continue their subsidies and dumping, while requiring poorer ones as to make drastic tariff cuts.

It also provided a definitive time line to negotiate a multilateral investment treaty and mandated negotiations on government procurement and trade facilitation. The timeline for the investment negotiations was tied to that for finalizing the modalities on agriculture and industrial goods, creating the negotiating space for major powers to demand trade offs. No one pretended there was any explicit consensus on which to justify those mandates.

Proposals for tariff cuts on industrial goods risked depriving poor countries of their primary source of income and leaving their fledgling industrial base and balance of payments at the mercy of cheap imports.

This extraordinary provocation was possible because of a bizarre process where appointed ‘Friends of the Chair’ decided ‘in their own responsibility’ what proposals should be forwarded to the Chair for inclusion in the ministerial text. There was no pretence that this reflected the views of the WTO member countries and no attempt to produce a balanced text that reflected the range of views. For an organization supposedly based on consensus and whose processes are already facing vigorous challenges this was an extraordinarily arrogant move.

Parallels are being drawn with what happened at Doha in 2001. A clearly unacceptable text was sprung on government delegations. It did not acknowledge the deeply divided views of WTO members on most issues and favoured the interests of the major powers, especially the EU. After a vigorous debate the text was amended in ways that addressed some of its most offensive proposals.

That was, in turn, debated and a final text emerged - which was worse than the original one. But there was little governments could do.

Clearly there is an expectation from those who are responsible for this text that poorer countries will fall into line yet again. Some have been more moderate in their public responses than might have been expected, notably Brazil. But the response of others has ranged from cynicism to outrage. India’s Minister concluded, to resounding applause, that “we have to express our disappointment that the revised text brought out by you has arbitrarily disregarded views and concerns expressed by us. We have so far constructively engaged in the entire post-Doha process in the hope that this is a development round. We wonder now whether development here refers to only further development of the developed countries. Consequently, Mr Chairman, we feel that this text does not lend itself to any meaningful dialogue.”

Malaysia’s minister Rafidah didn’t mince her words either. Rejecting the proposed text on the new issues in capital letters, underlined, she concluded that “MALAYSIA CANNOT SUPPORT ANY TEXT TO IMPLY THE COMMENCEMENT OF NEGOTIATIONS ON MODALITIES. MALAYSIA’S POSITION is NON-NEGOTIABLE REGARDLESS OF ANY MOVE or developments IN THE OTHER ISSUES being discussed in the Cancun Ministerial.”

The scene is set for further clashes tomorrow. Even if the major powers manage to manoeuvre through some sort of text and pretend that it is based on consensus, the WTO’s prospects for survival as the pre-eminent economic policy agency in the world are looking increasingly slim.