[E-rundbrief] Info 427 - W. Bello: Collapse of the WTO Doha Round

[Matthias Reichl]

E-Rundbrief - Info 427 - Walden Bello (Focus on Global South/ 
Thailand): Why Today's Collapse of the (WTO) Doha Round Negotiations 
is the Best Outcome for Developing Countries.

Bad Ischl, 24.7.2006

Begegnungszentrum für aktive Gewaltlosigkeit

www.begegnungszentrum.at

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Why Today's Collapse of the Doha Round Negotiations is the Best 
Outcome for Developing Countries

By Walden Bello*


Bangkok, July 24--Today's collapse of the Doha Round negotiations of 
the World Trade Organization in Geneva is one of the best things to 
happen to the developing world in a long while.

In the past two weeks, in anticipation of the July 27-28 meeting of 
the World Trade Organization's General Council, a major rescue effort 
was mounted to save the "Doha Round" of global trade negotiations 
from collapse.  The most prominent of these efforts took place at the 
Group of Eight Summit in St. Petersburg, where the leaders of the 
world's most powerful economies called for a successful conclusion to 
the round, painting it as a "historic opportunity to generate 
economic growth, create potential for development, and raise living 
standards across the world."

This was pure myth.  The idea that the Doha Round is a "development 
round" could not be farther from the truth.

At the very outset of the <?xml:namespace prefix = st1 ns = 
"urn:schemas-microsoft-com:office:smarttags" />Doha negotiations in 
November 2001, the developed country governments rejected the demand 
of the majority of countries that the talks focus on the hard task of 
implementing past commitments and avoid initiating a new round of 
trade liberalization.  From the very start, the aim of the developed 
countries was to push for greater market openings from the developing 
countries while making minimal concessions on their part.  Invoking 
development was simply a cynical ploy to make the process less unpalatable.

Lopsided Negotiations in Agriculture

The state of the agricultural negotiations before today's unraveling 
was reflective of this. Even if the United States had conceded to the 
terms of WTO Director General's compromise on cutting its domestic 
support, this would still have left it with a massive $20 billion 
worth of allowable subsidies.  Even with the European Union agreeing 
to phase out its export subsidies, this would still have left it with 
55 billion euros in other forms of export support.  In return for 
such minimal concessions, the US, EU, and other developed countries 
wanted radically reduced tariffs for their agricultural exports in 
developing country markets.

Indeed, even at a very late stage in the negotiations, the US 
appeared determined to eliminate any protection for developing 
country farmers.  US Trade Representative Susan Schwab attacked the 
provisions for "special products" and "special safeguard mechanisms" 
already institutionalized in the December 2005 Hong Kong Ministerial 
declaration.  Admittedly imperfect, these mechanisms would 
nevertheless allow governments to slow down the erosion of local 
agriculture by exempting some products from tariff cuts and raising 
tariffs on subsidized imports.

  The WTO negotiations, if brought to a conclusion on such lopsided 
terms, would result in the slashing of poor countries' farm tariffs 
while preventing them from maintaining food security. This is a 
recipe for massively expanded hunger and threatens to further 
impoverish hundreds of millions of the poor worldwide. The 
consequences for the South were perhaps best summed up by a 
Philippine government negotiator before the WTO Agriculture 
Committee: "Our agricultural sectors that are strategic to food 
security and rural employment have already been destabilized as our 
small producers are being slaughtered by the gross unfairness of the 
international trading environment.  Even as I speak, our small 
producers are being slaughtered in our own markets, [and] even the 
more resilient and efficient are in distress."

The Specter of Deindustrialization

But the developed countries not only want radically reduced 
agricultural tariffs from developing countries.  They also want 
maximum entry to southern markets for their industrial and other 
non-agricultural goods.  In the NAMA (Non-Agricultural Market Access) 
negotiations, they have demanded that the industrializing economies 
of the South cut their non-agricultural tariffs by 60-70 per cent 
while offering to cut theirs by only 20-30 per cent.  This not only 
violates the GATT-WTO principle of less-than-full-reciprocity.  It is 
absurdly inequitable.  The South African government reflected the 
frustrations of most of the global South about the Doha process when 
it stated that "developing countries will not agree to destroy their 
domestic industry on the basis of unreasonable and irrational demands 
placed on them by the developed countries."

The extinction of agriculture and deindustrialization is not the only 
price that developing countries are being asked to pay for a 
successful conclusion to the Doha Round.  In addition, under the 
General Agreement on Trade in Services (GATS) negotiations in the 
WTO, they are being asked to allow foreign corporations more rights 
to buy and control public services in developing countries, at the 
expense of guaranteeing essential public services for the poor.

The Cost-Benefit Equation

It is no longer just the developing countries or global civil society 
that is warning that WTO-managed liberalization will be detrimental 
to the interests of the developing world. Even the most 
pro-liberalization agencies are now admitting that the benefits of 
the Doha Round to the poor have been greatly inflated.  According to 
a fall 2005 study by the World Bank, in a "likely Doha scenario" of 
reforms, developing countries would gain a mere $16 billion in ten 
years. That's a miniscule 0.16 percent of developing-country gross 
domestic product, or less than a penny a day per capita. The poorest 
billion people are projected to increase incomes by a mere $2 per 
year. That's why it is so heartbreaking to see "the poor" being 
invoked to sell the project of massive corporate expansion of the Doha agenda.

Yet the 2005 World Bank study, though less unrealistic than that 
agency's previous studies, is extremely inadequate, for it does not 
factor in many costs that the WTO regime imposes on developing 
countries.  It fails to account, for instance, for the negative 
impact of corporate patent monopolies under the WTO's "Trade-Related 
Intellectual Property" agreement, which force the poor to pay vastly 
increased prices for access to life-saving medicines.

Some estimate that these costs to developing countries are far 
greater than any alleged gains from liberalization.  For example, a 
recent United Nations Conference on Trade and Development (UNCTAD) 
study predicts that the losses in tariff income for developing 
countries under Doha could range between $32 billion and $63 billion 
annually. This loss in government revenues  the source of 
developing-country health care, education, water provision, and 
sanitation budgets  is two to four times the mere $16 billion in 
benefits projected by the World Bank.

Africa, the least developed region, will be one of the most prominent 
victims should the round be concluded successfully.  Summing up the 
findings of other recent research from the Carnegie Endowment, the 
European Commission, and the Food and Agriculture Organization (FAO), 
Aileen Kwa of Focus on the Global South points out that "the majority 
in Africa will be faced with losses in both agriculture and 
industrial goods liberalization. Even if agricultural export markets 
were open to Africa, the majority of African farmers  subsistence 
farmers  will not be in a position to compete. In addition, they will 
lose through having to open their domestic markets in the 
negotiations. The poorest countries in Africa will be worst hit  many 
are LDC countries in Sub-Saharan or East Africa."

Breaking out of the WTO Paradigm

In sum, not only do the economic costs of a potential Doha conclusion 
clearly outweigh any projected benefits to the poor; the loss of 
policy space for developing countries  to create jobs through 
industrialization, guarantee public services, and protect farmers and 
food security  would be tantamount to kicking away the ladder of 
development, to use the image of Cambridge University economist Ha 
Joon Chang, and prevent developing nations from using the very tools 
used by developed nations to pull themselves out of poverty.

So clearly detrimental to development is free trade that a recent 
study of the United Nations Developing Program (UNDP) advised poor 
Asian countries to do what Japan and South Korea did successfully: 
protect key industries with tariffs before exposing them to foreign 
competition.  To promote development and reduce poverty, governments 
should be encouraged to increase spending on health care, education, 
access to water, and other essential services, not pressured to sell 
them off to foreign corporations for private profit.

Trade can be a medium of development.  Unfortunately, the WTO 
framework subordinates development to corporate-driven free trade and 
marginalizes developing countries even further.  It is time to cease 
entertaining illusions about the alleged beneficial effects on 
development of the Doha Round. The collapse of the Doha Round will be 
good for the poor.  With today's unraveling of the WTO talks, the 
task should now be to shift to creating alternative

*Walden Bello is executive director of Focus on the Global South and 
professor of sociology at the University of the Philippines. www.focusweb.org

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     Begegnungszentrum fuer aktive Gewaltlosigkeit
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