Implications for the Collapse of the WTO Talks in Geneva

 Opinion

August 2008

After the collapse of the World Trade Organization’s mini-Ministerial talks in Geneva recently many people are disappointed, with some suggesting ways to save the Doha negotiations or at least salvage some parts of it. I have been following the aftermaths of the failure of the talks with eagerness and I realize that many have expressed regret at the collapse, and rightly so.

The Doha round of world trade talks launched in Qatar in 2001 had a good intention; to lift millions of people in the poorest countries out of poverty through a new set of rules governing international trade. This is the reason for our concern as African Monitor over the recent failure of the WTO talks in Geneva. We are especially concerned about the failure of the much needed talks and the implications for the developing world, particularly Africa. Yet we are also glad that the developing world put their foot down so as to voice out against the tilted global trading system.

After seven years of negotiations and the recently ended grueling nine days of attempts at negotiating, the talks collapsed, again. They staggered over the issue of farm import rules, which allow countries to protect poor farmers by imposing an emergency tariff on stipulated goods should there be a drop in prices or a surge in imports. Neither the United States on one side, nor India and China on the other, would give in from their positions.

At the core of the collapse of the recent talks are the varied notions on liberalisation and the subsequent implications for development. The developed world seems to be for the idea that liberalisation will bring about development and that therefore the failure of the Round constitutes a blow for the poor. On the other hand, India, Indonesia, China and African countries insist that markets and trade need to be cautiously regulated and that a flexible approach to trade policy is vital so as to react to the development challenges as they arise. I could not agree with the later notion more. Clearly, obligatory trade policies and liberalising in accordance with a standard formula cannot accommodate this flexibility. In fact, liberalisation cannot be an end in itself.

For some of us who believe in trade justice, the talks reflected the changing balance of economic power as emerging nations in Asia and Latin America (and to an extent Africa), grow in influence. The talks marked the beginning of a fight for the right to protect millions of subsistence farmers from poverty over efforts by rich countries to promote sheer commercial opulence. Its time the WTO accepted that the vibrant journey of development calls for a system that allows for flexibility, plurality, diversity and change. At the same time the talks made us reiterate the call for aid for trade in Africa because the idea is to ensure that in the long term, the continent moves away from overdependence on aid.

What the developed world needs to bear in mind is the fact that the world is in a very different scenario than when the WTO was formed in 1995. At that time the unipolar world as evidenced by the Washington Consensus advocating for liberalisation and deregulation was still at the zenith. It has plummeted from its podium since. Today’s world calls for fairness and trade justice in all its aspects. The failure of the Doha talks can hence be seen as another blow to the crumbling consensus.

I also noted that immediately after the collapse of the talks, ministers from the U.S., European Union (EU) and Australia made statements about the huge loss that the collapse of the Doha Round would imply for the poor. The U.S. Trade Representative Susan Schwab was quoted saying, “it’s ironic that while there’s a global food crisis, these talks came down to how much and how fast countries should have a right to raise their tariffs”.

The entire world, but disproportionately Africa faces a number of challenges; climate change, high oil and food prices, poverty and escalating water stress. As such the developing world’s adaptation and mitigation tactics have extensive implications on how the various countries produce food and how they organise their industries and economies. It also has implications on how and how much the developing countries trade internationally. As such the how much and how fast was not far fetched because the developing world realizes that its successes in trade and economics and by extension in poverty alleviation highly depend on action from the developed nations; significant and fast action for that matter!

In a world where legitimacy, credibility, transparency, ownership and rights-based approaches are increasingly becoming buzz words and have taken center-stage, it is certainly sad that the failure of the talks happened principally as a result of the United States and others pinpointing the Special Safeguard Mechanism (SSM) as the sticking point of the entire negotiations. Most developing countries rightly wanted this mechanism to protect their farmers. A lot of people and entities from the West have purported to be for the overdue rights of the poor and to be champions of an end to poverty. Where were those supposed friends at the WTO when the issue of the poor farmers became a sticking point during the recent talks? I ask this because if they are serious about being friends of the poor people then they should know better, that the international trading system and how it treats the poor has a lot of implications for poverty eradication. One wonders if these so-called friends are really genuine partners because at instances like the WTO talks one would expect to see them practically running to the cause of the poor.

On the other hand, the failure of the talks in fact can be regarded as a victory because key developing countries stuck to their principles and defended the wellbeing of the poor in their countries. A good example was the insistence on effective safeguards for small farmers. The battle over the SSM which means allowing countries to increase tariffs to prevent flooding of agricultural markets demonstrated a more firm approach taken by most developing countries. A new world, which dismisses the notions of unipolarity and bipolarity, is dawning and the world is moving towards multiple centers of economic and political powers with implications for production and trade.

The issue of grassroots communities is also at the core of our concern. Through such mechanisms like the SSM, a poor farmer with a lot of potential in an African country certainly needs some kind of system to protect him/her from the harsh global market forces. This means that through the SSM for instance, the influx of foreign agricultural products particularly from the developed world is regulated and farmers in a country would not find themselves stuck with produce that they cannot sell but for which the market has been taken over by foreign forces.

The talks also made some of us reiterate our call for the complete revamping of the entire WTO.  This is because in many respects the WTO is characterized by  glorious declarations with little substance. This is evidenced by the fact that the current WTO has not lived up to its own mandate, which says that parties to the agreement recognize that “their relations in the field of trade and economic Endeavour should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand”. Instead of over-insistence on trade liberalization, the WTO should have as its nexus the realization of these benchmarks.

When the WTO comes back from its August break, most of us hope that the talks will continue with the resilience of the past. We also hope that the spirit will still be a vibrant one in which everyone expects a realization of justice in the global trade system. We also look forward to the talks not being dampened just because the United States will be preoccupied with its Presidential election because the new world order is one that does not revolve around the U.S.A. There has already been speculation that nothing will happen until the new US President and the new Congress settle in next year. We all hope that that will not be the case because life has to go on, no-matter what happens to a single country.