Trading places

At the beginning of this month, the World Trade Organization dodged a bullet by coming up with a last-minute face-saving "framework for negotiations" that saved the current round of world trade talks from complete collapse.

Too bad.

According to an August 2 mailing from Global Exchange,

[t]he basic deal which allowed the impasse to be broken was that rich countries have allegedly agreed to slash agricultural subsidies, in a trade off for poor countries lowering their industrial tariffs. However, the timeline and actual numbers of the negotiations are left for further study.

News reports said that negotiators described the 11th hour deal as "historic" but Larry Elliott, economics editor for the Guardian (UK) called that "poppycock."

What happened in Geneva this week was that the trade ministers from 147 countries faced up to the possibility that a fresh failure could scupper the round launched in Doha[, Qatar,] almost three years ago for good. They were prepared to sign up to a framework agreement safe in the knowledge that there will be plenty of chances over the coming weeks, months and probably years to carry on haggling. ...

Nothing significant is likely to happen for six months as a result of the US presidential election and the arrival of a new European commission. An agreement is at least two years away.

Which may well be to the good. Global Exchange says

Aileen Kwa of Focus on the Global South writes, "All in all, the text is a raw deal with the South. It is the makings of a Round that will be catastrophic for the poor." The basic premise of the Doha so-called "Development Round" was that the WTO would finally start to benefit developing countries. This premise has all but been abandoned. ...

What is clear is that the type of agriculture subsidies the rich countries (mostly the US, European Union, and Australia) have agreed to cut will still allow them to prevent many developing-country products from entering their markets. The framework does not sufficiently address the serious problem of dumping - allowing multinational companies to sell food at below-market prices on developing country markets - which is wiping out small farmers and undermining food sovereignty around the world. Real changes in US and EU farm policy are not likely to come until 2006, when these policies come up for revision in the respective governments.

That sentiment is echoed by Elliot, who says

[d]eveloping countries may have left Geneva encouraged that the US and the European Union have promised deep cuts in farm support, but they have little concrete yet to show for their efforts. Brussels and Washington are experts in obfuscation and delay, superb at extracting the maximum political advantage from the smallest of concessions. As Oxfam International noted, there are no cast-iron commitments and no clear timetable. The US says, for example, that it will do something about its subsidies to cotton farmers, but is vague about the what and when.

Meanwhile, as Global Exchange notes,

tariffs on industrial goods has long been an important tool for development to protect local industries and create income for developing states. ... Unfortunately, the tariff cuts in industrial goods the poor countries have agreed to in the framework will chip away at this key development tool, devastating developing economies and starving national governments of needed budget revenue. ... In addition, many natural resources will be opened up for privatization.

As Kevin Watkins, head of research at Oxfam, wrote in the July 29 International Herald Tribune,

[t]here is a Swahili proverb that says, "When elephants fight, the grass gets crushed. When elephants make love, the grass gets crushed."

Which means that, as usual,

secret meetings, bullying of poor countries by the rich, and a massive pressure campaign seem to be the tactics of the day - as the WTO lives up to its moniker of a Medieval institution....

That sentiment, too, is echoed by others. Pascal Lamy, the European Union's outgoing trade commissioner, has called it precisely that. Elliott goes even further:

Despite the mobile phones and the laptops, the way the WTO does business would have been instantly recognisable to the Catholic church of six or seven centuries ago. There is the way the talks are always veiled in secrecy, the way the rituals of negotiation are conducted in a language that few outside the hallowed walls can understand, the way that a small group of influential players hold the fate of the meeting in their hands.

Just as with the medieval popes, however, this is seen as the only way of keeping the show on the road. Europe was divided up into princedoms all of which shared the same faith and owed allegiance to the papacy. Now the world is divided up into princedoms that owe allegiance to free trade. Geneva has its own articles of faith and a court for prosecuting wrongdoers. Its aim, like that of Rome, is to embrace the world.

But while spiritual power rests in Geneva, temporal power resides in the capitals. ... Everybody pays lip-service to free trade just as they once did to Catholicism, but they spend most of the time at war with each other, seeking territorial advantage. The bigger you are, the more influence you wield. ...

The WTO is an institution where the membership acts in flat contradiction to its professed beliefs. It is an institution that encourages the rich and powerful to steamroller aside all opposition, if they can. And it is an institution where efficient policymaking runs smack up against democratic involvement. ...

With 147 members, the organisation can either be fully democratic or it can be efficient: it can't be both.

It's clear which direction the majors - primarily the "Group of 8" major industrialized nations, or G8 - prefer: Making the trains run on time. How efficient.

Footnote: Global Exchange points to one at least temporary victory, and it's not a small one.

Public Citizen notes, "Perhaps the most interesting element of the text is what is not included. After years of developing country and civil society opposition to a proposed broad expansion of WTO scope and powers, the contentious issues of investment, competition and procurement were omitted, and the text on the remaining expansion issue leaves out the degree to which its terms will be binding on WTO nations."

It ain't over 'til it's over. Any maybe not even then. Elliott ends this way:

Developing countries know that the US, Germany and Japan relied on protection rather than free trade in the early stages of industrialisation. They look at the way the west currently behaves with a mixture of envy and contempt. The Catholic church was in a similar position in 1500.

"What happened next," he says, "was the Reformation."