[corp-focus] Celebrate, Don't Mourn, Collapse of WTO Talks

[robert weissman]

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Celebrate, Don't Mourn, Collapse of WTO Talks
By Robert Weissman
July 30, 2008

Predictably, the cheerleaders for corporate globalization are bemoaning 
the collapse of World Trade Organization negotiations.

"This is a very painful failure and a real setback for the global 
economy when we really needed some good news," said Peter Mandelson, the 
European Union's trade commissioner.

Even worse, says the corporate globalization rah-rah crowd, the talks' 
failure will hurt the developing world. After all, these negotiations 
were named the Doha Development Round.

“The breakdown of these talks is bad news for the world’s businesses, 
workers, farmers and most importantly the poor," laments U.S. Chamber of 
Commerce President Tom Donohue.

But don’t shed any tears for the purported beneficiaries of the WTO 
talks. If truth-in-advertising rules applied, this might have been 
called the Doha Anti-Development Round.

The alleged upside of the deal for developing countries -- increased 
access to rich country markets -- would have been of tiny benefit, even 
according to the World Bank. The Research and Information System for 
Developing Countries points out that Bank analyses showed a successful 
conclusion of the Doha Round would, by 2015, increase developing country 
income in total by $16 billion a year -- less than a penny a day for 
every person in the developing world.

The World Bank study, however, includes numerous questionable 
assumptions, without which developing countries would emerge as net 
losers. One unrealistic assumption is that governments will make up for 
lost tariff revenues by other forms of taxes. Another is that countries 
easily adjust to import surges by depreciating their currencies and 
increasing exports.

In any case, the important point is that there was very little to gain 
for developing countries.

By contrast, there was a lot to lose.

The promise to developing countries was that they would benefit from 
reduced agricultural tariffs and subsidies in the rich countries. Among 
developing nations, these gains would have been narrowly concentrated 
among Argentina, Brazil and a few other countries with industrial 
agriculture.

What the spike in food prices has made clear to developing countries is 
that their food security depends fundamentally not on cheap imports, but 
on enhancing their capacity to feed themselves. The Doha rules would 
have further undermined this capacity.

"Opening of markets, removal of tariffs and withdrawal of state 
intervention in agriculture has turned developing countries from net 
food exporters to net food importers and burdened them with huge import 
bills," explains food analyst Anuradha Mittal of the Oakland Institute. 
"This process, which leaves the poor dependent on uncertain and volatile 
global markets for their food supply, has wiped out millions of 
livelihoods and placed nearly half of humanity at the brink of hunger 
and starvation."

Farmers' movements around the world delivered this message to government 
negotiators, and the negotiators refused to cave to the aggressive 
demands made by rich countries on behalf of agricultural 
commodity-trading multinationals. Kamal Nath, India's Minister for 
Commerce and Industry, pointed out that the Doha Development Round was 
supposed to give benefits to developing countries -- especially in 
agriculture -- not extract new concessions.

The immediately proximate cause of the negotiations' collapse was a 
demand by developing countries that they maintain effective tools to 
protect themselves from agricultural import surges. Rich countries 
refused the overly modest demand.

And agriculture was the area where developing countries were going to 
benefit.

The rough trade at the heart of the deal was supposed to be that rich 
countries reduce market barriers to developing country agricultural 
exports, and developing countries further open up to rich country 
manufacturing and service exports and investment.

Such a deal "basically suggests that the poor countries should remain 
agricultural forever," says Ha-Joon Chang, an economics professor at the 
University of Cambridge and author of Bad Samaritans: The Myth of Free 
Trade and the Secret History of Capitalism. "In order to receive the 
agricultural concession, the developing countries basically have to 
abolish their industrial tariffs and other means to promote 
industrialization." In other words, he says, developing countries are 
supposed to forfeit the tools that almost every industrialized country 
(and the successful Asian manufacturing exporters) has used to build 
their industrial capacity.

In sum, says Deborah James, director of international programs for the 
Washington, D.C.-based Center for Economic and Policy Research, this was 
a lose-lose deal for developing countries. "The tariff cuts demanded of 
developing countries would have caused massive job loss, and countries 
would have lost the ability to protect farmers from dumping, further 
impoverishing millions on the verge of survival," she says.

By the way, it's not as if this is a North vs. South, rich country vs. 
poor country issue. Although there have been multiple lines of 
fragmentation in the Doha negotiations, the best way to understand 
what's going on is that the rich country governments are driving the 
agenda to advance corporate interests, not those of their populations. 
That's why there is so little public support for the Doha trade agenda, 
in both rich and poor countries.

Says Lori Wallach of Public Citizen's Global Trade Watch: "Now that WTO 
expansion has been again rejected at this 'make or break' meeting, 
elected officials and those on the campaign trail in nations around the 
world -- including U.S. presidential candidates -- will be asked what 
they intend to do to replace the failed WTO model and its version of 
corporate globalization with something that benefits the majority of 
people worldwide."

Robert Weissman is editor of the Washington, D.C.-based Multinational 
Monitor, <http://www.multinationalmonitor.org> and director of Essential 
Action <http://www.essentialaction.org>.

(c) Robert Weissman

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