Kelsey: Time To Rethink Failed World Trade Agenda

The collapse of the Doha round negotiations at the World Trade Organisation is cause for celebration by poor people and powerless governments around the world.

Such a statement is tantamount to heresy in New Zealand. For years we have been fed a diet of simplistic free trade rhetoric – the WTO is about freeing up world agriculture markets, New Zealand’s exports depend on agriculture, therefore the Doha round is critical to the country’s economic survival.

With the WTO Director General Pascal Lamy expected to announce the indefinite suspension of the Doha round of WTO negotiations formally in Geneva on Thursday, it is time for some more sober and informed reflection on what is really happening in the name of ‘trade’.

The Doha round began in the shadow of September 11, 2001. The governments of poorer countries were told by US Trade Representative Robert Zoellick that opposing a new round would be siding with the terrorists. The merger of US economic and foreign policy objectives has become more prominent in the years that followed. That arrogance and belligerence underpinned the US’s refusal to move in the back room discussions in Geneva on Sunday that saw the round collapse. It is mirrored by the self-interest of all the other major players who sit at the high table.

But the collapse of the Doha round is not simply because the ‘G-6’ have failed to strike a deal among themselves. The organisation itself is deeply flawed. The very idea that six of the most powerful exporting states in the world – the US, European Union, India, Brazil, Japan and Australia - should dictate an outcome to the other 144 WTO Members shows how untenable its ‘consensus decision making’ has become.

More importantly, the WTO’s rules are crippling poor people and poor countries. When pressure mounted for a new round of negotiations back in the 1990s, many Third World countries insisted it should revisit novel agreements they had signed in the Uruguay round without understanding the consequences. These included rules on foreign investment, intellectual property and services that allowed transnational companies to strip mine their natural resources and local economies and export the profits.

The major powers never intended to address those concerns. So in 2001 the representatives of poorer countries rejected attempts to name this a ‘Doha development round’. Claims to the contrary are a cynical deceit. Whenever poorer countries tried to make the rhetoric match the reality, deadlines passed or transparent buy-offs were tabled. As one negotiator summed up the ‘trade of aid’ package that was announced in Hong Kong ministerial meeting last year: “First they kill us, then they offer to pay for the funeral”.

All sorts of fanciful projections have been quoted to disguise this reality. Yet in December 2005 even the World Bank reduced its projections of the gains from a ‘successful’ Doha round to $96 billion, less than one-fifth of what it
predicted in a now-discredited 2003 report. Rich countries would secure four-fifths of those gains and the largest ‘developing countries’ most of the rest. A more sophisticated report from the Carnegie Foundation concluded the world’s poorest countries would lose under all scenarios. The tragedy is that even the smallest and poorest countries – most recently Tonga – have felt they have no choice but to join the organization on crippling terms.

The collapse of the Doha round should strip away the illusion that poverty and gross global inequalities can be fixed by fiddling with free trade rules.

We can expect the New Zealand government to respond to this crisis with a knee jerk response and frenetically seek to negotiate bilateral deals with anyone who will talk to it. That exercise is doomed to similar failure. Already a ‘spaghetti bowl’ of regional and bilateral agreements is imposing inconsistent and uneven obligations among richer countries, while poorer countries succumb to pressure and sign deals they cannot afford to deliver.
US moves to condition trade concessions in Africa and Latin America on endorsing US foreign policy show the intimate relationship between trade rules and military power in the world today.

Our government and other champions of free trade should treat the crisis now confronting the WTO as an overdue opportunity to rethink their flawed model of international trade rules and address the real questions of global poverty, inequality and war.

ENDS

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