"Participation Builds Unity"
"MADE IN AFRICA - FOR AFRICA"
"Participation Builds Unity"
"MADE IN AFRICA - FOR AFRICA"
PRESENTS
COLLAPSE OF THE DOHA NEGOTIATIONS
By Walden Bello*
JULY 2006
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(Courtesy Hassen LORGAT - (SANGOCO) South African NGO Coalition)
Why Today's Collapse of the Doha Round Negotiations is the Best Outcome
for Developing Countries
Bangkok, July 24
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 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
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
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
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
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.
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.
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.
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."
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.
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.
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