Another death threat for the “Doha round”

Having followed the chequered progress of the “Doha round” of talks all these years - not always understanding the specifics of the disagreements but never losing sight of the general  intransigence of the developed countries - I am not surprised that its latest instalment collapsed unceremoniously in Geneva late last month. So many things have overtaken the talks as the global economy stumbles on its way that the event has merited only passing mention in the media. In any case, the mainstream Western media have never shown much interest in the talks even though it affects every single country in the world. They turn their attention to the talks only when there is sensational bickering between the EU and US as to who is to blame for their collapse.

With my almost non-existent exposure to what policymakers and economic observers in Mongolia think of the world outside their two neighbours and some preferred third neighbours, I fear the mention of Doha rings not the faintest bell here. Yet it should, for the history of the Doha round has been filled with double-talk, with rich countries often demanding poor countries concede ground in unfair ways, with poor countries occasionally taking a strong stance against these demands, and the EU and US in particular driving for more open markets in poorer countries, sometimes even blaming the poorer countries for failed talks, or calling deals criticized as bad for the poor, as good for the poor. All this concerns all countries.

Commodities-export-obsessed Mongolia should take note as agriculture in its broad meaning is still the means of livelihood for a majority of its people and this is not going to change even when both Tolgois are fully operational. I can only quote, and I shall do it in some length, what Kamal Nath, an Indian minister who led his country to these talks for many years, said after their ‘collapse’ in 2008. He said, “This Development Round… (was) to demonstrate new opportunities for developing countries, primarily market access of developing countries into markets of developed countries. This Round was not for perpetuating the flaws in global trade especially in agriculture, it was not to open markets in developing countries in order for developed countries to have access for their subsidized products to developing countries. We say the Round should correct the structural flaws and distortions in the system, and there should be fair trade, not only free trade. They [the US] say, ‘We want market access and only if we get it the way we want it can we correct the structural flaws.’ There is no equity in that argument.” 

If the talks were really to collapse after the recent stalemate in Geneva it will be the first failure of a trade round since the General Agreement on Tariffs and Trade, the forerunner to the WTO, was founded in 1947. At the same time, it is not unexpected as the talks have repeatedly foundered on disagreements over agricultural and industrial goods tariffs, without even seriously addressing a host of other potentially controversial issues.
The Doha round, which took its name from the city in Qatar where it was launched in December 2001, has in effect been in stasis since the last ministerial meeting collapsed in July 2008. A growing number of WTO members have been privately accepting that the round will never be completed in anything close to its current form, though many continue to pay lip service to the idea of a comprehensive deal. But now, according to what I read in The Financial Times, the chances of salvaging even a minimal deal receded yet further as the US, EU and Brazil clashed over rules to restrain cotton subsidies and help the poorest countries.

Brazil rejected calls for a small agreement planned for December to expand to include agreements on liberalising industrial goods trade and for a “tariff standstill” to keep current import duties in place. It made a statement to the trade negotiations committee that did not name names - such statements rarely do - but was clearly aimed at the US and the European Union. Washington, which faces fierce domestic opposition to reforming its own cotton subsidies, has argued that a stand-alone package must also contain cuts in tariffs on “environmental goods” such as solar and wind power equipment. The EU argued that governments should commit to holding import tariffs at current levels until a full agreement could be worked out. But Brazil said, “Trying to reintroduce these market access outcomes through the back door… via environmental goods or proposals of tariff standstills will undoubtedly ensure yet another stalemate.”

WTO Director-General Pascal Lamy, whom many developing countries adore as an ineffectual angel, had earlier proposed a deal around cutting cotton subsidies and extending complete “duty-free quota-free” (DFQF) trade access to the least-developed countries, the world’s 49 poorest economies. The US, whose own cotton subsidies have been declared illegal by the WTO, has argued that other countries, notably China, have refused to say what their own cotton subsidies are. Washington also says a DFQF deal for the least-developed countries would cut across the US’s current trade preference programme for African nations.

The gradual realisation that the “Doha round” was drifting on to the rocks had led to a scramble to salvage something from the wreck. But in the event, even a plan for a simple standalone agreement to give more trade privileges to the world’s poorest countries foundered on a clash of interests similar to what had frequently before brought the round to a halt. The US cotton lobby remains so powerful that Washington has still failed to comply with a WTO ruling against US cotton subsidies obtained by Brazil in 2004. Rather than reform its subsidies, the US is in effect paying protection money, giving Brazilian cotton producers $147 million a year in return for Brasнlia not imposing trade sanctions on the US.
Moreover, extending trade preferences purely to the LDCs is politically fraught, and not just inside the US. Such a move would give some very poor countries with highly competitive textile industries, such as Cambodia and Bangladesh, a free run at the US clothing market. Such low-cost competition provokes opposition not just from the remnants of America’s own garment industry but, trade officials say, from nations that already benefit from the US’s existing programme, the African Growth and Opportunity Act - which includes both LDCs such as Zambia and slightly better-off African countries such as Ghana.

Global humanitarian interests demand the WTO’s transformation from being “an instrument of corporate monopoly over seed and food to being a regulator of corporations to prevent such monopolies” in the words of activist Vandana Shiva. We tend to forget that half of humanity is farmers, and in most developing countries they are the majority of the population. We cannot put at stake their livelihood security.  She has shown how the steady rise in food prices owes much to WTO rules including the removal of Quantitative Restrictions. “There would be no food riots if trade liberalization had not destroyed the food self sufficiency of independent sovereign countries and had not violently integrated poor country economies to rich country economies, and had not brutally linked the access of the poor to food to corporate greed, corporate monopoly and corporate profits based on speculation” Shiva has said.  While millions go hungry, the corporations have doubled their profits. Farmer’s livelihoods and people’s food rights will only be protected it QRs are reintroduced and corporate monopolies are reined in.

This is not the place to analyse why the Doha round will never be completed in anything like its originally intended form, but so intertwined are its issues that simplifying it brings complexity of its own. Even then, one unravelling is easy; Mongolia will be in peril if its pins all its hopes on commodity pacts and ignores what is happening on other fronts that are closer to imperatives of subsistence.