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Trade: WTO talks collapse again

NewsNotes, September-October 2008


On July 29, the World Trade Organization (WTO) negotiations in Geneva collapsed with no advances. In fact, negotiators have made little progress in the WTO process since 1999 in Seattle, when protestors outside negotiations and African representatives frustrated with the process were able to force an end to the discussions. Despite ministerial level negotiations in 2001, 2003, and 2005-08, fundamental conflicts continue.

After the failed talks in Geneva, Bolivian trade advisor Pablo Salon expressed the frustration of many Southern countries when he pointed to three areas that were unacceptable: the negotiating process, substantive conflicts and missing items in the negotiations, the same issues that caused previous negotiations to fail.

With 185 countries involved, the WTO negotiating process is incredibly complicated. To simplify, most noteworthy negotiations take place in what are called “green room” negotiations. In Geneva, only 35 countries were invited to the negotiations at all, yet even there, a smaller group of seven -- the U.S., European Union, Japan, China, Australia, Brazil and India -- was formed that held most of the significant negotiations. Although changes must be approved by all members of the WTO, countries not involved in the green room negotiations are strongly pressured to accept decisions made there without amendment. For years, even before 1999, countries not included in these green room negotiations have complained loudly about rules being established without their input.

Yet the substantive conflicts represent an even tougher challenge. A principal complaint from the global South is that the North is unwilling to make any real cuts in its agricultural subsidies while demanding large cuts from Southern governments. In Geneva, the U.S. offered to lower its maximum allowed level of domestic subsidies to $15 billion per year. But as it currently only spends a little over $7 billion on subsidies, this was basically a non-offer. In the meantime, the U.S. demanded that Southern countries lower their industrial tariffs by 40 to 60 percent while Northern countries would only reduce theirs by 25-33 percent. This goes completely against the proposed goal of the Doha development round of placing developing countries’ needs at the heart of the work program.

Another key conflict was over special safeguard measures (SSM) in agriculture that allow countries to temporarily restrict imports to protect native farmers from import surges that have decimated rural communities in the past. With the current food crisis, this theme was especially important to countries in the South, yet the U.S. demanded excessive usage requirements that would make it practically impossible for Southern governments to implement SSM. While this dispute played an important role in ending the negotiations, many, including India’s trade minister, Dr. Mari Pangestu, opined that the bigger issue was cotton. She said that the U.S. focused on the SSM issue in order to blame countries like India for being the holdouts on SSM, while avoiding negotiations on cotton where the U.S. is more clearly the holdout and would have been blamed for derailing the negotiations. In all WTO negotiations, countries jockey to not be seen as the one responsible for the negotiations’ failure.

Yet even if the negotiations had been successful, key problems facing the planet today would not have been addressed. In many ways the WTO continues to debate issues of the past. As the imminent end of cheap oil approaches and climate change increases due to fossil fuel use, the idea of negotiating to find ways to increase international trade is antiquated and illogical. Societies around the world need to be concentrate on how to localize their economies in preparation for a future of prohibitively high fuel prices. By securing rules that encourage increased trade, the WTO makes it even more difficult for governments to develop policies aimed at localizing food and energy production, even while this becomes a critical goal for all societies.

As Bolivian president Evo Morales said in an open letter to WTO members, “Foreign trade must be a complement to local production. In no way can we favor foreign markets at the expense of national production.” The reality of pending peak oil and climate change means that we should abandon the idea of increasing global trade and instead begin negotiations of how human society will be able to locally provide their basic necessities while assuring dignified lives for all.
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