WTO talks: Heading for another Potemkin agreement

Published: 14 March 2006

By Jeremy Hobbs, Executive Director, Oxfam International

This weekend trade ministers from the US, EU, Brazil, India, Japan and Australia will meet in London to test whether there is consensus among the key actors to move the faltering World Trade Organization talks to a conclusion.

Developing countries are holding out for what they were promised: an end to dumping, more access to rich countries’ farm markets, flexibility to use agricultural and industrial tariffs to build up their industries, and the right to opt in or out of talks to open up the services market.

Developed countries are trying to get as much access as possible to the emerging markets of India, Brazil and China, while retaining most of their agricultural subsidies in one form or another. As one developing country minister put it, ‘They want us to make concessions before they will stop doing things which are either illegal or unfair.’

On the face of it, the talks are going much better than they were in the lead up to the Hong Kong Ministerial Meeting, or at the meeting itself, where WTO Director General Lamy, looking as exhausted and unwell as the talks themselves, pronounced grimly that there had been no success but no failure either.

Since then Lamy has tried hard to revitalize the negotiations, helped by looming national political deadlines. But his efforts may not be enough to deliver the 2001 promise of a development agenda, offered as an incentive for reluctant developing countries to agree to a new round of negotiations.

Without substantially new offers from the key parties it is hard to see how significant progress can be made. The likelihood is we will get a very limited agreement – ‘low ambition’ in WTO-speak. In truth, the ambition is more unequal, rather than low. The gains already secured by rich countries on industrial products represent huge concessions by the developing world, especially given the failure by the North to agree genuine and meaningful concessions in agriculture.

So it is crunch time for the round – and the odds are high that the much-vaunted development agenda will also be crunched, with developing country interests sacrificed to get a mediocre result that keeps the multilateral trading system alive – just. The EU and US are banking on Brazil and India caving in under the pressure, knowing they would prefer a multilateral deal in the WTO to more free trade agreements which are anything but free.

But unless the talks this weekend address the key developing country demands, it will be time to stop the pretence that the Doha Round is about development and admit that in the face of tough mercantilism, the developing countries are in the business of survival.

The ‘best’ scenario offered by people very close to the process is that there will be slight improvements in agriculture from the EU and US, a deal that pleases no-one on industrial goods (not enough access for rich countries, not enough protection for poor countries), and some progress on services.

This will create a framework for future rounds of trade liberalization. It will be spun as an historic success, a reaffirmation of the multilateral system, a fundamental coming together of rich and poor countries on global trade. ‘Breakthrough concessions’, such as the end to export subsidies, will be celebrated (even though it came three years later than needed).

Sadly, it seems there will be little of substance to justify the claims. The proposed cuts to EU and US agricultural subsidies sound impressive but they mainly lower ceilings rather than reducing actual spending and offer no guarantee to end dumping. Furthermore, the EU has made it clear that there is no room for more reform of its domestic farm subsidies – a huge blow for poverty reduction efforts at home and abroad.

Attempts to rewrite the negotiations mandate on services have so far failed. This suits many smaller developing countries that do not want to be forced into opening markets prematurely. But it is too early to tell whether the process agreed to in Hong Kong will lead to some developing countries having their arms twisted into doing just that, with potentially disastrous results.

That leaves industrial goods and a wrangle about how to ensure the principle of ‘less than full reciprocity,’ which in plain English means the developing countries should not have to open their markets as much as rich ones. Some proposals from rich countries have actually produced results that did the opposite. Now the negotiations are mired in pursuit of a formula that all can agree to.

This is really the nub of the battle; in exchange for very little, developing countries are being asked to make harsh tariff cuts and give away their ability to nurture fledgling industries. This goes against the lessons of history: all rich countries have used tariffs to promote development. Without the same opportunities, developing countries will never reduce their dependence on agriculture and grow out of poverty.

Given how far apart the key positions are, it is quite likely that the outcome will either be minimal or nothing. Amazingly just getting agreement may well be seen as the real achievement, rather than the agreement itself. But this would be a hollow victory, and a complete surrender on making trade fair.

Contact Information

For more information, please contact:
Amy Barry, Senior Press Officer, on +44 (0)1865 472254, or mobile +44 (0)7980 664397