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TRADE: Realpolitik Takes Over

David Cronin

BRUSSELS, Jul 21 2008 (IPS) - When a new round of world trade talks was launched in Doha almost seven years ago, there was no shortage of rhetoric about the need for global cooperation to bring tangible benefits for the poor and the vulnerable. "International trade can play a major role in the promotion of economic development and the alleviation of poverty," noted the official declaration issued by the World Trade Organisation as its conference in the Qatari capital concluded.

As ministers and officials representing some of the key players in the world economy prepare for a meeting aimed at reviving the often troubled Doha round in Geneva Jul. 21, the lofty ideals contained in at least part the 2001 declaration are being traduced by Realpolitik.

Rather than being willing to offer concessions to poor countries, the European Union and the U.S. have decided to leave their systems for subsidising agriculture largely intact, while demanding that poor countries dramatically reduce the taxes that they levy on imports of industrial goods. Even though such tariffs are designed to allow those countries to protect jobs and build up domestic industries free from the full rigours of external competition, the EU is calling in Geneva for many of those countries to commit to far-reaching liberalisation.

No sector should be cosseted, according to Peter Mandelson, the European commissioner for trade. "I don't think this is an excessive or unreasonable ask from us," he added.

Anti-poverty campaigners see things very differently.

"The European Union's representatives still have their mouths full with talk of development and so forth," said Marc Maes from the Belgian organisation 11.11.11. "Yet they are telling themselves that South Africa, Argentina and India are no longer developing countries. This is very strange. Of course, India is very large but it is still a relatively small economy and a relatively small trading partner. The share of Belgium in world trade is still much more than India and Brazil combined, and we are talking about a population of 12 million, not 1.5 billion."

Ministers and officials gathering in the 'Green Room', as the meeting venue at the WTO's lakeside headquarters is known, will mull over two lengthy and highly complex documents on agriculture and trade in manufactured goods (the second category is labelled NAMA, or non-agricultural market access, in diplomatic parlance).

Under the NAMA proposals, poor countries are being asked to undertake the deepest cuts to tariffs that have ever been on the agenda at international trade talks. While rich countries have been adamant that such reductions must occur, many poor countries have been resisting them and have negotiated a wide range of exemptions.

Such exemptions notwithstanding, many campaigners believe that the proposals remain skewed in favour of the wealthy.

"Developing countries are still being pressed to open up their markets, despite the risks involved, while rich countries fail to address their own farm subsidies," said John Hilary, director of the British organisation War on Want. "If the deal on the table goes through, millions of the world's most vulnerable people stand to lose their jobs and fall into poverty. Ministers should abandon the talks before they cause long-term damage to the prospects of the world's poor."

On agriculture, the EU has previously entered into commitments to scrap its much maligned export refunds – payments officially designed to help farmers sell their goods abroad. Yet it has not had to tackle so-called domestic subsidies, which comprise the bulk of its 53 billion euro (84 billion dollars) per year Common Agricultural Policy.

Though not considered trade-distorting under criteria set by the WTO – now headed by Pascal Lamy, a former European commissioner – such subsidies allow European farmers to sell goods at prices with which their counterparts in poorer countries cannot compete. They have been blamed for contributing to a surge in subsidised imports in many parts of the world, with devastating consequences for poor producers.

The U.S. has similarly been able to hold on to its 'domestic' subsidies; the latest farm bill offers the possibility to increase support for farmers even further. This is despite calls from India that the U.S. slash its annual farm subsidies from 55 billion dollars to less than 16 billion dollars, while the EU cuts its subsidies by some 70 percent.

A new analysis by the Geneva office of the Institute of Agriculture and Trade Policy suggests that the opportunity afforded by the Doha round to ensure that trade improves the lot of the poor has been squandered.

"The Doha round in 2008 is radically different from the one envisaged in 2001," said the study's author Carin Smaller. "The latest negotiating texts on agriculture and manufactured goods are a complicated mess, reflecting a narrow set of commercial interests rather than a vision for how to reform the WTO. The ideological obsession with trade liberalisation, which drives the overall imperative of agreeing a round of agreements, coupled with countries' deepening concern that trade liberalisation might not be so great after all, at least not for all countries and all sectors, has given the negotiations an almost farcical bent."

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