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TRADE: ''Doha Collapse Won't Mean Suffering for The Poor''

Analysis by Aileen Kwa

GENEVA, Aug 6 2008 (IPS) - At the heart of the collapse of the World Trade Organisation’s Doha Round last week are the different opinions on liberalisation and its relation to development. Developed countries promote the idea that liberalisation will bring about development and thus that the failure of the Round constitutes a blow for the poor.

Immediately after the collapse of talks, ministers from the U.S., European Union (EU) and Australia made statements about the huge loss that the crash of the Doha Round would signify for the poor.

Said U.S. Trade Representative Susan Schwab, ‘‘it’s ironic that while there’s a global food crisis, these talks came down to how much and how fast countries should have a right to raise their tariffs’’.

Will the poor suffer because of the way the Doha talks ended? The failure of the talks can in fact be regarded as a victory because key developing countries were able to stand by their principles and to defend the interests of the poor in their countries. This included, for example, insisting on effective safeguards for small farmers.

The fight over the special safeguard mechanism (allowing countries to increase tariffs to prevent flooding of agricultural markets) illustrated a more nuanced approach taken by most developing countries.

India, Indonesia, China and African countries were saying that markets and trade need to be carefully regulated. A flexible approach to trade policy is critical in order to respond to the development challenges of the day.

A replay of the Uruguay Round of multilateral trade negotiations (1986 " 1994) was avoided. In the Uruguay Round, it was only after signing on the dotted line that developing countries started to question the fundamental imbalances central to those agreements.

If the Doha package of agreements had been submitted to, these imbalances would have been locked in and deepened, not eliminated or even reduced.

The world is in a very different place than when the World Trade Organisation (WTO) was formed in 1995. At that point the Washington Consensus advocating liberalisation and deregulation was still at an all-time high. It has fallen from its pedestal since.

Its failure can be seen in the fact that many African countries, despite implementing neoliberal structural adjustment policies to the letter, have de-industrialised in the last 20 years. The failure of the Doha talks is another blow to the crumbling consensus.

The WTO, with liberalisation at its core, is at a crossroads. It can attempt to amble on, paying no heed to the experiential realities of the majority of its members. Or it can take this opportunity to acknowledge that the dynamic journey of development requires a system that allows for diversity, flexibility and change.

Binding a country’s trade policy and liberalising in accordance with a standard formula cannot accommodate this dynamism. In fact, liberalisation cannot be an end in itself. Countries should liberalise only when it is of benefit to them.

What requires regulation at the multilateral level is countries’ responsibility for the effects of their actions on people outside their borders. This is where there is a huge gap in terms of global governance. Elections are nationally based. However, countries’ actions can destroy other countries’ industries, create unemployment and poverty.

Some call this ‘‘regulation of countries’ extra-territorial responsibility’’ or, in plain words, doing no harm to others. An example of this would be a system that disallows countries to export directly or indirectly subsidised agricultural products. The current WTO fails miserably in this regard.

Countries should be allowed to explore a diversity of trade policies, in as far as they are not harmful to others outside.

The current WTO has also not been faithful to its own mandate, which says that parties to the agreement recognize that ‘‘their relations in the field of trade and economic endeavour should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand’’.

Rather than the liberalisation of trade, the WTO should have as its bottom-line the attainment of these benchmarks.

To crown it all, Africa is being challenged by climate change, high oil and food prices, and increasing water stress. Our adaptation and mitigation strategies will have far-reaching implications on how we produce food and how we organise our industries and economies.

It will also have an effect on how and how much we trade internationally. We should be setting our sights on having low carbon economies and adjusting our production and trade accordingly.

A new world is already asserting itself. We are moving rapidly away from a unipolar or bipolar world towards multiple centres of economic and political powers, again with implications for our production and trade.

Can the WTO respond effectively and, if not, might it then fade into the shadows?

Analyst Aileen Kwa is the coordinator of the trade for development programme at the intergovernmental South Centre

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