WTO Derailed At Cancun!

PROBABLY never before has the failure of a multilateral negotiation been greeted with such exultation as the farcical end to the WTO Ministerial Conference in Cancun. People from all over the world danced on the streets of Cancun as news came in that the conference had ended without the adoption of a substantive declaration. They celebrated at the spot which had witnessed the tragic suicide of a Korean protestor just four days back.

For days protestors from around the world had infiltrated the area near the conference venue and caused mayhem, blocking traffic, confronting delegates and being chased around by a bewildered army of private security, conscripts and military policemen. Finally, on Saturday, these protestors had something to really cheer about. The evil empire that the WTO had come to symbolise had been stopped in its tracks. To understand the massive upsurge of jubilation at the final outcome of the WTO summit, not just in Cancun but in cities and towns across the globe, it would be necessary to understand how deeply hated the WTO has come to be.

HOLLOW CLAIM OF “FREE TRADE”

The WTO came into existence in 1995, as a result of a decade of negotiations. The WTO was formed with the stated objective of establishing “free trade” on planet earth. As the diehard votaries of the WTO never tire in telling us, “free trade” is a “win-win” situation for everybody – everybody is supposed to gain from liberalised trade. Eight short years after the WTO agreement was signed, people all over the world are realising how hollow this claim is. With each passing day it has become clear that the WTO stands, not for free trade, but for free exploitation of the poor countries in this world and the poor wherever they live. “Free Trade” has come to mean protection of developed country markets and the opening of developing country markets.

The first rumblings against the WTO reached a crescendo in Seattle four years ago when the ministerial meeting collapsed amidst street protests and rioting. Two years later, the developed countries tried to salvage matters in Doha in the backdrop of the so-called “war on terror”. In Doha, a modicum of developing country unity prevented the full scale launching of a new round that would link more issues to world trade. In Cancun, the unity of developing countries reached new dimensions. It was heartening to see developing country delegations refusing to buckle down to pressures from the United States and the European Union.

WTO: A HATED INSTITUTION

To understand why the WTO is such a hated institution today, it would be necessary to go back in time to the mid eighties when the developed countries, led by the US, hammered together an agreement that linked trade with issues that were not hitherto considered part of trade negotiations.  The attempt was clearly to use the carrot in the form of enhanced trade opportunities and the stick in the form of the threat of retaliatory trade sanctions to make developing countries change domestic policies that threatened the economic hegemony of the developed countries. The WTO, thus, brought within its ambit issues such as Intellectual Property Rights (Patents, Copyrights, etc.), Services including vital social sectors such as health and education, and agriculture. Developing countries were told that if they opened up their economies they would reap the benefit of accessing the markets of developed countries. But very soon it became apparent that the WTO was forcing the tearing down of all barriers in developing country markets, while the developed countries continued to protect their own markets.

The agriculture sector is a stark example of how the WTO rigged its rules to favour the rich and the powerful. Traditionally, the way the agriculture sector was protected differs among developed and developing countries. The developed countries protected their agriculture by providing subsidies, both in cash and through other incentives, to their farmers. Further subsidies were made available if the produce was exported. Developing countries, not being able to provide such subsidies, protected their agricultural market by imposing high duties on imports (tariff barriers) and through quantitative restrictions – that is by specifying a ceiling on the amount of each product that could be allowed to be imported. The WTO agreement was so designed that it targeted the protections of developing countries (by removing quantitative restrictions and reducing import duties) while allowing the developed countries to maintain their subsidies. Even the modest reductions that the developed countries were to make in their subsidies were not adhered to in the last eight years. As a result we have a situation today where each farmer in the US receives a subsidy that is seventy times the income of an average Indian farmer!

Similarly, in the area of textiles, though the US was mandated to bring down its protection over a period of ten years, nothing substantial has happened.  On the other hand developed countries have been repeatedly threatened and bullied to change their domestic laws to suit the WTO agenda – as has happened in the area of Intellectual Property Rights. In the latter case countries like India have been forced to change their patent Laws and thus lose the ability to produce cheaper versions of new drugs that are introduced in the market.

The results of these iniquitous system have been disastrous. The share of global trade enjoyed by developing countries has actually gone down in the past eight years. Farmers in these countries are facing competition from highly subsidized products from the developed world.

Not content with even this, in Doha the US and the EU had railroaded a declaration that would start negotiations on newer areas like Investment, Competition Policy, Trade Facilitation and Transparency in Government Procurement (the so called Singapore issues). These areas were designed to further deepen the penetration of developing country markets by Multinational Corporations.

This is the real background in which the Cancun meeting was held. In Cancun the negotiations broke down when the US and the EU counterposed the issue of reduction in their agricultural subsidies with the issue of starting negotiations on the Singapore issues. The sheer audacity of this proposal is really breathtaking. The EU and the US had been mandated by the 1995 WTO agreement to reduce their subsidies. All this while they have refused to do so. In Cancun they said that they would reduce these subsidies only if the new Singapore issues were taken up for negotiations.

RARE SHOW OF UNITY

What the US led coalition had not bargained for was the rare show of unity amongst the developing countries that was evident in Cancun. Led by what came to be known as the G21 (group of 21 countries – including Brazil, India, China, Malaysia, South Africa) the developing countries remained united till the end. The resolve of the developing countries drew enormous strength from the massive worldwide campaign that had, for an year, rallied people on the slogan of  “Derail the WTO at Cancun”!. Their basic demand was that the WTO should first ensure that the developed countries honour their commitments before any new issues are discussed. Both sides refused to give in, the meeting ended without a formal declaration and a future work programme.

The small leeway that the developed countries had made in Doha by starting discussions on the Singapore issues, after the collapse in Seattle, is now dead and buried. This is a major victory for the developing countries. But it would be foolhardy to believe that this is a decisive victory. The world still remains the same which stood mute while the US and UK marched into Iraq and devastated that country. This may be a small setback, but imperialism under the US leadership will strike back.

The US has already made its intentions clear. The US Trade representative Robert Zoellick said at the post conference press conference: “The U S trade strategy, however, includes advances on multiple fronts. We have free trade agreements with six countries right now. And we’re negotiating free trade agreements with 14 more. All our free trade agreement partners, some quietly, some more actively, tried to help over the course of the past couple of days. The results are very revealing to me, that over the past few days, a number of other developing countries, that are committed to opening markets and economic reforms, expressed their interest in negotiating free trade agreements with the United States”.

What Zoellick basically said is that if the WTO does not allow us to ride roughshod over other countries we will do so by negotiating with individual countries or smaller groups of countries. Through agreements such as the NAFTA (North American Free Trade Agreement) and the FTAA (Free Trade Agreement of the Americas) the US is already seeking to impose conditions on its neighbouring countries that are far more onerous than what is demanded of by the WTO. The opposition to such arm twisting, in order to be effective, would require a strengthening of the developing country unity that was seen in Cancun. The dark days are definitely not over, but there is the hint of a chink in the armour of imperialism.