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Vol.
XXVII No. 38
September
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WTO
Derailed At Cancun!
Amit
Sen Gupta
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 were 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.
