Saving Doha (and the WTO)
Friday 16 December 2011By Dr. Adrian Flint, University of Bristol and Christ
The tenth anniversary of the start of the Doha Round rolled by in November 2011.
The negotiations, which were supposed to usher in a restructuring of the global trading system in a manner that was to be of benefit of developing countries, have hit the buffers. The reality is that the completion of the Round looks increasingly unlikely.
This could be catastrophic for developing countries. The failure of the Doha Round talks has, in some respects, demonstrated the growing influence of developing countries within the WTO. No longer, it is clear, will poorer countries simply accept what has been put in front of them.
Stymied in the WTO, the EU and the US have sought instead to act far more unilaterally with respect to trade issues, side-stepping the constraints imposed upon them within the institution. The problem for developing countries is that, outside the confines of the WTO, the EU and US have had the ‘space’ to act far more aggressively in pursuit of their goals.
So, perversely, while developing countries have achieved a bigger voice within the WTO, they have arguably lost power as a result of its ensuing stagnation. Instead of negotiating new trade rules in a multilateral forum, the EU and US are progressively rewriting global trade rules through the imposition of bilaterally negotiated free trade agreements. For developing countries this shift in focus is alarming given that the EU and US insist on provisions that go way beyond what they could ever have achieved in a more democratic forum such as the WTO.
These bilateral agreements are contain WTO+ (provisions which are covered by the WTO but which go beyond current prescriptions) or even WTO-x (provisions that are not actually covered by the rules of the WTO such as environmental and labour standards) elements. Were the WTO to fail as an institution, developing countries would be exposed to a trade model based purely on old fashioned power politics.
The EU makes much of the fact that it is, collectively, the world’s largest aid donor, providing nearly half of all official development aid meted out between 2004 and 2010, and dispensing nearly €54 billion in development aid in 2010 alone. However, this altruism comes with strings and an embedded agenda. While it is far from clear that the ongoing recourse to bilateralism in trade negotiations is in the best interests of poorer countries, such shifts are certainly in the best interests of the EU.
The reasons are largely to do with matters of regulation and the establishment of European norms as the international standard. Increasingly, the EU (and the US) has become interested in shaping and dictating the regulatory environment. Frustrated by developed countries’ failure to gain the necessary ground at WTO negotiations, Deputy United States Trade Representative Michael Punke has argued that, with respect to the completion of the Doha Round, ‘no deal is better than a bad deal’.
This might be true for the US (and EU), but for developing countries, a bad deal is in actual fact better than no deal if it saves the WTO and the protection it provides. Without an agreement on Doha, the WTO is in danger of becoming irrelevant - even the anti-globalisation movement appears to have lost interest in the institution, with the running battles with police, rioting and teargas that epitomised summits like that of Seattle in 1999 now seemingly part of history. From a developing country perspective, this is potentially dangerous and the changing nature of the international trading system, where might is increasingly right, shows why.
What the EU and US are increasingly achieving, via their every proliferating web of free trade agreements, is a global trading system which is tailored to their needs. Through these agreements they are able to insist upon intellectual property rules more stringent than those demanded by the WTO, tariff cuts beyond that which is required, and agreements on rules surrounding investment, competition, public procurement and services. Other regulations woven into these bilateral trade agreements include aspects such as environmental and labour standards, corruption and elements of ‘good governance’. For those sceptical of free trade agreements, such additional measures have everything to do with protectionism and nothing to do with trade. It is for this reason that something must be salvaged from Doha.
It is evident, when one looks at the growing influence of developing countries within the WTO, that the latter is a far safer environment for developing countries: rules-based not power-based. In trade terms, countries like Brazil, China, India and South Africa attract most of the headlines, but this obscures the fact that many poorer countries have significantly improved their position inside the WTO.
Donna Lee and Nicola Smith argue that some of the delay with regard to Doha can be put down to small state activism, maintaining that ‘through the formation of a range of alliances, small developing states have become central to the process and form of multilateral trade negotiations’ and that by ‘raising their collective game in the WTO, small developing states have shifted from being mere objects of trade talks to being subjects in trade negotiations’. While they conclude that asymmetries in power still mean that the EU and US cannot be forced into action within the WTO, developing country activism has meant that the relationship is no longer a one-way street.
Crucially, the WTO allows for smaller countries to coalesce around important issues. Furthermore, in order facilitate meaningful negotiations, the WTO provides logistical support to poorer countries, helping the latter develop their technical and administrative capacities.
While not wanting to overstate the position of poorer countries within the WTO – they remain significantly under-resourced, capacity is frequently lacking, coalitions are frequently tenuous, and internal asymmetries within coalitions are clearly evident – their combined voice in multilateral talks has the potential to be ‘louder’ than when diffused across the free trade area dominated global ‘spaghetti bowl’. T
he loss of the WTO as a potent forum would undermine all the gains made by developing countries over the past decade within the institution. After all, there is far greater safety to be had in numbers. Changes to the fabric of the global economic system need to be negotiated in an open form, not imposed by those most able to inflict their preferences. The proliferation of free trade agreements that has been witnessed post-2000 should provide developing countries with a sobering insight into the alternative global system hovering on the horizon; a system determined by asymmetries in power rather than one which is rules-based.
Yes, the WTO is far from perfect, suffering indisputably from its own form of democratic deficit. However, it does offer a more attractive alternative to the increasingly muscular bilateralism that is currently on offer. Talk of development, partnership, and ‘special relationships’ is all very well, but there is some truth to the claim that, for the EU, free trade areas remain an end in themselves, rather than a means to an end. With every successfully-negotiated free trade agreement comes an increased acceptance of the world as the EU would like it to be – one in which its regulatory framework is the norm.
Poorer countries need to ensure that Doha is concluded, because a failure to do so will only undermine further their position in the global economy.