Opinion: WTO Talks Collapse, by Barry Coates, Executive Director of Oxfam New Zealand

It’s déjà vu all over again -- Dominion Post, August 1, 2008

by Oxfam New Zealand's Executive Director, Barry Coates

Big news this week – World Trade Organisation (WTO) talks collapsed. Sounds familiar? Unfortunately, such collapses in WTO Ministerial meetings have become all too common. Virtually every deadline set for negotiations in the current trade round has been missed. Over the past few days, much of the commentary from Trade Ministers has been about ‘getting back to the table’. But more of the same won’t work. It is time to change the menu.

Everyone knows international trade negotiations are hugely important but the welter of acronyms, technicalities and trade diplomacy makes it virtually impossible to understand what is actually going on. So most people were left a bit confused when the latest attempt to agree a deal in the WTO collapsed this week because of a lack of agreement on the single issue of ‘agricultural safeguards’. For most observers of trade negotiations, this seems a minor straw to break a large camel’s back.

To understand the context, it is useful to recall the recent history. The WTO’s Ministerial meetings have collapsed in 1999 (Seattle), 2003 (Cancun) and this week (Geneva). The core issue in each of these collapses has been whether the proposals on the table will make trade rules fairer to the poorer countries.

In between the acrimonious meltdowns was an agreement in December 2001 (in Doha) to start negotiations. The agenda for a “development round” was oriented towards tackling the main distortions in trade rules, particularly the subsidies and tariffs used by the USA, EU and other rich nations to protect their farmers. Such negotiations are obviously hugely important to New Zealand farmers, as well as to the 97% of the world’s farmers who live in developing countries.

However, as usual in trade negotiations, the devil is in the detail. Once the negotiations started they became much more about extracting concessions from the poorer countries to pay the price for agriculture reform. The latest chapter in the saga was played out over the past two weeks in Geneva.

The European Trade Commissioner, Peter Mandelson, demonstrated his usual media saviness early on in the first week, announcing a ‘new improved’ offer to open Europe’s markets to agricultural imports by 60% rather than 54% as previously suggested. It didn’t take much interrogation to reveal that the EU’s offer had not in fact improved at all, but had only been redefined by adding in tropical products to the calculations.

Next, it was the US’s turn. Its offer was, at least, a genuine improvement on its previous position, albeit from an unimpressive starting point. The US Trade Representative, Susan Schwab, said she would cap trade-distorting US farm subsidies at US$15bn. This sounded like a concession, compared to the current ceiling of $48bn. But the offer is far higher than the US is currently spending on highly trade-distorting payments to farmers. So its supposedly generous offer would allow it to almost double the existing system of payments, as well as to increase other forms of allowable (but still trade-distorting) subsidies.

Developing countries were asked to pay a heavy price for these largely cosmetic reforms, including deep cuts in tariffs on imports of industrial products. This is a clear case of the richer countries saying: ‘do as we say, not as we did’. Cambridge Economist, Ha Joon Chang, has published compelling work on why developing countries need to maintain tariffs, showing how the rich and emerging countries used strategic trade policy to grow their industries when they were industrialising. At stake are opportunities for the poorer countries to develop their own industries and employ their growing numbers of young people.

However, the proverbial straw that broke the camel’s back in negotiations last week was that developing countries were also being denied the flexibility to protect the livelihoods of their small farmers and ensure food security. The arcane-sounding ‘Special Safeguard Mechanism’ is designed to protect farmers against surges of imports, particularly important since the US, EU and others are able to subsidise their farm exports. This sounds a minor issue, but the livelihoods of millions of small and peasant farmers are at stake.

In previous trade rounds such negotiations problems have been solved by getting the US and EU together, hammering out a deal and then persuading others to sign up. But the world has changed. The tectonic plates of our global economy have been reordered. India, China, Brazil and other major developing countries will not roll over. Nor will the smaller and vulnerable countries.

This collapse does not signal the end of multilateralism or the death of the Doha round. It is clearly important for both developing countries and New Zealand to have multilateral rules to avoid the ‘spaghetti bowl’ of overlapping and inconsistent bilateral and regional trade deals. New Zealand plays a disproportionately important role in these negotiations – not only were they started under Mike Moore, then Director-General of the WTO, but our WTO Ambassador, Crawford Falconer, has played a key role as chair of the agricultural negotiations. If we want a deal, and an equitable deal, it is time we and other richer nations accept that ‘development’ must be added back into the Doha Development Round.

Article type: 
Press release