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3 Aug, 2008

Developing Countries Thinking & Acting Smart, Learning to Hold their Ground

Originally Published:  3 Aug 2008

The collapse of the World Trade Organisation talks is yet another sign of shifting global geopolitics as developing countries become smarter, understand the tricks and traps, and stick together in the face of attempts to play them off and pressure them into accepting bad deals.

It is also a triumph for civil society movements which have been well ahead of the game in warning developing countries about the pitfalls of WTO membership, and its hidden agenda.

In a typical demonstration of the negotiating gambits that dominate global fora these days, the United States and a handful of other developed countries sought closure by agreeing to as little as possible, especially on key issues they knew to be at the heart of the developing countries’ demands, and then instantly blamed China and, to some extent, India for the collapse.

This has become pretty much a routine reaction.

In the climate change debate, global warming was being blamed on the growing emissions by factories of China, the same factories that have contributed to China’s otherwise hugely admired economic progress and liberalisation programme.

When oil and food prices began soaring, this, too, was blamed partially on China’s growing demand for both oil and food.

India, too, has been blamed, but more gingerly than China. These days, the U.S. and its allies are courting India big time, and don’t want to upset that country, especially in the light of the hugely controversial recent debate in India over kowtowing to the U.S. over the nuclear deal.

It’s called talking from both sides of your mouth. On the one hand, the developed countries and their legions of consultants laud the developing countries, especially China and India, for their economic progress. On the other, they blame that same progress and the voracious appetite for consumption amongst the growing middle-class millions for causing the rise in oil/food prices as well as global warming.

Developed countries absolve themselves of nearly all responsibility. Upsetting the status quo, which is extensively stacked in their favour, is not in their interests.

This is changing big time. Developing countries are standing their ground. While they realise the benefits of free and open trading markets, more importantly, they realise the value of creating fair and balanced trading systems.

Although the newfound unity of the developing world is a major step forward, it is even more critical to start jabbing back.

Take for example, the recent spate of sub-prime crises, discovery of fraud and skullduggery in high-powered accounting and consultancy companies, financial scandals and bailouts of companies like Fannie Mae and Freddie Mac.

These debacles, with potentially worldwide ramifications, are taking place in countries which, in 1997, deployed an army of pundits to ridicule us in Asia about our systems lacking transparency and accountability and being riddled with cronyism, corruption and nepotism.

Why are leaders of the developing countries not demanding equivalent transparency and accountability from the developed countries about the cronyism, corruption and nepotism in their ranks?

Fortunately, the pressure for transparency has at least led the WTO to put a huge amount of information on its website. The content, substance and tone of the various comments made by delegations before and after the talks reflects the key issues as well as the precise reasons why the talks collapsed. Here are some excerpts:

Mr. Kamal Nath, Minister of Commerce & Industry, India:

<> “Most of Indian agriculture is subsistence level agriculture. For us, agriculture involves the livelihoods of the poorest farmers who number in the hundreds of millions. We cannot have a development Round without an outcome which provides full comfort to livelihood and food security concerns in developing countries….. The poor of the world will not forgive us if we compromise on these concerns. These concerns are too vital to be the subject of trade-offs.

<> “The Rules issues are important pending business. I believe the Chair has recently acknowledged what everyone has known for a long time – that his proposals are deeply unbalanced. The issues involved are of very deep systemic concern to many countries including India. Anti-dumping rules have to be strengthened to provide sound under-pinnings for market access provisions.

<> “We are not discussing trade and commerce here. We are talking about livelihoods of millions of poor fishermen in India. We cannot accept disciplines which threaten these livelihoods or circumscribe our right to assist such fishermen. We had asked for a revised text before the Ministerial Meeting. We were not alone in this. This call has not been heeded.”

Uhuru Kenyatta, Kenya’s Deputy Prime Minister and Minister for Trade, speaking on behalf of the African Group.

<> “The African Group expects an outcome that will deliver on the development promise of the Doha mandate in a manner that will enable us to successfully sell the results of the agreed modalities in our respective constituencies. The African Group therefore emphasises the need to strike the right balance on the level of ambition between agriculture and NAMA.

<> “On domestic support, we urge the developed countries to take a leading role in ensuring that we achieve a substantial reduction in trade distorting domestic subsidies.

<> “The African Group is looking more towards enhanced fair international trade than aid.”

Bozkurt Aran, Ambassador of Turkey:

<> “At this critical crunch time, it would be unfair and inappropriate to ask more from developing countries on these vitally important tools for development. In no way, these issues can be compromised for pure commercial interests. We have a chance, a real chance to settle a balance in the world agricultural trade and create fair and more equitable conditions for the future.

<> “The fundamental nature of the SSM is obvious: in a Development Round a livelihood and rural development tool for the developing countries.

<> “In that sense, the levels of triggers and the remedies need to be set in such a way that the user countries could address problems in the domestic markets immediately and fully. Make no mistake, we would not approve or give our consent to any package without an adequate SSM system.”

Even the Japanese had their concerns. According to Akira Amari, Minister of Economy, Trade and Industry:

<> “It goes without saying that it is impossible to give 100% satisfaction to every Member since the diverse interests of Members are entangled in a complicated way. Therefore, the Ministerial can only be successful if we can find a way where all Members can share a good balance of happiness and unhappiness and all of us can bring home some happiness, net of pluses and minuses.

<> “For Japan, the results from the Agriculture negotiation will cause pains domestically. Therefore, it will be difficult for Japan to sell the results of this Round to our domestic constituencies unless we can achieve gains in NAMA, Services and Rules that are big enough to offset the pains in Agriculture.”

Organisations like the WTO are doomed to failure because they are attempts to create unrealistic one-size-fits-all regulatory regimes.

At this stage, it is only the rules of the game that are being set up. In the event a deal is struck, cases will soon line up under the dispute settlement mechanisms. That’s when the even more sparks will fly.

The only beneficiaries will be hotels in Geneva, and lawyers negotiating all the agreements, as well as contesting the disagreements.