Trade talks: dead in the water!

Everyone is agreed.  After seven years of talking, the world trade talks are going nowhere. Long live talking! These talks were doomed from the start. Everyone knew it. They just ignored it.

They were meant to be for the developing world, after the previous (Uruguay) round had so clearly favoured the developed world.  Developing nations lost out big time at Uruguay. They did not understand what they were signing up to.  Their needs were ignored  And the rules were implemented too quickly for them to adjust. They had been hoodwinked. The World trade talks have been notorious in the past for the bullying that goes on by the major industrial powers.  Often, secret deals are done in smoked filled rooms.  When the motions are put to the vote they always get carried in favour of the US, Europe and Japan.

This time  was to be different. Indeed, everyone was optimistic after the gains offered through the Jubilee 2000 campaign on debt forgiveness and the Millenium Development Goals to alleviate poverty, signed  by the UN in 2000. The talks were called the Development Round.  Doha would focus on dismantling trade barriers in order to encourage development and cut poverty.

So how do you get 153 nations together and ensure they are all singing from the same song book?  Most people would tell you to hold back a bit.  Think carefully.  Make certain the groundrules are properly designed to fit those goals.  You have to ensure explicitly that the developing countries will benefit from the negotiations.

Joseph Stiglitz (Nobel prize winner) points out, in his book (Fair trade for all:  how trade can promote development,  published 1998) that the talks should have set their priorities to fit these goals. They could then discuss the  changes countries would need to make in their trade barriers to ensure this.That sounds reasonable. Yet it didn't happen.  Pascal Lamy, for some reason, just ignored the horse trading. Nothing was done at the start to outlaw it.

So no one took up the developing worlds' crucial issues at the start: how to reduce the tariffs imposed on goods they needed to export across the world.

In fact, from the start the developed countries were bent on adding issues to benefit themselves. In the news broadcasts we heard a lot about sectoral agreements (open up the entire industrial sector in emerging markets to competition) and the protection of intellectual property (how to ensure that developed world innovations were kept away from the developing nations) and much much more of little use to poor nations trying to catch up. Stiglitz says it loud and clear:  the talks needed a proper economic analysis as well as a commitment to social justice to ensure the results fit their goals. Did no one read his book? It's boring but spot on!

What they got instead was the same old economic powers bullying the weaker members in  pushing their own interests. The developed nations would not acknowledge developing countries were handicapped.  Yes they have abundant supplies of un- and under- employed labour but that is not enough to help young industries withstand the onslaught of fierce competition. They need adequate capital, decent training and proper technology transfer. And protection for a while.

In July 2008, Pascal Lamy said "members have not been able to bridge their differences".  He added that out of a list of 20 issues, the difference had arisen only on the 19th of them (the special safeguard mechanism that permits them to protect poor farmers by imposing tariffs on specific goods to prevent an import surge (Peter Mandelson imposed the same on China to stop it importing too many women's bras last December). This time round, it was the US that created the stalemate.  The Europeans were prepared to be flexible.  The US was having none of it.

In the end, Brazil's Foreign Minister said: "The main reason (for the failure) resides in the excessive demands in relation to sectorials.  The word to apply to it:  greed".  But hang on:  Grumpy Gordan and Dubya always said they would ensure the talks succeeded.  Brown said there will definitely be a meeting of trade ministers this month to finalise agreement!  When the Financial Times' Alan Beattie phoned his office last week, they would not respond!

Almost immediately, Russia, India, Indonesia, Brazil, and Argentina have all said they will raise import duties or restrict trade. So much for seven years of talks!

Last July, India's Commerce Minister said:  "I urge the WTO Director-General to treat this failure as a pause, not a breakdown, to keep on the table what is there".  A Pause?  What rubbish.