World Trade Organization
Development is dead in the World Trade Organization (WTO) negotiations.
The original mandate for the Doha negotiations said that it would have the “needs and interests” of developing countries at the “heart” of the negotiations. But in reality the main interests of developing countries have been sidelined in the negotiations and it is clear that is clear is that the negotiations are now all to do with market access for rich countries, helping to give their economies a boost after the financial crisis. Recent studies show that rich countries are likely to gain 25 times more per capita from any deal than developing countries. Developing countries might gain a penny a day per person. This would be a one-off gain from increased global trade as a result of a deal, but it would have to be balanced against ongoing loses in tariff income and declining terms of trade. The Doha round will fail to deliver on the substantive welfare outcomes for which developing countries had hoped.
We are currently living through global crises of unprecedented impact and magnitude – financial, food and climate. The Doha negotiations are also being promoted as a solution to these. In fact they would exacerbate the crises. The WTO can only offer more of the liberalisation and deregulation that led to the financial markets spiralling out of control and it promotes a model of the economy that does not recognise environmental costs and which treats food as a market commodity like any other rather than a basic human right. The impact of financial, food and climate crises have had disproportionate effects on poor people and particularly for women who produce more than 80% of all food produced in the world. It is the rich nations that have reneged on the Doha development mandate and are threatening the multilateral trading system by demanding unfair obligations on developing countries
The WTO was established with the noble aims that:
“trade and economic endeavour should be conducted with a view to raising standards of living [and] ensuring full employment … while allowing for the optimal use of the world’s resources in accordance with the objective of sustainable development” (Marrakesh Agreement Establishing the World Trade Organisation, 1994)
Members of the WTO have not shown genuine commitment to these aims. Development has died within the WTO. ACORD calls on WTO member states to take bold steps and go back to the drawing board to seek a global trading system that would truly support the welfare of the majority of people in this world rather than the profit of a few.
In 2003 four West African countries, Mali, Chad, Benin and Burkina Faso (the Cotton 4 or C4), raised cotton as a particular issue within the Doha negotiations. The issue is about US and EU cotton subsidies, the damage they cause to the African countries’ economies and the need for compensation and the eventual phasing out of the subsidies. In 2004 the WTO General Council called for the cotton issue to be resolved ambitiously, specifically and expeditiously. Six years later, little tangible progress has been made because the US has dragged its feet at every opportunity.
African countries – particularly the Cotton 4 – continue to fight their corner to achieve the best possible deal on cotton. The original proposals from the C4 and the African group, called for the prompt elimination of cotton subsidies. The outcome of the WTO’s 2005 Ministerial Conference in Hong Kong made a mockery of this demand. The positive sounding declaration was made that all forms of export subsidies on cotton would be eliminated during 2006. This sounds good but actually it is the domestic rather than export subsidies that are the problem, so this amounted to nothing. Beyond this there were only vague proposals that cuts in domestic cotton subsidies should be “more ambitious” than reductions in other agriculture subsidies. Attempts by the African Group to add more substance to the outcome were opposed by the US.
Brazil mounted a challenge against US cotton subsidies in the WTO dispute settlement system. This should have been good news for the Cotton 4, and it was - partly. The ruling upheld Brazil's claim that the US subsidies distort trade, and instructed the US to put an end to this. For a long while, the US ignored this ruling, until Brazil obtained permission from the WTO to impose sanctions on the US to compensate for its losses due to the unfair competition from US cotton. Under the threat of this, the US made a deal with Brazil, and this is where it turned to bad news for Africa. The US will now pay Brazil US$147.3 million per year until 2012 as a “technical assistance fund” for Brazilian farmers the two countries will continue to negotiate. In 2012, the US Farm Bill, which sets out US farm subsidies will be up for renewal, and the implication is that by then the US and Brazil will have reached an agreement. What this deal means is that the US will continue to subsidise it's own farmers, but will now subsidise Brazilian farmers as well ! African farmers are left out in the cold.
Theoretically, the Cotton 4 could themselves take a challenge to the WTO dispute settlement system, but it is clear that the US shows complete disregard for its rulings. It was only the threat of sanctions that forced them to move, and then only because Brazil is a powerful enough economy for it to hurt the US if Brazil imposed the sanctions. The US economy would barely notice if one of the Cotton 4 countries imposed sanctions.