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BOOK REVIEW
WTO fault
Lines
Doha Development Agenda.
A Global View. T K Bhaumik (ed)
Reviewed by Chanakya Sen
The dismal
failure of the World Trade Organization's (WTO) Cancun
ministerial in September 2003 is a manifestation of the
fault lines in the entrails of the multilateral trading
system. This expansively edited book features
contributions from trade scholars and practitioners and
covers the whole shebang of WTO deadlocks and
polarizations that exploded in Cancun. "There is a
crisis. One can solve a crisis only when it is
recognized." (p xxxii)
 The Doha Development Round
- initiated at the fourth WTO Ministerial in Doha, Qatar
in 2001 - is now almost certain to miss the January 2005
deadline for the "Single Undertaking" concept, thus
putting paid to hopes of ambitious trade liberalization
to revive the world economy and lift millions out of
poverty. Doha is the first multilateral trading round
explicitly dubbed as the "development round", an
affirmation that no other form of international economic
cooperation can offer developing countries the gains
that free trade can generate. However, against the tide
of development fanfare, countries in the Organization
for Economic Cooperation and Development have
backtracked on special and differential treatment (SPD)
as well as implementation concerns. Whether the global
North is committed enough to convert platitudes into
reality is the anxiety of the majority of WTO members.
In industrialist Rahul Bajaj's words, the "Marrakesh
spirit and basic principles behind the establishment of
WTO seem to have been forgotten". (p 44)
Indian
Commerce Minister Arun Jaitley's essay in the book calls
for adequate windows of exception for economies highly
dependent on agriculture and for speeding up the
progress of the Uruguay Round implementation - the
largest trade negotiation ever - while questioning the
peak and escalation tariffs of developed countries.
"Where market access suits you, you go ahead with the
sword. Yet, when a country from the developing world has
the ability to penetrate your market you hold up the
shield and block access." (p 10)
But European
Union Trade Commissioner Pascal Lamy counters that SPD
is "creating second-class WTO citizens with diminished
WTO obligations but also diminished WTO rights". (p 15)
An EU business representative proposes "graduation" to
determine which countries should benefit from SPD and
for how long, instead of blanket amnesties and waivers
that reduced developing economies to bystanders in the
General Agreement on Tariffs and Trade era.
Cairns Group chairman Mark Vaile assails
domestic support in agriculture, saying it is
trade-distorting, and calls for its progressive
elimination as "a moral obligation of the developing
world". (p 21) He also cautions against the EU's
cumbersome idea of protecting geographical indications,
which, if extended beyond wines and spirits, entails
costly registration systems for developing countries.
Economist Jagdish Bhagwati, meanwhile, has lambasted
legally complex, costly and rigid standards as "backdoor
intrusionism" to realize the protectionist aims of
developed states. By the reckoning of many, standard
harmonization is the most insidious force inside the
WTO.
New Zealand's trade minister, Jim Sutton,
makes the significant point that border protection and
subsidization in textiles, footwear and agriculture are
also present in developing country markets, attenuating
South-South trade. Forty-five percent of developing
country trade flows are South-South and 70 percent of
the tariffs paid by developing countries are to other
developing countries. It is essential for developing
countries to liberalize trade among themselves, he says.
Razeen Sally, professor at the London School of
Economics, gives a heuristic account in which he laments
the Gadarene rush to regional trading agreements since
the debacle of Seattle in 1999. The WTO is "in serious
danger of becoming marginalized by spider webs of
discriminatory trading arrangements". (p 58) Creeping
legalism in the organization opens vistas for judicial
activism powered by rich member states able to afford
armies of high-fee boffins, he states, adding that if
developed countries do not live up to their commitments
to phase out bilateral quotas on textiles and clothing
by the 2005 deadline, more storms will brew. EU
enlargement and the decision to expand the scope of
textile quota restrictions from May 2004 is a
retrogressive step, stated Sally. Tariffs on main
textile and clothing products remain at 12 percent in
the EU and 25 percent in the US.
Niggardly
technical assistance from developed country coffers and
disguised restrictions on trade through the EU's
environment trump card are other trouble spots addressed
in the Doha Development Agenda. There is
currently no obligation to part with a particular amount
for helping poor countries to implement WTO agreements.
Mandatory "eco-labels" based on a life-cycle approach
could erode the competitive advantage of developing
countries. Trade retaliatory "environmental imperialism"
sets dangerous precedents.
Academic William
Antholis remarks on the irony that the workers and
farmers most in need of assistance globally are not
industrialized labor unions, Japanese rice farmers or
French organic farmers on the streets of Seattle, but
rather textile workers and subsistence farmers in
developing nations. "Industrialized nations use their
activist groups as a green screen for protectionist
tendencies". (p 156) Developing countries perceive many
western non-governmental organizations as fronts for
business interests from the industrial north. The WTO
must beware of protectionists seeking to disguise
special interest agendas in the cloak of public values,
says Antholis.
Loopholes in the Agreement on
Agriculture (AOA) and its lopsided implementation are
touched on by Amir Ullah Khan. Japan, the EU and the US
have cut down low tariffs more than high tariffs.
Steeper reductions of high rates by the developed world
are vital. Under the AOA, export subsidy commitments are
problematically viewed at aggregated levels, allowing
developed countries flexibility to maintain and even
increase subsidies at finer levels of disaggregation.
Bioethicist Vandana Shiva considers the conflict
between the TRIPS (trade-related aspects of intellectual
property rights) agreement and the Convention on
Biological Diversity. Western-style patent systems sap
the centuries-old practice of sharing biological
heritage to reap equitable benefits. TRIPS also does not
impose any obligations on the owners of patents to
undertake technology transfer in the country granting
them the rights.
Consultant Julian Arkell calls
for specific commitments under the General Agreement on
Trade in Services (GATS) by advanced countries to help
strengthen the domestic services of developing countries
through access to technology and distribution channels.
Ministries of immigration and labor in the North are
undermining GATS Mode 4 on the movement of natural
persons through the arbitrary protection of borders and
discriminatory exclusion. Quad countries have given no
indication of wanting to address temporary entry for
semi-skilled and unskilled workers. Until now, GATS has
recorded a 0 percent unrestricted commitment in Mode 4.
The few horizontal commitments are biased towards
movement of executives, managers and intra-corporate
transferees.
Economist Nagesh Kumar vets the
contentious "Singapore Issue" of trade and investment
and the proposed Multilateral Framework on Investment
(MFI). "A one-size-fits-all approach to FDI [foreign
direct investment] policy that is sought to be evolved
through the MFI in WTO cannot serve the interests of
countries at different levels of development." (p 396)
Only the rights of investors are being protected in the
MFI, without concomitant obligations and
responsibilities to host country interests. Developing
countries should never forfeit litheness to impose
performance requirements on foreign investors in tune
with public policy objectives.
Lobbyist Peter
Wilmott studies the more benign Singapore issue of trade
facilitation, which rationalizes that the processes and
spreading of best practices to mitigate border
bottlenecks can accrue benefits in a very large measure
to developing countries. The incremental gain of
smoothening procedures at the entry and exit points of
goods is going to be proportionately less for
industrialized economies, says Wilmott. Unlike other WTO
topics, trade facilitation is a win-win experience
rather than one of trade-offs and concessions. It
reduces invisible costs and is in the interest of the
overall growth of international trade.
Maurice
Schiff of the World Bank takes up the Doha mandate of
examining the trade options of small developing
economies. South-South Regional Integration Agreements
(RIAs) tend to benefit larger and more developed members
relative to smaller and poorer members, a phenomenon
labelled as "dynamic divergence". North-South RIAs are
likely to be superior to South-South RIAs, but only if
small economies don't put all their eggs in one basket
and liberalize trade with the rest of the world while
being locked into Free Trade Areas with the EU or the
US. Further integration into the multilateral trading
system and unilateral trade liberalization are the
optimal solutions for small economies to survive the big
bad world of preferential trading agreements, says
Schiff.
Readers searching for detailed exegeses
on the various stumbling problems confronting the WTO
should get a copy of this volume, whose overriding
concern is to make the Doha Development Round a success.
As one contributor, Fred Smith of the US Enterprise
Institute, avers, "Collapse at Cancun may be the best
outcome if it leads to a revitalized and more
politically effective free trade strategy." (p 194) If
some of the outstanding fissures raised in this book are
addressed conscientiously, the WTO and the global
economy, which are on life support devices at present,
can get up and start walking hale and hearty again.
Doha Development Agenda. A Global View. T
K Bhaumik(ed), Penguin Books India, New Delhi, 2003.
ISBN: 0-67-004999-9. Price US$19.80, 496 pages.
(Copyright 2004 Asia Times Online Ltd. All
rights reserved. Please contact content@atimes.com for
information on our sales and syndication policies.)
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