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Doha and the WTO

The November 2001 meeting in Doha, Qatar, was another significant blow to the credibility and legitimacy of the WTO.

Instead of pursuing the goal of conducting trade and economic endeavor “with a view to raise standards of living,” etc., as the GATT and later the WTO preamble very righteously claimed, Doha was a blatant display of the fact that the WTO agenda has been completely hijacked by the big trading powers.

Sure enough, these are politically incorrect words. But they do describe how a large population in the developing world has started to feel about the whole concept of a new economic order and free trade, with WTO as its primary symbol. The recent WTO session at Doha saw a lot of disagreements and resistance from the developing countries – led by India – to the draft that was put up to the delegates.

What happened at Doha? The Doha declaration carried extremely weak and non-committal language on all developing country concerns (including agriculture, implementation, debt and technology transfer). It had nothing new on the environment and sustainability. Instead, there was a controversial reintroduction of the notorious “green room” procedures (used to exclude many delegates from negotiations).
The language on the phasing out of agricultural subsidies was watered down owing to the strong objections of the European Union and there was no commitment to an early phase-out of textile and garment quotas because of the strong resistance of the United States. There was no commitment to change the wording of the TRIPs (Trade-related Intellectual Property Rights) agreement to accommodate developing countries’ overriding of patents for public health purposes nor to outlaw biopiracy and patents on life, which was a key developing country concern coming into Doha.

What are the developing countries saying? Exports from developing countries continue to face tariffs and protectionism. This is especially true of exports like agricultural products and textiles. U.S. and E.U. have done precious little to open up in these sectors that matter to developing countries. The developed countries provide $280 billion in annual agriculture-related subsidies, while the developing world can hardly provide any to its farmers.

On the other hand, the developed countries have been aggressively pushing for opening up of developing markets in sectors like telecommunications, information technology and financial services – sectors that their transnational corporations want opened up. Thus, as much as domestic opinion permits, the developed countries have been pursuing a corporate-driven policy of “liberalization if it benefits me, protectionism if it suits me.”

We know from “Creating Modern Capitalism” that U.S., Germany, Japan, and Britain have all followed protectionist policies when they needed to protect their industries. However, when the developing countries plead their need to protect key domestic industries until they can face up to the financial muscle of the transnationals, the developed countries reject the plea and conveniently preach the virtues of unrestricted trade.
Also, the developing countries do not have only trade on their agenda. Sustenance of their poor populations and development is equally important, thus the need for subsidies in agriculture and key sectors. A lot of these countries cannot afford to undertake the “fast-track liberalization” that the developed world so knowledgably prescribes.
Liberalization has to be accompanied by building up of human capital to sustain it and building up of infrastructure on which to carry it to conclusion. Liberalization that outpaces these, will fall apart and, ultimately, only lead to chaos – as proven by examples of Indonesia and the erstwhile USSR. However, the WTO agenda completely ignores these issues and asks for reforms “soon, now, right now” without regard for consequences to developing countries.

TRIPS protects the intellectual property rights of corporations but easily allows abuse of shared knowledge of indigenous communities. An example is the “Basmati” rice patent that came up for approval in the US a few years ago. Basmati is a variety of rice, renowned for its flavor, that has been grown in India for centuries. The Indian government had to fight this matter in US courts to prevent “Basmati” from being patented and the right of growing the rice taken away from millions of poor farmers.

The developing countries are asking for – at the minimum – exclusion of seeds, plants and life-saving drugs from the TRIPS regime. Unfortunately, TRIPS, in its present form, refuses to give leeway for the fact that survival and human development hold a much higher priority in these developing countries than “full and complete” implementation of “intellectual rights.”

Why are the voices of the developing countries drowned out? The vision of a new economic world order, of benefits of free trade and of creation of wealth is equally attractive to both developing and developed countries. This desire was the foundation of the GATT, which was eventually replaced by the WTO. Compared to GATT, the WTO is much more powerful because of its dispute settlement system – countries that do not abide by it can be taken to court and can face retaliation.
The developing countries, however, have found the WTO to be simply a method of arm-twisting by developed countries. Although 98 out of 132 members of the WTO are developing countries, most of these depend on the U.S., E.U. or Japan for imports, exports, aid, and military ties.
Besides, the processes of WTO itself work against the developing countries. These countries do not have the resources and the expertise to go through the lengthy negotiation processes (40-50 rounds) in WTO and are typically not as well prepared as the developed countries. This lack of expertise also shows up in the process of battling out issues in the court.

Additionally, the WTO process is non-transparent, with lot of manipulations and exclusive “green room” meetings of pre-selected countries to work out specific issues. These countries word the draft and then put it up for all members to accept – leading to heated debate and disagreements.

But does WTO have a future?
Both the Seattle and Doha meet of the WTO showed how the interests of developing and developed worlds have ended up getting polarized against each other. It is na‹ve to expect that ignoring the concerns of developing world and forcing the developed world’s agenda on them will bring any lasting benefits of trade and stability. Manipulations may force agreement for a while, but such agreement is unlikely to be honored in the long run simply because it is not sustainable for the developing countries. Therefore, WTO does have to, ultimately, address the concerns of developing countries in order to succeed.

On a more humane plane, there is also the question of the value of human life. Is greed at the cost of human misery justified? Perhaps some misery is indeed justified to encourage innovation and free human endeavor in the long run. But, if so, then how far? What is the right balance between genuine interest in development and furthering own commercial interests ? After all, just because misery is not at one’s own doorstep, it is easy to block it out and only follow the pot of gold. Worse still, the lure of commercial gains helps one to rationalize and conveniently convince oneself of the virtuousness of the pursuit.
The WTO is a great opportunity for all but, unfortunately, so far it has only proven to be an opportunity-in-waiting.

February 25, 2002
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