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Cleaning house at the WTO

(with Timothy A. Wise)

This week, the 10th anniversary of the infamous “Battle in Seattle,” ministers assembled in Geneva with renewed hopes of reviving world trade talks. To dampen expectations, World Trade Organisation chief Pascal Lamy bills the event as a mere “housekeeping session,” rather than full-fledged negotiations.

There is no question the WTO needs to clean house. The organisation charged with developing a fair and legitimate multilateral trading system has been left in the dust of world economic events.

A global financial crisis brought on by weak regulation of financial markets has driven the world economy into deep recession, and the WTO prattles on about further deregulation of financial services.

Similar deregulation spilled into commodity speculation, causing a food crisis, and the WTO continues to push for accelerated liberalisation of developing country agricultural markets.

Africa’s cotton-producing countries lose market share by the day, while the US uses every tactic to avoid implementing a ruling that found US agricultural support programmes in violation, not of new and stricter trade rules, of the old trade rules.

Despite strong economic evidence that a multilateral trading system is preferable to bilateral and regional trade agreements, the US and European Union continue to undermine the WTO by strong-arming smaller countries into bilateral trade deals.

Climate change may be the biggest threat of the 21st Century, and the higher income nations use the guise of WTO intellectual property rules to resist enabling the rapid and affordable transfer of clean technologies to those nations most in need.

It is indeed time to clean house. Over the past 10 years the higher income nations failed to retool the WTO into an 21st century global governance organisation that could manage world trade in a manner that could raise living standards, decrease poverty, establish and enforce reasonable rules for global trade, and respect the environment.

Since the breakdown of the Seattle trade talks in 1999, the emergence of economies such as South Africa, Brazil, India and China, with their broader WTO alliances, have made the WTO a much more legitimate and representative institution for the nations in the world economy. From Cancún to Hong Kong to Geneva, these developing country coalitions have fought for the principles that allowed the current round of negotiations to be launched in Doha: “development,” with policies that favour developing countries; “special and differentiated treatment,” with the formal recognition that developing countries need greater policy flexibility; “less than full reciprocity,” in recognition that high-income countries need to give more than they demand if the promise of development is to be achieved.

But every time push comes to shove, the US and other high-income countries make a mess. The latest breakdown came a year ago, when the Bush administration rejected a developing country proposal for a “special safeguard mechanism” – the right for developing country governments to raise tariffs in the event of sudden or large increases in imports that threaten to undermine food security.

Has the Obama administration come to Geneva ready to change course? Despite Obama’s campaign pledges to the contrary, rumours abound that US trade representative Ron Kirk is coming to demand that developing countries make even deeper cuts into specific sectors and to be even less tolerant of safeguards for food security, financial stability, or the transfer of clean technology to abate climate change.

As usual, the US and its supporters arms themselves with refurbished projections of how much wealthier the world might be if developing countries followed US orders. The latest claim, recently cited by Lamy, is that an ambitious Doha deal could deliver $300bn-$700bn in global welfare gains, with the benefits “well-balanced” between developed and developing countries. As we’ve shown in a recent policy brief from the Geneva-based South Centre, these are only the latest in a long line of studies that are highly speculative, use methodologies that are unproven, and assume far more ambitious outcomes than seem at all likely at this point.

Ron Kirk should bring his broom to Geneva rather than a list of further US demands. Sweep away the stale dust from the Bush era. Agree to fully enforce Brazil’s cotton ruling. Commit to multilateralism by putting a moratorium on regional and bi-lateral agreements that undermine the WTO. Finally, grant the developing world the policy space to safeguard their vulnerable firms and families from unfair competition. Such moves would show that the battle of Seattle wasn’t for naught.

For other Guardian articles by Gallagher: http://www.guardian.co.uk/profile/kevingallagher

For GDAE’s Globalization and Sustainable Development Program:http://www.ase.tufts.edu/gdae/policy_research/MexicoUnderNafta.html

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