The WTO: the road from Seattle to Doha

Only two years after the hullabaloo at Seattle, the Interministerial Conference at Doha (Qatar) agreed on an agenda for a new round of trade talks, due to begin in January 2002 and end by 31 December 2004. The new round will be called the ‘Agenda for Development’, and its objective will be to make a step forward in the process of liberalising international trade.

Thus a new round follows on from the famous Uruguay Round, concluded in 1993 with the conference at Marrakech, which among other things paved the way for the transformation of GATT into Wro.

Given the incredible interest aroused by Seattle, significantly today the WTo – only two years later – has managed to agree (with consensus) on a project that failed at Seattle and to a background of general indifference in the media and public opinion. Let’s try and see what has happened on the road from Seattle to Doha.

1. What died at Seattle for good was a way of dealing with international politics and diplomacy ignoring public opinion. For a long time international politics had been reduced to a subject for specialists, and came under little scrutiny from legislative powers (it was a domaine réservé) and was ignored by public opinion (except for cases of war).
   The everyday business of foreign policy has always received little attention from the
   wider public, especially when dealing with complex technical trade issues.
2. The protests at Seattle highlighted at least two factors:
   2.1. The uneasiness in public opinion both in the North and South about the perverse effects of globalization and the consequent ‘commercialisation’ of social relations.
   2.2. The effects of trade liberalisation on a world scale are not equal and tend to benefit industrialised countries more than poorer countries, although in the First World there is also the perception that ‘something is being lost’.
3. The Seattle fiasco demonstrated that the prevalent way of building international consensus in recent decades on trade matters was no longer valid. The big powers in the field – the United States, the European Union and Japan – can no longer afford to sign agreements and expect all the others simply to follow them. In light of the developments mentioned above, there was a serious need to take into account the interests of developing countries, listen to their voice and establish new rules for the game which are fairer for everyone.
4. On the way from Seattle to Doha, the European Union, under the guidance of the French commissioner Pascal Lamy, had pursued widespread consensus building with the aim of launching a very ambitious new round of trade negotiations. And that is what happened at Doha.
5. But why this need for an ambitious round? The answer is as response to the new trends in society and in the South of the world based on the principle that the wider the discussions, the greater the possibility of identifying proposals and solutions meeting the interests of the various WTO members. But also because international trade has changed incredibly over the last ten years. Not only because trade in services is now much more significant (and less regulated) than traditional commodities, but there is also a host of other aspects creating a truly complex picture. Here we are talking about issues such as intellectual property rights and their consequences on sanitary matters, public health, consumer protection, environmental protection, labour regulations, etc.

The new round could not therefore simply focus on promoting further quotas for liberalisation, but inevitably had also to take into account this more complex picture.

The solutions, however, are far from unequivocal. When José Bové stands as the paladin for protected European agriculture (and the subsidies he enjoyed as an exporter of subsidised cheese) he is at the same time proposing solutions thwarting the possibility of development through the export of farm produce for those countries which he claims (or pays lip service) to hold in great esteem. Similarly, when Brazil, India and South frica (rightfully) challenged the multinationals by introducing the principle whereby some medicines can be produced locally for specific cases, it raised the complex problem of intellectual property rights and the potential negative effects (for all) on the future of pharmacological research.

Simplifiers and oracles of absolute partial truths must be banned, if we wish to find well-balanced and not facile solutions.

To meet this challenge, the European Union has sought to involve in the process of consensus building some countries considered to be of key importance in the emerging world, thus breaking with the special Washington-Brussels axis whose days are now at an end.

These countries are more or less: Brazil, Mexico, South Africa, India, Indonesia, Egypt, and Malaysia, as well as Canada and Australia. This group was thus added to the traditional countries – the European Union, USA and Japan – among participants in the two-year preparations for the new Conference. Other countries also took part, especially as a regional representatives, but the key players were those listed here.

In fact you don’t need to be a great diplomat to realise it would be impossible to create a working agenda with 142 countries. The agenda is established by a small circle, albeit now enlarged, whether all the members of Wro like it or not.

The process had been successful moving forward until September 11, when the attacks inevitably deviated attention from commercial issues. The initial impression was that there would be no talk of trade issues for some time – la guerre oblige. But in fact the catastrophe of September 11 had a positive input. Among other things, those attacked became more aware that the world was structured on an unfair basis (even though this naturally could not justify the attacks). A new round of talks leading to trade on a fairer basis was seen as a way of alleviating the tensions besetting humanity.

The conditions for reaching consensus thus improved greatly after Seattle and September 11.

But how did this consensus building in the Wro agenda take place? On one hand, contacts between the European commissioners and their counterparts in the other countries were much more frequent than in the past. Each meeting had the aim of gradually piecing together the whole agenda, eliminating prejudices or taboos. Clearly, in this kind of framework everyone must make concessions. We no longer live in a world where the strong can dispose of the weak as they please. Many regional brain-storming seminars were organised and attended by functionaries from the various countries which would in practical terms take part in the talks. I attended one of these events in Latin America. These initiatives, sponsored by the Eu Commission, were very useful because they enabled people who would later be involved in the negotiations to freely discuss the issues, creating very useful and cordial relations.

The European Union then launched a number of initiatives objectively responding to the requirements of developing countries: the ‘Everything But Arms’ initiative has opened up European markets to almost all products from developing countries and ‘Access to Medicines’, supporting the Brazilian and South African initiative to suspend patents for some medicines in emergencies, paved the way to international consensus on this very tricky issue.

Lastly, there was a significant change in method between Seattle and Doha. Seattle failed because the initial document anticipated the outcome of the negotiations. At Doha a more modest initial agenda was established and it will be the subject of talks over the next three years.

Bearing in mind all these factors, Doha was a success. But it took a lot of very hard word and the forthcoming round will be even tougher.

Many countries came away from Doha satisfied, however, and this is a considerable improvement on the past.

This brings us to the conclusions of the conference and the content of the agenda of the new round due to begin in January. The outcome of Doha marked the beginning of the so-called ‘Round for Development’, whose planned duration is from January 2002 to December 2004.

The sides will have to come to an agreement on the various themes up for discussion by that date. In this sense Doha was a success because the main objective was established, unlike what happened at Seattle.

If this had not been so, the credibility of the multilateral trade svstem would have been fatally damaged, probably also pushing back the process of opening up markets.

But what was really at stake? In theory all the countries in the world, or at least all the members of the WTO are in favour of free trade.

In practice, each country seeks greater free trading in the sectors where it is most competitive and greater protection where it is weakest.

From 1945 the various rounds of GATT up to the last Uruguay Round in 1993 led to the gradual reduction of customs tariffs. Today they are generally much lower and no longer an obstacle to trade.

Agriculture, however is still an exception. In this vital sector for many exporting developing countries, tariffs have come down much less, and are still at very high levels.

Moreover, even when tariff measures have decreased, new kinds of barriers have emerged – the so-called non-tariff measures – creating serious obstacles to trade (health measures, technical regulations, certificates, standards, etc.).

The WTO’s basic idea is to create multilateral regulations to avoid unauthorised or arbitrary measures, which actually conceal protectionist moves.

The key concept is non-discrimination. A country can introduce a technical regulation which it considers more appropriate, but must do so in a transparent way, justifying it on the basis of serious considerations and, most importantly, applying it in a non-discriminatory way to the products of other countries.

Of the many examples we can cite the first case judged by the WTO arbitration body. The USA was condemned for prohibiting the purchase of Mexican tuna because it had been fished (in Mexico!) without respecting Us regulations (i.e. with special nets preventing other species from being captured). The WTO judged the use of this regulation to be a pretext concealing the Americans’ protectionist attitude (defending the American fishing industry).

A similar case arose later between Canada and the European Union (especially Spain), when the Canadians wanted to unilaterally limit access to Canadian waters for European (Spanish) fishing boats, using the protection of halibut as an argument. Let’s be clear, all agreements on the subject of fishing include quotas limiting the catch and take into account the protection of the fish species, but what they cannot do is emanate unilateral laws and then only apply them to foreigners. That amounts to discrimination and as such is illegal.

The problem of the agricultural sector, where the market is less free than in the industrial sector means that the large agricultural exporters (the USA, but also Argentina, Brazil, Canada, Australia and New Zealand as well as many developing countries) have gained less from the liberalisation of markets than exporters of industrial goods and services.

The United States could certainly make up for this in other sectors, but many developing and emerging countries are only competitive in the agricultural or primary sector, and the asymmetry of international trade has penalised them.

On the other hand, these countries are forced to open up their markets to products from industrialised countries, without receiving as a counterpart the complete liberalisation of agricultural markets.

The situation in the European Union is complex. On one hand, the Union is the principal importer of farm produce from the developing countries and from the large agricultural exporters but, on the other, the СAP mechanisms artificially push up internal prices, creating an almost insurmountable barrier for products competing with European agriculture.

The outcome is very high prices for food in Europe and the persistence of relatively inefficient European agriculture.

This debate could rage on for very long time, but the in many ways legitimate European decision to maintain an inefficient agricultural sector for economic – but also social and cultural – reasons contrasts sharply with Europe’s free-market ambitions pursued worldwide.

It defends free trade in other sectors but not in agriculture.

Incidentally the USA has a similar attitude, but actually accuses Europe of protectionism when it too has introduced powerful mechanisms, making it very hard for exports from developing countries. But while the CAP reform has led to cuts in subsidies, under Clinton and Bush American subsidies have soared.

There are several attendant problems. On one hand, we preclude many of the poorer countries from developing further, because we limit the access of their less expensive products to our markets. On the other hand, we demand that they open up their markets to our goods and services.

The mechanism really under fire are the subsidies to farm exports, which consist in paying European (or American) exporters the difference between the domestic price and the world price (naturally much lower), so that the produce can be exported to third markets despite its higher price.

The interesting thing is that for industrial products there are strict mechanisms against dumping, but none in agriculture. In concrete terms the subsidies paid to farmers in rich countries protect the market from potential exporters of food products.

To this background, countries exporting agricultural products have demanded that a condition for the first round be the elimination of agricultural subsidies for exports and a substantial reduction in domestic subsidies on production.

Incidentally, in absolute terms Europeans pay more subsidies, but in per capita terms the Americans pay more.

The Doha Declaration establishes that negotiations should be begun to achieve these two objectives without any guaranteed result (this phrase was added by the European Union, the original version simply established the complete elimination of subsidies, but now will depend on how the negotiations go).

The exporting countries are satisfied, because for the first time the principle of free trade has also been applied to agriculture. The countries paying subsidies are also satisfied because they managed to eliminate the automatic clause in the text. But there can be no doubt about what kind of the difficulties lie ahead for the negotiations.

The other main points in the new round will be:

1. The implementation and revision of WTO rules. The emerging countries were very keen to deepen commitments further rather than open new negotiation fronts. They were partly satisfied: earlier agreements will be revised, as will some existing mechanisms (anti-dumping, export credits, and internal regimes promoting investments) judged as being biased in favour of rich countries.
2. Services. Negotiations will begin immediately on banking, insurance, telecommunications and tourism. Today services represent a increasingly large part of the world GDP and regulation lags behind the commercial reality.
3. Industrial tariffs. Further cuts are expected.
4. Settling disputes: revision of the mechanisms to make them fairer and more effective.
5. The environment. The European Union wished to introduce an environmental clause into international trade. This useful principle is defended by many NGOs and is a response to real concern in public opinion. But it is a two-edged sword, opening the door to a good deal of potential abuse. The developing countries opposed the clause, and especially the introduction of the so-called ‘precaution principle’ allowing unilateral suspension of imports of specific products. In the end the following compromise was reached: the negotiations will include a comparative study of WTo rules and other international conventions on the subject of the environment so as to avoid contradictions and incoherence. The aim is to define clear transparent rules to avoid unilateral manoeuvres.
6. Trade-Related Aspects of Intellectual Property Rights (TRIPS). This agreement on intellectual property rights marks a great victory for the developing countries (especially Brazil, India and South Africa), who successfully fought for the introduction of a principle of flexibility as regards patents. This is the outcome of the AIDS battle. In cases of health emergencies, patents can be suspended. A principle of linkage was also introduced as regards the Convention on Biological Diversity and the development of biodiversity and traditional cultures (the struggle against so-called ‘biopiracy’).
7. Other topics. This raft of issues was greatly insisted on by industrialised countries, especially the European Union.

Given the growing complexity of international trade, the Eu wanted the negotiation to include the definition of multilateral rules on investments, public tenders, competition, and trade facilitation.

In the end the developing countries won the day and for the time being there will only be technical studies on these subjects, and as regards any negotiations on the issues, the matter will be discussed in two years time.

The less developed countries fear they will be subject to a new series of concessions in these fields, where the richer countries will be able to exploit their greater potential.

This then is not all that was discussed at Doha but a summary of the major points. I should like to conclude with two observations.

Firstly, this trade agenda is the most balanced in the history of the WTo. The set of factors, illustrated above, including the post September 11 shock and the international anti-globalization protests have forced the International community to take into account the widespread unease which demands a response in terms of action.

Secondly, establishing an agenda is already a great step forward. But the really difficult bit is from here on in. The talks will be very tough and as we have seen there are many complex issues. There will be no easy answers and the solutions will require a good deal of ambition and courage not only from those involved in the talks but also civil society which now follows these processes much more closely.

We thus all have a duty to keep informed in order to express constructive opinions rather than simply resort to counter-productive slogans.