Canada’s ambassador to the WTO, John Gero, yesterday accepted a post as chair of the international trade organization’s highest-level decision making body — the General Council. It may be a dull assignment. Reuters is reporting today that, “Gloom and frustration pervaded the [WTO] on Monday as the prospects of completing a new global commerce pact this year receded.”
WTO Director-General Pascal Lamy had hoped to organize a ‘stock taking’ exercise for the end of March to figure out whether the Doha negotiations, which have been rocky since they began under U.S. pressure in 2001, could be concluded this year as suggested by member nations during the 2009 ministerial in Geneva. But he now says there are too many “gaps and uncertainties” to bring all 153 WTO ministers together at this point. “Gaps between countries were now wider than in July 2008,” said Mexico’s ambassador, Fernando de Mateo y Venturini at Monday’s General Council meeting.
For over a decade now the Doha round of multilateral trade negotiations — so named after the city where rich countries led by the United States finally convinced developing countries that development concerns could be addressed at the WTO — have been stuck on the same issues of high agricultural subsidies in the U.S. and EU, the need to preserve non-agricultural tariffs in emerging and least developed economies, and controversial issues such as intellectual property rights, market access for services (i.e. privatization of services), not to mention procedural problems with the rule-making process in general.
“But the continuing rise in unemployment, even as the world pulls out of the economic crisis, is making many countries have second thoughts about opening up to more trade, while Brazil, one of the keenest supporters of a deal, faces elections,” says the Reuters article today.
The U.S. is singled out to some extent because of President Obama’s lack of attention to the WTO and trade issues in general, but market liberalization is not high on many government priority lists anymore. If Brazil is more supportive of continuing the multilateral discussion it’s because like India, China and other rising developing countries, its power within that multilateral system is increasing relative to the traditional QUAD countries — Canada, U.S., Japan and EU.
Last year, the WTO ruled against the United States in a case Brazil brought to a dispute panel on U.S. cotton subsidies. In response, on February 10, Brazilian President Luiz Inácio Lula da Silva issued an executive order allowing “measures to suspend concessions or other obligations of the country related to intellectual property rights and others, in cases of noncompliance with multilateral obligations by a Member of the World Trade Organization – WTO.”
Brazil is hitting the U.S. where it hurts — on intellectual property rights, where the U.S. continues to try to force its legal regime on the rest of the world. Under Lula’s new orders, Brazil will be able to break U.S. patents and suspend remittances from royalties in WTO-sanctioned retaliation for the illegal U.S. cotton subsidies.
So who else will hurt from a breakdown in talks? According to Reuters:
Nepal said that least developed countries (LDCs) were paying the price for failure to reach a deal, and called for an ‘early harvest’ — a call which drew support from China.
This would involve agreeing on and implementing measures of direct concern to LDCs — such as duty-free and quota-free access for their goods in other markets, big cuts in cotton subsidies and a deal to help them trade more by cutting red tape and corruption and improving infrastructure — while the rest of the negotiations continue.
Conclusive studies have proven that LDCs would actually lose the most from comprehensive agricultural and non-agricultural liberalization (tariff elimination). They are seeking an equitable agreement that recognizes the importance of protection for vulnerable economies. Nevertheless, if the Doha round goes nowhere, it clearly won’t be from lack of effort from the developing world. Total failure would, in fact, prove that the rich countries who initiated it never intended to live up to their promises of a more fair and balanced global trading regime.