Thousands protest the 2009 G20 summit in London. Image: The Telegraph
With a lackluster (to say the least) climate agreement in hand, and a perception that the worst of the economic crisis is behind them, world powers have turned their attention to the WTO. Some are seriously talking about completing the long-stalled Doha Round by 2012. WTO Director-General Pascal Lamy appears ready to launch his “final countdown” at a mid-January meeting in Geneva. He told a General Council meeting on December 14, “There can no longer be any a priori red lines,” and asked countries to “move out of their comfort zones.” While it would be easy to dismiss all this as the usual misplaced optimism, there are good reasons to take Lamy seriously this time. There is even the chance these global discussions may impact free trade negotiations between Canada and the European Union.
According to Bridges Weekly trade news digest, “Intensive negotiations are set to start from 10 January, when the negotiating groups on rules, trade facilitation, trade and environment, intellectual property rights, and development will begin intensive sessions, followed on 17 January by agriculture, non-agricultural market access (NAMA), services, and dispute settlement.” This will be followed by a January 26 “green room” meeting to discuss sectoral issues with key members/countries, a February 2 Trade Negotiations Committee meeting, and a March deadline for new texts. Inside US Trade also reports today that the EU is trying to organize its own “green room” meeting of trade ministers from the U.S., Brazil, India, China, Australia and Japan before the Jan. 26-30 World Economic Forum meeting in Davos, Switzerland.
This new push seems almost implausibly tied to G20 commitments over the past several years to conclude the comatose Doha Round, which began in its namesake city in 2001. Doha is the follow-up to the Uruguay Round of the General Agreement on Trade and Tariffs, which began in 1986 and then culminated at a 1994 meeting in Marrakesh, Morocco, with the signing into being of the WTO. The new global trade organization was powerful despite its small number of employees, who were tasked with managing and enforcing a series of trade agreements that went beyond trade to include binding restrictions on government policy in a number of areas. These treaties included the GATT, the General Agreement on Trade in Services, the agreement on Trade Related Aspects of Intellectual Property Rights, a Financial Services Agreement, a deal on Trade-Related Investment Measures, etc. Almost anything a government did affecting the economy, according to the new WTO, could be challenged as an illegal trade barrier.
CHANGING POWER DYNAMICS
The Doha Round has been stalled on issues critical to developing countries, which have used process in the WTO to their advantage. Working in coalitions, these countries have successfully held off (in summits in Seattle, Cancun and Hong Kong) demands by the former QUAD countries (U.S., EU, Canada and Japan) to deepen commitments on services, agriculture, and non-agricultural market access (NAMA, meaning tariffs on manufactured goods designed to protect fledgling home-grown industries). Developing countries have sought special and differentiated treatment (S&D) in the WTO, and special safeguard mechanisms (SSM) that would allow them more room to pursue national economic and social strategies without fear of being taken to trade court. WTO dispute panel decisions against member states can be ignored but at the risk of sometimes painful trade retaliation from the winning state.
Developing and “emerging” economies such as Brazil, South Africa, China, India, Argentina, South Korea and others (Russia is close to ascending to the WTO) have been willing to play the game, seeing benefits in extracting concessions on agricultural subsidies and other areas from the U.S. and EU. These smaller economy countries occasionally win WTO disputes. Brazil complained to the WTO in 2002 about American cotton subsidies which hurt farmers around the world by lowering the global price of cotton and making imports into the world’s largest market unattractive. Brazil won its case in 2004, the U.S. appealed, and Brazil was granted retaliation rights last year. The U.S. has paid off Brazilian farmers rather than change its subsidies.
The G20 is partially the result of these changing global power dynamics expressed at the WTO. It was no longer possible for G8 countries to pretend they represented “the international community”. Others needed to be brought into the fold, even if it was only for PR reasons in the minds of the U.S., Canada, France and other G8 members. Having believed their quick action in 2008 has stabilized the global economy to some extent, and fresh out of the Cancun climate talks, G20 countries are turning again to world trade. The statement from the November summit in Seoul, South Korea, declared: “We recognize that 2011 is a critical window of opportunity, albeit narrow, and that engagement among our representatives must intensify and expand. We now need to complete the end game…”
“In sum,” said Lamy this month, “we have the political signal, we have the technical expertise and we have the work programme. We now need to translate these into a comprehensive deal which you can all take back home. The final countdown starts now.”
The success of this new new push will nonetheless hinge on the same issues — agricultural subsidies in developed countries and tariff flexibility in the global south, as well as preferential access to large markets for least developed countries (LDCs). The Third World Network, one of the best sources for WTO news out there, summarized the positions of some of the developing country blocks in a recent article. According to that report, India, which has often led global south resistance to developed country demands on tariffs, supports a so-called horizontal process on top of or behind sectoral negotiations, so that the texts are “bottom-up” and “reflect consensus reached among the Members.” Other countries such as Egypt fear it’s still too soon to be bargaining across sectors because it makes developing countries more vulnerable.
Canada, a member of the Cairns group of agricultural exporters, may face more pressure to remove farmer protections in the supply-manged dairy, poultry and egg sectors, though the government’s position at the WTO has been consistently that supply management is not on the table. The Harper government, through former trade minister Stockwell Day, gave limp support to completing the Doha round at a WTO ministerial meeting last November, but it’s uncertain there is much political will to ramp things up in Geneva.
HOW WILL CETA BE AFFECTED?
In a creepy way for Canada, history is repeating itself. The last time there was such a buzz around completing the Doha Round was 2006, at the WTO summit in Hong Kong. Since then, and even prior to 2008, the EU, U.S., Canada and many smaller economies have turned from the multilateral discussions toward bilateral trade deals that would go further than the WTO in most areas. Canada has finished deals with Peru, Colombia, Jordan, Panama (in committee now), and a modest agreement with the European Free Trade Association (Iceland, Liechtenstein, Norway and Switzerland). The European Union has an aggressive free trade agenda with a focus on high-value emerging markets such as South Korea, India, Japan, China and Brazil.
In 2006, the EU and Canada were two years into negotiations toward a Trade and Investment Enhancement Agreement — the precursor to the Comprehensive Economic and Trade Agreement being negotiated now. The European Commission claims it walked away from the TIEA because it was dissatisfied with provincial-territorial ambitions. The Harper government is happy to use this line also because of its obsession of signing a comprehensive deal that will bind subnational governments and municipalities to WTO-plus trade constraints. But the official position of the Department of Foreign Affairs and International Trade is that Canada and the EU lost interest when Doha appeared to be around the corner in 2006. According to DFAIT:
since many of the issues we are tackling in the TIEA are also being addressed in some fashion in the WTO negotiations, Canada and the EU jointly decided in May 2006 that it would be best to pause the TIEA negotiations at this stage and await the outcome of the WTO Doha Round before moving ahead. Since the TIEA negotiations began, Canada has not anticipated concluding the TIEA before knowing the results of the WTO talks as the latter is of central importance to Canada in reducing EU barriers.
With the EU convening ministerial meetings in January at the same time as Canada and the EU are set for a sixth round of CETA talks, you could reasonably wonder if CETA will be neglected. Canada-EU trade relations have always been supplemental to the EU’s larger ambitions with the United States. EU Trade Commissioner Karel de Gucht was in Ottawa this month for a stock taking meeting on CETA and the two government have recommitted to completing a deal by the end of 2011. But the meeting felt like a side-note to a subsequent Transatlantic Economic Council (TEC) meeting in Washington at which U.S. and EU officials and business leaders “agreed to reduce the burden of regulations that far too often ‘get in the way’ of us doing business together and make high-tech and innovative business key to our strategic vision for more jobs and a better standard of living for all our citizens on both sides of the Atlantic.”
Canadian and European business lobbies are transparent in their hopes that CETA is just a stepping-stone to a NAFTA-EU free trade deal, or a Free Trade Area of the Atlantic if you will (FTAA v.2). A powerpoint presentation by Canada-Europe Roundtable for Business director Jason Langrish spells out the so called benefits:
– Would encompass 1 billion people and have a GDP of $35 trillion
– Relationship already highly integrated; similar institutions and policies
– Would place pressure on China and India to negotiate seriously at the WTO
– By moving with the EU, Canada will ensure that it plays a central role in a NAFTA-EU negotiation
Still, it is unlikely that either Canada or the EU would want to see CETA, their beautiful baby, fall ill after a hard year of heavy negotiations. Doha and Europe’s fixation on the U.S. may complicate things for Canada but the Harper government and the keener provinces (Quebec especially) have put a lot of political capital into CETA and would be embarrassed if negotiations fell apart a second time.
On procurement alone, the EU stands to gain more concessions from Canada bilaterally than through ongoing plurilateral (non-essential) WTO Government Procurement Agreement negotiations. The U.S. and EU bickered this month, according to Inside US Trade, on whose procurement markets (public spending by government and public entities) are more open. Municipalities, for example, are excluded from U.S. commitments under the GPA, and most countries (there are only 40 GPA signatories) stay away from the agreement entirely. Canada, however, is poised to permanently commit municipalities and most other subnational public entities in its deal with the EU.
TRADE ON TRIAL IN 2011
With CETA, Canada is playing the role of guinea pig for the flailing trade liberalization agenda. Even if WTO talks are truly re-energized, they will seem much less a threat to Canadian public policy than comprehensive bilateral negotiations with the largest (highly privatized) market in the world. But the consequences for developing and emerging countries of completing the Doha negotiations at the WTO remain significant. Existing trade liberalization did nothing to protect economies from the financial meltdown — it made them more vulnerable.
The priorities today are not open markets. They are job creation, sustainable development, climate change avoidance and mitigation, food availability and food price stability, the protection of water sources, access to clean drinking water and sanitation, and reducing wealth inequality globally and within nations. Trade liberalization has only one wrong answer to these questions, that is that open markets free from government interference naturally allocate scarce resources in the most efficient and fair way. This is Pascal Lamy’s answer and it is the WTO answer.
Then as now, a renewed push to complete Doha is a step away from real solutions to our world’s converging crises. The WTO, CETA and other bilateral trade agreements that protect profits first with barely an afterthought to development or ecological survival, will need to take centre stage in 2011 as part of the global fight for water, climate and economic justice.
