WTO: Last Doha’s birthday

Umberto Mazzei

21/11/2011

Opinión

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The WTO seems a beehive when the Doha round is reaching its 10^th anniversary and the VIII Ministerial Conference on December approaches. Shakespeare would say it's "Much to do about Nothing", As a caustic Ambassador said recently, "Doha is a corpse that still breathes." If it was not for the sudden shift in the accession of Russia to the WTO, there would be nothing to show at the ministerial. As so many people that boasts about what they lack, Director-General Pascal Lamy proposed a slogan for this ministerial: "WTO delivers".

We must admit that big efforts to deliver have been made, but to deliver the world to avid Multinational Corporations. What we find lacking are initiatives to give opportunities to small and medium companies or create employment in the first world, third world or the growing world between. At WTO, the bias is in favour of borderless profit for Multinational Corporation, has perverted the sense of the word Protect. In the language of the world, to protect the weak is a positive and even an ethical duty. At WTO it turned into an abusive epithet. If any country defends the livelihood of its population or prevents speculation, it is immediately branded as "protectionist." The altruistic attitude would be "open to international markets" where Big Corporations are known to speculate with multiple swindles like: subsidized prices, manipulation of supply and demand or trade in fraudulent financial papers.

WTO’s Doha Round is technically dead, nor can it be otherwise. No responsible government would give up political space in the present global economy circumstances. It is kept in artificial life because some Members want to harvest on the agreements reached on specific issues and others want to introduce again, under new labels, old topics already rejected.

The rejected topics are known as "Singapore Issues". Roughly speaking, they are issues over which there are commitments in preferential trade agreements – "free trade" or "regional" agreements – but which are not considered by the multilateral WTO agreements. They were four: Foreign Investment, Government Procurement, Competition Law and Trade Facilitation. The first three were rejected as negotiation topics, only Trade Facilitation was admitted for negotiation – important to international corporations because it is about customs - but with 850 brackets in the text, it can not fly.

Right now there is some maneuvering seeking to introduce the other three subjects, in parallel with the Doha Round. There is a proposal by Australia to multilateralize regional trade agreements (RTAs). There are proposals to sign "plurilateral" agreements, as was in use at the GATT. Both are attempts to fracture the WTO, whose authority originates precisely on the multilateral approach, on the fact that there is consensus among 154 countries. Consensus means that no country opposes it. Groups of countries can negotiate regional or plurilateral approaches to trade, but it must be outside the WTO.

The ALBA proposal on Electronic Commerce

The exponential growth of Internet has brought a growing commercial use of electronic means. Electronic Commerce was not specifically addressed by the General Agreement on Trade in Services (GATS), which only prohibits discrimination on telecommunications services, nor is there a reference in the Telecommunications Services Annex. Neither TRIPS or other WTO agreement deals with it. The only source of legislation are the principles and rules of the UNCITRAL model, which does not have a focus on development and provides only a framework for national legislation.

The regulatory vacuum is accompanied by a concentration on the growth of electronic technology that causes discriminatory abuse and growing inequality. It is a serious concern, because electronic technology expands every day to cover more basic trade activities. The increase is impossible to measure and covers all kinds of uses. Some are essential to tourism, such as buying plane tickets or making hotel reservations, others are central to office or domestic work, such as access to on line programs, others are important in education and culture, such as purchase of real or virtual books.

At WTO there have been already complaints and the General Council approved a work program that separated the theme in several issues to be treated separately in the Services Council, the Manufacturing Council and the Committee on Trade and Development. This separation removes the synergy indispensable for the study of such innovative activities and there is no progress done. There are major issues that need legal definition, such as the rights of providers and certifiers, the electronic signatures, the moment of validity of contracts or payments on line, and many more that merit international clarification.

As electronic commerce favors mainly developed countries, which are the main exporters of such services, it was agreed in 1998, together with the work plan, to have a "moratorium" (a suspension) on any tax or customs in electronic commerce activities. This temporary measure must be renewed at the VIII Ministerial Conference.

Given the state of affairs and the favorable situation to improve them that presents the renewal of the "moratorium", the ALBA group (Bolivia, Cuba, Ecuador, Nicaragua and Venezuela) came forward with a proposal, that was later supported by Argentina and Uruguay. The idea is to concentrate the work on electronic commerce at the Trade and Development Committee, to create a coherent synergy and develop a constructive and impartial cooperation on the subject.

The political background is that Washington gave order to discriminate against Cuba on the Internet. Cuba is denied access to optic fiber connections and must use satellite access which is more narrow and expensive. Cuba is excluded from the networks of Microsoft, Oracle and CISCO or from PGP signatures. Cuba is not allowed to use Amadeus, for hotel and other tourism services, is excluded from buying antivirus programs, from access to Google. The exclusion list covers Americans providers and even foreigners that use U.S. made technology. Washington is spitting into the future a rancor born in 1960.

The ALBA friends feel solidarity with Cuba, as do all the other countries at the UN, which - exception made of United States and Israel – have shamed the US Cuban blockade. There is the feeling that something so much into the future as electronic commerce, must be dealt with in a civilized manner, brushing aside economic aggression by stale political differences. The ALBA proposal seeks to define a legal base for electronic commerce based on the principle of nondiscrimination and covered by the WTO multilateral authority.

The Government of the 20 (G-20)

There is an ongoing attempt to convert the financial G-20 into a sort of World Government, which issues orders to the 154 WTO members. The G-20 actually duplicates efforts already under way elsewhere, but in a restrictive and asymmetric way, as is fitting for Multinational Corporations. The G-20 is a bully attempt to replace multilateralism, the Bush / Obama style. It is the denial of legal multilateralism, because the absence of procedures at the G-20 allows to push around those countries chosen by Wall Street as speakers for the developing world .

The G-20 is a creature of the global disaster caused by the complicity of the U.S. and European governments with Wall Street criminals, who sell worthless securities and speculate with invented money on all sort of stocks and securities casinos. It is sad that with a record that disqualifies the ruling class of Europe and the United States to govern their own countries, there are still heads of government that agree to associate with them and give their preaching a veil of legitimacy.

The G-20 now wants to dictate also in non financial activities. It already gathered a G-20 agricultural forum, not to be confused with the prestigious G-20 WTO agricultural. The agriculture ministers of the 20 anointed met in Paris, in June, and drafted some policy dictates. The G-20 summit in Cannes was very busy in condemning Greece and Italy to debt bondage, a modern version of The Merchant of Venice, but found time to turn the Parisian text into an edict.

The edict requires countries to "remove export restrictions or extra taxes on foods purchased by the World Food Programme (WFP) and not to impose again in the future." The European Union presented it in the WTO as a UE proposal. EU Ambassador to the WTO, Pangratis Angelos, presented it before a WTO GRULAC (WTO Latin American and Caribbean Group) meeting as an humanitarian initiative: ensuring food to the 100 million affected each year by lack of food.

Sovereignty over national resources

When a humanitarian purpose is mentioned, people better be always alert. Zaire is a graphic case. It has very little coast and a huge hinterland. It happened that the coast was granted in 1885 to a philanthropic society that paid Henry Stanley to expand its dominance by fire and blood into the heart of Africa[1]. A month ago, humanitarians killed Qaddafi, 50,000 Libyans and destroyed for 30 billion[2], according to companies of those NATO countries that bombed to rebuild, with Libyan money.

The EU is concerned over the impact - never proven - that export restrictions in countries that ensure first stable food prices for their own people may cause on food scarcity. However, the UE doesn’t mention other factors that are quite well known to cause food shortage crisis. We referre to speculation in the international market prices, cartelization of international distribution of food and growing production of agro-fuels. In a self serving way , the UE omitted also to mention the subsidized prices of its agricultural exports, which the Doha mandate requires eliminate because they have destroyed agriculture in poor countries that were self-sufficient and in some cases even food exporters. With such slanted approach there is reason to suppose that it is again an humanitarian pretext for something else, under the umbrella of World Food Programme.

We found a clue. The executive director of World Food Programme, Josette Sheeran, is a very nice-looking American lady, but was formerly Under Secretary at the US State Department and Deputy U.S. Trade Negotiator. She is a senior member of the Council on Foreign Relations and had a distinguished activity in the private sector: she was chairman of Empower America, a Washington conservative "think tank" and worked with Starpoints Solutions, a well-known Wall Street firm. These data shows her as a person well known in the trade world where Multinational Corporations give orders to the U.S. and the EU governments.

What is wanted here is to make a crack on the sovereign right of countries to use their resources to meet first the needs of their population. It is a case of manipulating feeling s and use the prestige of a UN humanitarian organization to wipe away obstacles to the looting of resources. It's what is allowed in the so called free trade agreements. The new Peruvian government of Ollanta Humala inherited the problem of not having enough gas to meet domestic needs because the gas which Peru produces is exported to the United States, as ruled by the investment chapter on its FTA with U.S.

EU and Egypt Proposals on export controls.

The EU did not wear it self out discussing its proposal, it just sent it as a letter to the President of the General Council, Frederick Agha, to be put on record. Undermining of the opposition was left for Egypt, along with several net food importing countries. The Egyptian proposal text contains an even more ambitious request: to eliminate even export taxes, which are a fiscal instrument accepted by the WTO. It is worth remembering that Egypt was an exporter of grain, until eventually the European agricultural subsidies ruined its agriculture.

A perverse irony - seen at WTO- is that often victims act on behalf of their tormenters. The export restrictions prevent multinationals from totally setting the world price of commodities, as under monopoly conditions. Monopolies fix the amount to be sold at the point where the difference between cost and price is higher, with no thought for demand. It is an elementary economic rule and the main victims of the high prices and shortages mandated by the international cartel would be those net food importers supporting the Egyptian proposal.

The text of the Egyptian proposal hints at influence by Multinational Corporations. It wants to prevent restrictions from countries that are exporters of basic food stuff. Basic food stuff are precisely those grains handled by the transnational corporations: soybeans, sorghum, wheat, barley, corn. The cartel does not do business with flour or canned food, for example, which is what is needed in a food crisis. Flour mills are not part of the Horn of Africa landscape or the desert sands.

The sudden call - 48 hours in advance – by the Directorate General for a formal special meeting to discuss the Egyptian proposal (16/11/11) hinted that there was an attempt to force approval. Firstly, because formal meetings are convened only when consensus had been reached at informal meetings. Formal meetings allow cheating (and does happen): the Chairperson lets speak only the side he favors, lowers the hammer and declares consensus. Secondly, because to convene a meeting on that specific issue was an attempt to separate it from the other issues being discussed at the Agriculture Committee, where there is no consensus on anything.

There was a rapid mobilization. Immediately, just after the meeting started, Argentina requested to change the meeting mode from formal to informal, because there was no consensus. Bolivia spoke disagreeing with the proposal. Cuba and Venezuela, showed some dissent, after having initially backed the Egyptian proposal as net food importers. The President bowed to the obvious, changed to informal meeting mode and the proposal sank in a sea rejections and counterproposals.

The UE made it’s own attempt on 11/18/2011 with the ACP countries (Africa, Pacific, Caribbean former European colonies). The Ambassador of Mauritius presided the meeting and tried to impose the European text unaltered, “take it or leave it”, he said. It is a rather unexpected attitude at an entity intended for negotiations. Cuba said it would leave it and others followed. Efforts for global control of food resources will continue, because Egypt already asked to talk next week to those Latin American countries who disagreed.

Considerations

1. What is at stake is the absolute control of trade in commodities by a transnational cartel that would fix national and international prices. Controls or export taxes are not to blame for food shortages. Argentina has an export tax on basic food stuffs and tripled its sales over the past 6 years, while keeping stable and accessible domestic prices during speculative bubbles.

2. The controls on export flow serves to prevent speculative looting of countries. The so-called "tortilla crisis" in Mexico, was revealing. The cartel that controls the purchase and sale of maize – Maseca and Carghill – exported the Mexican harvest, creating an artificial shortage. The price went up 70%. The cartel re-imported maize to be sold at the new price. The tortilla price rose 60%. Simple.

3. Export restrictions are not prohibited by WTO - only export quotas – so the idea is to bring the matter to the VIII Ministerial, for a negotiation mandate on the issue. We must first enforce the existing mandate, which requires eliminating subsidies and reduce domestic help, because they ruin traditional agriculture and destroy local food supply in poor countries.

4. The G-20 order and the EU proposal does not mention reforms on the present practice on giving Food Aid which is known to distorts domestic prices in the countries that receive it. To make matters worse, only one country – the United States - opposes the repeated suggestion that such assistance be given in cash, so the affected country can buy food on its own region and encourage agricultural development. There is also no mention of the role of lack of access to developed countries markets on food insecurity in developing countries.

5. The export restrictions have mitigated the effects of several crisis caused by speculation in commodity exchanges, by cartelized prices in food distribution and the diversion of crops and fertile land into production of agro-fuels.

6. The reason for raising the removal of barriers to the export of commodities at the WTO is because it has credibility and its rules are binding with speed and rigor, when they favour Multinational Corporations. Meanwhile, panel decisions contrary to those interests remain inoperative - such as the one on cotton subsidies, that has not been of much help to the four African cotton producers that have their economy devastated.

7. Countries should be alert against any possible contraband in the texts brought for the Ministerial Declaration. The President of the General Council announced that he wants a "ministerial declaration" on the issues agreed (so far none) and a "work program" sanctioned by the VIII Ministerial Conference (read the Secretariat) for anything not agreed. There is also talk of using Article 47 "Early Harvest" to anticipate for the least developed countries trading advantages concluded positively. It is a nebulous text that emerged at the Doha Ministerial Conference, that can be reaped also by the Multinational Corporations puppet governments.

Conclusions

The Doha Round is 10 years and is holding a piñata party, where everyone wants to get something in the scramble. It was christened the Doha Development Round - DDR- and it crumbles because it did not live up to its name, the entire content against equity in international trade that the DDR was suppose to reform, is still there.

Geneva 11/18/2011

- Umberto Mazzei has a PhD in political science from the University of Florence. He has taught international economics at universities in Colombia, Venezuela and Guatemala. He is Director of the Institute of International Economic Relations in Geneva.

[1] Association Internationale Africaine, where Leopold II of Belgium was Presidente and sole shareholder.

[2] Amount mentioned also by the National Transicional Council, as reported by Russia Today on 11/15/2011

https://www.alainet.org/pt/node/154136?language=es