WTO: Impartial Trade VS Preferential Trade

Umberto Mazzei

04/05/2013

Opinión

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The WTO is the international economic body of the biggest practical importance for all countries. For developed countries it guarantees stable world wide trading rules. For developing countries it guarantees also that by standing together they can repeal the imposition of unfavourable rules. It is the latter fact that displeases multinational corporations that impose their dictates on Washington, Brussels and Tokyo.

It is difficult to subjugate developing countries in a multilateral organization that works on the basis of consensus. This prompted the policy to first subdue and bind complicit governments through those bilateral agreements labelled “Free Trade”, which in fact are a model of economic policy that in many areas include managed trade instead of free trade.

At the WTO, the basic rules – which are a GATT legacy- are: non-discrimination to any country (Most Favored Nation Treatment), equal treatment for products once imported and domestic ones (National Treatment) and timely disclosure of rules affecting trade (Transparency). They are called Multilateral because they apply to all members. There are several agreements, the main ones deal with goods, services and intellectual property. There are also more specific ones of an interpretative kind, which are those on Technical Barriers to Trade, Sanitary Regulations, Unfair Competition such as Dumping and Subsidies, etc.

As an elementary principle, a bilateral agreement that grants a preferential treatment to its members at the expense of other members of the WTO, is contrary to non- discrimination. So bilateral agreements are tolerated at the WTO only if they pass a test in order to prove that there is no harm to any member of the WTO and it does not contradict WTO agreements.

The bargaining skills of Mr. Blanco

At the WTO, the Doha Round is locked by the resistance of the US and the EU to reduce the dumping of U.S. and EU subsidized products on agricultural markets. Those subsidies artificially lower international prices and ruin domestic producers; those low prices only benefit the international agro-industrial corporations and international supermarket chains. The EWG - Environmental Working Group (www.ewg.org/farm) that researches U.S. agricultural subsidies, reported on the unequal distribution of $ 240 billion in agricultural subsidies between 1995 and 2011. A privileged 10% of farm operations receives 54% of that money. Twenty six receive more than one million per year. In 2013 the subsidies will increase to 194 billion, while the US is cutting social spending on education and health.

Mr. Blanco, who chaired Mexico’s NAFTA negotiations and who allowed the dumping of agricultural products in the Mexican market, cannot be the right person to solve that problem in the WTO. His malleability in NAFTA forced three million peasants to migrate to cities and to loose Mexican historical food sovereignty. It is exactly what a majority of WTO members, developed and developing, want to avoid.

Mr, Blanco, waived in NAFTA the rights of WTO members to place countervailing duties on subsidized products prices. A right granted by liberal trade doctrine, because a market economy revolves around prices. Countervailing duties are quite legal at the WTO; it suffices to prove the damage. There are initiatives calling for subsidies damage to be presumed and to reverse the burden of proof on the one that gives the subsidies. We doubt that Mr. Blanco can handle this delicate subject.

Another issue in which Mr. Blanco in NAFTA turned away from the WTO standard is on Intellectual Property. In NAFTA, the extension of pharmaceutical and agrochemical patents registered in the countries of the bilateral are discriminatory. It prevents the entry of equivalent products - sometimes from the same brand- made in WTO countries where those patents have expired. It is a very important issue, because that trade discrimination, extends monopolies to certain companies and encourages the public health cure.

The methodology used Mr. White in NAFTA, for trade in services is not appropriate for the WTO. The NAFTA works with a negative list: it has a list of services sectors excluded from open trade and the rest remain open. At the WTO there is another method: the services sectors opened to trade are specifically mentioned; the rest remains at the discretion of the country. Mr. Blanco’s quality as negotiator can be gauged by NAFTA: Mexico opened the market for almost all of U.S. services, but the US allowed only those already committed at the WTO, and then only in the District of Columbia and federal government agencies. It happens that there are services, such as financial ones and many others, whose permits are given by state authorities. So NAFTA allows U.S. banks to operate in Mexico, but is of no use for Mexican banks to operate in the U.S.

In NAFTA, Mr Blanco negotiated a dispute settlement system that has cost Mexico dearly in settling Investments and Environmental cases. The NAFTA criterion is peculiar on this type of agreement: the projected gains are accepted as something acquired as private property. There is an emblematic case: Metalclad. This American company threw toxic waste into the aquifer of San Luis Potosí and Mexican authorities enforced the law against such antisocial and dangerous behavior. Metalclad went before the ICSID, the arbitrator under NAFTA. The ruling was against Mexico and Metalclad was paid $ 16 million in damages.

The negotiation skills of Ambassador Azevedo

Ambassador Roberto de Azevedo has a long and successful record and experience in dealing with the issues and standards at the WTO. He has not committed mistakes or given a bad example for which his country or Latin America or the international community had to pay.

His conciliatory capacity is recognized even by his own opponents. His repeated successes before the Dispute Settlement Body and the way he negotiated the application of its recommendations are samples of his technical and diplomatic skills.

Ambassador Azevedo has been well known by all the representatives of the member countries since the WTO exists and clearly enjoys great respect and sympathy. In talking with members of the WTO delegations, it is clear that his victory is assured.

Conclusion

Azevedo will have a wide victory, unless the computing “Troika” dares to commit a fraud that would be too obvious. It would cause a scandal of serious consequences for the credibility of the WTO and its authorities, and would lead to a review the rules for electing the Director General.

Geneva 05/04/2013

https://www.alainet.org/pt/node/75815