GLOBAL ECONOMICS
Kathleen Macmillan and Patrick Grady
"High Stakes Trade Talks"
November 26, 2001.
Although World Trade Organization delegates may not want to hear it, the Ministerial meetings at Doha in early November that launched the new round of trade talks were actually the easy part. The really tough task will be in Geneva where trade negotiators will have to make good on their commitments to further liberalize world trade. Let’s hope they are up to the job since the stakes for the world economy are very high.
Doha was do-or-die for the WTO. Granted, the chances of success where much greater there than they were two years ago at the failed WTO Ministerial in Seattle. There was no distracting carnival atmosphere with colourful marching turtles and butterflies demonstrating in the streets of this straight-laced Arab city. And, more importantly from the delegates’ point of view, no black brigades smashing store windows or crowds of angry demonstrators blocking access to the conference centre. Protestors, who probably wouldn’t have received visas from the Government of Qatar in any event, were scared away by the spectre of terrorism and the warnings of their own governments. While Doha was hardly the perfect venue for a dialogue with representatives of civil society, it was a great place for trade ministers to hunker down and work.
Trade ministers did the right thing at Doha in agreeing to a new round of talks. The terrorist strikes of September 11 have shattered consumer confidence and pushed an already sagging world economy into a deeper recession. Statistics Canada figures released this week show that Canadian imports and exports both declined sharply in September reflecting weak demand in North American markets and the effects of disruptions at the Canada-U.S. border. A new round of trade negotiations will help to forestall the wave of protectionism that inevitably arises in a recession. Fewer trade barriers mean more trade which is good for the world economy and particularly for developing nations.
But the real accomplishments of Doha go far beyond the economic. The fact that ministers could bridge their considerable differences and agree on a negotiating agenda for the world trading system shows that the WTO, one of the key international institutions underpinning the rules based global economy, can indeed work. The spirit of international cooperation that prevailed in the Arab city of Doha contrasted sharply with Osama bin Laden’s ravings on Al-Jazeera about the Dar al-Harb or House of War in which the international economy is supposed to exist. It’s much better for all concerned to have a dialogue among nations than a clash of civilizations.
The WTO risks falling flat on its face, however, unless negotiators can make some serious progress over the next several years. This will not be easy in areas like agricultural subsidies where the French had to be dragged kicking and screaming by their European colleagues to agree on even the most watered down of commitments to future reform. Another battle ground is certain to be antidumping as the US Congress will strongly resist changes despite the agreement made at Doha to re-examine and clarify rules in this contentious area.
All eyes will be on the WTO when it comes to the treatment of developing country members. The developing world, led by Brazil, India, Tanzania and Egypt are fast losing patience with the West’s hypocrisy when it comes to trade policy. The persistence of high import barriers to products where developing countries have an advantage like textiles, footwear and food products and the continued use of antidumping and other "unfair" trade laws in the West has frustrated developing nations. At the same time, the WTO has held poorer countries to a tight timetable and without much in the way of technical assistance to meet their ambitious commitments on intellectual property measures (TRIPs), investment measures (TRIMs) and other matters such as customs valuation.
The hypocrisy of the West reached new heights, post September 11 when powerful nations like Canada and the United States were able to strong arm favourable deals from pharmaceutical giants to supply the anti-anthrax drug Cipro while developing nations that have suffered for years with such devastating diseases as AIDs and malaria had been expected to rigorously enforce the full patent rights of drug manufacturers.
Rich countries promised just barely enough at Doha to convince developing nations to agree to a new trade round. On the plus side, commitments to work at reducing farm subsidies and industrial tariffs encouraged developing nations. But poorer countries were frustrated by the West’s refusal to hasten the phase out of textile restrictions and by the EU’s insistence that environmental issues be considered in future trade talks. Of tremendous symbolic value was the compromise reached on intellectual property that would give poor countries access to patented drugs when required to protect public health.
The WTO will be under the gun in the months and years to come. If negotiators fail to deliver on the goals set out at Doha, it will threaten the continued existence of the institution itself and the inclusive rules based global trading system that has contributed so much to peace and prosperity in the postwar world. However, a breakthrough - particularly in the thorny areas of agriculture and textiles that have confounded negotiators for so long - will do much to enhance the WTO’s credibility. The ball is clearly in the West’s court. Now, more than ever, it is time to demonstrate that international cooperation and globalization can work to the benefit of all nations.