Divide-and-rule doesn’t work at WTO any more

by Paranjoy Guha Thakurta

(August 03, New Delhi, Sri Lanka Guardian) The collapse of the Doha Round of talks at the World Trade Organisation in Geneva on July 29 reflects an important development in the political economy of the globe: it is no longer that simple for rich countries to divide and rule the "wretched of the earth", to use the title of Frantz Fanon’s well-known book about the Algerian anti-colonial struggle, first published in 1961.

Those who lament the demise of multilateralism in international trade and those who rue the absence of the few crumbs that would have been thrown the way of least developed countries had the Geneva negotiations "concluded" successfully, should realise the greater victory that has been won. Developing countries — from better-off "emerging" economies like China and India to the "small and vulnerable" nations of sub-Saharan Africa — have stuck together through thick and thin and refused to yield ground to the powerful nations of North America and Europe, and Japan.

The message that came through loud and clear was simple: it is better to have no deal than a bad deal. That the US ended up blaming India and China for the collapse of the talks — ironically described in official documents as the Doha "Development" Agenda — that had started in Qatar’s capital in November 2001, merely reflected the planet’s changing economic equations.

What was more significant was the fact that affluent nations could not "buy up" a few developing countries with special sops as had been done many times during past rounds of negotiations. It has been nearly seven years since the Doha Round of talks has been going on. Two earlier rounds of trade negotiations, the Tokyo Round and the Uruguay Round, had lasted six years and more than seven years respectively. The difference this time is that the developing world has remained united.

Special deals with individual countries were sought to be struck. They did not materialise. Sweeteners were held out. They were refused. The US and the European Union offered to consider more temporary work visas for skilled professionals that India has been demanding for a while. Four West African nations (Mali, Benin, Burkina Faso and Chad) had mobilised themselves to press for a cut in US government subsidies to its cotton farmers.

There was a glimmer of hope on July 22 when WTO director-general Pascal Lamy (whose current mandate expires at the end of August) suggested that there was forward movement in the talks among trade ministers of 30 different countries and that the US and Europe would pare farm subsidies while developing countries would reduce import tariffs. But by the evening, after nine days of intense negotiations, it was clear that the talks would fail.

The blame game then started. America blamed India and China for being "overly protective" in opening their doors to a wide range of imports — from food products to chemicals and automobiles. The Group of 33 developing countries, on the other hand, argued that farm subsidies in the US and Europe squeezed their own farmers out of the market, thereby reducing local food production and leaving their countries vulnerable to sudden spikes in food prices as has happened in recent months.

When the US said it would reduce the ceiling of its official annual aid to agriculture to nearly $15 million (almost Rs 64,000 crores), a member of the delegation from Brazil sarcastically remarked "nice try", and added that what the American government would be doling out to its farmers was "still too high".

The US is the only country in the world where a higher proportion of its population is behind bars (three per cent) than the percentage who farm (two per cent). It cannot be denied that at least half of the population of the world outside America directly depends on agriculture for their livelihood. Three-fourths of the world’s poor survive on farming and 95 per cent of the world’s small and marginal farmers live in developing countries. By seeking to subsidise a small section of less than six million Americans, the US has pitted their interests against those of nearly 90 per cent of the world’s population.

China’s representative at the WTO said that what the US was demanding from developing countries was "a price as high as heaven". India’s commerce minister Kamal Nath has stated that the US wanted to enhance the commercial interests of its large agri-business corporations, whereas developing countries like India wanted to ensure that the "livelihood of its farmers" was protected. The breaking point in Geneva came on the exact modalities of devising the Special Safeguards Mechanism in the Agreement on Agriculture that allows a country to temporarily increase customs tariffs in response to a surge in import volumes or a sharp decline in prices.

The WTO — with 152 countries as members — is meant to facilitate rules-based international trade that is fair. In the Doha Round, the concerns of the poor countries were sought to be addressed through "special and differential treatment" when it came to reduction of import tariffs. It was also stated that there would be "less than full reciprocity" between developed and developing countries when it came to cuts in import tariffs. In other words, rich countries were supposed to reduce duties relatively more than poor nations. None of this has happened and appears unlikely to take place in the near future.

The poor of the world today has a greater stake than the wealthy in a transparent, multilateral trading arrangement that redresses grievances. The affluent are resisting the inevitable with a "carrot and stick" combination of threats and allurements. The problem is that the carrot is tasteless and the stick is made out of flexible rubber. Old imperial policies of divide and rule are no longer working.

(Paranjoy Guha Thakurta is an educator and a commentator based in New Delhi)
- Sri Lanka Guardian