WTO: Lucidity flashes at the Ministerial

By Umberto Mazzei
11/12/09 Geneva

This year ends with large international meetings, all of them in Europe. In Rome, the World Food Summit, FAO. In Lisbon, the Ibero-American Conference. In Geneva, the Conference of the Global System of Trade Preferences, UNCTAD and the Ministerial Conference of WTO. In Copenhagen the Climate Conference. This concentration of events was inconvenient  for developing countries and even less to Ibero-American ones, which had an extra summit, because they often have few diplomats specialized in technical subjects and have little money for such mobilization.

In our view, the event with the greatest potential was the Conference of the Global System of Trade Preferences, UNCTAD - very little reported - which dealt with trade between developing countries. I will write latter about it. Today we will talk about what happened at the WTO, which was “Much to do about nothing.”

The WTO Ministerial Conference passed, without glory, but with some lucid interventions. There was the ritual proclaiming the desire to conclude the Doha round in 2010, but with little conviction. Before the ministerial preparatory meeting, at the G-20 on agriculture at the WTO, the Bolivian delegate said that his country clearly prioritized the substance of the negotiations over the urgency at signing something. That would be the leitmotiv in the statements of some lucid ministers and representatives. The other was that of transparency and reform of the WTO, which many want, but with divergent agendas.

Notable Statements
When you hear statements in international policy environments it is well to remember that old comparison which says that diplomats – at the inverse of ladies-  when they say yes, they mean maybe; when they say maybe, they mean no; when they say no … it is not being diplomatic.

Cuba

The first lucidity flashes were in the statement of Rodrigo Malmierca, Foreign Minister of Cuba. "The crisis has disproved the myths that deregulation and economic liberalization promote growth and development. The international trading and financial system need to be radically transformed, not cosmetically, to meet the challenges of the XXI Century " he began.

"The procedures of the WTO negotiations have not improved in terms of transparency," he continued, "it still does not guarantee real and effective participation of all Members at all stages of the process, as the only way to reach genuine consensus "..." The current situation of the Doha Round is far from achieving the purposes of development that it sought to support. The purpose of completing the round next year, is a goal that must not be translated into a precipitation that undermines the legitimate interests of the South. The aim should be to achieve significant and balanced progress in all negotiating areas, particularly those relating to development."

South Africa
Later, Robert Davies, Minister for Foreign Affairs of South Africa, spoke about the biased priorities in the negotiations. First, he made clear that “South Africa was not part of the agreements reached by some members in the July 2008 Package”, then he added that “these texts are imbalanced and reflect too much accommodation of the sensitivities of developed countries in agriculture, while demanding too much from developing countries in terms of reducing their applied industrial tariffs and policy space for industrial development.”

“South Africa fully supports the position of the G20 and Africa Group amongst others in calling for an “early and successful conclusion” to the Doha Round, with successful being defined in terms of its delivery on the Doha development mandate. Let me say though, that if we have to choose between the two, South Africa will opt for a successful developmental outcome.”

“The current bailout packages …could also exacerbate existing imbalances. It is for this reason that South Africa has supported the proposals made by Argentina and other developing countries that the WTO monitor the impact of such measures on the trade and investment of developing countries.”

“Finally, we would support the call made by a large number of countries to initiate a dialogue on the future reform of the WTO. For South Africa this must focus on strengthening the consensus principle and ensuring a more inclusive and transparent approach to decision making.”

United States

Ron Kirk, the United States Trade Representative, also prefers to wait. He said he expects “a strong outcome in the Doha Round of negotiations” but admitted that it is substance what counts: “The United States is committed to achieving such an outcome, and I believe that success is possible in 2010. But substance will drive our progress, and success is not something that any one Member, or any small group of Members, can deliver or dictate.” A clear criticism of M. Lamy, Mr. Amorim and the ultra-round clique that push to sign something, quickly and at any price.

Interestingly, Mr. Kirk acknowledged that “The circle of leadership within the WTO has grown broader and more inclusive and each and every Member of this leadership group has a responsibility.” He admitted also that there are other engines pushing the world economy: “While developed countries will continue to have a significant role in the global economy, advanced developing countries are playing an ever-increasing role as well.  According to the International Monetary Fund, 58 per cent of global economic growth between now and 2014 will be provided by China, India, Brazil, Argentina, South Africa and the ASEAN countries.” We assume that the forecast is limited to 2014, because after it will be higher still.

Venezuela
Another lucid participation was that of Ambassador German Mundaraín, who spoke for Venezuela. Mr. Mundaraín pointed out the illegitimate interference of the appointed financial G20 on WTO negotiations, which is the business of  the 153 member countries: at the WTO- he said-  "statements are produced, even distorting precise terms, saying that there is a G 20 “mandate”. I wonder how can the G20 impose a mandate to the WTO, or to our CEO? For this and other reasons, I believe that the WTO is now being perceived as the trade office of the G 20."

Argentina
Argentina’s Foreign Minister, Jorge Taiana, was busy in Lisbon and was among the last speakers, but went straight to the root of the problems. He first stated that with the financial crisis trade had fallen more than production and that this situation is called to continue, so that "trade will stop playing … the dynamic role for demand growth that it has in recent decades.” An oblique reference to the collapse of the United States as a market.

Then moved to the "rescue packages" and requested that the WTO apply the "full exercise of the supervisory and control function that it is entitled to use." Because, "measures that go beyond traditional trade policy instruments such as tax packages, financial assistance and "Buy National" policies adopted by countries with the biggest economic weight, have a  significant impact on the competitiveness of others, especially on those developing countries that do not have similar tax resources."

He stated that "in addition to striving to conclude the Doha Round” we want it “to respect the mandates and to be development-oriented" and "focus our attention on the rules governing the different sectors that are the subject of trade”. That means, stop putting dates and focus on negotiations to promote balanced development.

He concluded making a reference to the ministerial conference on the Global System of Trade Preferences among developing countries, as an example for "a more open and equitable trade that boosts South-South cooperation, which is becoming increasingly necessary to support the multilateral system." A reference to the fact that if at WTO the interest of the South is not satisfied, it will follow other paths.

The President’s Summary on the Ministerial
Chile is a compulsive trade agreement signer and is also an insider at WTO. The Deputy Director General chosen by M. Lamy from Latin America is Chile's Alejandro Jara, the Chair of the General Council is the Chilean Ambassador Mario Matus and as a result, Mr. Andrés Velasco, Chile’s Minister of Finance was invested as President of the Seventh Ministerial Conference.

 

Mr. Velasco presided during the testimony of all countries, but, judging by his summary, it is legitimate to wonder if he heard those that we report here. He should have, because three of them are members of the G20, the group to whom the WTO Direction says to be subordinate.

Starts Mr. Velasco " Recognizing the crucial part that the WTO has played in mitigating the effects of the crisis.” A credit attributed gratuitously, without any base, and contradicted by the statements we have reported here.

He continued saying "The development dimension must remain a central to the Round," Developing countries complained precisely that development has not been at all central to the round.

“Ministers reaffirmed the need to conclude the Round in 2010 and for a stock-taking exercise to take place in the first quarter of next year.” Not true, the reported statements do not consider it necessary to conclude the round in 2010 and prioritized the substance of the negotiations. As far the stock-taking exercise we ask ourselves over what. What can be done in a couple of months and with a Christmas interruption coming? More time and money sacrificed to the Ego Supremo at WTO?

 

“There was broad agreement that the growing number of bilateral and regional trade agreements is an issue for the multilateral trading system, and that there is a need to ensure that the two approaches to trade opening continue to complement each other. Some support was expressed for the eventual convergence of the two approaches.” It is a trick to break up regional unions that was proposed by M. Lamy during his election campaign. Saying that there was some support at WTO for the idea is pure fiction. Would the European Union open its common market to the whole WTO membership? Would Brazil, who excludes products from its own partners, would allow the rest of the world into Mercosur? It is an idea, flown by M. Lamy, that only international corporations support.

Now, the most serious misinterpretation, "There was wide support for building on progress made to date. There was also support for not attempting to reopen stabilized texts”. Is it that Mr. Velasco calls “stabilized" the texts proposed by chairmen of the different negotiating areas, sometimes arbitrarily and ignoring objections, as in services under the Mexican De Mateo? But if there is not a single text accepted! The Foreign Minister of South Africa was explicit in expressing disagreement with the texts of 2008, the United States also disagrees. On what concerns reopening debates, WTO rules are clear in saying that nothing is negotiated until everything is negotiated.

“The contribution the WTO can make through removing barriers to trade in environmental goods and services was widely endorsed.” But, if there is not even agreement on what an environmental good is and only developed countries with their vassals support the proposal!

 

It is troubling that the president of WTO’s ministerial meeting draws conclusions that do not correspond to what was said by the ministers. There is a risk that even if ha calls it "a non-exhaustive summary of key points that I have taken" his personal opinion may be used to   manipulate it as a mandate. It would not be a novelty, complaints about lack of transparency at WTO are many and have increased with M. Lamy, to the point that his coerced unilateral initiatives are regarded as a main cause for failure in the negotiations[1].

 

There is a suspicious coincidence between Mr. Velasco’s Summary and what M. Lamy wants. It is rather shady to ignore the statements made by countries whose texts we have quoted, but there is a clue as to the origin of this summary. Mr. Velasco, as Chilean, always spoke in Spanish, which is the normal procedure when the national tongue is one of the three official WTO languages, but he read the summary – apparently made during his two hours lunch –in English. Only two days later was there an Spanish version available.

Conclusion

The Doha Round negotiation became an unmanageable labyrinth without exit. It is better to dispense with it and restart at zero, perhaps after the crisis. Lets leave the word to South African Minister Robert Davies, who at the last agricultural G20 meeting said WTO’s conduct fulfilled Einstein’s definition of madness: “continuing to do the same thing, hoping for a different outcome”.