By Liepollo Pheko · 4 May 2011
In April this year, it was widely reported that agricultural talks for the Doha Round had yet again failed to advance. After a decade of unproductive negotiations to conclude the World Trade Organisations (WTOs) Doha Development Round of multilateral trade talks, the recent failure of talks on agriculture appears set to push the entire Doha talks over the edge.
Recent media reports suggest that the “Doha Round is Doomed.” Its failure to emerge with a common vision for global trade over an extended period has finally forced WTO officials to read the writing on the wall and suggest that perhaps its time for a “Plan B.” WTO director general, Pascal Lamy, has finally conceded that there are “unbridgeable gaps” between the countries involved.
These so-called “unbridgeable gaps” are largely between industrialised and emerging economies, where to simplify the disagreement, industrialised nations seek easier access to emerging markets’ economies to flog their manufactured goods, while developing nations as well as so-called less developed countries (LDCs) seek better access to industrialised countries’ markets to sell their agricultural products, but remain unable to compete in these countries because of their highly subsidised agricultural sectors.
Given the actions of both the European Union (EU) and the United States (US) and their political elbowing with regard to trade policy, David Walker’s [WTO Chairperson for farm trade issues] well-worn chestnut that developing nations, including LDCs, are steering the Doha agenda, does not stand up very well to scrutiny. It is clear that both the EU and US utilise the trade agenda to leverage their political imperatives.
But while negotiations concerning the Doha round are slowly grinding to a halt, this has not prevented countries effectively talking amongst themselves at a lightening pace. As of 2011, there are an estimated 4,000 bilateral agreements in force around the world compared with about 80 such agreements in 1995.
However, the acceleration of bilateral and regional initiatives also emphasises existing inequalities in the political and economic leverage that various country groupings can exercise in the world economy.
The burgeoning number of free trade agreements (FTAs) involving both developed and developing countries has raised political and economic concerns, while increasing inconsistencies in international trade law. In fact, NGOs and social movements have consistently criticized these processes and the existing imbalanced trade rules resulting from disproportionate power relations between developed countries, developing countries and LDCs.
Although the official discourse argues that regional trade agreements (RTAs) and FTAs are “stepping stones” towards the objectives pursued in the Doha Development Round, these initiatives actually create further constraints on developing countries’ capacity to exercise their sovereignty and policymaking to promote socially responsive economic development strategies, particularly those that are empowering to women. This includes an over reliance on foreign direct investment that normally yields little benefit for domestic economies and communities.
The EU has been using RTAs in order to improve and maintain its market share in developing countries’ markets. With shrinking economies, truncated domestic expenditure, the lingering and biting impact of America’s recession and an aging population, it is Africa and to some extent Asia and Latin America that offer Europe the prospect of economic salvation.
The US’ interest in entering into FTAs with developing countries can mainly be explained by its desire to achieve multilateral economic objectives through regional integration, while pursuing further market access. To achieve its objectives, the US adopted a three-dimensional trade strategy, which sees bilateral, regional and multilateral talks as interrelated and mutually supportive. Thus, promoting convergence of interests in more open trade, while ensuring that RTA partners have areas of common interest that they should want to further liberalize at the multilateral level.
One of the most insidious effects of the neoliberal agenda is the attack on national policy and political sovereignty. This constitutes political interference conducted under the cloak of economic agreements. One problematic area relates to the RTA’s and FTA’s promotion of the idea of trade as “the means for development,” which insists on linking trade to political and investment issues.
This is consistent with the US’ belief in economic liberalism as a means for development, which complements entirely their agenda of empire building through economic, military, environmental, cultural and political incursions across the world.
We must bear in mind that Geopolitical and security considerations are the driving force behind agreements with Middle Eastern and North African nations. Trade agreements with these countries are seen as vehicles for ‘deepening’ political relationships. It remains to be seen how Tunisia, Egypt and eventually Libya will reconfigure their respective relationships with both the US and the EU. The travesty that is today Iraq should provide the necessary warnings and signposts.
This trend towards greater liberalization also results in further eroding developing countries’ and LDCs’ capacities to regulate and choose their development strategies.
Crucially the connection between the Doha Development Round and the realisation of Millennium Development Goals (MDGs) is hardly discussed. Yet we know that lower tariffs lead to permanent revenue losses in poorer countries, which reduces their capacity to fund the activities identified by the United Nations as necessary to achieve MDGs. The impact of stronger intellectual property protection on development can include raising the costs of inputs for farming. This makes food security and poverty reduction in the rural sector harder to achieve, with all the effects that this has for the other MDGs such as health and education.
The second question regards the real impact of RTAs on developing countries’ and LDCs’ leverage in multilateral negotiations. One might speculate whether industrialised nations are now pursuing their interests through RTAs and FTAs because of developing countries’ coalitions that are attempting to rebalance existing rules and power dynamics.
Most BRICS (Brazil, Russia, India, China and South Africa) countries are quick to emphasize the group’s commitment to what South Africa’s Trade and Industry Minister, Rob Davies, called fairer global trade conditions.
Groupings such as BRICS and IBSA, for example, present the possibility of alternative regionalism between and within various regions of the global south. Notwithstanding the concern that the BRICS formation itself is a danger to African countries, such groupings in turn could potentially buffer the corrosive effects of RTAs, such as, the economic partnership agreements (EPAS). Developing countries’ coalitions, including the G33, are unequivocally calling for the rebalancing of the Multi-Lateral Trade System’s (MTS’) decision-making process as well as of existing trade rules.
This development in the MTS might indeed be the reason why the stronger partners of the world economy prefer to make deals outside of this context. This might be another strategy to divide developing countries’ coalitions by providing separate deals that are then injected into the multilateral context with further strings attached. For example, what RTAs and FTAs like the EPAs potentially signal is an erosion of existing African regionalism, as evidenced by the EU’s insistence of problematically carving up blocs within the Southern African Development Community (SADC) and the East African Community (EAC).
However, the BRICS and CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa) have also demonstrated a conspicuous aversion to articulate an alternative to the trade fundamentalism of the Doha round. While they represent an interesting antidote to the bland uni-polar world after the end of the Cold War, they do so using the same paradigm and uneven commitment to key issues, such as workers’ rights and environmental sustainability.
As such, the current MTS will most likely remain intact and be driven by the new super powers. None of the current drivers have indicated any shift away from the pre-eminence of the WTO and have instead voiced their support of Russia’s drawn out debut into the body.
If indeed these are the superpowers of the next twenty years, one would hope for a more imaginative economic framework. In addition, South Africa’s disappointing vote on Libya does little to bolster confidence in a bright new world. However, none of this entirely diminishes the power of possibility and greater vision from South Africa and other emerging economies at a future point.