Why America is Moving Away from the WTO
As WTO ministers meet in Nairobi, Tuft University’s Tim Wise explains the tensions between developing countries and developed countries and why America is pursuing asymmetrical negotiations in regional trade deals like the TPP
JESSICA DESVARIEUX, TRNN: Welcome to the Real News Network. I’m Jessica Desvarieux in Baltimore.
On December 15, trade ministers from around the world will gather in Nairobi, Kenya, for the World Trade Organization’s ministerial meeting. The WTO deals with regulation of trade between participating countries by providing a framework for negotiating trade agreements and resolving disputes. Now negotiations on new trade reforms are contentious, as negotiators from the United States and other developed countries are insisting that the WTO abandon the current Doha Development Agenda which promised to favor developing countries to make up for the inequities of past global trade rules. India and other countries are insisting that negotiators commit to achieving those development promises, including reforms to rich country agricultural policies.
Here today to help us understand this conflict and its implications for global development is our guest Tim Wise. Tim is the policy director for Tufts University’s Global Development, and he will be in Nairobi for the WTO meetings. Thanks for joining us, Tim.
TIM WISE: Pleasure to be here, Jessica.
DESVARIEUX: So Tim, let’s take a step back and understand how the WTO works. We have more than 100 countries are part of this intergovernmental body, brought together to just draft rules and regulations for trade. Its roots go back to the WTO’s predecessor, the General Agreement on Tariffs and Trade, which was established post-World War II by the victors of the war, mainly the U.S. and Western Europe. So isn’t the WTO going to be inherently biased toward developed countries?
WISE: Well, I think that bias is built in. And in part the current round of negotiations started in Doha, Qatar, in 2001 was an attempt to meet some developing countries’ complains that the institution had done just that, the earlier agreements were seen to be largely written by the rich countries with rules that favored the rich countries. And that so-called Doha Development Agenda was intended to rectify some of those past inequities.
DESVARIEUX: Can you just give a quick example of a rule that was clearly biased towards the West?
WISE: Well, the rich countries were allowed initially to–agricultural subsidies and agricultural policies in general, were initially excluded entirely from the agreement, and after one round of agreements, the agreement on agriculture was incorporated into, into the WTO agreement. But it allowed huge levels of agricultural support and other sorts of export dumping policies that favored the rich countries. Those are exactly the kinds of policies that the Doha Development Agenda was intended to begin to address.
DESVARIEUX: Okay. Let’s talk more about these export dumping practices. Because as you mentioned, you have, essentially, these wealthy countries that are dumping these cheap products into these markets. But what is the alternative? What are developing countries saying that these developed countries should be enacting? What policy should they be enacting?
WISE: Well, the negotiations have been ongoing since 2001. And it’s not that they haven’t made progress. That is, it’s not that there hasn’t been–and there haven’t been active negotiations with proposals from all sides. And in fact, progress have been made through 2008 that resulted in, that had on the table some fairly useful reforms. Reforms that the United States government, the European Union and Japan are now backing away from, as we approach this Nairobi ministerial. But that includes caps on what’s called trade-distorting support. So varieties of agricultural support that governments give, either be that tariff protection or agricultural subsidies, or explicit export subsidies. An agreement to lower those levels, to cap those levels, to progressively reduce the trade distortions that resulted in dumping.
Those all were in, not fully agreed, but in, certainly in the text, and actively proposed and advocated for by developing country groups. That’s what they are currently demanding, is that those negotiations pick up where they left off, and continue to deepen those reforms.
DESVARIEUX: But Tim, doesn’t the American government have an obligation to protect their farmers first, no matter what these trade rules are, even if that means more subsidies for farmers like in the U.S. farm bill? What do you make of that argument?
WISE: Well, I think the principle of the, in fact, within the WTO and within the trading system is that governments should have, certainly, a flexibility to support their own sectors and their own citizens. But those policies and programs should not have negative impacts on others in the world. So in theory the goal is to try to reduce those sorts of trade distortions that, that impact other people. I mean, export subsidies are a classic example.
One way to support your farmers is to take their surpluses and offer them super cheap on the international market by subsidizing them. That increases sales for the farm sector in the United States. But it has a negative impact on all other producers and exporters of, say, cotton, because prices are suppressed at the international level. They can’t get the same prices. They’re crowded out of export market because of artificially cheap cotton coming from the United States. And that’s a case where agreeing to a regulated set of trade rules that discipline such practices for rich countries in particular, but all countries overall, is in the interests of all governments to create a hopefully fairer, and–but in any case more regulated trading system.
DESVARIEUX: So Tim, what’s been the U.S. reaction to all this hostility from developing countries who want to have more say in policymaking?
WISE: Well, initially I think there was some openness in the, as to agreeing to a so-called Doha development round, that is, to agreeing that there was a need to balance some of the, some of the advantages that rich countries had had. That’s significantly evaporated. And so I’m somewhat shocked at the level of intransigence that our own government is showing in these negotiations. There, our representatives and our ambassador to the WTO is actively saying that the Doha development round should end. It has failed, in his words. And he fails to note that it’s failed because rich countries have refused to negotiate.
DESVARIEUX: All right. And has that led to them now looking to make trade agreements like, with the TPP, for example? Using different avenues to get trade done.
WISE: That’s right. I think, I think for the U.S. government in particular, there’s been an alternative strategy since 2008, and that has been to try to broker these large regional trade agreements. The Transatlantic Trade and Investment Partnership, the TTIP, and the Trans-Pacific Partnership with Pacific Rim countries. Those agreements become, are generally far more restrictive, and have far–are more far-reaching, in terms of the kinds of reforms they demand on developing countries, because developing countries don’t have as much bargaining power in those negotiations, in the same way that Mexico didn’t have as much bargaining power bargaining with Canada and the United States on NAFTA.
DESVARIEUX: Why does their bargaining power get reduced when they go into these more isolated trade deals, for example?
WISE: Well, in the WTO it’s one country, one vote. And most countries in the world are represented, so the developing countries are the vast majority of countries at the table. In theory. In practice there have been many–a long history of sideroom negotiations among selected countries to broker take-it-or-leave-it-deals, and that’s some of what’s going on now.
But in something like the TPP, the rich countries are not in the minority. And far more often dictate what they want, in part because what they’re offering, in theory, at the table, is access to the U.S. market. And so in exchange for access to the U.S. market in the TPP they can demand of, say, Vietnam, that it liberalize a variety of sectors that are of strategic interest to the United States. It’s called–academics call it asymmetric bargaining power, and it plays out in really dramatic ways in these regional trade negotiations.
DESVARIEUX: All right, Tim, let’s turn the corner and talk about solutions. What would you see as being a fair compromise, that really takes into consideration the needs of everyday people both here and abroad?
WISE: Well, what I would like to see come out of these Nairobi negotiations is essentially what developing country groupings are demanding. And more than 100 developing country representatives have issued a statement saying that one, they want the Doha development round to continue, that its goals are worthy. The development goals are worthy. And that it can’t be concluded until those development goals have been achieved. That’s a very simple and moderate demand, because those, those rules still favor developed countries in significant ways, and they’re by no means perfect in making up for past inequities, but they are an advance. They’re a promise that’s been unmet.
The fact that the United States government is walking into Nairobi saying no, we don’t want to even talk about those development goals anymore, is frankly outrageous. And a real blow to multilateralism. I mean, I find it shocking that at a time when the United States government is actively looking for multilateral partners in the fight–in the war on terror, that it is thumbing its nose at this most multilateral of institutions, one that includes a one country, one vote system that includes almost all of the countries in the world. It’s a real blow to multilateralism if the U.S., EU, and Japan, and other rich countries can just essentially say we’re not going to negotiate on what you care about. We don’t care about it anymore. You can’t make us do it. And here’s the agenda we will talk about, and if you don’t agree to that, too bad.
DESVARIEUX: Yeah, kind of throwing their weight around. All right. Tim Wise, always a pleasure having you on. Thank you so much for joining us.
WISE: Thank you, Jessica.
DESVARIEUX: And thank you for joining us on the Real News Network.
DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.
Dumping Responsibility on Third World Farmers Yet Again, Timothy A. Wise. The Wire, December 13, 2015
India’s Time to Lead at the WTO, Timothy A. Wise and Sachin Kumar Sharma, Down To Earth, December 12, 2015