WTO: The agenda after Bali

By Umberto Mazzei

Geneva , 02/04/2014

Strategic background

In international organizations it is always necessary to monitor what happens after reaching agreements, even when texts are carefully negotiated. There is a tendency to have them hijacked by groups that deviate interpretation towards ​​their own interests. If it is a final and definitive form of a negotiated basic text, the risk is greater and vigilance must be constant. The WTO is by no means an exception and therefore there should be a vigilant follow-up to the management of the post Bali Ministerial agenda.

That interpretive risk is even grater at the WTO, because the debate there has a background of economic interests. Advantages obtained there translate into greater wealth or bigger poverty. At WTO the risk of interpretive manipulation is big, also because there is a small group that has a very clear policy goal and therefore takes the initiative. Their goal is simple: to remove space for national policies that hinder big international corporations. Most of the other WTO member countries usually focus on specific interests, which are not always the same and are not always seen with clarity or honesty.

The main obstacle to the triumph of the proposals of the dozen of countries, which with their vassals, promote the interests of international corporations or their domestic lobbies, is paragraph Nº 47 of the Doha Declaration. This paragraph expresses the concept of negotiating every thing as a Single Undertaking, i.e. that nothing is agreed until everything is agreed. The goal is to balance the negotiation because countries do not have the same interest in all issues. This makes easier to yield in one area because there is gain in another. Some countries, for example, care for an opening to financial services while others prioritize the elimination of agricultural export subsidies.

The Single Undertaking pushed the United States to create those administered preferential trade agreements, in order to impose to some what could not be obtained from all, which have euphemistically been called “Free Trade Agreements“(FTAs). The European Union followed suit with their Economic Partnership Agreements (EPAs). Both are adhesion texts where the counterparty can not change anything. They pass for regional economic integration agreements, the kind tolerated at the WTO, but their emphasis is not commercial, but the expansion of intellectual property monopolies and imposition of supranational rules for Investment. Greater participation for owners of Intellectual Property and Investment is the basic idea of global wealth distribution in the narrative of Value Chains, now supported by an agreement on Trade Facilitation.

There is talk for a rapid implementation of the Trade Facilitation agreement, because it would increase trade in about one trillion of U.S. Dollars; a figure without any base, according to a study by Tufts University1. What is known is that it would produce many consultancies, paid for with funds from cuts in other spending. It is a perspective that deserves little priority.

The Post- Bali agenda

It is vital that members of the WTO remember paragraph No. 47 of the Doha Declaration when thinking on Trade Facilitation, in the post- Bali agenda. Paragraph 1.11 of the Bali Declaration talks about the agenda and says: As further evidence of this commitment, we instruct the Trade Negotiation Committee (TNC) to prepare, in the next 12 months, a work program clearly defined on the issues remaining of the Doha Development Agenda. This will be based on the decisions taken in this Ministerial Conference on Agriculture in particular, the development and issues related to LDCs , as well as all other issues under the Doha mandate that are essential to conclude the Round . Priority will be given to questions of the Bali package in which they were unable to reach legally binding results.

All the other issues are given 12 months for the Work Programme, however, on Trade Facilitation a Preparatory Committee for an expeditious entry into force is created and directed that before July 31, 2014, it should have a Protocol with the commitments in the A category, for insertion in Annex 1A of the WTO Agreement and to open that Protocol for adoption before July 31, 2015.

Members should not accept the entry into force of the agreement on Trade Facilitation as a separate instrument and isolated from the context of the negotiation as a whole. In Part II of the Bali Declaration, the caption 1.8 explicitly recognizes Trade Facilitation as part of the Doha programme for development. To accept its entry into force as an isolated accord would alter the negotiating balance. It would also set a precedent for an early harvest of the issues on which developing countries have made concessions and to ignore the issues that require policy changes in developed countries.

There are commentaries in that sense suggesting that what has been negotiated so far in Modalities should be reviewed, because times have changed. Certainly there are changes in the economy, but are not related to trade, which is part of the real economy, but because of scams and speculation going on in the fantastic world of finance.

U.S. diplomats already murmur that everything negotiated on Modalities should be thrown overboard and greater market access in goods (NAMA) and services should de negotiated instead. They forget that the core mandate of the Doha Round is the elimination of agricultural subsidies and those are still there – disguised in the new Farm Bill as insurance, but with bigger ones for rice and cotton – causing trade distortions that starve farmers in poor countries and erode gain in those efficient agricultures that do not subsidize their production.

It is said that high prices in Agriculture have made unnecessary the use of subsidies; it is not that prices rise, is that the dollar falls and that is another form of subsidy, as a tribute paid by the rest of the world that still uses the dollar as a reference value in international prices.

The next Work Programme

The Bali Declaration , in paragraph 1.11, as we already saw, orders the TNC to prepare a clearly defined program of work on the remaining issues of the Doha Development Agenda.

That’s what the text says, but according to some interested parties, the Work Programme Post- Bali must include the mutilation of the Doha Round and above all, the inclusion of new issues. The new issues should include:

a) acceptance of plurilateral agreements at WTO, like those admitted by the old GATT (Art.XXIV) : groups of countries accepting commitments on specific issues, valid only among them. On that basis some were inherited by WTO, like Government Procurement, Civil Aircraft, and some new ones in services like Financial Services Agreement, basic telecommunications and on goods related to information technology (ITA). The idea is to introduce into the WTO, under this figure, standards obtained on preferential trade agreements, of a bilateral or regional nature.

The pretext is that with the proliferation of such agreements, the WTO risks becoming irrelevant. If we were to accept this argument, it would be the multilateral standards that would become irrelevant. Preferential trade agreements signed by the United States and the European Union are based on the prosperity of those core economies, a situation that may change in the short term. In that case, preferential standards left outside the WTO, would lose all value as a reference. If accepted as plurilateral related issues within the WTO, the difference between standards becomes murky and plurilateral standards would acquire enough legitimacy as to request compliance from client countries on privileges for Intellectual Property and Investment, even in the case of a commercial collapse of the agreement.

At the recent informal summit in Davos, about thirty countries decided to create at WTO a plurilateral on Environmental Goods, and since at WTO those goods have not yet been defined, they adopted the list of 54 tariff lines negotiated at APEC2. It is known that the emphasis on this issue comes from countries whose corporations own almost all the patents for cleaner industrial production. which should replace the present infrastructure.

b) There are ongoing efforts to introduce a trading approach based on Value Chains. It is true that production is an international issue and even more so since International Corporations exported jobs abroad. There are positive effects for some countries and negative for others. The Value Chain approach implies that among those involved in the making of a product, there are some who deserve better rewards than others. It is an old Ricardian idea, by which in the sale of a cup of coffee, the waiter who serves it earns more than the farmer who grows it. The narrative on Value Chains says – all added- that the reward for know-how, intellectual property and investment should be much greater than the one for the work done to materialize the product.

Remarks on a WTO Cursus Honorum

In ancient Rome a political career required the prior exercise of a sequence of positions called Cursus Honorum . It was an effective way to maintain power in the hands of the senatorial class. At WTO there are moves to install something alike, but without a legal basis. Nowhere is it written that to be, say, Chairman of the General Council, the candidate can only be the incumbent that chairs the Dispute Settlement Body.

Those uses are aimed at perpetuating a group of diplomats, from a restricted number of countries, in positions from which they can influence negotiations. A clear example of this procedure happened when Mr. Pascal Lamy, then WTO Director-General, stated that to be eligible for the post of WTO Director General, it was necessary to have previously been minister in one’s own country. He wanted, with such a false assertion, to disqualify Brazilian Ambassador Roberto de Azevedo, the current Director General. Today everyone agrees that if his false pretence had been followed, the WTO would have lost an able, conciliatory and efficient Conductor.

1 Tufts University, Global Development and Envoronment Institute, Policy Brief , Nº 13-02, Dec. 2013; The Uncertain gains on Trade Facilitation, by Jeronim Capaldo

2 APEC Asia Pacific Economic Cooperation

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