Celebrate, Don’t Mourn – The Collapse of the WTO Talks

Predictably, the cheerleaders for corporate globalization are bemoaning the collapse of World Trade Organization negotiations.

“This is a very painful failure and a real setback for the global economy when we really needed some good news,” said Peter Mandelson, the European Union’s trade commissioner.

Even worse, says the corporate globalization rah-rah crowd, the talks’ failure will hurt the developing world. After all, these negotiations were named the Doha Development Round.

“The breakdown of these talks is bad news for the world’s businesses, workers, farmers and most importantly the poor,” laments U.S. Chamber of Commerce President Tom Donohue.

But don’t shed any tears for the purported beneficiaries of the WTO talks. If truth-in-advertising rules applied, this might have been called the Doha Anti-Development Round.

The alleged upside of the deal for developing countries — increased access to rich country markets — would have been of tiny benefit, even according to the World Bank. The Research and Information System for Developing Countries points out that Bank analyses showed a successful conclusion of the Doha Round would, by 2015, increase developing country income in total by $16 billion a year — less than a penny a day for every person in the developing world.

The World Bank study, however, includes numerous questionable assumptions, without which developing countries would emerge as net losers. One unrealistic assumption is that governments will make up for lost tariff revenues by other forms of taxes. Another is that countries easily adjust to import surges by depreciating their currencies and increasing exports.

In any case, the important point is that there was very little to gain for developing countries.

By contrast, there was a lot to lose.

The promise to developing countries was that they would benefit from reduced agricultural tariffs and subsidies in the rich countries. Among developing nations, these gains would have been narrowly concentrated among Argentina, Brazil and a few other countries with industrial agriculture.

What the spike in food prices has made clear to developing countries is that their food security depends fundamentally not on cheap imports, but on enhancing their capacity to feed themselves. The Doha rules would have further undermined this capacity.

“Opening of markets, removal of tariffs and withdrawal of state intervention in agriculture has turned developing countries from net food exporters to net food importers and burdened them with huge import bills,” explains food analyst Anuradha Mittal of the Oakland Institute. “This process, which leaves the poor dependent on uncertain and volatile global markets for their food supply, has wiped out millions of livelihoods and placed nearly half of humanity at the brink of hunger and starvation.”

Farmers’ movements around the world delivered this message to government negotiators, and the negotiators refused to cave to the aggressive demands made by rich countries on behalf of agricultural commodity-trading multinationals. Kamal Nath, India’s Minister for Commerce and Industry, pointed out that the Doha Development Round was supposed to give benefits to developing countries — especially in agriculture — not extract new concessions.

The immediately proximate cause of the negotiations’ collapse was a demand by developing countries that they maintain effective tools to protect themselves from agricultural import surges. Rich countries refused the overly modest demand.

And agriculture was the area where developing countries were going to benefit.

The rough trade at the heart of the deal was supposed to be that rich countries reduce market barriers to developing country agricultural exports, and developing countries further open up to rich country manufacturing and service exports and investment.

Such a deal “basically suggests that the poor countries should remain agricultural forever,” says Ha-Joon Chang, an economics professor at the University of Cambridge and author of Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism. “In order to receive the agricultural concession, the developing countries basically have to abolish their industrial tariffs and other means to promote industrialization.” In other words, he says, developing countries are supposed to forfeit the tools that almost every industrialized country (and the successful Asian manufacturing exporters) has used to build their industrial capacity.

In sum, says Deborah James, director of international programs for the Washington, D.C.-based Center for Economic and Policy Research, this was a lose-lose deal for developing countries. “The tariff cuts demanded of developing countries would have caused massive job loss, and countries would have lost the ability to protect farmers from dumping, further impoverishing millions on the verge of survival,” she says.

By the way, it’s not as if this is a North vs. South, rich country vs. poor country issue. Although there have been multiple lines of fragmentation in the Doha negotiations, the best way to understand what’s going on is that the rich country governments are driving the agenda to advance corporate interests, not those of their populations. That’s why there is so little public support for the Doha trade agenda, in both rich and poor countries.

Says Lori Wallach of Public Citizen’s Global Trade Watch: “Now that WTO expansion has been again rejected at this ‘make or break’ meeting, elected officials and those on the campaign trail in nations around the world — including U.S. presidential candidates — will be asked what they intend to do to replace the failed WTO model and its version of corporate globalization with something that benefits the majority of people worldwide.”

Ref: counterpunch

Robert Weissman is editor of the Washington, D.C.-based Multinational Monitor, and director of Essential Action.

Speculate to accumulate

he International Monetary Fund and the World Trade Organisation promised that more trade would help to eradicate poverty and hunger. Foodcrops? Self-sufficiency in food? They had a better idea. Local farms would be closed down or encouraged to concentrate on exports. This would make the most, not of natural conditions which might be good for growing tomatoes in Mexico or pineapples in the Philippines, but of the fact that production costs are lower in Mexico and the Philippines than they are in Florida or California.

Farmers in Mali would rely on more highly mechanised, more productive producers in the Beauce or the Midwest for grain supplies. The farmers would pack up, move into town and get jobs in some western firm that had relocated to take advantage of cheaper labour than it could find at home. The countries on the East African seaboard would lighten their load of foreign debt by selling their fishing rights to the factory ships of wealthier countries. The Guineans would import tinned fish from Denmark or Portugal. Never mind the additional pollution generated by transporting all these goods. A life of bliss was guaranteed and so were the profits of the middlemen – wholesalers, shippers, insurers, advertisers.

The World Bank, prime promoter of this “development” model, now tells us that there may be food riots in 33 countries. And the WTO fears a resurgence of protectionism: some food-exporting countries – India, Vietnam, Egypt, Kazakhstan – have decided to reduce exports in order to feed their own people. What a nerve! The North is easily upset by other people’s selfishness. The Chinese eat too much meat, that’s why the Egyptians are short of wheat.

Some states have followed the World Bank and IMF advice and turned over their food crops. They can no longer keep their produce for themselves. Well, they will pay, that’s the law of the market. According to UN Food and Agriculture Organisation figures, their bill for grain imports has risen by a massive 56% in one year. Naturally the World Food Programme (WFP), which feeds 73 million people in 78 countries every year, is asking for a further $500m.

Someone must have decided this was excessive, as it got only half that amount. But the sum it sought was only what the war in Iraq costs every couple of hours, and a tiny fraction of what the sub-prime mortgage crisis will cost the banking sector, which has been bailed out by the state. To look at it another way, the WFP asked on behalf of millions of starving people for 13.5% of the sum earned last year by John Paulson, the astute hedge fund manager who realised that thousands of Americans are in negative equity and face ruin. No one knows how much the incipient famine will yield or who will reap the profits, but nothing is ever lost in a modern economy.

History repeats itself, one speculation after another. The Federal Reserve’s monetary policy encourages debt, first the internet bubble, now the real estate bubble. In 2006 the IMF was still saying there was “every indication the mechanisms for granting loans on the US property market were still relatively effective”. Market effective. Perhaps the two words should be welded together once and for all. The real estate bubble has burst. So the speculators are resurrecting an old eldorado: the grain markets. Purchasing contracts to deliver wheat or rice at a future date and counting on selling them at a higher price. And what ensures prices will keep on rising? Famine.

So what does the IMF do? The IMF, which has “the best economists in the world” according to its managing director, explains that “one way to solve the problem of famine is to increase international trade”. The poet Leo Ferré once said that “all you need to sell despair is the right formula”. It looks as though they’ve found it.

Ref: Le Monde

Islands at Risk: GE in Hawaii