In his article below, Kevin Watkins doesn't mention that the result of all this rich-country hypocrisy is that about 80% of world trade takes place only between a ring of about a dozen countries. America, with the largest domestic economy -- and by far the largest number of economists -- is the worst offender. In batting vigorously for the inclusion of China into the World Trade Organisation (WTO) recently, America, I fear, is not so much thinking about the poor of China but of the immense opportunities for American business to invest there and of the huge consumer market that is now waking up.
KH
------------------------ 43. God's diplomacy
THE RICH WRECKERS OF THE WORLD TRADE ROUND
Kevin Watkins
The Luddites are at it again. As ministers prepare to descend next month on Cancun to launch the Doha "development round" of trade negotiations, the World Trade Organisation is under concerted attack. Small groups of dedicated, well organised and ruthless activists are plotting to sink the round, striking at the heart of the rules-based trading system.
The wreckers in question are not balaclava-clad representatives of the anti-globalisation movement but men in suits representing the governments of the world's richest countries. Thanks to their efforts, almost all the deadlines set for reaching agreement on issues of concern to developing countries have been missed. There is now a real danger of collapse.
Such an outcome would be a tragedy on two counts. First, the new WTO round is an opportunity to reform the unfair trade rules that systematically disadvantage the world's poorest countries. Second, failure at Cancun would accelerate the trend towards regionalism, bilateralism and unilateral power politics, triggering a protectionist backlash in the process.
When they signed up for a new trade round in Doha in 2001, northern governments promised concrete action to open their markets, cut agricultural subsidies and deal with the concerns of developing countries over the public-health implications of WTO rules on intellectual property rights (Trips). No progress has been achieved in any of these areas. Instead, rich countries appear bent on using the round to advance aggressive liberalisation in areas primarily of interest to corporate constituencies at home.
No development agreement will be worth the paper it is written on unless it lowers northern trade barriers against exports from developing countries. The problem is that rich countries like to preach free trade overseas, while practising protectionism at home. When developing countries export to industrialised countries they face tariffs four times higher on average than those applied in trade between industrialised countries. Rich countries impose higher taxes on processed goods than on raw materials, hampering efforts by developing countries to diversify out of poverty. It is unconscionable for the world's richest countries to reserve their highest trade taxes for the world's poorest people. At Cancun they should agree to duty-free and quota-free access for all low- income countries, zero tariffs on labour-intensive exports from all developing countries and the elimination of tariff escalation.
It is the same story in agriculture. Northern governments spend $l billion a day on farm subsidies -- six times the amount they allocate to aid. These subsidies generate large export surpluses which are dumped overseas. Farmers in poor countries are being forced out of global and local markets
At Doha, the European Union and the US promised a WTO ban on export dumping. Both farm subsidy superpowers have reneged on this commitment. The 2002 US Farm Act will increase subsidies by $8 billion a year for the next decade, guaranteeing continued over-production. The EU's singular contribution to the agricultural trade negotiations has been a farm "reform" that maintains current spending, leaves export subsidies intact, and sectors such as sugar and dairy farming in chronic surplus.
When it comes to intellectual property, the US is the problem. Under intense pressure from the pharmaceuticals industry, the Bush administration has refused, to accept WTO rules that would limit the patent rights of drugs companies in order to make affordable medicines available in developing countries.
Notwithstanding the near-unanimous opposition of southern governments, the EU is demanding a WTO investment agreement that will force developing countries to open up sectors such as banking and insurance. And the US is using negotiations on financial services to achieve similar goals.
The refusal of industrialised countries to listen to developing countries' opinion threatens to damage the credibility and legitimacy of the WTO. This, after all, is supposed to be a consensus- based group, not a rich men's club.
Northern governments have a month to prepare the ground for a successful outcome at Cancun. They could usefully revisit the promises they made in Doha and then assess their proposals against two criteria: will they make trade work for the poor; and do they enjoy the support of developing countries?
The writer is head of research at Oxfam Financial Times 5 August 2003 >>>>
Keith Hudson, 6 Upper Camden Place, Bath, England
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