Sunday, August 17, 2008

The WTO's Last Gasp

By Shamus Cooke

Most had already pronounced it dead, and were surprised to learn that the WTO had meet in a frenzied attempt to conclude its “Doha Round” negotiations. The prospects for wrapping up the deal were always slim, however, and now the WTO has lapsed peacefully back into coma. It was made official on July 29th, when it was announced that the trade talks had officially collapsed.

Doha has confirmed what everybody already knew: the WTO is dead. And although keeping a brain dead patient on life support is sometimes comforting, the plug must be pulled eventually. The US and the EU refused to lower agricultural subsides (for their giant Agri-corporations), while China and other emerging economies refused to open their markets wide enough (protecting their own mega-corporations) for the leading industrialized countries.

The WTO’s death rattle has reverberated throughout the ruling class and beyond. Stark warnings are being broadcasted. The once mighty optimism in the market economy has turned sour. The Economist, in a most foreboding tone, decried: “it is possible to imagine the world economy becoming less integrated. It has happened before: the fairly free world economy of the late 19th century was riddled with protectionism by the 1930s.”

And with this we get to the heart of the matter. Like the UN (itself experiencing terminal illness) the WTO was set-up after WWII with the intention of managing and minimizing economic disasters and consequent wars. It was understood that multilateral (international), free-trade was a precondition for a healthy capitalism, preventing trade blocs from forming that could lead to military confrontation.

When the economy is growing, this is easy to do. When a serious, global recession hits, free-trade is quickly tossed aside—an everyone for themselves attitude takes over. Protectionism in the form of trade blocs develops in an attempt to push the effects of the recession onto someone else.

And while many so-called liberals are whining about the sacredness of the “democratic” institutions of the WTO and UN, we must expose the lie and show its true class nature. The UN is controlled by the elitist Security Council— the same countries that pull the strings at the WTO. It is illustrative enough to mention that only 30 countries (out of 153) were invited to the current WTO negotiations. After creating a “model” agreement, the rich nations attempt to force it down the throats of the poorer ones. Even though every member country has a veto vote in the WTO, the poor countries know their place. After the last WTO talks collapsed, the poorer countries that rejected submissiveness were subsequently threatened by US politicians, who made it clear that they would be forbidden access to the all-powerful US market. Similar threats, though usually made behind the scenes, are the basis for this institution of democracy.

But even farcical democracies have their limits. The nations that once ruled the world with an iron first are losing their ability to intimidate and control the others. A block of recently-developed countries— China, India, Brazil, South Africa, etc— have used the WTO as a venue to flex their muscles. China in particular is using the WTO to expand its power at the expense of its rivals. The NY Times agrees: “The [WTO] discussions in Geneva have confirmed that the balance of power in global trade has shifted irrevocably with the rise of China.” The old powers—Europe, US, Japan, etc— are feeling their supremacy melt away; they are the ones who are abandoning the WTO for the calmer waters of bi-lateral and regional free-trade agreements.

These kinds of free-trade agreements now account for more than half of the world’s trade. The WTO’s demise has accelerated this process, which has the effect of making an already-slumping world economy worse; while heightening tensions between nations that were already strained.

The giant corporations — themselves owned by billionaires— are quickly driving the world towards greater and more destructive wars. The international institutions of stability that the mega-rich created for themselves— WTO, UN, IMF, World Bank, etc— have been discredited or self destructed. This is because the balance of power between countries has shifted dramatically, requiring new organizations to express the change. Historically, the process of “re-organization” requires the nastiness of war, the winners of which create international institutions to their fitting.

Economic superpowers do not simply forfeit their power, the basis of which is rooted in the economic system of capitalism. This system has, once again, outlived its historic usefulness, and threatens to return the world to the state of barbarism that it assured us could never happen again (the WTO was a key “insurance” company). Society cannot be run for the private profit of individuals without these periodic episodes of crisis and misery. Taking the control of social wealth out of private hands is society’s crucial task, a struggle guided by the ideas of socialist internationalism.

The writer Shamus Cooke is a social service worker, trade unionist, and writer for the Workers International League (


Thursday, August 07, 2008

Efforts Begin to Salvage WTO Deal

For all the debts that will never be paid due to the rocket-high requirements of the IFIs... The end of the WTO could actually mark the start of something new or pave way for more imposing tyrants.


GENEVA: As efforts begin to salvage a deal from the wreckage of last month's global trade talks, experts say the first task is to untangle the confusion around a farm safeguard that became a stumbling block.

The World Trade Organization's director general, Pascal Lamy, said the talks, now in their seventh year, were near agreement on 90 percent of the agenda, especially in the core areas of agriculture and industrial goods. For many WTO members, it would be frustrating to discard that progress because of a dispute about a technical but important measure to help poor farmers withstand a flood of imports.

"Almost everything was right for a conclusion when we had this impasse between the United States and India," the president of Brazil, Luiz Inácio Lula da Silva, said Thursday in Beijing. "If we don't get back to the talks, and if we don't clinch a deal in the coming months, it will take four or five years more, and that would be a huge loss for everyone."

A senior U.S. trade official, Warren Maruyama, said Wednesday that the differences between the United States and big emerging countries like India and China were too complex to be resolved quickly. He said there was no point bringing ministers back together until such issues like the safeguard had been sorted out. But trade diplomats point to several factors suggesting that the negotiations, part of the so-called Doha round of talks, could be resumed soon even if a final deal must wait until after the U.S. elections:

The U.S. trade representative, Susan Schwab, emphasized after the talks collapsed that U.S. offers remained on the table.

WTO members largely refrained from apportioning blame, keeping the diplomatic atmosphere clear for the next move.

India, which fought for more safeguards to protect its farmers, needs a Doha deal for them to be introduced.

Trade officials have said they expect some trade diplomacy on the sidelines of the Olympics, where the president of Brazil will be joined by President George W. Bush and other leaders.

In addition, Lamy, the WTO director general, can review U.S. and Indian positions when he visits Delhi next week and Washington the week after.

The fight over the proposed "special safeguard mechanism," which derailed last month's talks, was not only unexpected but also missed the point, according to some trade experts.

Big developing countries like India and Indonesia wanted a measure to let them raise tariffs to protect their millions of subsistence farmers from a flood of subsidized imports. Exporters - including not only the United States but also developing countries like Uruguay or Costa Rica - said the measure must not conflict with the broader aim of opening markets.

Safeguards are an established part of the trade arsenal, going back to the foundation of the WTO's predecessor, the General Agreement on Tariffs and Trade, in 1947. They allow a country to raise tariffs temporarily to counter a surge in imports that threatens to damage domestic industry.

In recent years, India has been the most prolific user of existing safeguards, applying them 15 times from March 1995 to June 2008, out of a total 164 cases by 39 members, according to WTO figures.

All WTO members have the right to raise their tariffs to the maximum rates, which are negotiated at the WTO, whenever they want, as Brazil did last year with textiles to counter an influx of imports. What a safeguard does is allow a country to raise its tariffs temporarily above the ceiling.

The discussion was complicated last month when developing countries like India and Indonesia said they could apply the new safeguard even to products on which they did not have to cut maximum tariff rates in the Doha round.

The Indonesian trade minister, Marie Pangestu, said the safeguard would only be invoked in emergencies, not as a regular measure. But the implication is that for such products, the safeguard could raise tariffs above the current levels, which were agreed 15 years ago. That would leave exporters, rich and poor, worse off than today.

The talks then deadlocked on whether, and under what circumstances importers, could exceed those ceilings.

Still, the outlines of a possible compromise on safeguards are discernible, trade experts have said. The question is not whether countries can exceed the previous ceilings but whether they are prepared to make new commitments.

If a safeguard created in the Doha round is limited to tariff cuts agreed to in the round, it would be difficult for exporters to reject because WTO members already accept that a sudden influx of imports can hurt farmers. But if developing-country importers do not want to limit the new safeguard to new tariff cuts in the Doha round, they will have to convince exporters why and agree on clearly defined conditions for its use.

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