In the dock

WTO 'Development Agenda' rings hollow

Posted: 8 May 2002

Author: John Madeley

'We are too beholden to trade' a trade official of a developing country told me at the ministerial meeting of the World Trade Organization (WTO) in Doha, Qatar (November 2001).

The meeting was a bizarre affair. The last WTO ministerial meeting in Seattle had floundered largely because the street protests empowered developing countries to stand up to the might of the West. In Doha, against a background of sealed-off, people-less streets, Western governments were so desperate for a deal that they arm-twisted developing-country ministers to an unprecedented extent. The WTO secretariat too was desperate; its very credibility was on the line if there was a repeat of Seattle.

In the end there was a deal of sorts. But the declaration agreed by ministers - to launch a new round of negotiations to liberalize world trade - is so weak it means almost nothing.

WTO agreements already cover many of the goods and services that are traded internationally. There was a clear lack of enthusiasm in Doha for extending the WTO's mandate to include the new issues that the European Union especially had pushed for - investment, competition, transparency, government procurement and trade facilitation. Negotiations on these issues will not start until after the next WTO ministerial meeting in 2003 and countries will then have the right to veto them - they could therefore be postponed indefinitely.

This lack of enthusiasm could signal something else - a rethink of the role of trade. Despite the WTO's rhetoric of launching a 'Development Round', the reality is that trade has failed to deliver for most developing countries; for most the outcome of the last round of talks, the Uruguay Round, concluded in 1993, has not contributed to reducing poverty.

But then the rules of world trade were written by Western governments with ample assistance from the corporate sector. For developing countries they are someone else's agenda: the rules make development policy subservient to trade. For example, under the WTO agreement on trade-related investment measures (TRIMS) a country cannot give preference to domestic supplies to encourage local industries and stimulate development. Foreign companies must be accorded the same treatment.

Before the Doha meeting, 'developing countries had made more than 100 concrete proposals to make WTO rules fair to the poor. Very few of these were taken on board,' says Barry Coates, director of the World Development Movement. Doha was a test for Western counties and they flunked it, showing no interest in changing world rules to benefit the poor.

Developing countries feel resentment over what is now going on. The WTO has irritated many governments by its unwillingness to listen to their concerns about the impact of trade liberalization on their countries. For them, dependence on the vagaries of world trade does not seem like the route to sustainable development - especially given the indifference of its institutions.

A further cloud on the horizon is the prospect, post-Doha, of the liberalization of trade in services, under the WTO General Agreement on Trade in Services (GATS). Talks on the GATS are due to take place this month (11-22 March) in Geneva. GATS is a dream agreement for the transnational corporations who provide internationally traded services - and the WTO lists 160 such services.

Countries can, in theory, decide which of their service sectors they open up to foreign companies. But developing countries are coming under enormous pressure to open up key public services such as water supply. A recent Christian Aid report alleged that Britain's Department for International Development (DFID) has withheld aid funds for water supply in Kumasi, Ghana, until bids for the leases of Ghana's urban supplies have been received. 'Aid is being used as a lever to open up Ghana's water sector to multinational companies,' warns the report.

This kind of pressure only increases resentment. With the prices of many primary commodities at all-time lows and with Western countries maintaining sizeable barriers against key manufactured goods from developing countries, a raw deal from services is the last thing they need.

'Let goods be homespun whenever it is reasonable and conveniently possible,' advised economist John Maynard Keynes. Trade is in the dock. Unless there is a serious attempt to change world trade rules by the time of the next WTO meeting in 2003, developing countries may well decide to put far more emphasis on production for local consumption than on trade.

John Madeley is a writer and broadcaster with a special interest in trade and sustainable agriculture.