The 13th Ministerial Conference of the World Trade Organization in Abu Dhabi ended last week without any agreement on several of the key issues that the annual gathering of commerce ministers from around the world was meant to urgently address.
Even after running into overtime, as has become the norm with international negotiations nowadays, the only agreement that could be salvaged from the conference was a two-year extension of the tax-free status for digital e-commerce data transmissions. Meanwhile, key discussions on agriculture, fisheries and a host of other issues remained unfulfilled, with deep divisions among the participants.
Before the week-long negotiations began, the delegates knew exactly what lay on the table for them to resolve. Brazenly, the Western nations were quick to blame the developing world, notably India, for holding out on an agreement on fisheries and agriculture.
While it may be true that India had opposed any agreement, its opposition stemmed from a long-pending demand by it and almost 100 other developing nations about the manner in which the developed world has reneged on its commitments under the WTO.
First, in November 2001, the WTO members began negotiating a comprehensive round of agreements, called the Doha Development Round. The name reflects the spirit and the stated objective of the negotiations, which is to bring together a series of initiatives and trade agreements to help the developing countries achieve some level of development through tax concessions and other special statuses. The Doha Development Round is today almost dead, as the developed nations have gone back on their word
However, the Doha Development Round is today almost dead, as the developed nations have gone back on their word. Instead of making special provisions for the developing world, allowing the poorer nations to play some catch-up with the rich countries, they have begun treating the developing nations at par and asking them to make the same, if not more, concessions on import tariffs and other issues as the rich nations.
On top of that, the rich nations have also been adding to their demands more lopsided agreements that help them in areas where their industries or businesses are strong, while holding off in areas, notably farming and fisheries, where the developing world can have the upper hand.
Take fisheries for instance. For many developing nations, fishing is an important source of employment, as well as nutrition, for a significant proportion of their populations, often as high as 10 percent. In sharp contrast, fisheries are a source of livelihood for less than 0.05 percent of the total British workforce. Yet Britain has indulged in a “cold war” with France over fishing rights in the English Channel and British ships still go far to the south in the Atlantic Ocean to catch fish.
The situation is not much different in France, which also keeps on heaping subsidies on its fisherfolk, while in the same breath urging India and other developing countries, where tens of millions of workers depend on fishery as a means of survival, to…
Similar is the case with agriculture. The US, the EU and other rich nations spend upward of $60 billion each on subsidizing their farmers, while lashing out at countries like India for continuing with its own subsidies. A European farmer can get €35,000 ($38,200) in subsidies every year, while an Indian farmer receives less than €110 annually.
It is absolutely fine for the developing nations to have stood their ground and not buckled under the pressure of the rich world
In the face of such a hypocritical stance by the rich nations, it is absolutely fine for the developing nations to have stood their ground and not buckled under the pressure of the rich world. They are right not to agree to terms that would go on to harm hundreds of millions of people for several years, if not decades.
Another area where the stance of the Western nations has completely exposed them is the issue of dispute settlement. The WTO developed a relatively effective mechanism that had, for decades, addressed disputes arising between member countries through dispute settlement bodies. These are similar to courts in common parlance, where nations would sue each other for breaching their commitments or where unfair practices like excessive duties or even the dumping of products could be challenged.
However, for the past several years, the US has single-handedly wrecked even this part of the WTO, which was perhaps the sole functioning part. Naming “judges” to the dispute settlement panels needs a consensus among all member countries and the US, which has felt “outraged” that it could possibly be found guilty and penalized by the WTO, has refused to agree to the candidates proposed by a majority of the members of the organization.
As a result, many countries have gone about acting in total breach of their commitments, rendering the entire agreement and the organization itself useless and powerless.
Amid such realities, the failure of the Abu Dhabi Ministerial Conference is not such a disaster for anyone. Moreover, almost every country is now in clear violation of the spirit and perhaps the act of the WTO as well, since they have all — notably the US and the EU — launched big subsidies for their domestic industries, spending hundreds of billions of dollars on them.
With no government seemingly in the mood to pull back from narrow-minded national policies and focus on the broader global agenda, the world is clearly headed for years of the unraveling of globalization, which had dominated the global business world for almost four decades.
Maybe the time has come to put the WTO into a suspended state, since it is unlikely to serve any useful purpose for some years to come. This way, we will not only avoid the misery of failed ministerial conferences but also end the unrealistic hopes that are built on such weak foundations.
Ranvir S. Nayar is the managing editor of Media India Group and founder-director of the Europe India Foundation for Excellence.