WTO: Alert on the transition

We are living the last few weeks of M. Pascal Lamy at the helm of the WTO. Eight years in which nothing really advanced, but that has to be seen as a success, because M. Lamy spent a lot of energy – his and that of his adversaries - in his struggle to impose the agenda of Big International Corporations and Big Banks.

During those years, the Doha Mandate about reducing agricultural subsidies by Developed Countries became a matter of archaeological curiosity. Negotiations, according to the Doha mandate, were to be directed to compensate some of the Uruguay Round’s unfair measures, biased in favour of Developed Countries. Instead, they were diverted to request more open markets from Developing Countries, which are the only growing ones. To request more markets is the eternal short-term solution to the endemic Anglo-Saxon problem from Supply Side Economics: overproduction overcomes demand, and creates crisis after crisis.

The cause is basically the same since the nineteen century. Owners try to produce at maximum capacity and increase profits with low wages, instead of increasing market demand in their own market with good wages. Today’s management is basically the same, only that now jobs and investment are exported to cheap labour countries with loose labour laws. Those low wage products are traded worldwide thanks to low tariffs and open markets. The low cost workers manage to survive and the anonymous owner keeps most of the profit because of investor privileges and expanded intellectual property and distribution monopolies. Therein lies the tale of the "Global Value Chains", a new label for the "Washington Consensus", which is voiced by vendors at WTO lately.

Alert to "Trade Facilitation"

From July 15, there is a week devoted to a topic of utmost importance to Big International Corporations: Trade Facilitation. The negotiating group is chaired by a Swiss citizen, serving as the Guatemalan Permanent Representative at WTO, who has a son in prison in Switzerland accused of multiple murders; indeed, a person vulnerable to pressure if there is one.

The proposed negotiation text has over five hundred words in brackets, because there is no consensus on them. Obviously, approval before the Bali Ministerial Meeting is unlikely, unless consensus is "created" by the chairman of the negotiating group. This illicit practice is not new to WTO; it was used in 2008 for the issue of non-Agricultural Market Access on the draft text over progress at the Doha Round.

Another possibility is that the consensus on Trade Facilitation is faked at the Trade Negotiations Committee (TNC), chaired by M. Lamy. A close precedent took place during the last weekend of November 2011. After a Green Room meeting (group of countries selected by the Director General to give advice) a "political guidance" paper landed at the WTO General Council meeting that was to approve by consensus a proposal to be adopted, in December 2011, by the Eighth Ministerial Conference.

That fatherless paper was circulated by the Chair of the General Council for study and approval, even though the rules require that every document to be discussed at the GC must be included in the circulated agenda at least ten days prior to the meeting. The CG Chair also set a deadline of 24 hours to approve or reject the text unaltered, something similar to the "Fast Track" procedure used by the U.S. Congress to spearhead Free Trade Agreements.

One could expect a riot from such abuse, because the paper was illegitimate and there was no time for consultations in a procedure where a lack of objections means consent; but there was none. The only reaction came from the ALBA group, which before speaking against it at the CG, delivered a paper to the press, just in case the Chair attempted to ignore them during the debate.

The Chair had no choice then but to submit the paper as representing only his own opinion. We must make it clear that by now no one has seen a text proposal without brackets in the agenda, but we already know that there can be surprises.

Forecasts for future issues

Under the guidance of Roberto de Azevedo it is safe to say that during the next four years all subjects pertinent to the multilateral WTO framework will be conducted in a balanced and conciliatory manner, but there will be strong attempts to introduce issues that are foreign to multilateral affairs. These are some samples of that alien agenda:

a) bilateral agreements

Governments from developed countries will continue to promote the interests of big business and big banks by developing bilateral agreements, which increasingly reduce policy space for governments. They will do that in all those countries where they control the ruling classes and will do it in haste, because the remaining vestiges of political freedom, together with economic disaster and discontent may change today’s actors in the political scenario.

Among these the bi-lateral agreements, the just started negotiations between the European Union and the United States stand out. If they manage to overcome vital differences in Agriculture and something comes to fruition, it will destroy the small and medium enterprises on both sides of the Atlantic, those that provide more employment. It is easy to tell, because it is what always happens with those bilateral trade agreements that also concentrate wealth among those related to the main actors of bilateral trade agreements: Multinational Corporations of goods and services.

Another important agreement is the "Trans Pacific Partnership" (TPP) built on the criteria of "value chains", which implies more extensive and restrictive monopolies on Intellectual Property (ACTA and SOPA standards), greater privileges to foreign investment and total openness in services, including those sinister financial ones. The TPP is intended to stop the growing economic influence in Latin America and Asia of Mercosur and China.

There is a rumour that the European Union is exploring ways to negotiate a bilateral trade agreement with China. A plausible idea, if Europe could do what is convenient for her, because both are big exporters with positive trade balances and their economies are complementary.

b) trying to make bilateral standards multilateral

The idea is to assimilate into the multilateral system the transfer of national sovereignty in favour of Multinational Corporations obtained in bilateral agreements. The instrument intended to be used for the introduction of those bilateral standards into WTO will be the old GATT figure of plurilateral agreements.

There are subjects that were accepted in bilateral agreements which will be the object of a sales pitch at the WTO. One is Trade Facilitation which was already discussed there and is associated to the concept of Global Value Chains. Another will be supra national investment rules, in order to close the circle of the global economic control.

The purpose of trade facilitation is to reduce customs control. It could be useful to correct endemic customs corruption in some countries. The problem is that the United States refuses to accept any deviation from its text in the negotiation, which describes their own customs procedures. It is an arrogance that does not fit with the decreasing importance of the United States as a market and as a model for rules.

c) Forget Doha

The elimination of agricultural subsidies was the reason-to-be for the Doha Round. An issue that caused much debate and the development of many tricks intended to camouflage subsidies, but that in the future will be ignored. The pretext will be that they are not being applied because there are high agricultural prices in international markets. Prices are higher now in relation to the low ones created by those subsidies and which ruined the agriculture in countries where agriculture was the economic base. Even now, without subsidies, the prices would be higher and would benefit the development of local agriculture and food sovereignty.

Doha is dead and that is the way the United States and the European Union look at it. The lack of any agreement to endorse at the Ministerial Conference in Bali should not be considered as a failure at all; as it is not a failure to not undersign something when you don’t agree. The measure of success should be the consensus reached in measures that help everyone and not the consensus ill gotten through blackmail and complicity to make some richer and others poorer.

Responsibility in Bali

The incoming WTO Director General, Roberto de Azevedo, will chair the Bali Ministerial, but the outcome of the Ministerial will have been already cooked, under M. Lamy, by the end of July. There will be little that Sr. Azevedo can do to right the course, despite his prestige and the hope of change that he represents. For better or worse, what happens in Bali is part of the legacy of M. Lamy and no one else’s.


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