The new geopolitics of trade and the collapse of the mini-ministerial at the WTO

Mariarosaria Iorio

IGTN Geneva Office

 I. The geo-political context

Two visions of the world have emerged from these talks. One vision was based on Market Access as a means to ensure economic growth and promote economic development.  The other vision was based on the protection of livelihoods of small farmers and rural population.  

 These two lines of political thought have been there all along the negotiating process, and cascaded in the technical aspects of the negotiations.  This is not new. What is new is the conviction of more and more actors in the negotiations that there are issues that cannot be anymore left to the market to be regulated: poverty and livelihoods demand specific actions and strong positions. 

 
II. The political value of technical issues

One can understand the surprise of those who say that the collapse was not “only” about the SSM[1].  It would, however, be misguiding to think that this issue was too “small” to have the talks collapse. 

In countries where 60 per cent of the population is composed by small farmers who are mostly women, and where import surges of subsidized products have already and could again displace millions of people, the SSM acquires a major political value.  This issue is highly symbolic and goes beyond the technicalities of the negotiations.  

There were 20 issues on the agenda of this mini-ministerial. The Special Safeguard Mechanism (SSM) was the 19^th on the agenda.  The G33[2] had announced from the beginning of the mini-ministerial that the SSM was linked to livelihood and therefore was not negotiable. This position was maintained by India in the G7[3]. This position was supported by more 100 other developing countries.  The G20[4] (this group has more diversified economies and interests) had discussed the issue of the SSM without finding a common position. 

Was the SSM the “only” reason for the collapse?  Given the architecture of the “package” and the sequencing of issues, the SSM was to be followed by cotton subsidies.  The Hong Kong decision says that:  "We recall the mandate given by the Members in the Decision adopted by the General Council on 1 August 2004 to address cotton ambitiously, expeditiously and specifically, within the agriculture negotiations in relation to all trade-distorting policies affecting the sector ... ". This issue was not discussed.  

The cotton issue was of particular interest for the Western African (Benin, Burkina Faso, Chad and Mali) countries whose producers suffer of competition of subsidized cotton from rich countries.

Then, looking back at other specific issues on the table in agriculture the approach of exchanging Overall Trade Distorting Subsidies (OTDS) in agriculture against market access in agriculture emerging markets and in non-agricultural market access (NAMA) reflected again a political choice that links growth to market access, and to the so-called offensive interests. 

This argument was not convincing to those who have defended all along the need to protect the weakest segments of their societies, i.e. small farmers and local food production.

In NAMA, a Swiss formula coefficient of 8 for the US and the EU represented, as stated by Argentina, a cut slightly over 42%, while a coefficient of 20 for some countries, including flexibilities would have meant a cut of 60%.  

This approach would have meant a two thirds cut lower for developed countries than for developing countries.  “It is less than full reciprocity inversely applied for the benefit of the main trading partners”.  It would have been against Less Than Full Reciprocity and Paragraph 24 of the Hong-Kong Ministerial Declaration. 

The numbers in NAMA were asked to be changed and the conditions attached (sectorals in exchange if more flexibilities and better coefficients) to be eliminated.  The NAMA[5] stood strong on these issues.

The following countries attended the Signaling Conference on Services[6] (26 July 2008):

The following areas were mentioned in particular: Professional services:  Legal; accounting; architectural and engineering; integrated engineering; medical and dental; veterinary; and services provided by midwives and nurses.  Computer and related services, Research and development services, Rental and leasing services, other business services:  Advertising;  market research and opinion polling;  management consulting;  technical testing and analysis;  services incidental to agriculture;  services incidental to mining;  services incidental to manufacturing;  printing and publishing;  photographic;  packaging;  convention services;  and further activities such as translation and interpretation, design, or mailing services.  Tourism services, postal services, audiovisual services, construction, distribution, private education services, environmental services, financial services, transport, energy, cross-border supply, commercial presence, presence of natural persons.  Telecommunication services were also part of the sectors signalled for commitments.  Willingness to open education (primary and secondary education) and health care services (mode 3 and mode 4)[7] were also signalled as well as energy services.  

The Conference was not the final outcome of the negotiations.  It was basically to signal the areas where countries were ready to take new commitments or to enlarge existing ones.  Civil society had called to have the essential services out of the services offers.

III. And then? 

 The context of the Uruguay Round no longer exists. Emerging economies have now a voice in the world trading system.  This is a major change.

 Some Members might start using the Dispute Settlement Body as a tool to advance the controversial aspects of the negotiations (i.e., Brazil is already launching one on cotton subsides). This might result in an increase in Dispute Settlement cases, a legal way to deal with issues that have a political weight. 

 Instead, a serious reflection should take place on whether or not Members are ready to face the challenges of a changing world.  For how long can some of them ignore the new geo-politics of the world economy?