INTERNATIONAL

Salvaging The WTO's Future: Doha And Beyond

-Amit Dasgupta, Kathmandu

The stormy Uruguay Round concluded in 1994 "contradicting earlier gloomy forecasts", with an agreement to found the World Trade Organization. Indeed, it may be said without exaggeration that the historic transition from GATT to WTO was the single most important development for the global economic system in the 20th century.

GATT, General Agreement on Tariffs and Trade, was essentially what the name suggested i.e. an agreement among trading nations. It operated through a Secretariat and while its successes were indeed remarkable they were perhaps more so because it was nothing more than an agreement and did not, therefore, enjoy the status or the organizational standing, and even influence, of other bodies such as the International Monetary Fund and the World Bank. The transition from GATT to WTO changed that as it was essentially a transition from an agreement to an organization. With one single and dramatic move on January 1st 1995, the WTO was placed on the same legal and organizational and influential standing as the Fund and the Bank.

The emergence of the WTO, unlike the GATT, has lent a new meaning to the words 'economic globalization' because it has come to be seen as being synonymous with the integration of national economies into the global economy or the Multilateral Trading System. Almost every country is a member of the WTO and those that are not, barring a few exceptions, are in the process of accession.

Ironically, however, barely six years into its existence, the WTO has started generating mixed responses. Critical questions are being asked about the style of the WTO's functioning and whether the distribution of gains from market liberalization has been fair. Many have begun to argue that the WTO is at crossroads and that the future of the Organization may well depend on the outcome of the Fourth WTO Ministerial Conference in Doha.

The criticisms are, in fact, wide-ranging and sweeping. At one level, there is a rapidly growing skepticism that integration into a global economic order through trade liberalization per se would result in greater economic prosperity and enhanced human welfare. Indeed, it is being increasingly argued that poor countries would be further marginalized. In other words, that trade liberalization would only succeed in concentrating wealth in the hands of the already rich and result in the increase of poverty in the majority of the world's population, coupled with unsustainable patterns of production and consumption. The 1999 Human Development Report of the UNDP emphatically cautions against the unequal and inequitable spread of the opportunities and rewards of globalization, as it would result in concentrating power and wealth in a select group of people, nations and corporations, marginalizing the others.

The sudden proliferation of anti-globalization view bears mention. Writings, speeches and publications, and public demonstrations not only berate globalization, but also seem to imply that there is some kind of sinister 'hidden agenda' or conspiracy that is being hatched by the richer countries against their poorer counterparts. Disruption of meetings and conferences on trade liberalization are no longer unexpected by the host governments or the delegations that attend such meetings. Seattle started the trend, which was replicated in different cities, such as Bangkok, Davos, Buenos Aires, Quebec City, Genoa and elsewhere, with varying degrees of success.

While the protests have generated a lot of interest and generated its own momentum, the legitimate and genuine concerns with regard to the enormous asymmetries in the economic situation in the rich and poor countries needs to be recognized. Amartya Sen (92001) suggests that doubts about the global economic order, which extend far beyond organized protests, have to be viewed in the light of the dual presence of abject misery and unprecedented prosperity in the world in which we live. The central issue, in other words, is inequality. Indeed, the growing and legitimate perception is that the distribution of gains through trade liberalization is unfair and that the poorer countries are, in fact, at the receiving end of the stick.

At another level, it is being argued that the WTO is not working to everyone's benefit and that it functions more like an exclusive club for the richer countries where the poorer countries are treated not as equal members but as hangers-on in the fringes. Such a perception is based largely on first, a somewhat late realization by the developing countries that they were 'done in' at the Uruguay Round negotiations and second, the complete sense of isolation and alienation that they felt in Seattle at the Third WTO Ministerial Conference.

Even developed countries agree today that it would be fair to say that the Uruguay Round negotiations were unfair on the developing countries, since these countries conceded far more than they received in return. The reasons are fairly straightforward and unfortunate. Developed country delegations were much better prepared than the developing countries with regard to where their interests lay and what concessions they were willing to make.

Furthermore, claims that rapid trade liberalization would result in enormous economic benefits for all-enthused the poorer countries, many of which saw it as a sort of fast track to economic prosperity. This possibly explains, but does not justify, the fact that most developing country delegations were inadequately prepared at the time of the Uruguay Round negotiations, which turned out, as some skeptics argue, as being GATTastrophic for the Developing and Least Developed Countries.

At the same time, it is important to recognize that there exists considerable variation in the level of understanding of the different WTO instruments and thus, of participation in the negotiation process itself. First, not all the developing and least developed member countries of the WTO have embassies in Geneva. This is quite simply because they can't afford to locate a Mission and to adequately staff it. While no studies are readily available, it would be reasonable to say that the cost of maintaining a full-fledged mission in Geneva would constitute a high percentage of the development budget of many Developing and Least Developed Countries.

In addition, in very few of those countries, that do indeed have embassies in Geneva, are the diplomatic personnel exclusively engaged in WTO-related work. Thanks to the large number of international organizations situated in Geneva, such as ILO, WHO, WIPO, WMO, etc. considerable burden is imposed on the personnel who are required to shuttle from one meeting to another on subjects as wide-ranging as human rights to the Agreement on Agriculture! This naturally results in issues not receiving the attention that they merit. Secondly, many Developing and Least Developed Countries are still in the process of understanding the implications of the various WTO Agreements. The highly technical and legalistic language of the Agreements is such that many would say, and not in jest, that after years of trying to understand the WTO Agreements they discover that they have actually misunderstood tem! Regrettably, in several of these countries, no debate or consultation with the different stakeholders has taken place, primarily because expertise to conduct informed discussions is lacking. As a net result, it is only much later that they realize that the implementation of the Agreements imposes considerable costs and sacrifices on their part. As per World Bank estimates, the average cost to each developing country to implement just three of the Uruguay round Agreements is US$ 150 million! The serious political impact this has domestically can't be ignored as governments are questioned by their constituencies for not protecting their interests and concerns.

This compares very poorly with the sort of preparation undertaken by richer countries. Delegations from the U.S or the EU or Japan or any of the developed countries to the WTO Conferences or even at their WTO missions in Geneva are considerably larger than those from the poorer countries and furthermore, include specialists and lawyers, allowing for a detailed and thorough evaluation of every clause, comma and intervention. In short, these negotiators are fully au fait with where their interests lie and how this can be ensured and protected.

A combination of above factors resulted in severely constraining the effective participation of the Developing and LDCs in earlier WTO conferences. As a result, the full import and implications of the WTO Agreements was never realistically assessed or appreciated by them. It was, therefore, only much later that these countries realized that the Uruguay Round Agreements were unbalanced and tilted against their interests. Indeed, at the time of Seattle Conference and its build-up in Geneva, the developing countries took a far more activist role than earlier. The process of consultations both internally and with other like-minded countries was intensified. While there was no common South-position at the Seattle Conference, there was general consensus among the developing countries that the Uruguay Round Agreements were unbalanced, in that they imposed significant obligations on the South without providing them either sufficient rights or effective access to the markets in the North. Accordingly, they called for a re-negotiation of these Agreements. While this pro-active stance and better preparation augurs well for the developing countries in future negotiations, much more needs to be done in the area of capacity building to fully appreciate the import of the negotiating process and the fine print of the Agreements. Criticizing the developing countries for failing to promote, protect and project their interests and concerns is therefore, not an entirely fair criticism.

There was also unanimous disappointment at the manner in which the Seattle Conference was conducted. This is the second reason why there is disenchantment with the WTO. Indeed, even after two years, postmortems of the Seattle Conference continue to be harsh and critical of the manner in which the developing countries were subjected to threats, bamboozling and arm-twisting tactics by the developed countries. It would be no exaggeration to say that Seattle severely eroded the credibility of the WTO, as it ruthlessly drove home the point that the global trading system was far from global. Developing country delegations were left expressing their "disappointment and disagreement" and anger at the lack of transparency in the proceedings and their continued marginalization and exclusion from issues of vital national importance. They saw Seattle as a betrayal of trust and of good faith, splitting the global system once again on North –South lines.

It is relevant to emphasize this point because integration, which is the basic objective of the global trading system, by very definition refers to a process of co-opting everyone and everything into a larger space that is inclusive and not exclusive. Yet, Seattle succeeded in doing exactly the opposite, because the poorer countries were made to feel isolated, alienated and marginalized. They were relegated to the fringes of discussions and the negotiations through facetious arguments. Very tellingly, the Seattle conference, especially in its conduct, seemed to be making the point that free trade, and not fair trade, was the end objective for the developed countries and the big business lobbies that they represent. This meant opening up the markets in the developing countries through a time-bound schedule, while at the same time, their won markets remained protected through a variety of tariff and non-tariff measures. There were also doubts raised with regard to the WTO Secretariat and in particular, the role of the DG, as it was increasingly being perceived to be partisan and representative of the interests and concerns of the richer countries. As a natural consequence, a sense of deep disenchantment, uneasiness, suspicion and envy, fear has begun to characterize the developing country perceptions of the so called "opportunities" that the global trading system was expected to offer. Even the next DG WTO acknowledged in an interview that a valuable lesson learnt from Seattle is that an essential aspect of a new round (that Seattle was aiming for) must be the full integration of all states in the trading system and the fair distribution of trade benefits.

All eyes are now on the forthcoming Doha Conference. Has there been any dramatic change in the situation since Seattle? Most analysts would say that, by and large, status quo persists in terms of positions that developed and developing countries are going to adopt. The south insists that the imbalances of the Uruguay Round Agreements need to be corrected up-front and draws attention to a series of commitments made, which have so far remained only on paper, such a the development dimension and the special and Differential Treatment provisions. The North insists that any corrections can only be done through a new round. Interestingly, DG WTO is himself providing unqualified and open support for a new round when the majority of developing countries have expressed their serious reservations and objections to a new round and the expansion of the WTO's agenda.

The developed countries would make every effort to expand the trade agenda at Doha through the introduction of 'new issues'. In this, they would deploy all the tools they can muster from cajoling and discussing in the first instance, to threats and straightforward arm-twisting in the next. The US has already threatened isolation for those who do not agree to play ball. There would also be attempts to wean away LDCs b offering sops to them. In the end, they hope to open developing country markets further. Marginal; concessions, if any, would be made to the developing countries.

In would appear, therefore, that Doha is drifting towards a Seattle-revisited scenario and promises to be acrimonious and bitter. Clear battle lines have been drawn and there does not appear to be any meeting ground. In this regard, certain facts cannot and should not be ignored: the faith of the developing countries in the WTO, as protecting their interests and not acting as a spokesperson for the developed countries and for big business, has been severely eroded. If Doha, therefore, becomes a re-enactment of Seattle with the developing countries again being made to feel isolated and marginalized, it would raise serious doubts and misgivings about the credibility of the WTO and its future and thus, strengthen the hands of all those who are opposed to globalization and the WTO. This augurs ill for the TO and for a rule-based global trading regime that all countries are committed to strengthen.

Can anything be done, and if yes, what? Let us consider the different possibilities. The first could be a repeat performance of Seattle. Both sides stick to their positions and talks collapse. Status quo would prevail and neither side would be satisfied. This could precipitate serious rethinking about the WTO and where it is going. In the second scenario, a so-called 'give and take' approach is adopted: the trade negotiations are expanded and a new round agreed to and simultaneously, the developed countries agree to taking a fresh look at how to redress some of the genuine concerns of the developing countries. While this is the option that the developed countries and DG WTO would be striving for at Doha, there are serious problems with it because developing countries would be extremely cautious in trying to ensure that they do not once again end up giving much more than they receive. As a result, negotiations and bargaining would once again be acrimonious and highly guarded. At that stage, the discussion and negotiation process could become less than transparent. Bamboozling and arm-twisting would resurface. The developing countries are already distressed at the manner in which the WTO decision-making process is operating and any recourse to threats and selective consultations, through Green Rooms would lead to a collapse of the Conference.

There is however, a third and more viable option. This rests on a genuine desire to strengthen a rule-based multilateral trading regime and the WTO by specifically addressing at Doha, developing country concerns and in particular, their loss of confidence and trust in the global trading regime and the manner in which if is functioning at present. In other words, using the Doha Conference to unambiguously endorse the need to correct the anomalies and the deficiencies in the current system and to win back the trust and confidence of the developing countries. This would mean that the inclusion of new issues through a new round of trade negotiations would need to be withdrawn by the developed countries. It would also mean that a mechanism is decided upon to list out and address, within an agreed and reasonable time frame, the concerns of the Developing and the least Developed Countries. In other words, Doha is used as a confidence building measure.

This is neither as ambitious nor as ludicrous as it may sound. While the immediate reaction of business interests and lobbies in developed countries, particularly the US and the EU, may be to reject such a proposal outright, there are merits in it. For one, it would salvage the WTO which otherwise, may have out-lived its legitimacy because of its loss in credibility. In other words, Doha could see the search for an alternative to the WTO. Secondly, once the faith of the Developing and the Least Developed countries is won over and the WTO strengthened, it would give a fillip to trade liberalization and to a rule-based multilateral trading regime. This would be good for business and good for the global economy.

However, wining back trust is not going to be easy, since it would mean recognizing the centrality of inequality in the present system and inquiring why the distribution of gains has not been fair. It would also mean that the development dimension needs to be placed at the core of the global trading regime. Developing countries need to be treated as equal partners and the WTO needs to be treated as equal partners and the WTO needs to function in a neutral and transparent manner with greater representation ant middle and senior levels than it has at present. This would encourage the poorer countries to feel that they are part of the system and that they have much to gain by participating in it fully.

Whether the global community and DG WTO, in particular, would have the courage to take such a step remains to be seen. Either way, DG WTO, would have made history: either by burying the WTO at Doha or by giving it new life.

It's your call, Mr. Moore. Do you have the courage to take the roads less traveled by? Or will it be business-as –usual?

Text courtesy: Salvaging the WTO's Future:Doha and Beyond edited jointly by Dasgupta and Bibek Debroy. This book was only recently launched in New Delhi. We thank Mr. Dasgupta for the kind permission granted to us for printing the article contained in the book-chief editor.

CREATIVE HOLIDAYS

Taking advantage of one's holidays in France to learn a handicraft or an artistic activity is a good way to discover the traditions of a religion and to return with an original creation.

Every year, France, which is the number one tourist destination in the world , receives 67 million foreign tourists , but , apart from the most visited sites, Paris, the French Riviera and the Chateaux on the Loire, and far from the crowds, France also offers places off the beaten track where you can relax while learning and developing a handicraft or an artistic activity. Everybody is familiar with France's prestigious products such as Limoges porcelain and Grasse perfume but people rarely realize that they can make themselves. Yet this dream is within everybody's reach, including beginners, thanks to courses offered by local craftsmen. It is a way of complementing a tourist holiday and astonishing friends back home.

The wild plateau of Aubrac, in the Aveyron region, is famous for the legendary Laguiole knife. Now, under the guidance of a professional knife-maker, you can make your own. You will choose the material for your handle horn, boxwood, heather-root, rosewood or deer antler, and then you will assemble the spring, the bolster and the blade and finish it off with engraving, decorating and polishing. If you are more attracted by the sea, Douamenez, in Brittany, is the center of maritime tradition. The professional trainers of the Ateliers de I'Enfer workshop teach boat enthusiasts how to make decorative skiffs or model boats out of wood. You can choose to make a figurehead or dinghy, or discover the secret of ships in bottles.

Another time-honored tradition is porcelain, which is made in Limoges, in the Haute-Vienne department. Francoise Ville-Goureix, a painter, enamel, worker, modeller and porcelain decorator will receive you in her studio and show you the various techniques of painting on porcelain. You will decorate a white porcelain object and , at the same time, you will be able to enjoy a free visit to the National Porcelain Museum. Another technique made available to all is that of sculptors and potters who have chosen Vallauris, in the Alpes-Maritime department, as the capital of ceramics. Picasso himself decorated a chapel there. There, in that creativity-including atmosphere, the School of Fine Arts offer courses in pottery, model making, and turning for adults and children, with its own teachers. One imagines that glass blowing is reserved for professionals and yet, in Biot, on the French Riviera, master glass-blowers, faithful to the Provincal tradition of glass making will teach you about the tools and techniques of this craft. In the setting of this magnificent glassworks, whose specialty is glass containing small-trapped air-bubbles, you will be able to make your own goblet. While you are there, you will e able to admire the magical sight of glass-blowers in action, in the big hall.]

Less of a manual art but extremely refined, the creation of a personal perfume, unlike any other, is a dream. Here, in the land of lavender and mimosa, Grasse the perfume capital, in Provence, offers to make your dream come true. The "Nose" in particular of the famous Galimard perfumery will explain the architecture of a good perfume, after a visit to the perfume factory, the history of this industry and a presentation of the basic products and techniques to harmonize them. The Molinard perfumery, which is also in Grasse, offers a perfume creation workshop in a beautiful 1900 setting (that of the Villa Habanita, next to the perfumery), with theoretical and practical work. Each participant will be awarded a diploma and take his or her perfume away with them. Moreover, he will always be able to order some more of it as the formula is kept secret. Close by, Michele Funel, a master-perfumer, has created a perfume workshop in Cagnes, producing all kinds of products of natural origin. She runs courses offering an introduction to perfume-making, during which she will enthusiastically present her profession and will help you to create your own personal perfume. You will be able to give free rein to your imagination.