The World Trade Organisation (WTO) was created in the Uruguay Round of international trade talks (1986 to 1994) through grossly imbalanced ”negotiations” between the major powers and the other much weaker and ill-prepared member states. In the years since, more developing countries have joined the WTO and/or have become more informed and proactive on its thoroughly undemocratic functioning and biased agreements. However, the organisation remains a virtual battlefield.
The most powerful governments ruthlessly pursue their national economic and strategic interests, the needs of their corporations and other domestic economic and social interest groups. They use skilful negotiating ploys within the public processes, and procedural and political manoeuvres backstage. Above all, they exert economic and financial pressures on vulnerable governments. And they can use the WTO’s sanctions mechanism against lesser countries.
On occasion both the United States and the European Union even use the WTO’s dispute procedures against each other. But the US itself gives very qualified and conditional support to the WTO multilateral agreements, as it does with all other international agreements, and only in so far as they do not impinge to any degree on US political sovereignty and economic and strategic interests.
Washington also sustains unilateral trade measures on the basis of its own ”301” trade legislation. It uses unilaterally devised arrangements, such as Washington’s African Growth and Opportunities Act, or actively pursues bilateral trade and related agreements. Many countries go along with such unilateral ”offers” and bilateral approaches and agreements, despite what might be differing positions in the WTO context.
The US simultaneously builds its own multilateral regional trade agreements (such as the North American Free Trade Agreement and Washington’s proposed Free Trade Area of the Americas), which go well beyond WTO rules. And it uses these different sets of agreements to reinforce or counterbalance the WTO, as necessary.
For its part, the EU while avoiding the worst excesses of US unilateralism, also resorts to bilateral, multilateral and inter-regional reciprocal free trade agreements to further its own interests and as a counter to US global economic dominance.
Above all, both the EU and the US are preparing such agreements as fall-back positions for their international trade, investment and other relations should the multilateral rules not function to their satisfaction or expand adequately to respond to their needs.
Notwithstanding the above, membership of the WTO is being sought by (virtually) all countries because it is held to be essential to participate in international trade. But such membership is not an automatic right. It is conditional on commitment to the principles of free trade and the other trade-related policies of the WTO, such as high intellectual property guarantees, and foreign investors’ rights.
Furthermore, accession to the WTO is being made increasingly difficult as the US in particular adds extra conditions that go beyond the established WTO trade terms. These include economic, political and security demands — as with China’s earlier and Russia’s current bilateral negotiations with the US over their applications to join the ”multilateral” WTO.
Yet such trade/economic and other political (human rights) conditions are waived for countries that are already amenable to big power demands. Others, whether they are members of the WTO or not (such as Saudi Arabia and other oil-producing states), have close trade and other relations with the US, and other major players in the WTO, regardless.
Clearly, the WTO’s rules are neither solely about trade nor only about international relations. They intrude on and directly affect an expanding range of domestic policies, and constrict the options that should be matters internal to individual countries.
The WTO includes many questionable ”trade-related” agreements on the insistence of the economically advanced countries. These reflect and reinforce major changes taking place in their economies — hence the creation of the General Agreement on Trade in Services, the Agreement on Trade-Related Intellectual Property Rights (Trips) and the Agreement on Trade-Related Investment Measures.
Conversely, stronger governments have been allowed to use various devices to protect their producers, such as the back-loading of tariff reductions in their clothing and textiles sectors within the 10 year ”adjustment period” they secured for themselves in the Uruguay Round; a right they regularly deny to weaker countries.
Both the US and the EU have also skilfully avoided removing WTO-illegal export supports and direct and indirect production subsidies, particularly for their agricultural sectors, by incorporating a 10-year ”peace clause” or ”blue box” within the Agreement on Agriculture in the Uruguay Round. And they created a ”green box” within which to disguise and continue the application of such supports into the future.
The majors also utilise the WTO’s anti-dumping rules as further instruments to protect their domestic producers from competitive developing country exports. And Washington resists the WTO decisions for such rules to be subject to review in the built-in agenda after the Uruguay Round, with due revisions as needed.
The more developed countries maintain higher tariff peaks and tariff escalations (tariff increases in step with the degree of product processing or manufacture) against the exports of weaker developing countries. These not only block trade but impede the necessary phases towards industrial development in developing countries.
Notwithstanding all these abuses, the WTO is now supposedly launched into a full new ”development round” of negotiations due to be completed on January 1 2005. But the negotiations under way in Geneva are neither developmental nor democratic.
The major powers are avoiding dealing with the almost 100 amendments to existing WTO agreements, as demanded by the developing countries under the heading of ”implementation issues” before any further agreements can be negotiated.
They are similarly sidelining the demand by developing countries that the ”special and differential” terms — brought over into the WTO from decades of negotiations in the preceding General Agreement on Tariffs and Trade — must be made effective and operational in all agreements, and as a condition for further negotiations on other issues.
The majors are even back-tracking on the undertakings on Trips made during the Doha Round in 2001 that countries with urgent public health problems can manufacture under licence, or import, the necessary cheaper generic drugs. In order to defend the ”rights” of pharmaceutical companies, the US is trying to limit such health rights to only three diseases (Aids, malaria and TB), while the EU argues that such rights apply only to the very poorest countries.
Both the US and the EU are, in their own ways, evading carrying out the long-overdue reduction and phasing out of export subsidies and other supports they give to their agricultural producers. Thus, the dumping of their cheap/subsidised exports will continue to damage weaker smaller producers elsewhere. The EU is conversely removing barriers against agricultural exports from the rest of the world into its markets.
Yet the major powers are energetically pursuing liberalisations or ”market access” serving their interests. Industrial Tariff Liberalisations, misleadingly retitled Non-Agricultural Market Access, are being widened. The General Agreement on Trade in Services is pushing increased opening up of all service sectors in all countries.
The EU in particular is contriving to gain acceptance of the introduction of new issues for negotiation in the WTO — especially on investment deregulation, the opening up of government procurement and the global harmonisation of competition policy — even though many developing countries are opposed to these.
It has been repeatedly demonstrated how such a huge expansion of the scope and powers of the WTO on behalf of the stronger economies carries negative implications for the development prospects and democratic internal policymaking rights in weaker economies throughout the world.
Dot Keet is a senior researcher with The Alternative Information and Development Centre in Cape Town.