Doha talks look set to fail - and that's the good news

The Guardian

2nd July 2008

There will be intensive efforts at the World Trade Organisation this month to try to conclude the Doha round of trade talks that were launched in Qatar in November 2001. Pascal Lamy, the WTO director-general, wants about 35 trade ministers to meet next month to draft a deal. Chances seem virtually zero - but no tears should be shed.

After six-and-a-half years of talking, the WTO's 152 member states are still far apart on the chief issues under discussion: agricultural subsidies, tariffs on manufactured goods, and safeguards for products considered by poorer countries to warrant special treatment.

But awareness is also growing that completion of the round will not help the poor. Called a development round when launched, it has become instead a free trade round whose outcome would benefit richer rather than poorer countries. Key matters affecting the poor are missing from the talks, especially the role transnational corporations (TNCs) play in world trade, and the huge impact they have on poorer communities.

Developing countries want to see big reductions in the west's subsidies to its own farmers. But there is limited room for manoeuvre. Europe's trade officials, even trade ministers, cannot drastically alter the common agricultural policy (CAP), decided by agriculture ministers and influenced by powerful farm lobbies.

Under its new farm bill, the US is set to increase outlays to its farmers - to the consternation of the G20, a group of developing countries in the talks. They claim the bill contradicts the mandate of the Doha round, taking agriculture policies in the wrong direction. On non-agricultural market access and special products, too, considerable differences remain between rich and poor countries.

Western governments, the WTO and free marketeers claim that completing the Doha round would help solve the problem of high food prices, but this argument has been countered by more than 230 NGOs, trade unions, farmers' organisations and social movements from nearly 50 countries. They say that the Doha round, "as is currently envisioned, will further intensify the global food crisis by making food prices more volatile, increase dependence of developing countries on imports, and strengthen the power of multinational agribusiness in food and agricultural markets".

And here lies the rub. The WTO and the Doha round negotiations are based on the premise that it is countries that trade. But in today's global economy, it is TNCs that trade; about two-thirds of world trade is between them.

An ActionAid report, Power Hungry, has shown how food TNCs use and abuse their market power to drain wealth from poor communities. "Agrifood TNCs are exercising their market power to raise the price of agricultural inputs, engage in unfair buying practices, form price-fixing cartels, shut local companies out of markets, and push down prices for farmers' goods," says ActionAid. "By imposing tough standards that poor farmers cannot afford to meet, TNCs are threatening the livelihoods of hundreds of thousands of smallholders."

Strange that the WTO has nothing to say about all this, that the issue of corporate power never made it to the Doha negotiations. But unless the WTO deals with the reality of trade and the poor, it has a credibility problem as wide as the rich-poor gap. Developing countries need a better deal from world trade, but are unlikely to get it under the WTO, unless there are substantial changes.