Failure of the WTO & UN Model
Talks aimed at building enough consensus to justify the potential mini-Ministerial broke down this week over additional US demands that developing countries, particularly China and Brazil, reduce their tariffs on certain sectors of industrial goods in their economies to zero. This “market access” demand was even more extreme than the US position in July, which was already viewed by developing countries as too aggressive, given the lack of relative ambition in US and European offers on agriculture.
What is needed now is a significant roll-back of WTO rules so that our government can provide solutions to the Food, Financial, and Economic Crises – and so that governments worldwide can develop a new set of rules to discipline predatory and speculative global investors that have wrought such damage on workers, farmers, and the environment in countries around the world, say community groups that have been hit hard by WTO rules which have negative impact on their ability to make a decent living. We need our government to take the lead in calling for the dismantling of WTO rules that interfere with our government’s ability to regulate global commerce for the benefit of sustainable development and poverty reduction,” they say.
The world has changed significantly since talks were first launched in Doha, Qatar in 2001. The current global economic model, of which the WTO is a major institution, is becoming widely discredited as multiple crises caused by the failures of this model have wrought significant damage in the global economic system worldwide.
Negotiations to expand the WTO through the Doha Round were supposed to have concluded years ago, but several Ministerial-level meetings, as well as ongoing talks in Geneva, have failed to reach consensus. Most recent efforts to conclude the Round during this summer’s mini-Ministerial in Geneva ended in a stalemate over agricultural issues – not surprising in the midst of a global Food Crisis in which liberalization of agriculture (including the reduction of tariffs in developing countries, leaving them exposed to extreme volatility in the commodities markets) played a major role.
But more than any other moment in the WTO’s history, the emerging crises in the financial markets and the real economy worldwide are exposing deep structural flaws in the global economy and the rules of the WTO, which would only be exacerbated by a potential WTO expansion.
A lack of adequate regulation and liberalization in the financial markets is widely agreed to be a primary cause of the growing Financial Crisis. Yet in the WTO negotiations on services, rich countries are seeking further deregulation and liberalization of the financial markets. It is without logic that the Lamy had pushed for a conclusion to the WTO expansion agenda as a solution to the global financial crisis, when its actual policies would, by any sensible estimation, contribute to further global financial instability.
As well, the crisis in the real economy exposes the need for policy space, particularly in developing countries which did not cause the crisis, to protect their industrial sectors from a downturn in global demand. Developing countries’ accession to radical US demands in the Non-Agricultural Market Access (NAMA) negotiations would have left them more exposed to even further job loss and foreclosed development opportunities.
Importantly, many of the solutions widely agreed to be necessary to pull economies out of the crisis, such as nationalization of failing industries, direct fiscal stimulus and increased global financial services regulations, are currently prohibited by WTO rules, and would have been further curtailed by WTO expansion.
Therefore, governments should be discussing a permanent suspension of the Doha Round WTO expansion talks, as well as setting new talks aimed at rolling back many of the most pernicious provisions of the WTO – particularly those that set the stage for the emergence of the Food, Financial, and Economic Crises. Only then can new ideas about a completely different set of global rules be developed – rules that would truly discipline predatory and speculative corporate behavior and ensure that global finance and global trade serve the needs of the real economy towards sustainable development for the future.
UN Failure to Address Climate Crisis
Addressing the Poznań climate conference that constitutes the half-way mark in the negotiations on an ambitious and effective international response to climate change, to be agreed in Copenhagen at the end of 2009 and to take effect in 2013, the year after the first phase of the Kyoto Protocol expires, UN Secretary-General Ban Ki-moon said, “Together, we face two crises: climate change and the global economy. But these crises present us with a great opportunity—an opportunity to address both challenges simultaneously. Managing the global financial crisis requires massive global stimulus. A big part of that spending should be an investment—an investment in a green future. An investment that fights climate change, creates millions of green jobs and spurs green growth. We need a Green New Deal.” He added, “It is an idea that was embraced with enthusiasm at the recent development conference in Doha, Qatar, and at the meeting of finance ministers in Warsaw which concluded this past Tuesday."
Amid evident pessimism at the Poznań, Poland conference due to the powerful resistance of global business, now that the 14th Conference of Parties (CoP 14) to the United Nations Framework Convention on Climate Change (UNFCCC) has come to end, it is clear that gulf of differences still need to be bridged.