WTO summit: Sense of deja vu blights ambitions of poor

HONG KONG will represent the WTO's third spell in intensive care in six years. Pascal Lamy, the head of the WTO, knows it. The trade ministers who will sit down today (Dec 13) for six days of talks know it. The 11,000 journalists, activists, church leaders and business lobbyists know it. All that remains to be decided is whether the global trade talks leave Hong Kong as a corpse or as a patient on the mend.

By Larry Elliott

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Published: Tue 13 Dec 2005, 9:50 AM

Last updated: Thu 2 Apr 2015, 6:50 PM

Along with aid and debt relief, trade was one of the main components of the UK's anti-poverty agenda for 2005. Hong Kong was supposed to crown the year in triumph; instead, the year has ended messily and a deal still seems a long way off. For poor countries, it seems like groundhog day. They were promised a development round when the talks began in Doha four years ago, but the latest World Bank estimates show that 70 per cent of any gains from freer trade will go to rich countries, and they will get 25 times as much per head as poor countries.

Doha came just two months after 9/11 and there was a desire in the West for a show of global unity. Once the talks began in earnest, though, a more familiar pattern emerged. As one WTO official put it: "People think these negotiations are all about free trade. They're not. They're all about what you can protect."

And protect the US and the EU certainly have. Washington has shown a great reluctance to anger its pharmaceutical lobby by allowing developing countries to produce cheap generic copies of patented drugs for life-threatening illnesses; Brussels has offered cosmetic changes to the Common Agricultural Policy but nothing that suggests access to the world's biggest market will be any easier for the products that matter for developing countries. As far as the very poorest countries are concerned, the talks are an irrelevance. An ending to the subsidies America pays to its cotton farmers would help West Africa, but most of the 40 'least developed countries' lack the capacity to benefit from more open trade. When it comes to agriculture, any gains will be made by the bigger developing countries such as Brazil. For the poorest, growth will lead to trade and not vice versa.

If the games of brinkmanship are familiar, the potential for the talks to go wrong has been amplified both by the WTO's expanding membership and the complexity of the talks. In the old days, life was much simpler. The road to Hong Kong began back in 1948 with the General Agreement on Tariffs and Trade, but Gatt originally only had a handful of mainly rich members and was concerned solely with industrial tariffs. Today, the WTO has almost 150 members, any one of which can theoretically veto an agreement, and an agenda that encompasses agriculture, services and intellectual property rights as well as trade in agriculture.

Lamy, the WTO's director-general since September, has decided to settle for limited progress in Hong Kong in the hope talks can be completed in Geneva, rather than a third 'train crash' in six years. Better, in Lamy's phrase, to 'recalibrate' than see the WTO's credibility fatally undermined.

Yet, even this cautious approach contains risk. There are negotiators and officials in Geneva who believe that once the political pressure is off the talks will lose momentum. There are fears that a bad deal — minimal concessions from the West on agriculture, nothing on cotton for West Africa, a lack of properly financed aid to help poor countries build up their ability to trade — would be hastily agreed rather than the talks failing completely. But some, including Joseph Stiglitz, the former chief economist of the World Bank, say that would be a mistake. In a view echoed across many poor countries, he says no deal would be better than a bad deal.

Larry Elliott is economics editor of the London-based Guardian newspaper

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