(Some) Developing Countries Don’t Like the “Trade” Bit in “World Trade Organization”

The Doha round of world trade talks stagger on, with the latest “deadline” for completion of a deal set at end-2007 (i.e., before the US presidential campaign season gets underway in earnest). Last week the chair of the agriculture negotiations released a paper designed to inject movement back in to the agriculture negotiations that are proving the key stumbling block to reaching a deal on the other important areas of world trade. (On why agriculture is such a big deal, considering its relatively small share in world goods trade, see here). In any event, the chairman’s paper has been roundly criticized, which means it has been a success.

Part of the skirmish, and this is true of the trade talks more broadly, is the explicit commitment to give developing countries “special and differential (S&D) treatment” in the negotiations. In other words, poorer countries have to lower their trade barriers less than do developed countries. In the wake of the disastrous meeting in Cancun in September 2003, when developing countries flexed their muscle, these sorts of concessions were deemed necessary to get the Doha round back on track.

Unfortunately, the S&D provisions have been used frequently as an excuse for developing countries to do almost nothing to lower their trade barriers. It is not quite that clear-cut, of course. Many developing countries have an interest in exporting to other developing countries, and so want to see trade barriers come down across the board. But generally, developing countries feel that this round is about developed countries lowering their barriers to developing country goods and services, while the poorer nations continue to protect their “sensitive” goods markets from competition.

Mercantalism is to some extent the basis of the World Trade Organization: it presupposes that countries will only open their markets in return for increased access for their exports, from which the benefits of trade flow. That’s economic nonsense, of course, but in the absence of political will for unilateral trade liberalization (see more about that here), the negotiated multilateral route is the best one towards freeing markets and giving consumers access to cheaper and more goods and services.

The new development focus of the WTO, however, is proving to be an obstacle in itself to reaching a deal. South Africa, for example, on behalf of a group of other developing countries, read a statement in a meeting earlier this week of the negotiating group on market access (for industrial–or manufactured–goods) that, according to an article today:

“accused rich countries of subverting the talks known as the Doha round by seeking to advance their commercial interests instead of the original “development” goal of lifting millions of people worldwide out of poverty through free trade.” (emphasis added)

Seeking to advance their commercial interests? Those shameless knaves!

The World Trade Organization is just that – a trade organization. It is not a development institution. It is true that freer markets and trade lead to economic growth, but the Doha round of trade talks is a commercial negotiation, not a donors’ conference.

Naming it the ‘Doha Development Agenda’ may have been politically necessary, but it has proven to be a big mistake.