Ei-iE

WTO Ministerial reveals widening gap between rich and poor

published 20 January 2012 updated 27 January 2012

The 8th World Trade Organisation Ministerial Conference concluded on December 17th after 3 days of high level meetings exposed deepening divisions between developed and developing nations.

In his concluding remarks, conference chair Olusegun Olutoyin Aganga of Nigeria noted that while all ministers had agreed on the importance of the WTO’s rules-based trading system, no progress was made on bridging the differences that have stalled talks for the past decade.

“Ministers acknowledge that there are significantly different perspectives on the possible results that Members can achieve in certain areas,” Aganga reported.  “In this context, it is unlikely that all elements of the Doha Development Round could be concluded simultaneously in the near future.”

The gaps between rich and poor countries were underlined on the first day of the conference as a group made up mainly of OECD countries called on trade ministers to take a pledge against “protectionism” by agreeing not to raise tariffs or adopt other measures even if they are consistent with WTO rules.

While agreeing that protectionism must be resisted, the trade ministers of many developing countries insisted upon the need to maintain policy space to manage their specific development needs.

At a session organized by the International Trade Union Confederation during the Ministerial Conference, South African Trade and Industry Minister Rob Davies sharply criticized the anti-protectionist pledge. “There are WTO rules that we have fought for and won that allow for flexibilities and policy space to support the needs and interests of developing countries like South Africa,” Davies concluded. “The anti-protectionist pledge would take away those hard-won rights.”

Davies noted that some ministers were warning that protectionist measures could, as in the Great Depression, push the already fragile global economy into a prolonged recession.

However, Davies says these ministers are ignoring the other important lesson to be drawn from the 1930s when countries prematurely introduced deep spending cuts that derailed the recovery.

“The biggest threat to economic recovery today is not trade protectionism but the austerity measures and cutbacks many governments are pursuing,” Davies stated.

Ministers attending the conference were also divided over proposals to introduce new issues into the WTO, including climate change, food security, trade and exchange rates, and energy.

Conference chair Aganga told the closing session that many ministers “expressed reservations” about beginning negotiations on new topics because of “the possibility of addressing issues selectively or shifting the focus away from unresolved issues in the [current] negotiations.”

Negotiations aimed at liberalizing the trade in services, including education services, also remain at an impasse as ministers failed to overcome their differences on industrial tariffs and agricultural subsidies.

Following a series of meetings withofficials and delegates at the Ministerial, EI’s senior advisor David Robinson reported that many countries remain reluctant to liberalise education services, in so small measure because of the lobbying of teachers’ unions.

“Nevertheless, we have to recognize that there are a small group of influential countries that are continuing to press others to open up their education sectors to commercial competition and private investment,” Robinson warned.

Robinson noted that the continuing stalemate in talks has prompted some ministers to call for a change in the way services negotiations are conducted. Rather than multilateral negotiations in which all service sectors are discussed at once with all WTO members, some are suggesting that those members interested in specific service sectors engage in “plurilateral” talks.

“Plurilaterals are not a new idea, but the suggestion today seems to be to ratchet them up as central rather than peripheral to the negotiations,” Robinson said. “The danger is that you get a group of like-minded countries together that hammer out an agreement that suits them on, for example, education services and then they pressure other countries to sign on. It fundamentally alters the nature of talks and tips the balance in favour of those countries seeking concessions.”

In response to the new prospect of plurilateral negotiations, the BRICS group of countries – Brazil, Russia, India, China, and South Africa – issued a joint statement following the Ministerial in which they said “we will not encourage or support plurilateral approaches, or any other negotiating modality that may compromise or weaken the multilateral nature of the negotiations.”

The conference also saw five Latin American countries questioning the “exclusionary and undemocratic practices” leading up to the gathering.

Bolivia, Cuba, Ecuador, Nicaragua, and Venezuela issued a statement dissociating themselves from a political guidance document prepared ahead of the Ministerial that they say “represents only the opinion of some members.