In the gloomy world of World Trade Organisation (WTO) negotiations, developing countries are being asked, in the words of one commentator, to “chase a black cat down a dark alley blindfolded”. Riaz Tayob takes us into the corridors of the WTO and introduces us to the complicated and confusing world of negotiations on issues that affect the lives of millions in the Global South. Agriculture, health, services – it’s all up for grabs and rich countries will stop at nothing to get their hands on as big piece of the pie as they can cram into their mouths. In this context, and with a dash of manipulation and strong-arm tactics thrown in for extra spice, the danger is of a deal that is an empty gift but sold as real, concludes Tayob.

The importance of the World Trade Organisation (WTO) belies its relatively obscure birth in 1995. Since then it has been quietly chugging along, spreading economic terrorism of the fundamentalist kind. Market fundamentalism is dressed up in the clothes of growth, trade and development and yet this emperor is still naked. And the emperor will stay naked irrespective of what happens in Hong Kong, China. Whatever deal is brokered during this round of negotiations in Hong Kong or thereafter, developing countries cannot benefit much.

Past experience shows that developing countries can put their foot down and stop the process. However, until now they have been unable to extract anything meaningful from a show of unity and are still prone to the “divide and exploit” tactics of the rich countries. The systemic imbalances of the process work against developing countries and it is interesting to see how the audacious negotiating tactics of the rich countries has forced developing countries to move from being antagonists to protagonists on the same issues in a short space of time. The one redeeming feature of the current system is that the empty gift development deception so painstakingly cultivated by the rich countries and their coterie of media is being unravelled from within and without.

Essentially three outcomes are possible. Firstly, no deal is brokered at all. The talks then promptly resume after Hong Kong. Secondly, some sort of minimum deal is worked out to narrow the differences and then to pursue further discussions after Hong Kong. Thirdly, a big deal is brokered. The rich countries must consent to this as they effectively have a veto. A development deal that really meets some or all of the developing country interests may happen, after all this is a development round. But this is unlikely if developing countries continue to be clear about their demands for development space, corrections to inherited imbalances and the inclusion of new opportunities. This is because the essence of the round is about rich countries seeking market access in the developing countries and not about development. So while expectations of a deal in Hong Kong may be low, developing countries have high expectations of the negotiating round. However, the ever present danger to citizens of the world is that the liberalisation machinery may get its way after all, as happened with the rejected Cancun text being accepted almost verbatim six months later by the General Council in Geneva. The lesson to be drawn from this is nothing less than constant vigilance. Deep technical and political analysis is required to ensure that development is not a casualty of the Doha Negotiations.

The high level of ambition in these current Doha Development Agenda negotiations is being recalibrated. High ambitions, it seems, are likely to harm the prospects of a deal and all parties who have an interest in the multilateral system need to be constructive to make progress. This sounds reasonable enough, but only if one discounts the entire experience of developing countries in the WTO. Why should countries who are facing increasing poverty and inequality compromise on high development expectations? The rich countries have continuously made excessive demands on the agenda, to deflect attention away from the demands of the poorer countries, to undermine legitimate demands for changes in agriculture and to limit policy instruments that can be used for development. Besides defending their current policy space, developing countries have sought greater balance in the system by redress of built in inequities, access to promised opportunities that are meaningful and a change to agricultural subsidies regulation.

This overly modest set of demands has been greeted with aristocratic extravagance of the rich countries who have demanded over the years inter alia:

- a 0% tariff on manufactured goods by 2020 (so called Non-Agricultural Market Access – NAMA);

- rules on competition, investment, transparency in government procurement and trade facilitation (the “Singapore Issues” or the “New Issues”);

- reversals on the rights on intellectual property to prevent adequate access to medicines;

- limits on miniscule developing countries agricultural subsidies (de minimus supports);

- more liberalisation on services including essential and public services.

Recalibration of expectations for Hong Kong is a direct consequence of the rich country strategies. The strategy and tactics are so excessive that developing countries have over the years found themselves being protagonists and antagonists for the same issue. This is a reflection not only of their adaptability and “constructive engagement” at the WTO, but the sheer might and power of the rich countries in the negotiations.

For instance, in the services negotiations, developing countries were very hesitant to undertake further commitments under the General Agreement on Trade in Services (GATS). The general opposition to liberalisation was well recognised and when the rich countries saw that they were not getting market access into poor countries they sought to change the negotiating process from a bilateral request-offer to one that ensured that all countries liberalised a specific number of sectors. Developing countries faced with this audacious demand now spend a lot of their time defending the original GATS negotiating process. The initial proposals on competition policy started by some developing countries were perverted into something that the developing countries later had to oppose. Contrast this with the European Union (EU) first dropping their demands on the four Singapore Issues in Cancun then, according to Martin Khor of Third World Network, “undropping” it so that it is squarely on the agenda now. Developing countries cannot even get issues of major national interest on the agenda whereas the EU has the liberty to drop and undrop an issue. And they perceive themselves to be more development friendly.

The services negotiations are important for the rich countries because most of their new employment is in this sector. It has been packaged by the first world media marketing it as an opportunity for the developing countries when in fact the rich countries are desperate for this access. The services negotiations have not reached a point where outstanding issues have been sorted out. At this stage a country has very little idea about the scale and size of a liberalisation offer because the rules have not been worked out. In addition, there has been no progress on measures to protect domestic service suppliers if there is an import supply surge. Developing countries are being asked in these negotiations, as Chakravati Raghavan in his candid way has put it, to ‘chase a black cat down a dark alley blindfolded.’ The recent US/Mexico case has shown that if a country liberalises services at the WTO, pursuing national development goals may be made illegal.

It is not as if the stakes are not high for developing countries. The damage that can be inflicted on developing countries as a result of this round is enormous. In agriculture, the legal fiction of subsidies needs to be addressed. The developed countries deception was stylised into different legal boxes that allowed them to continue to pay subsidies. By definition, some subsidies were prohibited (blue box), others were targeted for reduction (amber box) and a door was opened to sanitise trade distorting support by calling it non-trade distorting support (green box) that has no limits and is legal.

The fiction that the green box is non-trade distorting is now well exposed. Pertinent for rich country citizens is that these supports go mainly to large agricultural corporations and not to their small farmers, so the issue is not about rural livelihoods and the well being of their citizens. Private corporations receive direct payments from the tax payers and still charge exorbitant prices to consumers for agricultural products. It shows a high degree of regulatory capture of the rich country political system which has been shown to cause untold misery, suffering and environmental degradation throughout the developing world – for which no amount of aid can compensate.

Peter Mandelsohn, the EU trade commissioner, has recently alluded to the importance of food production as an issue of national security. He said: "I don't believe in a free market in agriculture... If we had a free market ... we'd be in the hands of a relatively small number of producers who could hold us hostage." Internally, he does not want a system that would compromise the ability of Europe to cater for her needs. Externally, holding the entire developing world hostage to a system that compromises their food security is not an issue for discussion.

Implicitly, Mandelsohn recognises that the political control that the current trade deal gives the rich countries over the citizens of the developing countries is far too important to be given up. After all, if you can control the food supply of the poor countries, as the rich world does, then it is easier to exert other forms of control. The more brazenly imperialist US does not give as much credence to the European perspective and recognises that ownership of productive resources in the developing countries provides far more political leverage, and is seemingly willing to compromise more on agriculture but also not by much. The EU and US expect the poor countries to salivate over their offers, because of their generosity. They offer to cut the ceiling of what they are allowed to pay. It has no impact on the actual subsidies they are paying, because they are paying less than what they are legally entitled to pay. In any event, they do not want to place any limits on the Green Box subsidies which are legal and have no ceiling. This keeps the possibility open that they can shift their subsidy cuts from one box to the other, meaning that their offer is actually worthless. Less than 10% of their gross domestic product is in agriculture while in many African countries it is over 50%. The logic of the rich countries is: “why teach a person to fish when you can give them a meal”. This is what the rich countries sell to their citizens as “development.”

The rich countries are also pursuing major cuts on tariffs in industrial goods, fisheries, forestry and mining products (NAMA – Non Agricultural Market Access). They propose to cut tariffs by a formula on each and every line of tariffs. Rich countries already have low tariffs and have a proposed a formula that cuts the tariffs of developing countries much more than it would cut their own, in real terms. Yet, in terms of the agreements, the tariff cuts are supposed to non-reciprocal, with developing countries cutting their tariffs less. Argentina, Brazil and India have proposed a formula with a medium cut. The Caribbean nations have proposed a formula that proposes a very small cut for developing countries. Despite the attractiveness of the Caribbean proposal support for their proposal has not been forthcoming. The draft report produced by the Chairman of NAMA predictably sidelines the Caribbean proposal for the Ministerial.

There is an even better alternative method to tariff cuts under NAMA, if tariff cuts are required of developing countries at all. Yilmaz Akyuz says that an average cut in tariffs, as opposed to a line by line cut, will allow developing countries the flexibility to better meet their future needs because they could protect some sectors while opening up others for competition, as long as the changes do not exceed the average tariff limit. What is very worrying about Akyuz's analysis is that the average tariffs of developing countries are already much less than the average tariffs used by the rich countries during their developmental stage. What is even worse is that least developed countries and some others are being asked to place a ceiling (bind) on all their tariffs in exchange for not making any tariff cuts. This is a very serious limitation on their policy flexibility, especially if they are supposed to be getting this round for free. But with usual rich country aplomb, the packaging of the “gift” matters much more than the real contents inside.

In public health, the rich world and the WTO Secretariat in Geneva are all party to a fraud that can directly be linked to the suffering and deaths of millions of our people. In 1995, developing countries secured legal rights to violate patent laws which were protected under the Trade Related Intellectual Property Rights (TRIPs) agreement. Developed countries then promptly proceeded to prevent countries from using these flexibilities and in 2001 in Doha, developing countries secured an agreement that merely restated the rights they already had. The flexibilities in the TRIPs agreement to promote access to medicines had a limit, however. If a country was violating a patent right using a compulsory license to legally make generics, it could only produce primarily for its domestic market.

African countries with limited local production capacity faced the risk of not being able to secure adequate supplies of generics and sought a waiver. The waiver would allow them to secure enough generic drugs, allowing the producers to produce more than the limits in TRIPs. This may have been a tactical error that history may judge harshly because Africa pursued a waiver instead of relying on the flexibilities provided in article 30 of TRIPs, that gives wider flexibility. By pursing the waiver we undermined the possibility of developing article 30, which is more flexible and provides greater access to drugs. In any event the waiver has proven so onerous to be positively useless as no developed or developing country has made use of it in spite of a huge need for drugs.

The waiver had two components, a signed agreement and the text of a speech read out by the Chairperson of the TRIPs council. The agreement placed conditions on using the waiver and the Chairperson's text had many more onerous conditions. The signed agreement did not refer to the Chairman's statement when it was signed. The WTO Secretariat then fraudulently added an asterisk and a footnote referring to the Chairman's text, in an effort to make the use of the waiver nigh impossible. The developing countries protested about this and to date the Secretariat of the WTO refuses to remove the asterisk and the footnote. The developing countries refuse to recognise the Chairman's text as part of the agreement because it was not agreed to and also undermines the purpose of the waiver. So the dispute on the TRIPs agreement is a false dispute created and orchestrated by the rich countries to protect profits at the expense of millions of lives.

The danger inherent in the TRIPs agreement was made very clear at the Second African Union Extraordinary Session of Trade Ministers in Arusha. South African and Kenyan officials attempted to withdraw the Africa Group proposal. The Africa Group proposal is the basis for opposition to the fraud on the waiver and an attempt to secure a solution that is practical. Using tactics that can only be called highly synchronised, South Africa and Kenya tried to get the Africa Group proposal withdrawn. They did this without making it explicit that this is what they intended. Thankfully with concerted effort by other Africans this was averted. It is interesting to note that South Africa indicated unequivocal support for the Africa Group proposal during its consultation with civil society. The change in position therefore undermines the value of the consultations. With Kenya of course, the change in position occurred at a time when the entire cabinet was fired and yet there was a continuity in the position of TRIPs. The powers behind these changes seem to have an influence on African politics that is as opaque as it is powerful.

There is a real problem with transparency, accountability, good governance and democracy at the WTO. The WTO processes are simultaneously crude and sophisticated in their dictatorial tendencies. The draft texts for discussion in Hong Kong have been prepared by Chairpersons who have been accused of ignoring developing countries proposals and putting in elements where there is no consensus. Overall the bias of these chairpersons is toward the rich countries. The rich countries make a point of complaining that they have been sidelined by the chair in an effort to create an impression that the chairpersons texts/reports are not biased. Developing countries have not been as easily hoodwinked as the rich country media on this. The representative of Venezuela, upset at the text presented by a Chair, asked him “where does your responsibility [for the text] end and where does ours [the members] begin.”

From the very beginning developing countries have to start negotiations from a point of weakness that has been built into the process. The fact that Pascal Lamy is now the Director General of the WTO should also not be forgotten. He was unanimously selected for the job and has moved from being the bully boy in the school yard to the teacher with the whip. What is clear is that he has not seemed to have changed his tendency to tell developing countries what is good for them. He did this in his previous position as EU Trade Commissioner and continues to this day. In what must have been one of his lowest moments in his career, he addressed the AU Trade Ministers meeting in Arusha. He said that expectations must be recalibrated and that African countries should develop a bottom line. This was not a problem. However like Father Christmas he came carrying the “gift” of “aid for trade” and the promise of an increase in assistance for African countries. Now it can be seen as genuine, but in the context of North-South relations it can also be seen as an attempt to buy up the ministers. After all, many African states are aid dependant and are easily influenced in this way.

The danger of a deal that is an empty gift, well packaged by Lamy and his de facto political bosses in Washington and Brussels, is real. The Lamy factor should not be underestimated. The WTO may be a medieval institution, as Lamy once called it. He now has the power of the medieval lords behind him to drive a deal whatever the cost to developing countries. Developing countries should remain vigilant and ensure that they get what they want from the round. They do need to do a lot more to expose the injustices that they face in the process because without such exposure, the rich countries maintain and extend their power. If they do this more and more, then any failure of this round can be clearly blamed on the rich countries instead of them.

* Riaz Tayob works for the Southern and Eastern African Trade Negotiation Institute (SEATINI) www.seatini.org

* Please send comments to [email protected]