From Geneva: The WTO as Deja Vu | The Rushford Report

GENEVA—U.S. Trade Representative Ron Kirk and his fellow trade ministers from the World Trade Organization’s 153-member countries gathered here last week for the WTO’s 7th ministerial meetings. The talks, held on Nov. 30, Dec 1 and 2, carried a certain amount of historical baggage. They happened to come exactly ten years after the WTO’s 3rd ministerial meetings in 1999 famously collapsed in the Battle of Seattle. There would be no “Seattle Round” of multilateral trade-liberalizing negotiations aimed at expanding global trade and thus enhancing global prosperity by slashing tariffs and subsidies that distort trade flows and dampen economic growth. Two years after the Seattle debacle, ministers met again, this time in Doha, Qatar, where the new round was finally launched. But in the eight years since the Doha Round began in Nov. 2001, the WTO’s member countries haven’t even been able to agree on the broad framework of what they would negotiate — called “modalities” in trade speak — much less get down to the details of specifically which tariffs and subsidies would be cut, when, and by how much. One deadline after another has been missed, as the poorer developing countries have loudly accused rich Europeans and Americans of assorted protectionist hypocrisies — allegations that have been returned in kind, although in less-strident tones.

Here last week as the ministers met in this tranquil Swiss city along the famous lake that hosts the WTO’s headquarters, the Doha negotiations themselves were considered too politically dicey even to put on the formal agenda. Still, given the vital importance of the WTO to the health of the world’s trading system and the rules-of-the-road the organization is charged with administering, the meetings were important. To this observer, four central themes emerged this week.

The first involved the state of the Doha negotiations, and prospects for their successful passage. The second theme involved the gate-crashers, the always-colorful band of anti-globalists who brought Seattle to its knees eight years ago. They showed up here hoping to continue to demonstrate their power. The third theme concerned perhaps the most important work that the WTO is presently engaged in: the dispute-resolution process whereby member countries peaceably resolve their trade spats by turning to the rule of law. And the fourth highlights one subject that doesn’t receive the news coverage it deserves, but which is very important in the Doha process — the hopes of the Doha negotiations to help solve one of the world’s most serious environmental problems: the depletion of world fisheries thanks to government policies that encourage overfishing.

Let’s take it from the top. First, the politics.

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Doha as Déjà vu

To a reporter who has followed the WTO’s on-and-off again efforts to promote multilateral trade expansion over the past decade, this week was very much a deja-vu experience. WTO Director-General Pascal Lamy, the Europeans, the Americans, the Latins, the Asians and the Africans all stressed their intentions to complete the Doha negotiations by the end of next year. This time, we’re serious, went the refrain. The influential G-20 member countries — including Argentina, South Africa, Brazil, India, Indonesia, Guatemala, Peru and Malaysia – called “for urgent action on the Doha Round.” Lamy pointed to the importance of member countries summoning “the political will” to make that happen. America’s Ron Kirk and his European counterparts said that they were ready to enter what Kirk called “the end game” to wrap up a Doha deal.

One after another, the trade ministers spoke of the “constructive meetings” they had held, of the “centrality” of agriculture to the negotiations, and so forth. “The days of only nice statements should be over,” said the European agriculture commissioner, Marion Fischer Boel. Such a nice statement. These were the same sentiments I heard in the WTO’s 2003 ministerial meetings in Cancun, again the next year as the next “deadline” lapsed, again in Hong Kong when ministers met there in December 2005, and just before the negotiations last collapsed in acrimony here in Geneva in July 2008. I could have just skipped last week’s meetings and used the same quotes from the past, simply changing the datelines and some of the names. The WTO’s unwieldy general council seems to be morphing into the UN’s ineffective general assembly, where no issue is so difficult that it can’t be talked to death.

Brazil’s foreign minister, Celso Amorin, enthusiastically complained about rich-country subsidies for milk, sugar, and so on. The rich Europeans and Americans can afford to do these trade-distorting things, Amorin said; we developing nations can’t. Amorin said that it was “bothering” to him that the US didn’t show more leadership — the same line he has taken consistently, year after year, meeting after meeting. Amorin, as usual, didn’t have much to say when asked what Brazil is prepared to do to cut its own tariffs — tariffs that present economic obstacles to some of Brazil’s trading partners in the Third World. “You say, you are just repeating the same thing,” Amorin acknowledged at one press conference. But he kept on doing exactly that.

Much of the accusations from the Brazilians, the Indians — just about everybody –were hurled at American farm subsidies — while the developing countries dodged questions about how their tariffs and trade barriers hamstring trade with each other, and thus contribute to keeping them poor. During the week, I would run into James Bacchus, a respected trade lawyer who is a former U.S. congressman and also a former head of the WTO’s respected Appellate Body. The way the meetings are going, Bacchus quipped, “everyone stands in a circle and points fingers at everyone else.”

Asked how he felt being the target of so many complaints, Ron Kirk said at his closing press conference on Dec. 2 that at least he could go back to Washington and tell President Barack Obama “that they know who I am.”

Of course, the Third World countries were correct in saying that Kirk brought a weak hand to Geneva. That weak hand was hardly strengthened on Nov. 30, when Sen. Sherrod Brown (D-Ohio) sent a strong protectionist signal from Capitol Hill. He was aiming, the senator said in a press release handed out to reporters here, at “marking the ten-year anniversary” of the failed Seattle ministerial. Brown — backed by such anti-trade lobbyists as United Steelworkers president Leo Gerard — introduced legislation that would essentially gut the WTO and every other trade deal that the US is party to. The Trade Enforcement Priorities Act would “require the president to submit renegotiation plans for current trade pacts prior to negotiating new agreements.” Imagine how such a proposition would be received. While the chances that such a dubious notion will actually become law, its mere introduction pints to the poisonous mood regarding trade expansion in Washington, D.C. A companion bill that has been introduced by Rep. Mike Michaud (D-Maine) in the House of Representatives is being co-sponsored by about one third of all House members.

Kirk insisted that President Barack Obama is serious about trade liberalization, but there was precious little he would offer here by way of evidence of that still-untested proposition. Nevertheless, the affable US trade negotiator impressed many people in Geneva last week with his good intentions. While Kirk may have the weakest hand any American trade negotiator has ever brought to a multilateral trade-liberalizing negotiation, the consensus of opinion holds that the former Dallas mayor and corporate lawyer will become a very good negotiator — if and when the Obama White House gives him the marching orders to bring home a Doha deal. Frank Vargo, a former senior commerce department trade official who now holds the top international trade portfolio at the National Association of Manufacturers, told me that he didn’t think that Kirk had such a weak hand. The US will lead to conclude a deal that requires everyone to make difficult political compromises, Vargo said — but only when the other WTO members really want a deal and stop posturing.

Speaking of posturing for political advantage, China was happy to join in the America bashing on the sidelines of the meetings. Since the days of Mao Zedong, Beijing has sought to exercise influence in the Third World, at the expense of the former colonial powers in Europe and America. These days, it’s the US that is the main political target. Towards this end, China’s vice minister of agriculture told reporters after a G-20 press conference on Nov. 29 that the basic problem with the Doha process was “US protectionism,” although he declined to provide much by way of specifics. Niu Dun added that he was going to spend his time in Geneva networking with fellow trade officials from developing countries. “I do not want to have bilateral conversations with the US this week,” he declared. In July 2008, the last time the Doha negotiations failed, it was China that helped India kill the talks by expressing solidarity with a fellow Third World neighbor at the key moment.

Asked later in the week if he had had any useful meetings with Chinese officials during the ministerial, Kirk shrugged that “We continue to engage China in a thoughtful way.”

Of course, not all official statements sounded like insincere posturing last week, even if they did have that Deja-vu feel. When Australia’s trade minister, Simon Crean, and his counterpart from New Zealand, Tim Groser, spoke of the importance of “political will” to the process, they were believable because their countries have it. As Groser acknowledged, “I think we all share the frustrations” that have marked the Doha negotiations. The Aussies, the Kiwis, and a few others (like the ministers from such important international trading centers as Singapore and Hong Kong) understand the importance of trade liberalization.

But the familiar band of anti-global agitators who showed up here last week begged to differ.

The Gate-Crashers

I arrived here on Nov. 29, a calm Sunday morning — Sunday mornings in Geneva are always quiet — a day before the ministerial meetings officially convened. But the usual rowdy suspects — the same type of protestors who had helped trash the streets of Seattle ten years ago — had beaten me here. On Saturday, the anti-globalists had held what the French Swiss call “Un manifestation.” The English translation: often-riotous demonstrations. The protestors had been ostensibly marching to express solidarity with the WTO’s poorer member countries.

During a largely peaceful anti-WTO rally, a smaller group of violent so-called Black Bloc anarchists had smashed windows of stores selling luxury items — Swiss watches and jewelry — along the Quai des Bergues, near the plush (and therefore hated) Four Seasons hotel. Graffiti scrawled on a wall said “Mort au Capital.” One of the victimized jewelry stores had responded with a sign, also in French, taped inside one of the cracked windows that expressed outrage at the vandalism: “Who will pay” for this? Not the Black Block, for sure.

While there wasn’t much hard news to report, reporters with news holes to fill scrambled to fill them, not always very successfully. For instance, early on the morning of Nov. 30 I was having breakfast in my hotel room, watching a BBC World News interview with an interesting man I’d not heard of before. John Hillary runs a UK-based lobby group called War on Want, that basically blames foreign investments and liberalized trade expansion for causing job losses and exploitation in the Third World. Hilary announced to the BBC’s television viewer that the WTO has “lost credibility” although he said that it would be wrong “to do away with it” entirely. Hilary flat-out stated that WTO Director-General Lamy was “wrong” to say the Doha negotiations would help the poor. Hilary asserted that some 80% of the gains associated with the Doha Round would simply go to the rich, citing various “studies.” He was not challenged.

The War on Want, as it happened, was one of the most active NGOs who came to Geneva expressing their desire to help the Doha negotiations fail. The London-based pressure group spent some $3.2 million last year, and claims to have lobbied successfully toward “preventing the damaging conclusion of the WTO trade talks” during 2008. In its annual report, the organization claimed that this was “a crucial victory for workers in the developing world.”

The War on Want is funded by European governments, including the foreign aid agencies of Ireland and the United Kingdom. There is a certain irony in this. The UK’s Department for International Development helps finance a lobbying outfit that assigns a high priority to discrediting the work of the British trade ministry.

The European Union also gives to the anti-trade pressure group, which uses the money to trash EU trade positions in the Doha Round. During the Geneva ministerial, the War on Want issued an expensively printed glossy booklet that asserted that the strategy of the European Union was “to bully” poor countries in the Doha negotiations. The basic message: trade liberalization threatens jobs. Even the parts of the Doha negotiations that would cut European farm subsidies don’t seem to sit well with the War on Want — which claims a successful conclusion to the Doha Round would lead to “job losses” in Europe in textiles, leather, meat, dairy products, and sugar. The War on Want apparently sees no irony in proclaiming itself the champion of the world’s poor countries, while at the same time issuing a thinly-disguised call for continued European agricultural protectionism. So perhaps some of the donor EU governments are on to something after all.

The War on Want also raises significant funds from the British public, through the Big Lottery Fund and also a colorful organization called Comic Relief. I’ve often seen the latter on the streets of London, where they are distinguished for the red clown-noses they wear. There is even a Red Nose Day in the UK, the purpose of which is “to do something silly to raise money.”

You can laugh, but the War on Want has been much more successful in shaping public opinions than pro-trade business lobbies on either side of the Atlantic. Hilary’s organization is well-connected with British news organizations — the Guardian, Independent, Daily Mail, Scotsman, as well as the BBC — which often display an eagerness to help spread the pressure group’s message. “The media acts as a crucial multiplier” for us, the War on Want boasted in its 2008 annual report. And towards that end, last year was “another spectacular year” for us, the report correctly observed.

It turned out, however, that last week’s Geneva ministerial meetings were less than a rousing success for those who brought an anti-trade message. After the violence of Nov. 29, the demonstrators pretty much disappeared from the streets. And inside the convention center, some activists who were (generously) given credentials by the WTO seemed a pale imitation of their former selves. These are the same people who boasted ten years ago that they had brought Seattle to its knees.

During the closing ceremony, a group of some 20 anti-globalist activists briefly formed a circle outside in the halls, where they chanted slogans like “RIP WTO.” Rest in Pieces. Looking on with an approving smile of encouragement was Lori Wallach, who participated in the trashing of Seattle ten years ago. Wallach put out a release this week that asserted that “it is clear that the WTO is seen as a cause of the current financial, food and climate crises, rather than a cure.” One watching diplomat remarked how intellectually feeble the anti-trade crowd looked this week, noting “how little economics they seem to have learned in the past ten years.”

Advancing the rule of law

If the WTO’s member countries aren’t very good at the business of negotiations, that is far from the end of this story. Taking a step back to look at where the world’s multilateral trading system stands today quickly indicates why. This institution, launched in 1995, inherited the legal rules of the international trading system that were first established in the post- World War II era by the WTO’s predecessor international organization, the General Agreement on Tariffs and Trade. The GATT’s legal framework against runaway protectionism has held for more than 60 years. When it was put to the test in the deep global recession of the past two years, the world did not slip back into the 1930s.

Moreover, the WTO has significantly strengthened the GATT’s legal architecture that stands guard against the threat of global protectionism. The WTO’s dispute-resolution system, where members assert their rights not to be discriminated against by fellow trading partners, and have means to enforce those rights through litigation — which they didn’t under the GATT — is by-and-large working very successfully.

Two events held on the sidelines on Dec. 1 highlighted the importance.

Bruce Wilson, a former senior trade litigator at Akin Gump who has been the WTO’s top legal official for the past seven years, briefed reporters on the scope of what’s been going on. Since the WTO’s dispute-resolution system was set up in 1995, there have been 122 decided cases, with about 60,000 published pages of law, he observed. The U.S. and the European Union have been the two biggest users of the system. Wilson also pointed to “a noteworthy development” in recent years, as China is beginning to assert its legal rights. The Chinese are now the complaining party in four disputes, Wilson noted.

Earlier in the day, the Washington-based Global Business Dialogue held a seminar that also highlighted the importance of the WTO’s dispute-resolution system. Ron Cass, a former dean of the Boston University school of law and a former chairman of the U.S. International Trade Commission, summed up the general consensus by observing that the system is basically “working well.” (That widely-shared sentiment, alas, is not shared as widely on Capitol Hill as it should).

Veteran Washington trade lawyer John Magnus noted that the rules-making trade body had recently announced the filing of the WTO’s 400th case. This “normal, day-to-day function of the WTO’ to peaceably resolve trading spats among its members, Magnus added, “is clearly important, some would say the most important” work the WTO is doing. Magnus pointed out that “you have cases in the system that are challenging governments deep in their sovereign realm” — referring to such politically thorny issues for the Europeans as beef hormones, and US political hot-button trade disputes involving cotton, internet gambling, and anti-dumping rules.

I’ll give more details on how the dispute process is working in future stories, which will also highlight the important role that is being played by the Advisory Centre for WTO Law. That independent center — mainly funded by the usual good guys when it comes to mentioning enlightened donor countries, including Canada, Denmark, Norway and Sweden — provides legal support to poorer WTO member countries who have disputes with fellow trading partners. According to the center’s 2008 annual report, developing countries asked its staff of eight lawyers to provide 175 legal opinions last year. Indonesia has challenged anti-dumping measures imposed by South Africa on paper products. Thailand has obtained rulings adverse to the United States on the controversial anti-dumping methodology known as “zeroing,” and on US anti-dumping practices involving shrimp. Colombia has litigated successfully against the European Union’s discriminatory banana regime. (The European Union and the USA, which like to use the system themselves to litigate against each other as well as poorer countries, have declined to provide financial support to the ACWL.) Despite the lack of enthusiastic backing by the two most advocates for the rule of law, the ACWL has pressed ahead. Occasionally, it has worked closely to develop cases with such well-known Washington law firms as Sidley Austin and Akin Gump, chipping in to help the poorer WTO countries with legal expenses.

[The ACWL’s legal advice to WTO members is strictly confidential, and there is no public record of litigation that is presently being contemplated. But Indonesia’s trade minister, Mari Pangestu, told me this week that her country was considering a legal challenge to the US, which has passed legislation that bans the imports of clove cigarettes from Indonesia, thus giving US-made cancer sticks flavored with menthol a competitive advantage. And Vietnamese officials have let it be known that they are considering filing litigation that targets a looming new U.S. non-tariff barrier that could shut down Vietnamese exports to the US of its catfish. Last year’s US farm bill required the Department of Agriculture to set up an inspection regime that, for all practical effect, could ban the catfish trade for both Vietnam and China. This would seem to be the classic definition of a non-tariff trade barrier. Stay tuned for further developments.]

Saving the world’s fishing grounds

Here’s some more in the “good news” hopes for what the Doha Round could accomplish.

Not all environmentalists came to trash the Doha negotiations. Oceana, a respected Washington-based non-profit organization aimed at protecting the oceans, has high hopes for the Doha process. The organization was founded in 2001 with support from some well-heeled foundations, including the Pew Charitable Trusts and the Rockefeller Brothers Fund. Television actor Ted Danson is on the board, and the advocacy group now had eight regional offices from Madrid to Monterey. A few numbers explain why Oceana is doing all that it can to support the Doha process.

Some governments — Japan, Korea, Taiwan and some Europeans are the usual suspects — lavish subsidies upon their fishing industries that collectively amount to more than $20 billion annually. The economic harm that these subsidies do is easily explained, as the subsidies encourage overfishing. Credible estimates say that perhaps 80 percent of the world’s fishing grounds are being depleted — and the damage spreads further every year.

Oceana released this week a letter written by nine prominent marine scientists to the WTO’s Pascal Lamy that said reducing the harmful subsidies in the Doha Round offered “an unprecedented opportunity to make new trade rules that will turn the tide for the world’s fisheries.” As Oceana’s senior campaign director, Courtney Sakai — an energetic woman with a big smile who seems to have buttonholed every diplomat who came to Geneva last week — told me, “Successfully cutting these trade-distorting fisheries subsidies could be the first real example of how the WTO can encourage worthy environmental goals.”

Whether the WTO’s potential to promote rising global prosperity through the Doha Round, of course, remains very much an open question. Some observers say that if the round can’t be completed next year, that would be time to put it out of its misery. Lamy himself would acknowledge to reporters at his closing press conference, that in the years since the round was launched in 2001, it still remains unclear as to whether the WTO’s members have “the political energy” to successfully conclude it.

Watch what sort of a signal we will send by the end of March 2010, Lamy said. By then, he declared, it will be come apparent whether the member countries have found that political will. In the press room at least, where reporters had seen all this before, nobody was taking bets on that happening.