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Analysis
WTO slices through discord

By Paul Blustein
The Washington Post

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Instead, last week's global trade meeting ended with mutually congratulatory news conferences, following agreement on a framework for advancing the World Trade Organization's Doha Round of negotiations in Qatar.

The contrast could hardly have been starker with the WTO meeting last September in Cancún, Mexico, which broke down amid recriminations between rich and poor nations.

And although explanations for last week's outcome are myriad, one factor probably accounts for the accord better than any other: the fear that a second consecutive failure would permanently cripple the WTO.

In the end, for all the fierceness of differences over issues such as farm subsidies and tariffs on manufactured goods, the 147 member countries stepped to the brink and saw that the looming abyss was deeper and scarier than the leap taken in Cancún. Many fretted that Doha Round, and conceivably the trade body itself, might not be able to withstand another Cancún-style blow.

Those concerns were particularly strong among developing countries, including some of the same Latin American, African and Asian nations that had celebrated their defiant stance at Cancún as a triumph over U.S. and European Union arrogance.

Despite complaints that Washington and the EU use their clout to tilt the terms of global trade in their favor, developing countries know the WTO system protects the interests of poor lands, especially small ones, much better than if world trade were governed by regional blocs or the law of the jungle.

The WTO's director-general, Supachai Panitchpakdi, "made so many declarations that if this (Geneva meeting) fails, it's the end of everything in the WTO, and those messages are heard very loudly," said Celine Charveriat, head of the Geneva office of the aid agency Oxfam International, who worked closely with many of the poor-country delegations. "Right or wrong, those arguments were very important."

The WTO and its predecessor institution, the General Agreement on Tariffs and Trade, were designed to secure at least basic rights for poor and weak nations. WTO rules are arrived at by consensus, rather than votes weighted by economic power as at the International Monetary Fund and World Bank.

Small members can, and sometimes do, file complaints against mighty powers for breaking the rules, and they win judgments to force bigger countries to change offending conduct.

One of the WTO's fundamental principles is member nations are not allowed to discriminate against the firms or products of other members (an important exception being for national-security reasons, the justification the United States cites for its embargo of Cuba).
 
So although Charveriat, along with other advocates for the poor, was critical of the Geneva pact as doing too little for the developing world, she acknowledged that Third World governments had potent reasons for wanting to keep the WTO alive and well.

Partly that is because, with decisions requiring consensus, a single country may be able to obtain concessions by holding out against a broad deal.

Moreover, worldwide negotiations offer the only chance to win large-scale cuts in the billions of dollars in subsidies that the U.S., EU and other rich countries give their farmers.

Farm subsidies often lead to gluts of supply and depressed world prices for crops, impoverishing farmers in developing countries. Reducing or eliminating them is a key goal of nations such as Brazil and South Africa in the Doha Round.

"Even if developing countries think the WTO needs radical reform," Charveriat said, "they know they have greater leverage in the WTO than in bilateral agreements," such as the proposed free-trade deal between the United States and Central American nations.

"They also know that subsidies are never on the table in bilateral agreements," she said, because neither Washington nor the European Union, the two biggest subsidizers, will agree to slash their payments to farmers unless the other does likewise.

The desire to shore up the WTO was not the only reason for agreement in Geneva. One significant factor was the signal sent earlier this year by both the United States and EU that they were prepared to be more forthcoming if other countries were willing to deal as well.

The EU offered some major concessions in advance, in particular a signal that if the Doha Round is completed, it will phase out all its export subsidies for farm goods.

Export subsidies are the most reviled type of aid to agriculture because they go directly for crops shipped into other countries' markets.

The EU also gave up demands to expand WTO rules into new areas such as international investment, a proposal developing countries see as pushing too far.

U.S. Trade Representative Robert Zoellick this year contacted all WTO members and visited foreign capitals to convey the message that despite the political pressures of the U.S. election, Washington genuinely wanted to try this year to restart the Doha Round.

At the same time, Zoellick warned that if the Doha Round remained moribund, the United States would devote its trade energies to smaller pacts — with Australia, Morocco, Thailand, Colombia and other nations interested in dealing bilaterally.

"What came after Cancún was the crude reality of statements by the United States, saying to countries, 'If you don't want to deal in the WTO, we will deal elsewhere,' " said Arancha Gonzalez, the spokeswoman for EU Trade Commissioner Pascal Lamy.