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December 2015 DOHA DEVELOPMENT ROUND AND MULTILATERALISM AT RISK At the Nairobi ministerial conference, the developmental round and the WTO itself are likely to face an existential crisis.
The final month of 2015 continues to prove challenging for multilateralism. After July’s Addis Ababa third Financing for Development (FfD) conference delivered rather modest results, the Sustainable Development Goals summit redeemed hopes with an ambitious and universal Agenda 2030. More recently, the Paris Conference of Parties on climate change failed to produce an agreement capable of averting climate change disaster as average global temperatures rise two degrees Celsius above pre-industrial levels. When the World Trade Organization (WTO) biennial ministerial meeting convenes in Nairobi in mid-December to make progress on the Doha Round, the ostensibly developmental round and the WTO itself face an existential crisis. At Nairobi, a growing number of developed countries will want to end the round inconclusively, thus enabling them to effectively renege on earlier commitments and promises made since 2001 to get developing countries back to the negotiating table after the Seattle ministerial disaster. On the other hand, most developing countries want the Round to continue in order to realize the promises made following 9/11 in 2001 to revive multilateral trade negotiations at the onset of the Doha ‘Development’ Round after Seattle, which began with expectations of rectifying the anti-developmental outcomes of the previous Uruguay Round. The OECD countries are increasingly unwilling to make any meaningful concessions, thus effectively turning their backs on multilateral trade negotiations and more as was evident before and at the Addis Financing for Development (FfD) conference. The big game changers have been the recent US-led plurilateral initiatives, especially following the appointment of President Obama’s law school buddy Michael Froman as the US Trade Representative. The successful rush to conclude the Trans Pacific Partnership Agreement (TPPA) before mid-December’s inter-ministerial will further undermine the likelihood of successfully concluding the Doha Round of trade negotiations. In October, Froman successfully pushed through the TPPA in Atlanta. Meanwhile, the European Union has begun negotiations with the US to conclude a Transatlantic Trade and Investment Partnership (TTIP). By undermining WTO multilateral trade negotiations, bilateral and plurilateral trade agreements are the anti-theses of what they purport to do, namely trade liberalization. In Southeast Asia, the TPPA also undermines existing commitments, e.g. to the ASEAN Free Trade Area (AFTA), and thus, the economic bases for regional solidarity and cooperation. To come into effect, it must first be ratified by national parliaments. Ironically, this seems most unlikely to happen in the US Congress which seems reluctant to move ahead to ratify the deal soon, albeit for varied reasons. The TPPA has more support from Republicans, than Democrats. Criticisms of the TPPA are growing among US politicians, not only among the leading Democrat contenders, including Hillary Clinton, but also from leading Republican presidential aspirant, Donald Trump. Ironically, a Democrat President has pushed it through without the support of his own party, while the Republicans are likely to stall the deal for their own political considerations. Real focus not trade Despite being touted as a trade deal, the TPPA is not mainly about “free trade”. The US and some other TPPA partners are among the most open economies in the world, and there is little more to be achieved by further reducing tariffs. The main trade constraints involve non-tariff barriers, such as restrictions on solar panel exports from Malaysia, for example, which the TPPA will barely address. OECD countries with more competent trade negotiating capacity – such as New Zealand, Canada, Australia and Japan – delayed agreement at an earlier meeting in Honolulu at mid-year before October’s Atlanta deal. It is telling that the delay was due to squabbling over how best to manage trade in particular areas, reflecting influential lobbies in their respective countries. In fact, the so-called free trade agreement will actually protect and even advance interests that run contrary to free trade. Instead of trade, the TPPA is mainly about investment and intellectual property, primarily on behalf of the most powerful business lobbies involved. It will strengthen monopolistic intellectual property rights (IPRs) well beyond the onerous and restrictive provisions of the WTO Trade-Related Intellectual Property Rights (TRIPS) agreement. Meanwhile, growing evidence shows that IPRs hardly promote research, but may actually impede innovation. Specific TPPA provisions will also limit competition and raise consumer prices. Thus, the TPPA will slow innovation besides threatening public health and the common good. The TPPA will strengthen IPRs for big pharmaceutical, information technology, media and other companies which maximize their profits with the rents conferred by such rights. For example, it will enable pharmaceutical companies to have longer monopolies on patented medicines, keep cheaper generics off the market, and block the development and availability of similar new medicines. Investor-state dispute settlement The TPPA will also strengthen foreign investor rights at the expense of local businesses and the public interest. Its investor-state dispute settlement (ISDS) system obliges governments to compensate foreign investors for the loss of expected profits! ISDS thus confers foreign investors with the right to sue national governments for regulatory or policy changes that they claim diminishes the expected profitability of their investments. It has been and can be applied even where the rules are nondiscriminatory or when profits are made by causing public harm. The ISDS provisions make it hard for governments to conduct their basic obligations – to protect their citizens’ health and safety, to ensure economic stability, and to safeguard the environment. For example, if a government were to ban materials deemed to be toxic by, say, the WHO, that government would be liable to compensate the manufacturers not to kill its own people, instead of forcing them to compensate the victims who have already been harmed! Thus, the taxpayer will be hit twice – first, to pay for the health damage caused by the toxic substances, and then to compensate the manufacturer for their ‘lost profits’ if and when the government steps in to ban a dangerous product. This will deter governments from banning such substances, putting the public, both workers and consumers, at risk. Foreign corporations insist that the ISDS is necessary to protect property rights where the rule of law and credible courts are lacking -- a clear display of contempt for national courts. The US is seeking the same in the TTIP, implicitly impugning the integrity of European legal and judicial systems. TPPA politically driven It is no secret that the main motivation for the TPPA for the US is to undermine China. The broad support for the China-mooted Asian Infrastructure Investment Bank (AIIB), even from traditional US allies, was a major embarrassment which the White House has been desperate to overcome. In Southeast Asia, such a realignment abandons the ASEAN commitment to a ‘zone of peace, freedom and neutrality’ (ZOPFAN). Considering the paltry economic benefits as well as great risks involved, developing country governments joining the TPPA are probably doing so for political reasons while praying that they will not pay the political costs for the economic costs. Concluding the TPPA will encourage proponents of the TTIP and other similar plurilateral and bilateral agreements. While such arrangements retard and undermine trade multilateralism, WTO officials and others continue to maintain the pretence of complementarity and coherence. The threat to abandon the Doha Round will be used by the North to extract more concessions from the South who still hope that the survival of the Round is necessary for them to realize at least some of their developmental aspirations. The seemingly growing failure of multilateralism -- on finance at Addis, on climate at Paris and on trade in Nairobi as well as various other recent developments including the many typically self-serving interpretations of the ‘war on terror’ – threatens to irreversibly transform the contemporary international relations, presumably at the expense of sustainable development and the South. – Third World Network Features. -ends- About the author: Jomo Kwame Sundaram is Coordinator for Economic and Social Development at the Food and Agriculture Organization of the United Nations, and received the 2007 Wassily Leontief Prize for Advancing the Frontiers of Economic Thought.
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