US intransigence led to collapse of WTO’s Buenos Aires ministerial 

WTO Director General Roberto Azevedo (left) and conference chair and Argentine minister Susana Malcorra at the closing ceremony of the 11th World Trade Organization ministerial talks in Buenos Aires December 13, 2017.
WTO Director General Roberto Azevedo (left) and conference chair and Argentine minister Susana Malcorra at the closing ceremony of the 11th World Trade Organization ministerial talks in Buenos Aires December 13, 2017. Photo credit: © WTO/ Cuika Foto

The 11th World Trade Organization ministerial talks, which were held in Buenos Aires from December 10 to 13, collapsed with the conference failing to produce a ministerial declaration. As a result, the deadlock over the Doha Work Program is set to continue. The conference’s failure, a watershed in the history of world trade negotiations, has also pushed the multilateral trading institution WTO to the brink of a serious existential crisis.

The process of decision making in the WTO has not been much different from that of the GATT (General Agreement on Tariffs and Trade), which preceded it. Though in principle, the WTO is governed by the “one country, one vote” system, the process of decision making is through the pyramidical process; that is, a few countries would sit together, discuss and throw up a “consensus,” which would be accepted by one and all. Though WTO Director-General Roberto Azevedo said in the run-up to the ministerial that green room negotiations would not be allowed or permitted, this time too, it was no different.

The world economy has come a long way. The writ of the EU-US duo does not run like it used to in the 1960s and ’70s, when the United States, Canada, Europe and Japan controlled most of the world trade. But in the course of the last two decades, their share of world trade has dwindled, and the share of new players from the developing world like China has grown up exponentially. So, now green room negotiations without China, India, or South Africa have become impossible.

READ: Chinese to benefit from US-India showdown over solar panels at WTO (September 23, 2016)

Now who were the players at Buenos Aires, and what did they negotiate for?

The main players were Robert Lightizer, the US Trade representative; Cecilia Malmstrom, the EU Trade Commissioner; and Suresh Prabhu, the Indian Commerce Minister, who had the support of  a large set of Asian and African ministers, apart from the solid support of China.

Negotiations are no longer like they were in the ’70s. Times are a changing…

Keeping the cards close to his chest, the US Trade Representative had nothing to offer other than President Trump’s “America First” mantra. Washington was deft and open in its refusal to support a permanent solution with respect to the stockholding of food grains toward food security purposes, as assured at the Bali Ministerial. This, the United States thought, would force India and its group partners in Africa and Asia to go slow on their criticism of the large subsidy transfers made to the farmers in US and Europe. The United States was open about its aversion toward the Doha Development Agenda, which was the first ever effort at integrating trade with development concerns. The role played by the Seattle fiasco and Cancun ministerial toward the making of the development agenda is of utmost importance.

READ: WTO rules against India on discrimination by US on solar exports (February 24, 2016)

Further Trade Representative Lightizer openly expressed Washington’s disenchantment with the special and differential treatment (SDT) extended to developing countries, which is enjoyed by countries like India and China. Irked and provoked by the statement of Lightizer, Indian Minister of Commerce Prabhu stated that India was home to 400 million of the world’s poor people, and hence development concerns were so close to India at the world trade forums.

Lightizer also wanted the organization to move forward from being a litigating institution to a negotiating institution. Paradoxically, this is coming from the country which has taken the maximum number of countries to the Dispute Settlement Board of the WTO. (The United States once even objected to extension of the tenure of a judge in the DSB, due to a judgment made by the judge against it.)

The USTR said it wanted the WTO to take 21st century trade issues into consideration. These are concerns close to the United States, among them issues related to investment protection, intellectual property rights and electronic commerce. It argued that that labor and environmental clauses should be incorporated, so as not to give an “unfair” advantage to the developing countries.

Cecilia Malmford, the EU Trade Commissioner, made an attempt to save the stalemate at Buenos Aires by agreeing for a permanent solution for the stocking of food grains, if India agreed with respect to the permanent solution to issues related to e-commerce. Even on the e-commerce front, it would not be appropriate to pretend ignorance of the wanting nature of digital infrastructure in many of the Afro-Asian economies.

READ: India takes US to WTO over visa fee hike for H-1B, L-1 visas, limited quotas (March 4, 2016)

But  the insistence of the United States that there should be no mention in the Ministerial Declaration about the Doha Work Program didn’t sit well with the Afro-Asian countries. They displayed a chord of unity reminiscent of the Nehru-Tito-Nasser era, resulting in the ministerial failing to come out with a declaration. Many were airing their angst on social media platforms, essentially saying, “No Ministerial Declaration is better than one without mention of the Doha Work Program.”

In fact, the United States is not wrong in arguing that 21st century issues should be addressed. But it can be addressed only if the US is ready to dovetail the same with special and differential clauses for the developing world. If not, the multilateral system will slowly degenerate into a cobweb of bilateral treaties, plurilaterals and megaregionals like TPP (from which the United States exited) and TTIP (which has been a non-sequitir).

The challenge before the world is to transform the WTO, based on “one country, one vote,” into an organization that unifies countries, catering to the development aspirations of a planet with huge asymmetries.

(Krishnakumar S. teaches economics at Sri Venkateswara College, University of Delhi. This piece has also benefited from the discussion that followed a talk given by the author at Mahatma Gandhi University, Kottayam, Kerala, India, on December 20, 2017.)

(Update: A previous version of this post had incorrectly EU Trade Commissioner Cecilia Malmstrom’s surname.)

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Asian Infrastructure Investment Bank – Are the Bretton Wood twins being dislodged? (March 17, 2015)

Are the political duopolists in New Delhi colluding? (December 19, 2012)

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