What really happened at the WTO summit?

What really happened at the WTO summit?

Date: 23 December 2015

If you were to judge the outcome of last week’s World Trade Organisation (WTO) summit by media reporting, you would come away with the impression that world leaders had made a major breakthrough. The WTO, which overseas global trading rules, met in Nairobi, Kenya, and attempted to break a nearly 15-year deadlock which has pitched rich nations against developing nations.  

The Financial Times hailed last week’s summit as “a victory for the US and EU” and “the final nail in the coffin” of the so-called ‘Doha Development Round’ talks that had been deadlocked since 2001. Much of the rest of the media has echoed this general sentiment.

If this were true, it would be a total disaster for the poorer countries represented at the WTO. Despite the name, the Doha Development Round has little to do with ‘development’ and more to do with liberalising global trade to the benefit of big corporations – like everything about the WTO. But at least Doha in some way recognised the hypocrisy of rich nations in the WTO: on the one hand forcing southern countries to wrench open their markets and stop protecting their farmers, and on the other hand providing as many subsidies to their own corporations as possible. It was a weak branch that countries like India could cling to in order to say ‘this is supposed to be about development, but you continue to obstruct our development with your hypocritical trade rules’.

That’s why, in Kenya, rich nations wanted to declare Doha over, and move the WTO onto a whole host of other extremely controversial issues which they could foist on developing countries in the name of ‘free trade’. Highest on the list is so-called ‘investment’. The idea is that the WTO should develop a set of explicitly pro-big business rules similar to those being discussed in the US-EU deal called TTIP. The dream is that corporations have more rights than human beings, and travel the world unimpeded by democratic laws.    

That’s why, in the run up to the conference, many developing countries, led by India, were strongly resisting US-led moves to end the Doha Round and move onto these “new issues”. However bad the Doha Round was, it provided a placeholder to allow southern countries to keep their issues on the agenda – like India’s push to be allowed to buy food from farmers at guaranteed prices to stockpile or sell cheaply to the poor.

So what really happened?

The truth is that the outcome was yet another fudge – albeit one that could prove dangerous in the future. It is true that rich countries succeeded in getting rid of a commitment to continuing the Doha Round in the final text. Instead, the text now merely acknowledges the disagreements over whether to pursue the framework any further. But it’s also true that there was no unambiguous statement that Doha has ended. So that’s a dead heat.

More important was holding out against any mention of the new issues being pushed by rich countries. So even if Doha is destined for a slow death, what takes its place hasn’t yet been agreed. Keeping issues like investment off the agenda was extremely important and testament to the strength of developing country blocs (which the US and EU tried to ‘divide and rule’) and campaigners from across the world.

On the vital issue of whether WTO rules can trump people’s right to food, rich countries didn’t get their way either. Rich countries wanted to rule India’s National Food Security Act out of order. The Act, while successful in reducing poverty and malnutrition in India, has been attacked as being in breach of WTO rules as it involves stockpiling food bought from farmers at fixed (potentially subsidised) prices and distributing it to poor households at a discount. They failed. India didn’t exactly win either, but at least has a stay of execution. The lack of agreement in Nairobi means that India now has another 2 years until the next ministerial to try and get an agreement for a fairer deal.

Finally, southern countries were successful in securing concessions on cotton (an important issue for states in West Africa in particular) but rich countries wll be the main winners from the ban on agricultural export subsidies, which won’t actually  abolish general subsidy schemes like the EU’s Common Agricultural Policy (CAP) which is not explicitly linked to exports or production. The CAP, which is essentially a huge welfare scheme for (mostly) rich landowners, involves handing out money to owners of land regardless of whether they produce or export anything. The uneven WTO playing field, whereby rich countries’ subsidy schemes are categorised as being  “allowable” while poorer countries are prevented from subsidising their farmers, will continue.

As so often at the WTO, no deal would have been better than a bad deal. In the end, there was a deal, but a very vague and weak one. But this could still leave a dangerous vacuum. Without consensus on continuing the ostensibly pro-development Doha Round, by the next ministerial in 2017 there will be greater pressure on WTO members to accept a new agenda based on the interests of richer members.

And regardless of what happens within the WTO process, parallel deals outside the WTO like TTIP will push forward regardless. The danger is that even if no consensus is reached within the WTO, the rich countries will be able to set the rules through a network of bilateral deals that will give other countries no choice but to comply with what will rapidly become a de-facto global standard with the WTO increasingly relegated to the sidelines.

The Nairobi deal hasn’t changed what remains a fundamentally unfair system of global trade. But for all that, the Kenya summit did show southern countries can still stand up and prevent the rich world running roughshod over them. The triumphal rhetoric from the media is unjustified. The outcome could also have been much worse. We have the much maligned ‘deadlock’ at the WTO to thank for that.