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The ongoing WTO Ministerial Meeting at Doha in Qatar was the focus of
controversy well before it started. The WTO has been subject to growing
criticism not only from governments of developing countries but also from
civil society in developed and developing countries. It has been found
that the way in which the Uruguay Round Agreement has worked in practice
has contributed not to the promised increases in trade and economic
prosperity, but greater income disparities, livelihood insecurity and
reduced access to essentials like life-saving drugs for people across the
world.
Protests against these outcomes, both on the streets and within the
meeting rooms, led to the failure of the Seattle talks. For a while it
even seemed as if the Doha meeting would not go through, because of
security fears of the US and other developed country delegations after
September 11. In fact, this has reflected itself in reduced participation
at the senior level : for example, the number of people in the official US
delegation has shrunk from about 300 to 40, and neither the US Secretary
of Commerce nor the Secretary of Agriculture is present, nor is there a
representative of the US Congress.
That the Doha meeting is still being held reflects several forces : the
sheer embarrassment at the multilateral level, at having to postpone such
a meeting which is formally mandated by the GATT accord and which has been
planned for two years; the need to make up for the failure of the Seattle
meet; the desire of some developed countries to initiate a new Round of
trade negotiations which would include non-trade issues such as investment
and competition policy and reductions in industrial tariffs
Simultaneously there have also been other, more insidious, attempts to
treat the September 11 attacks as a means of pushing even more external
liberalisation down the throats of developing countries. The pretext is
that such terrorism is an attack on free trade which will supposedly
deliver prosperity for all. And the US Trade Representative made it very
clear that he saw the need for even greater and more comprehensive trade
talks because of, not despite, the terrorist attacks and the
subsequent war.
However, most developing
countries, and certainly most ordinary citizens in all countries who have
some knowledge of the actual experience with trade patterns and the
effects of external liberalisation on domestic output, employment and
livelihood security, are understandably sceptical about such an argument.
In fact, as shown below, the experience since 1995 has been very
disappointing.
Projected gains from the Uruguay Round Agreement
At the time of
signing the GATT agreement in Marrakesh in 1994, there were widely
publicised reports of the supposed gains to all countries from the various
measures covered in the Agreement. These gains were supposed to come from
tariff reductions, opening of agricultural trade and reduction of
subsidies by developed countries, liberalisation of trade in textiles and
clothing and better market access for all exports. In economic terms,
these were then supposed to involve the following kinds of gains
1) "Static
gains" due to a reallocation of resources to areas of comparative
advantage (that is, those
that are relatively better at producing particular goods).
2)
"Efficiency gains" that would result from reduced slack in
economies that have been highly protected.
3) "Dynamic
gains" due to improved technical efficiency or lower input use per unit of
output and technological change.
While the first was supposed
to result from a shift international production patterns, the second and
third were supposed to emerge from stronger competition within and between
national economies. The projections of such gains in terms of increased
value of world trade ranged from $180 billion to $ 230 billion over ten
years, around two-thirds of which was supposed to accrue to developed
countries and one-third to developing countries.
It was largely the promise of such gains that lured most developing
countries into signing the entire Final Act, even though many specific
agreements such as those relating to intellectual property and investment
measures were seen as detrimental to their interests, and aspects of the
other agreements were also problematic for them. Even the Indian
government presented the case in favour of signing the Marrakesh Agreement
in terms of the benefits that would come from increased exports of
agricultural and textile products as well as more inflows of investment
because of greater international trade in general.
Actual trade patterns over the 1990s
In what follows, we consider
the broad patterns of world merchandise trade over the 1990s. As will
become evident, most of the expectations have not been realised, and the
projections of increased trade flows were far too optimistic. In fact
world trade growth has been slower in the second half of the 1990s, after
the signing of the Uruguay Round agreement, than in the first half of the
1990s. And many developing countries feel that they have even greater
problems of market access and protectionist barriers to their exports than
they had before. This is why implementation issues have become so
important among developing countries in the WTO.
There is no doubt that international trade has become far more significant
in the world economy, and over the past two decades world trade has grown
faster than world output growth, as Chart 1 shows. However, as evident
from Chart 2, over the 1990s the value of world trade has fluctuated
substantially over the major product groups, and only in mineral products
(which include petroleum) has it gone up rapidly, mainly because of rising
oil prices in world markets over the second half of this period. In fact,
in agriculture, the value of world trade has stagnated and then fallen
over the 1990s, while manufacturing exports grew more slowly in the second
half of the decade.
Chart 1 >>
Chart 2 >>
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