World Trade Organisation collapse – who are the real losers?

The recent failure by leading trading countries to reach a consensus on a new global trading pact, under the World Trade Organisation, has been met with mixed reactions; with some feeling it is for the better while others see it as a great loss. Responding after the just ended World Trade Organisation Summit, that was meant to discuss the modalities of a new trading round, Peter Mandelson, the European Union’s chief negotiator lamented their failure to do so; “It is bad enough to be facing defeat in the last mile of such a marathon,” Mandelson wrote in his blog. “It’s worse to realise that some of the people across the table, instead of working for success, are in reality preparing for failure.” On going back to the negotiating table, India’s Foreign Minister says, “India is ready to be at the table without compromising on issues which concern poor farmers of not only India but 100 other developing countries.” The talks fell apart after India, one of the world’s biggest emerging economies, and the world’s economic superpower, United States, clashed over how poor nations could hike duties to shelter their domestic farming from a flood of imports. Apart from the polarization among the key countries, for some, the talks would have addressed pertinent issues such as the diminishing supply of food around the globe as well as tackle the issue of the alarming numbers of people living in extreme poverty as compared to the few getting wealthier by the day. At the moment, the world’s poor add up to 854 million of whom a shocking 820 million are living in developing countries primarily the low developing ones. These figures have not decreased in over 20 years even though the trend in agricultural production has slightly improved by 2 percent. The Geneva meeting of 35 WTO members began July 21. The seven-year-old Doha round’s progress has stalled over agriculture and non-agricultural market access issues. According to the WTO Doha agreement, the modalities for negotiations on trade facilitation state; “LDC’s members will only be required to undertake commitments to the extent consistent with their individual development, financial and trade needs or their administrative and institutional capabilities.” These negotiations put into account the principal of special and differential treatment for the developing and least developed countries. The Doha agreement further approved that those members in developing and least developed countries would not be obliged to undertake investment in infrastructure projects beyond their means. However with the amplified tension in the talks as disagreements between developed and the least developed countries coming to a conclusion required the sacrifice, hopefully, of one party; the developed side. However, with both parties wanting to secure their own interests when it comes to the agricultural sector, a conclusion proved hard to reach; areas of tension included failure to reach consensus on import tariffs for a new deal under the Doha Round, which has foundered repeatedly since it began. The developed countries are insisting on preserving the advantages they have already offered their farmers and at the same time also want to optimize subsidies to agriculture and cattle raising. On the other hand, the developing countries insist on protecting their farmers and agricultural production in the face of the competition posed by the developed countries’ agriculture and production. With agricultural production on the decline in developing countries, an imbalance between demand and supply in the world market has resulted. The current global food crisis has led to a hike in agricultural prices and if not hindered the predicament is that prices will be raised further, leaving countries prey to social and economic turmoil. This is basing on the fact that the number of the poor has not declined in 20 years even though their ratio to the population has dropped. This is all due to the difference between needs and resources. The argument of the already developed countries is that if they are deprived of subsidies and aid in their agricultural production policies already set, they would be placed in a weak position by the rising costs. The Geneva talks have seen China strongly criticizing and terming the US position on cotton subsidy as absurd. This regards her position on linking cotton subsidy reduction to tariff cuts by developing countries. Cotton subsidy is one of the strong issues seen as an obstacle to clinching the Doha round for opening markets.“Recently we heard certain absurd arguments that the U.S. reduction of their trade-distorting cotton subsidies would depend on the reduction or even elimination of the cotton tariff by developing members including China,” said China’s Zhang Xiangchen while talking to reporters in Geneva, Tuesday, reported United Press International / UPI Business News. Zhang claimed that high cotton subsidies to U.S. growers have hit cotton farmers in developing countries including those in Africa and 150 million others in China. He added that it is known to all that trade-distorting subsidies in the WTO are illegal while tariffs are legal measures of protection. The criticism against the United States is that the more than $3.5 billion subsidy to its cotton growers encourages excess production, thereby affecting exports of African growers. In Africa, only 10 percent of cultivable land is used. According to the World Bank estimates, urbanization - with 50 percent of the world population living in cities decreases agricultural areas and causes the deterioration of 5 to 10 million hectares of agricultural land annually. Ends