Open Letter to the US President on the Doha Round
CUTS-TradeForum
Trade deals show power politics is back
By Zaki Laïdi, Financial Times, March 31, 2013
America’s objective is to contain China’s rise by setting a high regulatory bar
Almost everyone seems excited about the prospect of a free-trade agreement between the US and the EU. But not so fast. The pursuit of such deals is eroding multilateralism, the foundation of post-cold war international relations.
In principle, the emergence of a multipolar world, in which the US is no longer the only very powerful country, should boost “multilateralism” – institutionalised co-operation among states in pursuit of shared objectives. It should boost efforts to achieve free trade via the World Trade Organisation, poverty reduction through the World Bank, and international security through the UN.
Yet the reality is different. Countries are seeking to extricate themselves from global agreements in order to extract concessions from partners on a bilateral basis or to protect national sovereignty.
Take the case of the WTO. A conflict between India and the US over agricultural subsidies derailed a final compromise in the summer of 2008. This would have – finally – concluded the Doha round of trade talks, which were launched in Qatar in 2001. Negotiations have stalled since the US-India spat. The main responsibility for this failure falls on the US, which believes the system of multilateral trade no longer offers the advantages it used to. The priority for the US is to secure access to markets through enhanced bilateralism. Hence the Obama administration’s drive to agree the trans-Pacific Partnership for Asia and, more recently, to conclude the Transatlantic Trade and Investment Partnership for Europe.
In each case, the strategic objective is to contain China’s rise by setting a high bar for regulatory standards. The novelty is that Europe, which has long defended multilateralism, is now succumbing to the temptation of bilateralism even while it remains completely incapable of assuming political responsibility for its trade policy.
If the TPP or TTIP come into being, they will kill the WTO. For better or for worse, the organisation will cease to be the place where trade standards are negotiated.
A free-trade agreement with the US does offer real opportunities for Europe but it also presents two dangers. The first is that it will act in haste in negotiating such a complex agreement by 2014, while also trying to resolve the eurozone crisis. The second is to be trapped by the US, which will already have negotiated standards in the TPP and attempt to impose the same standards on the Europeans, who will be too deep into the negotiations to challenge them effectively.
It is important to understand that the collapse of multilateral trade we are witnessing today is far from being an isolated case. Climate talks since the 2009 Copenhagen conference have challenged the multilateralism heralded by the Kyoto protocol of 1997. The idea then was to move forward on the basis of a shared objective – the reduction of greenhouse gas emissions. Today countries only make commitments on climate change on the basis of a very narrow assessment of their national interests. The idea that shared commitments – rather than individual interests – shape behaviour is now dead.
In a multipolar world, not only is the number of power centres increasing, so is the number of national interests. For example, the recent climate change conference in Durban, South Africa, included more than a dozen national groupings, such as those from developing and landlocked countries. The WTO is in a similar situation. The Doha round has become frighteningly complex because of the incredible inflation of issues raised by various actors.
This proliferation of interests reflects an erosion of international consensus across many of the areas around which states had rallied in the aftermath of the cold war. One need only compare the enthusiasm surrounding the Rio conference in 1992 with the dramatic failure last year of the Rio+20 environment summit. Many developing countries openly reject the discourse on ecology and climate change used by western campaign groups.
International security has also been weakened by the return to narrow national interests. Since the Nato-led intervention in Libya, the global consensus that seemed to be forming around the idea of “responsibility to protect” has been shattered because many emerging countries see it as a trap that will end up justifying regime change.
That is why they are reluctant to support intervention on behalf of the opposition in Syria. Under Brazil’s leadership, emerging countries are pushing hard for a UN resolution that removes the connection between the doctrine of responsibility to protect and the possible use of force. They want a toothless resolution aiming at sheltering national sovereignty against any external infringement.
Since the end of the cold war, Europeans have believed deeply in the existence of a global commons – and the declining importance of national sovereignty. The conduct of both the US and emerging countries suggests the opposite. Power politics is back. Multilateralism is dying.
From: CUTS International
Obama sets in motion global round of fresh trade talks
Press Trust of India, March 9, 2013
Faced with sluggish jobs growth and failure of the Doha round, the Obama Administration has set in motion an ambitious global round of trade talks covering Europe and much of Asia, which is bound to influence countries such as China, India and Brazil.
“Going through this crisis and recovery has pushed us all to focus on what it is we can do to create jobs and growth in every area of policy. If we are able to execute on this, it will be the most ambitious trade agenda in a very long time,” Mike Froman, Deputy National Security Advisor, was quoted as saying by The Washington Post.
The report said on Saturday that if the effort pays off, it could boost some of America’s most competitive and important companies.
Read this News Item at: http://www.thehindu.com/business/Economy/obama-sets-in-motion-global-round-of-fresh-trade-talks/article4491968.ece.
From: CUTS International
Comments Invited
Open Letter to the US President on the Doha Round
Dear Mr. President,
Greetings!
For more than three decades I am heading a leading Southern voice of non-state actors working on several public interest issues, which include international trade policy, economic regulations and good governance with demonstrated achievements. Our organisation, CUTS International – www.cuts-international.org – has established its reputation and credibility in doing evidence- and network-based advocacy through policy research. A testimony of our trade policy credentials is my appointment to the High-Level Stakeholders Panel on the Future of Trade, constituted by the WTO Director-General Mr. Pascal Lamy. This report will be published in April, 2013.
Mr. President: We thank you for outlining your agenda for trade and the international economic policy in your State of the Union address last week. We understand that the agenda for the world economy, in general, and global trade, in particular, will not progress without a proactive agenda on the part of the United States. We appreciate your thinking on two potentially large trade negotiations with which your administration is engaged and is expected to receive further momentum in near future – the Trans-Pacific Partnership agreement and the EU-US free trade agreement. (Obama puts trade at heart of agenda, Richard McGregor, Financial Times, 5th February 2013 – http://www.ft.com/cms/s/0/b9a115ea-6eed-11e2-9ded-00144feab49a.html#axzz2LyYyy5j0).
We understand your assertion that “trade that is fair and free across the Atlantic supports millions of good-paying American jobs”. We also understand the reasons for perceived public support to such a deal (The Public Supports a Transatlantice Trade Pact – For Now, Bruce Stokes, Pew Research Center – http://www.pewglobal.org/2013/02/19/the-public-supports-a-transatlantic-trade-pact-for-now-2/). However, it is also true that a future trade deal between the EU and the United States would “constitute rather modest gains – boosts of only 1.5 per cent and 0.9 per cent of gross domestic product to the EU and US respectively”. (Europe’s free trade deal with America could be a costly error, Marcel Fratzscher, Financial Times, 22nd February 2013 – http://www.ft.com/intl/cms/s/0/e6a94ef0-7c2f-11e2-99f0-00144feabdc0.html#axzz2LyYyy5j0). Such a modest gain will not create the number of good-paying jobs in the US as one may think.
Mr. President: While we understand that there are domestic compulsions which is shaping your future trade agenda, we urge you to put equal, if not more, emphasis on trade multilateralism by putting more negotiating capital to conclude the Doha Round of multilateral trade negotiations. Most, if not all, of the domestic trade-related issues that you wanted to address, and rightly so, can be better done by concluding the Doha Round of trade talks and by addressing issues such as trade and exchange rates, trade and climate change at the multilateral level by putting them as part of an in-built agenda of the World Trade Organisation and through its interactive engagement with other multilateral bodies. This is more so because of the fact that the centre of gravity of world trade is shifting towards the East and one cannot address the 21st Century trade agenda without engaging more and more with emerging economies.
As the WTO Director-General Mr. Pascal Lamy argued in one of his recent addresses to a meeting in New Delhi, jointly organized by CUTS International and Global Development Network: “I believe that the three following principles, if accepted globally, could help in overcoming the current stalemate:
1) Emerging countries need to accept that as they develop, which is their ambition, they will have to align their levels of rights and obligations with those of developed countries.
2) Rich countries should in turn recognize their own legacy, their own responsibility in the unfairness of some of the existing rules or in their ecological footprint and accept that, while emerging countries intend to apply developed levels of obligations/rules, they will only be able to do after a transition period, the length of which has to be negotiated.
3) Both developed and emerging have a responsibility towards the poorest in helping them build the capacity to reap the fruits and address the challenges of globalization.”
While Mr. Lamy was referring to the stalemate in the Doha Round of multilateral trade negotiations, it is equally true for other areas such as climate change.
Therefore, we urge you to assert a collective leadership in concluding the Doha Round of trade talks. That would do a world of good to not only the US economy but also to poor countries and, more importantly, it will help in shaping the future, 21st century trade agenda. And for that to happen the Office of the US Trade Representative should be more proactive and optimally ambitious in its engagement with other trade negotiators at the WTO so that a meaningful, forward-looking and balanced deal is arrived at the forthcoming Bali Ministerial Conference of the WTO Members in December 2013. Otherwise, we would witness trade protectionism through currency wars and other means and, as import intensity of trade is increasing in all economies, cross-border trade will become costly, harming all of us.
Thanking you,
Yours faithfully,
Pradeep S. Mehta
Secretary General
CUTS International
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