Why the WTO Is Going Nowhere
In the run-up to Cancún, the "big guys" are pursuing a shrewd divide-and-conquer strategy that co-opts individual nations (Singapore and Chile, most recently) by signing them up for "bilateral" agreements with the United States on terms that include the same restrictive investment rules the multinationals want in the next WTO agreement. "It's sort of Leninist, because they're picking off countries one by one," Bhagwati observes. This American tactic is designed to weaken the coalition of poor countries in the negotiations while creating an appearance of broader support for the multinationals' investment rules. Chile, for instance, has accepted a prohibition on capital controls even though it has skillfully employed capital controls itself over the past twenty years to engineer its successful development. Other nations may not get the chance.
From their side, developing countries are pursuing WTO issues that are genuinely about free trade--removing the protectionist barriers in the wealthiest countries for domestic agriculture and the pharmaceutical patent monopolies that impose exorbitant pricing on lifesaving medicines. More productive countries like Brazil want to eliminate the US, European and Japanese tariff barriers that block Brazilian food exports. Virtually all developing countries attack the awesome production subsidies that the advanced governments provide their domestic agriculture. The poorest nations, for instance, argue that subsidizing capital-intensive US agriculture allows agribusiness exports to underprice and destroy less advanced farming in Africa and elsewhere, while American farmers are compensated with price supports. Mexico's peasant farmers are currently being devastated in this manner by American corn, thanks to NAFTA.
These agricultural issues have been on the trade agenda of poor nations for at least fifteen years, but at every turn they have been denied any real progress. The Uruguay Round, completed in 1994, did establish limits on agriculture subsidies, but the caps were set so high that the United States could continue to increase its farm subsidies enormously without any violation. Since then, the big guys have issued a running series of paper promises and formal commitments, none of which amounted to more than empty pieties. The US and EU reps issued a new declaration of intent a few weeks before Cancún--one without any hard numbers or deadlines. In other words, more words but no actual commitment.
Does anyone believe that George W. Bush intends to depart from this pattern, that is, to throw American farmers and agribusiness over the side? Brazil is a prime example of the dilemma facing US trade negotiators. If the United States proposed genuine concessions on agriculture and some industrial issues, Luiz Inácio Lula da Silva, Brazil's new Workers' Party president, might conceivably be persuaded to compromise on some of the other things Americans want for the WTO, and especially for the proposed Free Trade Area of the Americas, in which Brazil holds the decisive position. As Wallach explains, Brazil "doesn't want US interests taking over Amazonia's timber, oil, biodiversity. It wants to protect its national health system from US HMOs. It has to insure that a grandiose WTO expansion doesn't occur at Cancún."
But--but--Lula also needs economic growth, more jobs and rising incomes, to succeed as president. Right now the Brazilian economy is stuck--stabilized but not growing. If the United States offered substantial concessions on agriculture, that would be hard to turn down. Brazil wants major reductions in the US tariffs, as high as 100 percent, blocking its citrus exports. It wants America to eliminate subsidies for soybeans and open wider the US market for Brazilian beef and other foodstuffs. The Administration rhetoric suggests these matters are ripe for serious negotiation.
But Brazil's wish list makes clear why such reforms won't happen, given President Bush's priorities. Soybeans are Missouri, Iowa and Arkansas, among other Republican-voting states. Beef is Kansas, the Dakotas and the Solid South. Oranges are Florida. Open markets for oranges would allow Brazil's abundant and efficient citrus production to devastate Florida. Karl Rove would not permit it; neither would Florida's governor, brother Jeb. Whatever gets said by the US Trade Representative, whatever declarations are issued at Cancún, count on this: There will be no agriculture deal for developing nations, not one that is real, not one that can even be whispered about, at least until long after the 2004 election.
The Doha Round is supposed to conclude in early 2005, but Bhagwati predicts it will be postponed two years and possibly longer. Cancún, he suggests, "will just be smoke and mirrors, just another guidepost in the marathon. They will have good speeches, goody-goody stuff. They will make noises in the direction of the developing countries, but this is not the place where they will be negotiating anything. This is why I'm a bit worried."