This was written in November 2005 i.e. before the Hong Kong WTO Summit in December and is up to date as of then. Ed.

Ever since the first World Trade Organisation (WTO) Ministerial Conference in Singapore in 1996, Southern governments have been objecting that they cannot afford to implement many of the agreements negotiated during the Uruguay Round which form the foundation stones of the WTO. Many of those requirements would devastate the agriculture and industrial sectors of poorer economies. Others, such as the protection of (Northern) intellectual property rights, are too complex and costly to implement, especially in the time allowed. Moreover, they point out that richer countries have failed to implement many of the most important commitments they have made.

None of these WTO members were prepared to contemplate withdrawing from the organisation, despite growing demands of their people and mounting research that links the WTO to deepening poverty and the imbalance of global economic power. Instead, they insisted that development concerns had to be addressed before any new round of negotiations could begin. When the Doha Round of WTO negotiations was launched at the Ministerial Conference in Qatar in 2001, this demand was swept aside. The meeting took place just weeks after the September 11 attacks in the US. Governments of poor countries were bullied and bribed to agree. The message was clear: opposing the new round would be tantamount to siding with the terrorists.

Everyone knew that promises that the powerful governments would address these concerns as part of the new Round would never be kept, and the governments of the global South rejected proposals that it should be called the Doha Development Round. Ignoring this, the Doha negotiations that are driven by and for the world’s most powerful countries and transnational corporations are cynically referred to by their promoters as the Doha “Development” Agenda or the DDA. Attempts by Southern governments to give meaning to the label have got nowhere.

From the beginning, the scene was set for the priorities of Southern governments to be subordinated in the process of trade-offs known as “a single undertaking”. These trade-offs apply across all the areas of Doha negotiations – goods (including natural resources), agriculture, services, intellectual property, trade facilitation, and new rules on subsidies and unfair trade practices. Basically, there would be no movement on Southern governments’ concerns unless and until they gave the rich countries what they wanted - even where they were simply insisting that the US, European Union (EU) and others delivered what they were already committed to do.

There was hope that this might change when different groupings of Southern governments stood together during the fifth WTO Ministerial Conference in Cancun in 2003 and said “no” to rich country demands on agriculture, cotton and the “new issues” of investment, competition, government procurement and trade facilitation. Many commentators naively believed that this was a turning point in the power politics of the WTO. In practice, Cancun exposed the internal contradictions that had riddled the WTO since its creation. It showed that the majority of WTO members could, temporarily, assert their will within an institution that, in theory, operates on consensus. But it also proved that they could only delay the extension of the WTO’s global rule making; they could not revisit the underlying neo-liberal agenda. Indeed, few of them tried to do so.

Since Cancun, the major powers in alliance with the WTO bureaucrats have re-established their dominance. Familiar manoeuvres have ensured that the poorest and smallest countries, which will often be most severely affected by WTO rules, are sidelined. The requirement for “consensus” is constantly honoured in the breach. Selected governments are invited to “mini-Ministerial” meetings to try to broker deals that are then foisted on the rest. So-called “friends groups” of powerful governments push their offensive interests in specific areas, creating a momentum that is hard to resist.

THREE STRIKES AND YOU’RE OUT!

TheWorld Trade Organisation (WTO) was established in January 1995 after the conclusion of the Uruguay Round of GATT negotiations. This powerful new organisation, with its own court, was empowered to enforce the historical General Agreement on Tariffs and Trade (GATT) on trade in goods, plus new agreements:

• the Agreement on Agriculture (AoA);
• the General Agreement on Trade in Services (GATS);
• the Agreement on Trade-Related Investment Measures (TRIMS); and
• the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

The WTO is required to hold a Ministerial Conference of all WTO member states every two years . Its role is to ratify decisions and provide guidance for the next two years. Despite the hype about the WTO as a great success story, these Ministerial Conferences have a track record of conflict and failure.

December 1996 First WTO Ministerial Conference, Singapore: moves by the rich countries to expand the WTO to “new issues” of investment, competition, government procurement, environmental and labour standards were rejected.

May 1998 Second WTO Ministerial Conference, Geneva was a non-event.

December 1999 Third WTO Ministerial Conference, Seattle collapsed after failure to agree to a new “Millennium Round” of negotiations. The US hosts and new Director General, NZ’s very own Mike Moore, were blamed for being too aggressive and ill prepared.

November 2001 Fourth WTO Ministerial Conference, Dohaagreed to launch a new round of negotiations against the backdrop of “September 11” and accusations that governments who opposed the round were siding with the terrorists.

September 2003 Fifth WTO Ministerial Conference, Cancuncollapsed over disagreements on agriculture, cotton and the continued pressure to include “new issues”, and the Doha Round was paralysed.

December 2005 Sixth WTO Ministerial Conference, Hong Kong?

But A New Dynamic Has Also Emerged

In the past, the Quad of the US, EU, Japan and Canada used to dictate both the negotiating agenda and the acceptable outcomes, leaving others with no real choice but to agree. Since the Cancun Ministerial a “new Quad” has been created. Brazil and India have joined the US and EU as the central players in the Doha negotiations. Their role at Cancun and since as leaders of the pivotal Group of 20 agricultural exporters from the South has cemented their place at the head table. This is especially so in agriculture; but they are also the key players in the negotiations on industrial goods and services.

This has shifted the balance of power in the WTO, so the negotiations no longer just produce compromises that satisfy northern mega-transnationals and domestic political factions. Yet India and Brazil are not representatives of, nor accountable to, the remainder of the global South. Their goal is to secure outcomes that satisfy their national objectives, which are heavily influenced by large corporate interests and national elites. Both governments are facing discontent at home because of this. The powerful social movements in Brazil are urging the Lula* government to use its newfound influence to promote a socially just agenda for trade, rather than the interests of agribusiness. The Indian government was elected in 2004 in a backlash against the neo-liberal policies that it is now pursuing at home and abroad. *Lula is the universally used diminutive for Brazil’s President Luis Inacio Lula da Silva. Ed.

So the seats at the WTO’s head table have been shuffled, the dynamics have shifted and the negotiations have been stalling because of a different set of issues. But the concerns of governments from poorer countries that they cannot afford to implement the rules agreed to in the Uruguay Round, let alone those being proposed in the Doha “anything-but-development” agenda, remain parked on the sideline.

New Zealand ’s Labour government is up to its neck in these abuses of WTO processes and the farcical rhetoric of the Doha “development” agenda. This is not just because it is desperate to secure an outcome that it believes will benefit New Zealand’s exporters. It also fears that another failure in Hong Kong will further cripple the WTO and fuel the rash of bilateral and regional agreements between more important countries and leave New Zealand out in the cold.

In the final few weeks before Hong Kong, frenetic rounds of meetings in Geneva and elsewhere were held to reach pre-agreed statements that Ministers could simply endorse at the meeting, and avoid the risk of another collapse. Continuing a much-criticised practice that preceded Cancun, the chairs of the negotiating committees on each of the major issues, with backroom assistance from the WTO Secretariat, produced draft texts for Hong Kong that reflected the demands of the richer countries and ignored the objections of most Southern governments.

New WTO Director General, Pascal Lamy, has described Hong Kong as a “stopover”; reaching the destination will take another year. It is his job to be an optimist and talk up the possibilities (and talk of crisis when he wants to put the frighteners on). Lamy said that the final text for Hong Kong would be taken to Hong Kong “under his own responsibility”. This means that it was not the product of “consensus”. It will be very difficult to dislodge without the same level of concerted determination as occurred at Cancun; yet governments who held the line at Cancun are very nervous about doing so again. They know that they will be blamed for the collapse of the meeting and for the further decline of the WTO.

The enormous pressure in Hong Kong to avoid another failure is reinforced by US domestic imperatives. The so-called “fast track” mandate for the US President to negotiate expires in June 2007. Current hostility to trade agreements in the US Congress means it may not be renewed. That would allow Congress to pick apart any deal that was negotiated at the WTO, rather than accepting or rejecting the package deal, meaning it would be doomed. Working backwards to allow time for any Doha package to pass through Congress, there would need to be an agreement on final texts in all aspects of the round no later than December 2006.

Agriculture: New Faces, Same Politics

A mini-revolution of sorts did happen at Cancun. During the Uruguay Round, the Europeans and the US stitched up a deal, known as the Blair House Accord, which the remaining countries had to accept as a fait accompli. They had been gingered along by the Cairns Group of agricultural exports, dominated by richer countries such as Australia and New Zealand. In Cancun, a new bloc of developing country agricultural exporters insisted that their demands were pivotal to any deal. Since then this Group of 20, led by Brazil, has remained on centre stage and pushed the Cairns Group to the margins. The result is a new exclusive negotiating club, the Five nterested Parties or FIPs, which comprises the EU, US, Brazil, India and Australia. New Zealand has managed to sneak in because the former WTO Ambassador and now National MP, Tim Groser, and his successor, Crawford Falconer, were appointed to chair the agricultural negotiations.

The Group of 20 (G-20) wants tariffs in richer countries reduced so they can sell more and they want export subsidies removed and other subsidies reduced so they can compete better. This is presented as a development agenda, although it coincides to a large degree with the Cairns Group of agricultural free traders to which Australia and New Zealand belong. The main difference is that the G-20 wants flexibility for developing countries – including themselves – whereas the Cairns Group wants all countries except the very poorest to obey basically the same rules.

There are major issues within the G-20 countries, especially Brazil, about their absolute focus on agriculture exports. The landless peasants’ movement (MST) that organises 1.5 million members in 23 Brazilian states and the international peasants’ movement. La Via Campesina, have accused the Lula government of serving the interests of agribusiness, rather than giving priority to land reform, eliminating poverty and social justice. The inference that the Group of 20 countries are more interested in the outcome of these talks has also offended other “Groups” of WTO members. The Group of 10 rich countries, including Switzerland and Japan, are demanding “flexibility” to protect “sensitive products”. Poor net food importing countries (the Group of 33 [G-33], led by Indonesia) insist that they must be able to ensure food security by nominating “special products” that are exempt from tariff cuts and taking special safeguard measures if imports threaten local production. Their needs for special protection are very different from the export-based goals of Brazil.

The African, Caribbean and Pacific (ACP) group wants to delay the removal of preferences for its products into other countries (mainly Europe), while other “developing” countries are insisting that those preferences must be eliminated. The four West African cotton producing countries keep asking for genuine moves to severely reduce US subsidies.

The Old Imperial Powers Still Rule …

When it comes to the crunch, and despite the mini-revolution, the old power politics of the US and EU is still driving the agriculture negotiations: any deal has to be saleable to US and European political constituencies.

Europe ’s Trade Commissioner Peter Mandelson is British Prime Minister Tony Blair’s former best buddy, who had to resign twice from his ministerial posts. He has been frantically talking up the Europeans’ negotiating position as being a major concession that the rest of the world must pay for: ‘”this Round will not be concluded unless you help us too in areas where we have comparative advantage: by opening your service sectors, reducing your applied import duties, and protecting or geographical indicators, to name a few”.

Mandelson tabled a “final offer” on October 28. He described it as falling at the “outer limits” of his negotiating mandate. What he offered fell short of Europe’s own reforms to its Common Agricultural Policy. The tariff cuts were along the lines that Brazil had proposed, with the highest tariffs being reduced most. But Europe would retain higher protection for “sensitive products”, especially beef, poultry, sugar and some fruit and vegetables . There was no date for the much feted end to export subsidies, or any reference to the demands from the G-33 of poor net-food importing countries for Special Products and Special Safeguard Measures. Existing domestic support for farmers and agribusiness was protected by juggling subsidies between different “boxes”. European experts have calculated that the EU’s September 2005 proposal would enable the total level of domestic agricultural supports that allegedly distort trade to be increased by 13.4 billion Euro!

All this was “strictly conditional” on Australia , Canada and New Zealand “providing further commitment on the reform of their State Trading enterprises” (e.g. the residual export monopoly of Fonterra) and on cuts to US Farm Bill subsidies and food aid. Mandelson is caught between his professed concern to rescue the Doha Round and fraught European politics, which must also be viewed against the backdrop of the rejection of the new European Constitution by the people of France and Holland.

Underlying this dissension are competing models for the future of Europe. Britain is insisting that Europe must change its labour market and welfare policies to create jobs for the bloc's 19 million unemployed and cope with its ageing population. French President, Jacques Chirac, has demanded more protection for French workers and refused to consider shifting resources away from farm subsidies and towards innovation before 2013.

Most significantly, France’s politicians are united in opposing any position that would undermine the current Common Agriculture Policy (CAP) that is due to run until 2013. French leaders insist that the CAP is essential for Europe’s food security and have accused Mandelson of exceeding his mandate, something that would require consensus support. This position is hardly surprising. As the EU’s biggest agricultural producer and beneficiary of farm subsidies, these are expected to account for €9.4bn ($11.3bn, £6.4bn) of France's €13bn receipts from the EU in 2006.

President Chirac’s threat that France would veto any proposal that exceeded the mandate as he perceived it, and his promise to demand changes to the “final offer” of 28 October should not be taken lightly. It was France that effectively sunk the proposed Multilateral Agreement on Investment (MAI) when it withdrew from negotiations in 1998. Mandelson’s insistence on trade-offs in other parts of the Doha Round might, therefore, be setting the bar so high that no WTO member will agree and so justify the EU not making any moves at all.

The United States is playing a similar game. The US has been reluctant to make significant concessions to poorer countries, such as different levels of tariff cuts or maximum tariffs. In practice, its demands would require greater cuts from poorer countries than from rich ones. Meanwhile its proposed package of phased reductions in tariffs and subsidies would actually allow the US to increase the support that it pays to its farmers. The US currently pays massive subsidies to its farmers through the Farm Bill; they will amount to US$170 billion over ten years. These proposals involve shuffling of financial support for farmers from one “box” or category of subsidies to another. Because it has a different mix of subsidies from the EU, it has proposed a different formula. Most important is a new “blue box” that would allow the counter-cyclical payments that the US pays to its producers when the world prices are low. The US has rejected attempts to “discipline” that box, insisting that those payments do not distort trade. According to Argentina’s Ambassador, the US proposal would allow the overall level of “trade-distorting” domestic support to be increased from $US21 billion to $US23 billion.

A second area of contention is the US self-serving “food aid” programme that fails to meet the basic needs of people in poor countries. This involves “donations” of surplus agricultural commodities that recipient governments can sell in their local markets to raise money, even when it swamps local producers, and for budgetary support. It has also been used as a way of dumping genetically engineered (GE) grain on countries that are reluctant because of the threat to their biodiversity and their own GE-free status. US proposals do not address these concerns.

Again, this position reflects the priority of domestic politics. The current US Farm Bill expires in 2007. There is no way that Congress is going to let the WTO challenge what is currently provided or set the terms for the next Farm Bill. Indeed, both the US Secretary of Agriculture and the US Trade Representative have reassured Congress that “we will not be writing the (new) farm bill in the WTO”. Moves are already underway in Congress to set the next round of support in concrete to make sure that is so.

Agriculture Negotiations On Life Support

The first significant moves in the agriculture negotiations post-Cancun were contained in what was called the “July Package” (actually agreed to in August 2004). This set a general framework for the three main pillars of agriculture negotiations: cuts to tariffs (“market access”); cuts to subsidies for farmers (“domestic support”); and removal of export subsidies, reforms to food aid and state-owned exporters (“export competition”).

The plan to produce a “first approximation” of a more concrete deal for Hong Kong by July 2005 failed. Intensive talks in October among the “FIPs”, and then an expanded FIPs-plus (including New Zealand) still came to nothing. On October 21, Falconer announced the talks were on life support; without significant movement by the end of the month he would report that the objectives for Hong Kong could not be met. The end of the month came and went, but no death notice was issued. So, this select inner sanctum had failed to generate an agreed outcome among themselves. Without movement on agriculture, everything else remains stalled.

Trade In Goods

The original focus of the GATT (General Agreement on Tariffs and Trade) since 1947 was on cross-border trade in goods, such as cars, refrigerators and other commodities. Since the WTO was created with a much more expansive agenda, trade in goods has taken a back seat to agriculture and services. Reflecting that secondary status, this part of the Doha negotiations has been named “Non-Agricultural Market Access” - or NAMA in the shorthand that is so pervasive in trade circles. This description belies the huge social and economic impact of undermining of the marginal industrial base in poorer countries, and helps disguise the role of these negotiations in promoting the exploitation natural resources, such as forestry and fisheries, by transnational corporations.

The NAMA negotiations are expected to produce a formula to reduce tariffs and other restrictions on imported goods. In another mockery of the “Doha Development Agenda”, the same old power dynamics are at play. Reducing or removing tariffs threatens the fragile levels of industrialisation in the global South. As one African ambassador observed: “Market access is useless if we have nothing to sell”.

Yet the WTO Ambassador from Iceland who chairs these negotiations has been pushing the approach favoured by the rich countries that was rejected by the global South in Cancun. He presented this again as the consensus text in July 2004, and because it was rushed through late in the day, after the deal was reached on agriculture, there were only muted objections. Some wriggle words were introduced that in theory allowed the proposal to be revisited, but this wasn’t followed up on. So what was unacceptable in Cancun is being treated as an acceptable basis for Hong Kong.

Despite these manoeuvres, negotiations have been bogged down. The industrialised North countries promote their offensive interests and the governments of the South challenge them to deliver on a “development round” and press for “special and differential” treatment. But, as with agriculture, there is also some tension between the interests of the larger “developing” countries of Brazil, India and South Africa and the rest – and a fear that the former might agree to move rapidly on NAMA if they reach some agreement on their talks with the EU and US on agriculture.

The Key Issues In NAMA

There are four critical issues in the NAMA negotiations. The first is the pressure on Southern governments to “bind” all of their tariffs at a level they can never exceed. That means giving away the flexibility to set tariffs on at least some products at whatever level the Government sees appropriate, given local circumstances.

The second issue is the formula to be used for tariff cuts. The current proposals require deeper cuts to higher levels of tariffs. Richer countries tend to have low tariffs. Poorer countries have higher tariffs, so they will end up making the biggest cuts. The third issue involves proposals for zero tariffs in some sectors, including forestry and fish products and natural resources, on a voluntary basis. The aim is to get countries that represent a “critical mass” of global trade (defined as 80% or 90%) to buy into this. That will leave little room for poorer countries to maintain tariffs on those products.

The fourth issue affects countries like the Pacific Islands that have historically benefited from preferential access for their goods into richer countries – usually as a legacy of colonialism and often because rich country producers were dependent on a secure supply of cheap raw materials, such as sugar. One of the rules in the WTO is that all countries have to be treated alike. Preferences breach that rule. The African, Caribbean and Pacific countries have been pushing for an “index of vulnerability” that would help slow the reduction of their preferences. That is opposed by other Southern governments, which don’t have preferences and see themselves as disadvantaged.

A Licence To Plunder The Seas

The livelihoods of 34 million impoverished people around the world depend directly on fisheries. Over 100 million people rely on fish as their main source of protein. Yet the world’s fisheries resources are being plundered and depleted by rapacious fleets of trawlers at an unsustainable rate. The UN Food and Agriculture Organisation says three quarters of the world’s major fish stocks are already over-exploited, fully exploited, significantly depleted or recovering from over-exploitation. Artisanal fishers point to the flood of neo-liberal policies imposed from above by the International Monetary Fund (IMF), World Bank and WTO as major causes of their poverty, marginalisation and displacement.

None of this is relevant to the WTO. While foreign fishing companies take no responsibility for this social and ecological crisis, their governments are sponsoring new “trade” rules that aim to guarantee their access to the world’s remaining fish stocks and undermine policies and programmes that seek to stem the pending disaster. Within the WTO, fish is treated as an industrial product within a potentially free global market to be addressed within the “Non-Agricultural Market Access” (NAMA) negotiations – having been excluded from agriculture negotiations because it made reaching agreement just too hard! Indeed, fish products are one of the “sectoral initiatives” that would see the early elimination of tariffs. Perversely, tariff cuts on fish products would reward those who engage in economically “efficient” mass exploitation and hasten the depletion of the ocean’s resources. Sustainable local suppliers would be forced out of their domestic market and the rape of the fisheries would intensify.

New Zealand belongs to a lobby group in the WTO called “Friends of Fish” that promotes a pure market model for fisheries, in line with our Quota Management System and private property rights in fish. They demand the elimination of all fisheries subsidies on the grounds that subsidies promote overcapacity and over-fishing. That position is opposed by South Korea and Japan whose fishing fleets are among the most rapacious and subsidised. But small-scale fishers in Asia also point out that their problems arise from the open access regime for foreign trawlers, not from subsidies. From their perspective, blanket rules that prohibit subsidies would restrict the right of governments to support small fishers and protect the food security of coastal communities.

The impact of the Doha Round on fisheries is not confined to NAMA. The major fishing companies use massive factory ships to process their catch. This means that poor countries, such as small Pacific Islands, whose waters are the source of the fish, gain no benefit through jobs and local industry. The companies have been pressing their governments to secure commitments on “services related to fisheries” in the General Agreement on Trade in Services (GATS) negotiations that will entrench their control over processing of the resource and of its global marketing and prohibit the source countries from reasserting control over the benefits from the resource.

WTO Out Of Fisheries

The voices of those whose lives have been devastated by these practices and agreements are simply ignored. The World Forum of Fisherpeoples (WFF) was formed in 2000 to fight “for the rights of the world’s small, traditional and artisanal fisher peoples” and “against Globalisation, the WTO, the World Bank and the IMF since they are the instruments of the Multi National Corporations in the World whose activities suppress the livelihood of small fishing communities. The Forum decided to join hands with the struggles of the International Forum on Globalisation and Peoples Global Action against WTO.”

In a statement to Trade Ministers in June 2005 the WFF called for the WTO to “convene an official assessment process, with other relevant international bodies, to evaluate how reductions of tariffs and (non-tariff measures) could intensify the exploitation of the very fisheries resources that governments and coastal communities are trying to bring under control, especially in places where illegal, unreported or unregulated fishing is a problem. Prior assessment with meaningful popular participation is essential if agreements to reduce tariffs are not to negatively impact the sustainable livelihoods of traditional fishing communities or the natural systems upon which they depend. WFF requests for official assessment of the potential impacts of liberalising market access, as mandated in Doha, have not only gone unanswered but have been implicitly rejected by the (Food and Agriculture Organisation). This reflects a stunning and unacceptable failure of international policy coordination that invites social and ecological catastrophe”.

The Southeast Asia Fish for Justice Network (SEAFish-J) planned a “fluvial protest” by artisanal fishers – a flotilla from the Philippines to Hong Kong. Not surprisingly, the Hong Kong government announced it would deny them access to its inshore waters. But however they made their way to Hong Kong, there was guaranteed to be a strong presence of fisherfolk, to deliver their message directly to the decision makers in the WTO.

GATS Hypocrisy Exposed

To understand the current crisis in GATS negotiations requires a step back in time. In the early 1980s the US gave an ultimatum that it would not negotiate on matters of critical concern to poor countries under the GATT unless it got what it wanted for its corporations on services, investment and intellectual property. The two biggest coups in the Uruguay Round were to extend rules that governed trade in goods to the increasingly lucrative sphere of services through the General Agreement on Trade in Services (GATS), and an agreement to implement US intellectual property laws around the world. Neither had anything to do with trade as traditionally understood. Indeed, getting officials and negotiations to accept the very idea of “trade in services” took a lot of intellectual gymnastics, bullying and bluff.

GATS was essentially an investment agreement to facilitate the expansion of transnational insurance, data processing and telecom corporations and cement in neo-liberal policies that were sweeping the world by the 1980s. Thanks to British Prime Minister, Margaret Thatcher, New Zealand’s Minister of Finance, Roger Douglas, and others in richer countries, and the IMF/World Bank in poorer ones, the new agenda of deregulation, privatisation and contracting out opened lucrative new opportunities for services firms. New technologies made it easier to transfer data, finance and commodities across national borders. The obsession with trendy and dumbed-down leisure consumption offered huge new markets in entertainment, sports, tourism, gambling and “personal services”.

A new version of the old international division of labour saw elite providers and consumers of services become more mobile, with corporate employers demanding free movement for their managerial tier, while low-skilled workers were rigorously vetted and victimised through repressive immigration laws. For American Express, Time Warner and Wal-Mart an enforceable global “trade” agreement that could guarantee the right to invest, access customers and restrict intrusive regulations around the world was a godsend.

The problem was that India, Argentina and a hard core of developing countries fought against the idea of GATS and, once they lost that battle, insisted that the agreement must allow individual governments to limit its coverage. The result was a partial agreement that constrains the right of governments to regulate in the best interests of their people, and privileges the interests of transnational firms. Yet the complex architecture of country-specific schedules requires governments to commit any specific sub-sector explicitly to the various GATS rules. The US managed to claw back two vital commitments: the text of GATS required new negotiations to extend these country-specific schedules of commitments within five years, and to develop disciplines on the use of domestic regulation, subsidies and government procurement in services.

GATS 2000 Negotiations Paralysed

The new round of GATS negotiations began in 2000, before the Doha Round. The aim was to extend guarantees that foreign firms can run a country’s services, ranging from health, education and pensions to railways, postal services and broadcasting, and to prevent governments from giving preference to local providers of such services. Ideally, they will also impose a straitjacket that requires governments to introduce only market-friendly regulations. The aggressive stance of the richer countries, now led by the European Union (EU), has been fuelled in part by the much more extensive commitments and intrusive rules that their services exporters have secured through the rash of bilateral and regional trade agreements that are sweeping the world.

Progress was slow. That was partly because the negotiating process required each WTO member state to make separate requests of each other member state to make new commitments in specific sub-sectors; then each government would choose what, if any, new commitments it would offer. Most governments took seriously the rhetoric of flexibility and the guarantee that governments would retain the right to regulate their services when deciding to limit what they were prepared to offer, even when they aggressively demanded much more from everyone else.

The second reason for the slow progress was the intensive, coordinated and highly effective international campaign being fought against GATS at national, international and sectoral levels. The GATS negotiations were supposed to be concluded by 2005. Like everything else at the WTO they became paralysed. Deadlines passed and were largely ignored. Requests to other WTO members were to be tabled by June 2002 and first offers made in response by March 2003. Revised offers were to be made by May 2005.

As of July 2005, after persistent pressures on governments to present initial and revised offers, 74 of the 124 WTO members had made offers (counting the EU of 25 members as one). Of these 64 were “developing” country members. According to the Chair of the trade negotiations, there were no offers from 24 developing countries that were not categorised as Least-Developed Countries (LDCs). Even those that had been tabled were of “low quality” and failed to offer new commercial opportunities – meaning they locked in the neo-liberal policies that were already in place but governments had not promised to deregulate or privatise more of their services or lift foreign investment restrictions.

By now, the paralysis in services negotiations was having a flow-on effect. The EU was insisting that any concessions it might make on agriculture (cosmetic or otherwise) depended on them securing more commercial opportunities under GATS for their corporations in water, banking, telecommunications, shipping, retail and more.

The Revival Of The GATS Attack

In June 2005 the GATS attack came back with a vengeance. A group of governments (including the EU, US, Japan, Australia, Switzerland, South Korea, Taiwan and New Zealand) began pushing a scheme that would require all countries, rich and poor, to lock open a minimum number of their services to foreign firms. These formed the centrepiece for informal discussions on the services negotiations in Geneva and elsewhere. Some of these governments had their own offensive interests in services that they were eager to pursue. For others, like New Zealand, their role had little to do with services and everything to do with their fear that the Hong Kong Ministerial would collapse, like Seattle and Cancun before it, if the Europeans could not secure a high enough price for its minimal moves on agriculture.

A number of different proposals were floated. The main proposal is for “benchmarks” or a formula approach where all WTO members would be required to commit a minimum number of sectors to the GATS rules in all their different “modes of supply” (including foreign investment). The EU says its quantitative formula would allow some choice – and therefore meet the GATS requirement for “flexibility”. There would also be different “levels of ambition” according to a WTO member’s level of development. This would require massive new levels of commitment: the EU’s proposal of October 27 wants new or improved commitments in 139 of the 163 services sub-sectors for “developed” countries and at least 93 for “developing” countries - including removal of all restrictions on foreign investment in those sub-sectors.

Australia has supported the EU proposal. New Zealand has been complicit in advancing the “benchmarks”, too. It tabled a “non-paper” at a special session of the services negotiations that suggested a formula for quantifying how much each country is offering. In a further mockery of the Doha “development” agenda, some rich countries are arguing they should get “credit” in these calculations for what they have already committed. In other words, most of the new commitments would come from poorer Third World countries who have always been reluctant participants in services negotiations.

A second strategy is to get a “critical mass” of governments to agree on model schedules for particular sectors. This would allow groups of like-minded (richer) countries to reach far-reaching deals on priority sectors, which others (mainly developing and least developed countries) are “invited” to join. In practice, these invitations would be backed by direct or indirect threats of loss of trade or aid for those who don’t accept.

These proposals are being developed by so-called “friends” of various service industries. These groups are created by WTO members, but the Secretariat’s officials sometimes attend for “information purposes”. According to the WTO Secretariat there are 14 of these informal groups (including logistics, legal, computer and related, aviation, environment, maritime, telecommunications, energy, courier/postal, Mode 4, trade and culture). Sometimes the sectors overlap, creating a web of services commitments that reflect the needs of the transnational companies. “Logistics”, for example, links rail and road transport, maritime transport, ports, inland waterways, postal and courier services and other distribution services.

New Zealand has particular interest in postal services. A moment’s reflection on foreign investors’ track record in New Zealand, and our own Transend’s disastrous foray into South Africa and elsewhere, should be enough to show the folly of any country constraining its right to regulate foreign firms’ activities in these sectors. “Environmental services” is a priority for the EU. It has even tried to shortcut the stalled GATS negotiations on government procurement, and bypass the rejection of broader negotiations on government procurement at Cancun, by slipping government procurement into its model schedule for “environmental services”. If it succeeds, it will open lucrative opportunities for Europe’s transnational firms in water, waste disposal, sanitary services and more.

The Chairman’s Coup

Not surprisingly, Southern governments have expressed outrage at this naked raid by transnational corporations on their services. Much of their infrastructure and many of their social services have recently been opened through privatisations and liberalisation, often under debt conditionalities from the IMF and World Bank. Without any time to build the capacity of their local non-state providers, they are being pressured to lock their doors open to foreign firms indefinitely and never to provide preferential support for their nationals.

These proposals have faced strenuous and sustained opposition from Brazil, the Philippines, Malaysia and ASEAN and others. If these GATS negotiations were genuinely based on consensus, as the “rules-based WTO” constantly claims, these proposals would have been dropped soon after they were mooted. Not so. They continued to appear in successive draft texts prepared by the Mexican Chair of the services negotiations, Ambassador Mateo, for tabling in Hong Kong.

Indeed, Mateo claimed that these references, which were inserted without any consensus by WTO members, could only be removed if there was a consensus to do so! Looking beyond Hong Kong, he has described 2006 as the “hunting season” for services as members are required to negotiate “final offers”. The aim is to finish negotiations by the end of 2006, to form part of the trade-offs in the “single undertaking” of the Doha Round.

People can be justifiably outraged by these developments; but they should not be surprised. This is consistent with what has happened right across the WTO since it was established in 1995. It also exposes the vulnerability of the WTO. For years, ministers and other cheerleaders for GATS have accused their critics of scaremongering. They insisted that the rules allow countries to decide for themselves which, if any, services they locked open to foreign firms under the “free trade” rules of GATS. Sovereign governments retain the right to regulate and protect their public services, they said. The development needs of poorer countries would continue to be recognised, allowing them to make fewer commitments than their richer counterparts and assisting them to participate in the global services economy.

Today, that thin veil has been stripped away. The GATS negotiations lie exposed as an arena driven by the self-interest of more powerful countries, on behalf of their services transnationals and/or as a trade-off for their agribusinesses, such as Fonterra. The New Zealand government’s active complicity in this process reflects shamefully on us all.

Trade In People

Colonisation was an economic enterprise built on the exploitation of people and natural resources for the benefit of the colonising state and its corporate interests and economic elites in the colony. Its most repugnant genocidal practice was human slavery, the trade in human beings. Today, neo-colonial globalisation has revived the trade – they call it Mode 4 of trade in services. True, it is more nuanced. Indeed, governments of the South are demanding the right to export their people to provide services in other countries, claiming this is their only “comparative advantage” in a global marketplace where the rich countries dominate the production of goods, food and services.

For some, notably India, those human exports are skilled technology workers who are keen to work temporarily in the US or Europe. Its Government wants to secure guaranteed access for those workers. The primary beneficiaries are not the workers themselves, but the firms who are able to minimise their costs and maximise their profits and their competitive position; yet there is enough of a win-win for the elites in India to be pushing hard for these guarantees.

For India Mode 4 is a means to complement the outsourcing of services work from richer countries. The growth of “outsourcing” and “offshoring” is most obvious with the growth of call centres and backroom operations. Banks and e-commerce operations pay relative peanuts for the processing of documents offshore. This is often highly skilled work. For example US law firms are increasingly sourcing their legal research and preparation of court documents from India, so they have a computer file waiting for them in their office in the morning. Such operations come under Mode 1 of GATS (cross-border supply of services) or Mode 3 (establishing a commercial presence) in situations where foreign firms set up an intermediary or clearing house in India. India’s goal is to minimise the restrictions other governments place on these activities, including regulations relating to professions and licenses.

The situation is very different for service workers in other countries who are forced by the economic conditions at home to leave their families and communities and work abroad. Sometimes this involves predatory migration, as nurses and teachers from Fiji or the Philippines are sucked up by countries like New Zealand. Others seek “unskilled” services jobs offshore. Unskilled is a misnomer – often they are highly skilled professionals who tragically can earn more as low paid domestic servants. Increasingly, women will leave those professional jobs as teachers or nurses in their own countries to seek low paid, high risk, exploitive work as domestic servants offshore. Men also leave their jobs or local communities to work in war zones as private security personnel. These “services exports” have no personal security and often few legal rights. Yet their families depend on the remittances they can send home. So do their countries. Fiji now earns more from remittances than it does from exporting sugar.

Those who make the money from this “trade” are the middle operators, sometimes State-run operators who oversee the temporary export of their citizens, and increasingly private firms that run contract operations, such as those recruiting security personnel for Kuwait and Iraq. This new international division of labour is embedded in the global services market. Its promotion through the GATS negotiations is fostering a perverse “development” model that is built on remittances and intensifies the hollowing out of poorer countries’ economic, social and cultural life.

Mode 4 - guarantees relating to the temporary movement of natural persons to provide services - has become a critical important factor in the GATS negotiations. India, which had been the prime opponent of GATS during the Uruguay Round, now has offensive interests that it is pursuing with vigour. As part of the “new Quad” of power brokers in the WTO and one of the Five Interested Parties (FIPs) in the agriculture negotiations it is perfectly placed to broker a trade-off.

This new power play was “formalised” in September 2005 during a summit of trade ministers from the “new Quad”. They decided to create a new 15-country special group on services negotiations to be jointly chaired by the US and India. The membership is heavily weighted towards countries that support the controversial benchmarks proposals and fails to include any sub-Saharan, Caribbean, Pacific or least-developed countries.

The stated aim of this elite group was to consider “concrete ways of imparting specificity and momentum to the services negotiations”. They failed to agree on either the task or the membership. This was a relief to many GATS critics and a considerable number of governments who fear that they will be unable to resist demands for extensive new commitments if India’s resistance folds. Whether India holds firm rests on Mode 4. The EU has been prepared to make some movement by including minimum requirements for commitments to allow entry of skilled workers within the benchmarks. The problem is with the US.

There are unconfirmed reports that the US negotiators promised India a minimum 65,000 Hi1b visas a year. Any such deal is legally untenable. Immigration is the tightly guarded domain of the Congress, and it is not about to have those rules rewritten in the WTO. The US Trade Representative has been instructed by the Chair of the House Judiciary Committee that oversees immigration “not to negotiate additional immigration provisions in bilateral or multilateral trade talks that require changes to the US law”.

There are also political reasons. The US has constantly claimed that the future economic and job growth will result from training new generations of high-tech workers. So “offshoring” of that work has become a highly controversial political issue; workers not only fear for their jobs, but they also see real impacts through the lowering of real wages and loss of health insurance and work conditions. Proposals to recruit the same expertise from India would provoke further resistance at a time when the US economy is faltering. Immigration also attracts a high level of paranoia. Armed citizen militias are currently patrolling borders in Arizona and New Mexico looking for illegal migrants. The obsession with security and scare stories of terrorists masquerading as technical professionals is producing pressure to tighten up, rather than provide guarantees, for visas, especially from South Asia.

Meanwhile, poorer countries with less bargaining power than India are spectators in this game. Unwilling to sink the negotiations by refusing the participate, they are also demanding Mode 4 commitments for “unskilled” workers in tourism, fruit picking, domestic labour, construction and security operations in return for any new commitments they make on services. The tragedy is that the governments of poorer countries that feel trapped in the GATS negotiations see this as their only option – one that no Northern government shows any sign of responding to.

How The WTO Kills Every Day

The denial of affordable life-saving drugs to those suffering the HIV/AIDS pandemic is perhaps the most damaging saga in the WTO’s short life. More than 20 million people have died of AIDS since 1981. Africa has 12 million AIDS orphans. By December 2004 women accounted for 47% of all people living with HIV worldwide, and for 57% in sub-Saharan Africa.

Young people (15-24 years old) account for half of all new HIV infections worldwide - more than 6,000 become infected with HIV every day. Of the 6.5 million people in developing and transitional countries who need life-saving AIDS drugs, fewer than one million are receiving them. In Papua New Guinea an estimated 1.7% of the adult population, or 47, 000 people, are infected with HIV.

Moves by the mega-drug companies to invoke the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) in a court case against the government of South Africa and a WTO complaint against Brazil provoked huge international outrage and a face saving back down by the companies and their patron states, the US and EU. Yet the problem remains unresolved.

A temporary truce had been agreed at the Doha Ministerial conference in 2001. The TRIPS Agreement makes some provision for countries to produce their own generic drugs under compulsory licenses; but these drugs have to be used mainly for domestic purposes. Many countries that desperately require cheaper drugs have no capacity to make them and need to import them. They can’t afford the extortionate prices the mega-corporations demand of them.

The 2001 Declaration on TRIPS and Public Health recognised this problem and mandated the Geneva-based Council on TRIPS to find a solution. They were to report it to the WTO General Council, which has representatives of all member states. That report was received in August 2003. The “solution” involved a waiver that was subject to several quite onerous procedural requirements. However, when the Chair of the General Council meeting read out the decision for adoption, he added several more procedural constraints. A wrangle is now underway about the status of the Chair’s statement and whether it should form part of the formal amendment to the TRIPS Agreement. The African Group and others object that it has no legal status and would impose hugely burdensome conditions that few importers or exporters of generic drugs would be able to meet.

The US insists that any permanent solution must include the Chair’s statement. Australia agrees. New Zealand says the Chair’s statement should provide “context” for interpreting the General Council’s decision – which in practice supports the US and Australian position. Brazil, which runs a world-leading HIV/AIDs programme, has said that having no solution yet is better than a bad solution. Meanwhile, the UN estimates that HIV/AIDS kills 6,000 people, and another 8,200 people are infected, every day.

Another Failed Ministerial, A Serious Loss Of Face

When Hong Kong China, Special Administrative Region (SAR) bid to host the sixth Ministerial Conference (MC6) in 2005, they expected to be hosting the celebratory conclusion of the Doha Round. After the collapse at Cancun it not only seemed that the deadline of 2005 was unattainable – there was also a risk that the next meeting would “fail” and the Hong Kong hosts would be held to blame. The loss of face would flow through to the People’s Republic of China as well.

There was little the Hong Kong administration could do to control what happened inside the MC6, which is under the control of the WTO. But it was also acutely concerned to control what happened in the public arena. The international publicity attracted by anti-WTO campaigners and any suppression of dissent was likely to shine the spotlight on Hong Kong in undesirable ways. Worse, mobilisations on its doorstep could fuel opposition to China’s implementation of its controversial WTO obligations and the demands of locals and migrant workers in Hong Kong for greater human rights and democratic government.

The Administration made huge efforts to avoid the meeting from backfiring on them. Like Cancun, the area surrounding the Convention Centre was cordoned off – although a similar nine kilometre buffer was hardly practical. Some transport services were closed and access to buildings restricted. After many requests and repeated promises, culminating in a direct appeal to WTO Director General Pascal Lamy, the MC6 Committee finally identified a venue for parallel activities in Victoria Park, Causeway Bay.

Despite visa-free entry from most countries, the Government hinted that it might vet people entering. Limiting accommodation was another ploy. Some hotels, including the YMCA, initially refused to accept bookings from people coming to oppose the WTO, claiming that was the position of the Hong Kong hotel and tourist industry. When this was made public, denials flooded in thick and fast. In any case, the racked up price of already expensive accommodation was beyond the reach of most of the social movements that were planning to voice their concerns in Hong Kong.

For the previous year, Hong Kong’s media was obsessed with stories of violence, fed largely from “unidentified” (Government) sources. These were fuelled by distorted and wildly exaggerated images of “violent protest” at previous WTO Ministerials and linked to the expected presence of several thousand Koreans. The standard line from officials was: ‘ What if some Korean peasants kill themselves during a protest at the Victoria tunnel?” (which links Hong Kong island to Kowloon. A Korean farmer publicly killed himself during protests at the 2003 WTO Ministerial in Cancun, Mexico. Ed.).

The Hong Kong People’s Alliance (HKPA) worked hard to build an effective mobilisation of activists in a wide range of parallel activities. In an open letter to Government head, Donald Tsang, in June 2005, they reiterated the principle of non-violence in protests against the WTO and “the position of the HKPA is to express alternative views through peaceful means”. They continually sent out press releases, held press conferences, hosted high profile visitors, organised events and ran education forums to bring the real issues to the fore. That is difficult in the free port of Hong Kong, where many criticisms of neo-liberal globalisation and the WTO seem counter-intuitive. Despite this, HKPA has made some headway. Parts of the media became bored with the beat-up about violence and started reporting matters of substance.

Yet The Hype Kept Coming

Locals were constantly reminded that the police had stocked up on “non-lethal ammunition”, such as riot shields and rubber bullets, prisons were being emptied and paving stones were being secured so they couldn’t be used as missiles – stories that are reminiscent of Auckland police sealing all the manholes so no terrorist/protesters could pop up at unexpected moments during the Asia Pacific Economic Cooperation (APEC) meeting in 1999! Indeed, protest and terrorism were deliberately and mischievously blended. In mid-September the local and foreign press reported that the Government had ordered hospitals to stock up on antidotes to cyanide and insecticide in preparation for chemical attacks, as part of its contingency plans for the week of the meeting.

Those who were at Cancun know that, aside from the suicide of Korean farmer, Lee Kyung Hae, no one was injured. The only property damage was the symbolic dismantling of the fence that was erected to keep the people nine kilometres from the Convention Centre where the decisions were being made. No protest actions involved any physical violence to anyone - police, delegates, local citizens or holiday makers. As the peasants’ movement keeps pointing out, it is the WTO that has a track record of responsibility for violence. As Lee Kyung Hae’s self-sacrifice starkly reminded the world: “WTO Kills Farmers”.

As the Hong Kong People’s Alliance has repeatedly pointed out, the Hong Kong government needed their cooperation. If they were not able to coordinate activities of the vast number of social movements, non-government organisations (NGOs) and trade unions that were present, there was much more likelihood of chaos in the streets. The Government seemed not to understand. Their arrogant dismissal of the local NGOs put them on the back foot. In particular, they were shown up by the slick public relations (PR) skills of WTO Director General, Pascal Lamy, at a Roundtable Forum intended to foster communication between dissenters and the WTO in October. Hong Kong NGOs criticised the head of the Trade and Industry Department, John Tsang, who chaired the Ministerial Conference, for not responding to their requests for a meeting for over a year. Tsang reportedly replied that he would “consider it, but you are supposed to be civil society, so you must be civil. I will not negotiate under duress” (Hong Kong Standard, 17/10/05).

The meeting at Hong Kong University ended early. Tsang took off in his car. After activists swamped Lamy’s vehicle, he got out and agreed to receive their petition. That is not to say that Lamy won the PR battle either. His response to accusations that the WTO had made life worse for the poor was simply to wash his hands of responsibility: “The WTO’s core business is not distributing welfare. The WTO’s business is creating wealth” (South China Morning Post, 17/10/05).

None Dare Call It Failure

On November 9 the Guardian reported that Brazil and India had concluded that the gulf between negotiators was too big to bridge in the five weeks left for the talks. Everyone else seemed to agree. The chairs of the various negotiating groups were originally supposed to present draft texts to WTO Director-General Lamy by the second week of November. Lamy was to have produced a first draft of the overall text by mid-November. Some, including New Zealand’s Crawford Falconer who chairs the agriculture negotiations, had declined to bypass the opinions of the major parties, while those, such as the chair of the services negotiations, who ignored the dissenting voices, had come under intense criticism.

The next meeting of WTO members in Geneva on December 2 was scheduled to decide what text was sent to Hong Kong – and, at the time of writing, it was anyone’s guess what the ministers would actually do at the Ministerial conference itself. So Hong Kong seemed a near certainty to be another failed Ministerial. Yet none of the WTO’s champions wants to name that reality. Euphemisms abound. One favourite is “scaling back the level of ambition”. Another is “recalibrating the expectations for Hong Kong”. Brazil’s Ambassador has suggested the need for a “Hong Kong II” – holding another Ministerial meeting early in 2006 to do what Hong Kong was supposed to do.

The WTO will be further crippled as a result of this failure. Yet the pressure will remain for some deal before the end of 2006. Negotiations that exist independently of the Doha Round, notably those on services, will continue. The rapidly expanding array of WTO-plus regional and bilateral negotiations is likely to intensify. And the same power politics and bankrupt neoliberal agendas will be played out in a multiplicity of venues.

A minority of transnational corporate NGOs are decrying this outcome, just as they declared the collapse of the Cancun Ministerial meeting in 2003 to be a disaster for developing countries. The Guardian reported Céline Charveriat, head of Oxfam International's Make Trade Fair campaign, saying: "Now is not the time to scale down ambition. The world's poor need a deal in Hong Kong ... Every day of delay is another day of suffering for millions”.

Walden Bello, from Focus on the Global South, replied: “ In the future, we would request our friends at Oxfam to make it clear to the press that they are speaking only for themselves and not as representative of trade campaigners or of civil society.  We would also request that they not claim to speak for the world's poor but only for themselves”. Meanwhile, social movements, progressive NGOs and trade unions, and community activists will maintain their pressure on governments of the South to stand firm and on the powerful countries and corporations of the North and on the latter to abandon their unconscionable demands.

Another Way Forward

One thing is abundantly clear - even if some deal is pulled off in Hong Kong, the World Trade Organisation remains in deep crisis and is unsustainable in the medium term. The fall back position being adopted by the New Zealand government is to promote WTO-plus agreements with anyone who will talk to it. That process and those agreements are equally unsustainable. It is time that we as New Zealanders get past the free trade rhetoric, recognise that the model of neo-liberal globalisation really is in crisis, and engage with the need to find a better way forward.

Foreign Control Watchdog, P O Box 2258, Christchurch, New Zealand/Aotearoa. December 2005.