Wednesday, December 2, 2015


As the world economy declines – driven by a fall-off in trade and increased protectionist barriers, according to recent reports by the World Trade Organization and analyses by some prestigious think tanks – trade negotiators are not helping much to avoid a possible catastrophe.

Even though the United States and 11 other countries of the Asia-Pacific region – some huge economies like Canada, Mexico and Japan – have just agreed to a massive “free trade” agreement, the real impact of the “reforms” is in doubt.  The agreement is advertised as covering some 64 percent of the world economy.

But the real task of getting the world economy on the right path is to deal with underlying economic issues on an inclusive basis.  The nearly 15-year-old Doha Development Agenda negotiations were intended to do just that by forcing structural adjustments in industrial and developing countries alike.  Many of the same nontariff reforms – as written into the TPP and anticipated in the ongoing TransAtlantic Trade and Investment Partnership between the United States and the European Union – are contained in the still incomplete Doha negotiating package.

There has been a distinctive lack of momentum in the past decade and a half on Doha – almost from the very beginning in 2001.  Except for a brief period under President George W. Bush, the United States has shown little interest in getting the multifaceted negotiations off the ground.

While TPP, for instance, encompasses only two real developing countries under its umbrella – Malaysia and Vietnam – Doha takes into account the benefits of 162 members – including a vast majority of the world’s least-developed and developing countries.

Are developing economies not worth the attention?  Hardly.  Most are experiencing rapid and high economic growth compared to the mature industrial countries.  For developing countries the potential for growth and trade often is just below the surface – to be exploited by all WTO members, including the United States.  A special issue of National Geographic magazine on Africa last year suggested that the continent – with all its poverty and lack of infrastructure – has massive economic potential.  Unexploited oil reserves are greater than those in all of the Middle East and the agriculture potential – to feed the world – is massive.  That is why China, Japan, South Korea, a scattering of Gulf countries and even European nations and the United States are buying up tracks of land there.

Yet Africa is the only continent left out of bilateral and regional free trade agreements and are being ignore in the Geneva negotiations by the economic powers that be there.

Rather, the United States is taking a different approach by focusing on more immediate concerns – what it can get from “like-minded” countries via free trade agreements.  The World Trade Organization at present counts has some 600 FTAs in force – and a lot more coming.  Some 123 agreements this year alone are still unreported to the WTO.

The good thing, according to a recent report on RTAs, is that they are all reciprocal – and most mirror WTO principles.  But the bad thing, according to a senior WTO trade official recently, is that no one quite knows where they are leading.  Should members start stepping away from the WTO to write rules on trade on their own, the organization as a negotiating body would be in jeopardy.

The United States is doing as little as it can since the short term of former USTR Rob Portman – now US senator from Ohio – to move the global trade agenda along.  Apparently the Obama Administration prefers to see a return after 20 years to the old GATT – General Agreement to Talk and Talk – where leisurely philosophical discussions with no deadlines can take place around a placid Lake Geneva.

That may be the reality after the December 15 to 18 ministerial conference.  There has been urgent consultations among WTO members to salvage the talks – and the moribund Doha Development Agenda.  The United States, supported by its major industrial allies – the European Union appears to be a notable exception – wants nothing more than to see the final nail driven into the Doha coffin.

What happens now?  The Nairobi agenda will be a “small” – read microscopic – package of proposals.  It will include another one-year extension of the moratorium on bringing non-violation complaints to the WTO Trade-Relations Intellectual Property Rights Agreement along with new – unexamined – work plans for electronic commerce and small economies.  Essentially those agenda items amount to nil in the scheme of things global.

Developing countries – led courageously by India, China and South Africa – are fighting for commitments from all WTO members – at least to recognize the work that has been done on Doha.  But because they are up against the political behemoths of the United States, South Korea and Japan, in particular, those efforts are likely to fall flat in Nairobi.

In the meantime the United States is showing its real intentions.  It has just wrapped up TPP – and is now actively pushing for an extension to other “like-minded” countries.  India – which some Administration officials had suggested could join the TPP – now seems out of the running.  You can say the same about the other BRICS countries – Brazil, China and South Africa – the largest and fastest-growing economies in the world.  Russia is not even a consideration given the current state of political affairs with the United States.

Not only is the United States pursuing a policy of exclusion, but last week it started pursuing a policy of retribution.  It announced rare labor practices reviews with some very major non-TPP countries like – Thailand, the Philippines, Ecuador, Fiji, Georgia, Iraq, Niger and Uzbekistan.

The only hope of the United States getting back into the business leading the process of expanding and improving global trade will be up to the next President.  While many of the front runners have turned away from supporting TPP, all have left open prospects of acting multilaterally – in the WTO?   We’ll see how the campaign debate on trade evolves – IF AT ALL.

— Jim Berger

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