Economy

I. The geo-political context

The collapse of the negotiations of the WTO mini-ministerial (21-31 July 2008) reflects the new geopolitics of the world economy. The emerging economies with a large portion of their population employed in agriculture have been at the heart of the negotiating processes, and have put at the forefront another way of approaching trade issues. This way puts people’s livelihoods at the center of decision-making in international trade
negotiations.

Two main visions of the world have emerged from the talks. One vision was based on Market Access as a means to ensure economic growth and promote economic development. The other vision was based on the protection of livelihoods of farmers. These two lines of political thought have been there all along the negotiating process, and are reflected in the technical aspects of the negotiations. This is not new. What is new is the conviction of more and more actors in the
negotiations that there are issues that cannot be anymore left to the market to be regulated: poverty and livelihoods demand specific actions and strong positions.

II. The issues

One can understand the surprise of those who say that the collapse was not "only" about the SSM1. It would, however, be misguiding to think that this issue was too "small" to have the talks
collapse. In countries where 60 per cent of the population is composed by small farmers (mostly women), and where imports surges could displace millions of people: the SSM acquires major political value.

There were 20 issues on the agenda of the mini-ministerial. The Special Safeguard Mechanism (SSM) was the 19th on the agenda. The G33, represented in the G7 by India, had announced from the beginning that the SSM was linked to livelihood and therefore was not negotiable. This position was supported by more 100 other developing countries. The G20 (more diversified economies and interests) had discussed the issue of the SSM without finding a common position.

Was the SSM the "only" reason for the collapse? Given the architecture of the "package" and the sequencing of issues, the SSM was to be followed by cotton subsidies. The Hong Kong decision says that: "We recall the mandate given by the Members in the Decision adopted by the General Council on 1 August 2004 to address cotton ambitiously, expeditiously and specifically, within the agriculture negotiations in relation to all trade-distorting policies affecting the sector ... ". This issue was not discussed.

The cotton issue was of particular interest for the Western African (Benin, Burkina Faso, Chad and Mali) countries whose
producers suffer of competition of subsidized cotton from rich countries.

Then, looking back at other specific issues on the table in agriculture the approach of exchanging Overall Trade Distorting Subsidies (OTDS) in agriculture against market access in agriculture emerging markets and in non-agricultural market access (NAMA) reflected again a political choice that links growth to market access, and to the so-called offensive interests. This argument was not convincing to those who have defended all along the need to protect the weakest segments of their societies, i.e. small farmers (who are mostly women) and petty traders.

The principles of Less Than Full Reciprocity and Special and Differential Treatment for developing countries as referred in the Doha Declaration was lost in the process. A Swiss formula coefficient of 8 for the US and the EU represented, as stated by Argentina, a cut slightly over 42%, while a coefficient of 20 for some countries, including flexibilities would have meant a cut of 60%. It would have meant a two thirds cut lower for developed countries than for developing countries. "It is less than full reciprocity inversely applied for the benefit of the main trading partners". It would have been against Less Than Full Reciprocity and Paragraph 24 of the Hong-Kong Ministerial Declaration. The numbers in NAMA were asked to be changed and the conditions attached (sectorals in exchange if more flexibilities and better coefficients) to be eliminated.

The lesson from this collapse is that there is a political economy of global trade as there is the political economy of national policy-making. The perception of what is important and what is minor in the international negotiations is linked to constituency of those who negotiate as well to a new geopolitics of trade policy. The context of the Uruguay Round has changed as some developing countries are now emerging economies and have now a voice in the world trading system.

1 The disagreement was on "how easily" the SSM could be invoked. The principle as such is in the modalities of 10 July 2008. The SSM is a special safeguard to be activated in exceptional circumstances and for a limited period of time.