Derailing Doha and the pathway to a new paradigm: How WTO’s collapse clears the way to solve today’s food, fuel, and financial

Original Publication Date: 
30 July, 2009

Derailing Doha and the pathway to a new paradigm

How WTO’s collapse clears the way to solve today’s food, fuel, and financial

By Victor Menotti,
July 30, 2008

Seeing the Sweep of History

As experts dissect the collapse of the World Trade Organization’s (WTO) Doha
round of global trade talks to explain its causes and effects, many are
missing how it signals a shift in the sensibilities of people everywhere to
end of the era of global free trade and renew government’s rightful role in
regulating commerce, especially in the critical areas of fuel, food, and

These three, interrelated crises are the direct result of a failure to
govern in the public interest and each now requires rapid responses through
global cooperation. Contrary to what some are saying, derailing Doha
actually clears the way to solve today’s fuel, food, and financial crises
while providing a pathway to a new paradigm of global cooperation rather
than competition.

How so?  First, failure to expand the WTO’s powers over essential areas of
our economy, in fact, preserves the “policy space” needed to shape vigorous
responses to today’s most pressing problems without policymakers worrying
about violating insidious world trade rules; see more on that below.
Second, with Doha “dead in the water,” the world can now concentrate on
other options already in play for addressing the rise in food and fuel
prices (not to mention temperatures and sea levels), as well as the
deepening turmoil in global financial markets.

While the WTO’s so-called Doha Development Agenda (DDA) was supposed to
prioritize the needs of poor countries, its proposals would have expanded an
energy-intensive and export-oriented development model, undercut millions of
peasant farmers with cheaper imports, intensified industrial agriculture in
the Amazon, increased trade in environmentally sensitive goods, and reduced
the rights of governments to protect public services, consumer safety,
community development, and ecological limits.  True, action on developing
country demands will be delayed but even more disappointing is the fact that
most of their priorities went all but ignored by the interests of global
corporations’ push to access more resources and new markets.

Victory led by Peasants, Farmers, Small Businesses in the Global South

Governments who were captured by corporate interests wrote the rules of the
WTO in 1994. Since then, peoples’ movements in key countries have been
slowly “taking back” their governments and putting forth new positions on
trade.  Doha’s derailment is the direct result of governments unable to
agree because they were held accountable to concerned citizens’ back in
their national capitols, especially in developing countries demanding
protections for peasant farmers, domestic employment and production, public
health, education, water, and energy.  In the end, global corporate greed
was restrained by peasants in India, China, and Indonesia, by workers’
unions and small businesses in South Africa, Argentina, and the Philippines,
plus by many, many other efforts worldwide.

Derailing Doha is a victory for peoples’ movements everywhere and needs to
be celebrated in the context of global civil society’s rewriting the rules
of globalization. Since before the 1999 “battle in Seattle,” global civil
society has organized successful opposition to expanding WTO’s powers.  And
although many groups may now be ready to declare the death of Doha, peoples’
organizations are already rising to the challenge of replacing WTO with a
new set of trade rules while exploring, through more sensible government
leaders, other international instruments to address today’s top crises.  For
example, increasing numbers of groups recognize the opportunity to set
global rules for energizing our economies via the United Nation’s climate
talks.  Doha can not be buried until other institutional options appear
viable, so the ball is in civil society’s court to propose a new agenda with
specific mechanisms around which all can unite.

Doha to deepen crises in fuel, food, and finance

In a desperate attempt to play on public fears about today¹s fuel, food and
financial crises conflating into global chaos, European Commissioner (EC)
for Trade, Peter Mandelson, told the Financial Times on the eve of the
mini-Ministerial that failing to conclude a Doha deal would “reduce our
ability to pass future tests on climate change, food security, energy
security, and other issues.”  Mandelson would have us believe that a Doha
deal could “bring fresh confidence to a world economy that is certainly in
need of it” as well as address these crises directly.  But Doha was no
silver bullet for today’s complex challenges; it’s more of a boomerang that
will come back to hurt efforts to tackle them.

Here’s why. Any expansion of WTO¹s powers over fuel, food, and finance
(which were essential elements of any deal) would reduce the role of
government in guiding our economies toward a new direction at a time when a
lack of leadership has been at the root of these problems.  Each of today’s
crises has resulted from a failure to govern in the public interest. Solving
them requires governments to reassert their proper roles by sending
investors and consumers clear market signals that reflect the true social
and environmental costs of our imbalanced fuel, food, and financial systems.

Mandelson¹s remarks came as a hand-picked group of trade ministers met in
Geneva to finalize a deal before approaching US elections made any trade
agreement impossible.  That’s because shifting public opinions of trade have
allowed President Bush’s authority for signing trade deals to expire.  Many
countries lack confidence in WTO’s free trade model, but recent polls have
shown that Americans’ loss of trust in globalized free trade has only
increased with time.

Seeking to seal a deal before the election window closes, American and
European trade negotiators pressured other governments for more concessions
to present a package that was politically palatable.  But trade deals
benefit mainly big businesses because, by design, they increase the profits
of private companies rather than protect the public interest.  And it’s
precisely this surrender of popular sovereignty over our economies to narrow
corporate interests that led to today’s crises in fuel, food, and finance.

Fuel prices, not to mention floods and fires, are on the increase everywhere
because the way we energize our economy has been governed largely by global
corporations that profit from our addiction to fossil fuels.  Concerns about
energy security and climate change should compel us to shift supplies
rapidly to sources that are socially stable and ecologically sustainable.
Yet WTO’s proposed Energy Services agenda would have deepened our dependence
on oil by opening new markets for companies like Halliburton while
restricting what governments can do to encourage an energy transition.
Mandelson’s comments appear ignorant of how expanding WTO’s powers over
energy policy would necessarily foreclose options for governments currently
engaged in UN climate talks, which aim to reduce global emissions of
greenhouse gases.

Food riots around the world followed the recent rise in energy demand,
despite warnings that the US and EC mandates to boost biofuels production
would force limited farmland into production of fuel rather than food.
Agriculture reform remains at the heart of Doha, though few expected it to
help feed the hungry.  That¹s because any deal would have conditioned US and
EU cuts in export subsidies to developing nations’ opening their markets
more. Not only could this make food even more expensive for poor nations,
but past market-opening measures have directly destroyed domestic food
production in poor countries, leading to shortages in local supplies.

Financial markets have failed spectacularly to self-regulate, causing the
foreclosure of over a million American households.  No one knows where it
will end as companies continue to sort out their losses on mortgage-backed
securities and other financial instruments whose complexity not only eluded
government regulators but also engulfed the very investment banks and hedge
funds that invented them.  Amazingly, at a time when we should be
strengthening global financial governance, the US and EU were pressing other
nations to agree to a Doha deal that would liberalize financial services
even further.  US trade negotiators (who wanted to force all nations to
treat foreign financial services companies the same as domestic ones) seemed
way out of step with Congress’ new provisions to prevent offshore tax
evasion by requiring Americans to use only companies under US regulations.

Pathway to a new paradigm

The most prudent course of action now would be for each nation to review
current trade rules (for Americans, under our next Congress), and then
replace those we find harmful to the public interest with new ones that are
democratically debated, not only by the US but also by our trading partners.
We need a new set of rules developed by a new round of talks that place
public interests before private. Remember that international economic
governance was originally under the General Assembly’s Economic and Social
Council when UN Charter when it was signed in 1945 in San Francisco;
reclaiming that history is one way to ensure that global economic relations,
and particularly the tools of trade policy, help not harm all people as well
as our planet.

In the meantime, global cooperation outside of the WTO must intensify to
address the crises in fuel, food, and finance.

Fuel faces a real revolution as public outcries about climate change and
energy security are already being priced into today’s market.  Governments
recognize the need for urgent global action on climate and mandated in Bali
that the UNFCCC conclude a new set of agreements by the end of 2009 in
Copenhagen.  The scientific imperative of shifting to ecologically
sustainable and socially stable energy supplies within a few decades
requires new global rules on finance and trade.  Not only public finance but
also private investment must be channeled to low-carbon alternatives.  And
any climate agreement will also have to relate to world trade rules. For
example, the world needs new rules, overriding WTO’s if necessary, to
finance the transfer of clean energy technologies to poor countries in ways
that ensure affordability while still rewarding innovation.

Perhaps nowhere is a cooperative approach to international relations more
necessary to guarantee our survival than the transition away from fossil
fuels.  Nor is there a more pressing roadtest for the United Nations’
recently adopted Declaration on the Rights of Indigenous Peoples, where the
world’s 160 million indigenous peoples who depend on tropical forests could
face billions of dollars in inward investment from “offsets” by polluting
countries. Applying indigenous rights, such as free, prior informed consent,
self-determination, subsistence, spiritual, and other core principles,
provides a rights-based framework to blaze a path toward a new paradigm in
how our global institutions honor the earth and its original peoples.
Climate, at least, has a global decision-making process underway whereas
other crises like food and finance have as of yet no place to be
comprehensively addresses; such spaces need to be created by civil society

For food, no global policy process now exists to address today’s crisis, as
evidenced by the non-impact of the recent UNFAO summit, and the
non-enthusiasm current World Bank initiatives are getting from groups who
feed the hungry.  Still, some comprehensive initiative could be launched to
unify the global groundswell of efforts to change WTO rules, revive
international commodity agreements, adopt fair trade and organic standards,
and create other international instruments to support small scale,
sustainable farming and food systems.

Financial regulation remains the ominous black hole in global governance,
though the need for much more than mere “cooperation” by national
authorities has become increasingly clear and compelling.  Everyone knows
finance drives all policy decisions yet nothing meaningful exists to govern
financial flows globally, private or public. Global justice will be present
only when capital, wherever it may go, is held accountable to universal
rights.  But as the credit crisis and mortgage meltdown continues to spill
over into global market turmoil, civil society is once again caught
flat-footed in the midst of this crisis.  Somehow, as we scale up our
responses to today’s emergencies, we must simultaneously create new
capacities within civil society to inform and inspire a systemic shift in
public opinion about governing global finance.

Solving today’s crises requires a paradigm shift from competitive to
cooperative relations among nations and peoples.  Global civil society has
harnessed enough power to counter the expansion of the global corporate
agenda, but can it unify around some of the strategic opportunities, such as
the climate process, to balance global governance and define new
international instruments that protect universal rights?

Such are the pathways now opening up before us.  The political moment in
history demands we go on the offensive to propose our own alternatives.
Indeed, another world is already arriving