The 1999 WTO meeting in Seattle failed due both to external challenges, such as anti-globalization protests, and internal challenges, such as conflict between the US and EU and differences between industrialized countries in the northern hemisphere and developing countries in the south. The failure doomed efforts to launch a new round of global trade negotiations. At the recent WTO meeting in Doha, Qatar, however, the very same conflicts between the north and the south and between the pro and anti-globalization forces existed.
The issues proposed for discussion in the new trade round reveal six major sticking points. The first is agricultural protectionism. Major disagreements regarding agricultural subsidies and market access exist not only between the US and Europe but also between industrialized and developing countries. The EU's reduction of agricultural subsidies failed to satisfy the US. Australia, New Zealand, Brazil, Argentina and other countries have demanded that the US, EU and Japanese agricultural subsidies be terminated. Developing countries have also demanded that both the US and the EU open their agricultural markets completely.
The second difference is environmental issues. Countries in the southern hemisphere are bewildered by Western countries' insistence on including environmental standards in the WTO agenda.
The third difference is market access. Developing countries have asked that industrialized countries abide by the General Agreement on Tariffs and Trade (GATT) and further open their markets to developing nations. The industrialized countries, however, find it difficult to keep this promise as the global economic situation continues to deteriorate. This has angered developing countries.
The fourth difference is conflicts between WTO regulations and member state's national laws. The organization's agreements require that member economies amend conflicting national laws to accord with WTO regulations.
The fifth difference is pharmaceutical and intellectual property right (IPR) issues. Under Article 65 of the WTO Trade-Related Aspects of Intellectual Property Rights agreement, developing countries are not required to enact domestic IPR laws until 2005. Industrialized countries, however, want the legislation as soon as possible.
Meanwhile, the US-India dispute over pharmaceutical products reflects the pressure facing developing countries during the transition period. Developing countries hope that clearer explanations regarding the WTO regulations can be made. Some African nations, moreover, have asked for a reduction in the prices of AIDS therapies and other patented pharmaceutical products. But Western countries have, on the whole, have turned a deaf ear to such requests.
The sixth difference is anti-dumping issues. The hardline US stance on the opening of its textiles market and its refusal to negotiate on anti-dumping issues have caused conflicts with developing nations. They have requested the US and other industrialized countries completely open their textiles and clothing markets.
They have also requested that a variety of anti-dumping measures protecting the domestic markets of industrialized countries be canceled. Japan and the EU have also teamed up with developing countries to attack the US anti-dumping measures, demanding negotiations on the issue in the multilateral trade round under the WTO. But the US said at the Seattle meeting that the anti-dumping issue was not negotiable.
From the above differences we can identify three underlying problems with the WTO: confrontation between the north and the south, competition and cooperation between the US and the EU and domination by vested interests who are also the rule-makers in the game of globalization.
Let's consider the north-south conflict. The key problem lies in the disparity between the rich and the poor, highlighted by the contrasting states of development between the Northern and Southern Hemispheres. The World Bank's October report clearly shows the gap between the north and the south. The average per-capita GDP in the world's richest 20 countries was 30 times that of the poorest 20.
Industrialized countries need to come up with solutions to the problem, otherwise the widening income gap will remain a ticking time bomb that threatens the integration of global trade. The anti-globalization movement, which is constantly attempting to detonate the bomb, serves as an ample reminder of this.
Second, along with economic globalization, the EU, which has both a competitive and a cooperative relationship with the US, is ready to make a new start after the completion of its regional integration. As a result, while the world economy has a new cooperative look about it, integration may yet further intensify competition.
Relationships that are at the same time both competitive and cooperative are riddled with conflicts of interest. Since no one wants to sacrifice their own interests, there is disagreement at every turn. This is one of the ironies of a globalization process that is intended to break down national boundaries.
Third, these vested interests usually exist among those who make the rules of the game. They are the ever victorious army in the competition and have established dominant roles. For those who have lagged behind, it is difficult to catch up with them. The strong remain strong while the weak remain weak.
In conclusion, trade liberalization and market openness are crucial to the integration of the global economy. As Britain's Financial Times commented in its Nov. 8 editorial, "The task in Doha is to fire the starting gun -- not set the finishing line -- for negotiations. The immediate challenge is to find the language to paper over cracks, not to cement them permanently."
To make an ultimate success of the Doha negotiations, each member must give up faction-alism. More fundamentally, the Doha meeting may prove to be a failure if the above-mentioned problems cannot be resolved. This would not only damage the implementation of global trade liberalization, but also the WTO's role as a gatekeeper. Such a possibility should not be overlooked.
Jeff Wu is the chief executive officer of the Decision Making Research Center.
Translated by Eddy Chang
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