World tirade organization

This week’s newspapers are filling up with stories bemoaning the demise of the World Trade Organization’s (WTO) Doha round of trade talks, which along with the 9/11 attacks in the United States, has defined international affairs thus far in the new century. The Doha round was always a pipedream, a set of high-minded, aspirational goals that had absolutely zero chance of ever becoming reality. In fact, if you had told me six years ago that the Doha round would still around in 2006, I would have been modestly surprised.

The Doha round itself has become the locus for two related, but significantly different, ideas. First, there is the principle of free trade itself, the notion that, ideally, nations will not use their systems of tariffs and duties to artificially influence market behavior, thereby creating needless inefficiencies. Those who tend to view Doha through this lens are pupils of a pure form of inter-state laissez-faire capitalism, über capitalists, if you will, who place unbridled confidence in the workings of the market.

The second idea associated with Doha depends upon the relationship of developing world economies to first-world farm subsidies, implying that what’s good for the former should equal less of the latter; or in other words, first-world farm subsidies are blocking the third world’s easiest route to prosperity, essentially making their agricultural products uncompetitive in first-world markets. And since most of these countries have very little to offer outside of agriculture, subsidies therefore consign the poor world to ever more poverty. Proponents of this view of Doha are largely the global social justice activists domiciled in NGOs like Oxfam and Greenpeace; some are capitalists; most are not. This unholy alliance between certain elements of the international business class and social justice advocates had held pretty firmly throughout the past six years, lifting Doha out of the dustbin on several occasions, only to see it slide over time back into the trash eventually. When it came time to get down to brass tacks, such as occurred in Cancun during the WTO’s ministerial talks in 2003, it became overwhelmingly obvious that the principles engendered by Doha were nothing but high-minded piffle. The political will needed to put the principles into practice was sorely lacking, and whether the topic was market access abroad or the subsidy regime in rich-world countries, no participant blinked during negotiations; therefore, nothing happened.

If the Doha round was always destined to succumb to the forces of gravity and plummet to earth, one might ask why the WTO invested so much energy and credibility into it in the first place. The aforementioned alliance was a long time forming, but it’s easy to see the 1999 Seattle round as a turning point. The WTO Ministerial Conference had somehow come to be a date on the social activists’ world tour, and the violence that ensued in Seattle likely elevated developing-world issues on the WTO’s agenda, if for no other reason but to avoid future confrontations with the brownshirts of the social justice crowd. While not purely a public-relations gimmick, the development focus of the Doha round never had enough acceptance or backing from the international business community to be anything more than an occasion for positive media coverage of the WTO.

Whatever PR strategy was involved in concocting Doha’s development agenda, it worked. In the years following Doha, the WTO transformed its popular perception from that of a ‘let-them-eat-cake’ congregation of fat cats into that of an organization with a social conscience. Note the coverage this week; very little of it characterizes the WTO, ipso facto, as the batcave of evil capitalists, and when compared with coverage from 2001, it becomes clear that the WTO has succeeded in getting the press off its back.

At a policy level, there is very little argument that rich-world trade policies have institutionalized on a global level the inherent inequity of the current system. Very few commentators would disagree that poor nations get a raw deal from the global trade system as it is. Sitting atop that system as it does, being its regulator of last resort, the WTO is a logical place to seek redress for those inequities, but the idea that the richest countries in the world would put the welfare of the poorest at the very heart of their trade policies is about as Pollyanna as it gets. And yet for all that, Doha survived for as long as it did because there is significant sentiment in the rich world advocating for use of the trade system to provide a boost to poorer countries, and this sentiment extends far beyond wingnut left liberals, the basic idea being that it is better to provide poor countries help via trade balances rather than direct distributions of foreign aid, a variation of the old ‘teach a man to fish’ idea.

The faultiness of such thinking lies not in its intent, which is noble and well-meaning, but rather in the idea that one can shift money around in such a fashion. To begin with, foreign aid budgets (which are notoriously small anyway) aren’t tied to powerful local constituencies who have the ability to sink the careers of politicians. Growing and shrinking these budgets—not to mention their specific appropriations—occur beneath the radar of public opinion. But when you start fracking about with farm subsidies and industry-specific trade policies, you begin to bump up against strong, moneyed interests (not to mention a powerful public nostalgia for local, bygone farming cultures) that are not inclined to give a whit about the plight of peanut farmers in Sierra Leone. On the floor of the US House of Representatives, I think the interests of the State of Georgia rate higher, as well they should, and in this manner, the Doha approach to ameliorating poverty died its ugly, predictable death.

So what is to be done? My main gripe with Doha these many years has been its ability to divert our focus away from more achievable results using bilateral trade agreements. As noted recently in The Economist, bilateral trade agreements have mushroomed since 1993, rising from about 40 to nearly 200, and irrespective of one’s opinion regarding the benefits of these agreements, they are clearly ascendant and must be contended with. By contrast, the WTO, as it grows in membership (there are now 149 full members and nearly all remaining countries in the world are in accession talks or have observer status), is a steadily weakening force for trade liberalization.

As demonstrated by the Bush Administration in 2002 with its steel tariffs, even the weak protections of free trade offered by the WTO can be circumnavigated by clever politicians, and even though the tariffs were lifted the next year after a WTO hearing ruled them illegal, the WTO is simply not strong enough a body to compel free and fair trade and suffers from the kind of irrelevance that tends to plague most large, multinational organizations.

Rather than focus on WTO-level attempts to aid poor countries, advocates would have done better to influence the smaller bilateral treaties, though the payoff admittedly would be smaller in effect. Perhaps even more effectively, poor-country advocates would do better to influence the rich world’s farm subsidy regime by shaming citizens into a guilty conscience. It would seem that the facts of the matter would be on their side, at least in the US, where said subsidies rarely help those they purport to help, but instead line the pockets of agribusinesses and large family-owned mega-farms as opposed to the humble small farmer. If most Americans were aware of the true nature of farm subsidies, support for these programs would be far less than it is at present.

Thanks to celebrities like Willie Nelson and Neil Young, the plight of the American small farmer is now a part of the American political mythos, but in reality, the only thing the celebrities accomplished was to skew the perception of farm subsidies, leaving the likes of Cargill to laugh all the way the bank. In the end, Doha died on the stage at Farm Aid, not in the boardrooms of Geneva.