December 15, 2005

Beginners' Guide to WTOese: "A Balanced Agreement"

I think a big part of the reason people find the WTO so hard to understand is that trade diplomats refuse on principle to speak plain English. Now, I know every specialized organization breeds its own specialized lingo, and the more specialized it is the more convoluted it gets...but at the WTO this dynamic has gone totally haywire.

Some of it is downright oxymoronic. It takes some immersion in this absurd little world before you realize that "most favored nation" (MFN) status means exactly the opposite of what it says: you're allowed to treat a given trade partner better than MFN (by signing a free-trade agreement with that partner, for instance) but you're not allowed to treat a partner worse. So actually, your most favored nation trade partners are the ones you favor the least.

Some of it is just mystifying: I have no clue at all why they have to say "full negotiating modalities" when what they mean is "an agreement."

Other elements of WTOese are really just bureaucratic euphemisms: "sensitive products" means roughly "whatever I'm being lobbied not to liberalize." "An ambitious agreement" means "you liberalize what I want you to liberalize but I get to protect my sensitive products." "Frank discussions" seems to mean "ministers tiresomly reiterating positions they've held for years." So if you see a WTO talking head on the news saying "ministers held frank discussions on full negotiating modalities for sensitive products aimed at reaching an ambitious agreement" you can just throw your hands up in utter despair.

But the particular linguistic deformation that caught my eye today is that most slippery of WTOese formulations: "a balanced agreement."

Every single delegation here claims to be working towards "a balanced agreement." Needless to say, no two ministers mean the same thing by the phrase. For the rich countries, "a balanced agreement" means "you liberalize your manufacturing markets and we'll liberalize our agricultural markets." For developing countries it means "we already liberalized our manufacturing markets last, so now you have to liberalize your agricultural markets." They use the exact same phrase, but they mean diametrically opposed things.

The reason I think, is something I alluded to yesterday. During the last round of trade negotiations - the famous Uruguay Round that dragged on from 1986 to 1994 - developing countries made major concessions on a whole range of issues and got pathetically little in return in terms of agriculture. The rich countries considered the Uruguay Round agreements "balanced" just because, for the first time, they introduced some (weak) rules on agricultural trade. More or less all the developing countries now believe the Uruguay Round agreement was seriously unbalanced - "forced consensus" at its worst.

Now the consequences of that unbalance are being worked through the system. Call it Uruguay Overhang. From the developing countries' point of view, the whole point of the current round of negotiations is to "balance" the iniquities of the previous round. Really, what the developing world wants is not so much a "balanced agreement" as a "balancing agreement"

Initially, the rich countries implicitly agreed, officially calling the current round the "Doha Development Agenda" in recognition that Uruguay was not exactly development friendly. But in the four years since Doha, calls for a "balanced agreement" have come back with a vengeance, especially in the EU. Sure, they still talk in terms of development, but more and more they're demanding a quid-pro-quo.

India and Brazil put the developing countries' position pretty succinctly yesterday. What they say, in paraphrase, is "hey, every time we meet them, the Europeans ask us what price we're willing to pay in exchange for them to stop doing things they shouldn't be doing in the first place."

The EU is desperate to spin its way out of this bind. Every time Peter Mandelson, the EU trade commissioner, comes anywhere near a microphone he says "balance" at least once sentence. The developing countries have to balance their demands for better agricultural market access with concessions on manufacturing tariffs. The US has to balance its call for dramatic farm tariff cuts by reforming its Food Aid programs. Canada, Australia and New Zealand need to "balance" by reforming their State Agricultural Trading Enterprises.

"Balance", in this context, means roughly "what's in it for me?!" Fluffy development rhetoric aside, the EU won't seriously consider farther farm trade concessions until they've extracted their pound of flesh on other issues. Some of the US delegates I've met put it even more bluntly: "they know if the conversation is about agriculture they're screwed, they're desperate to change the subject."

The funny thing is that the US is arguably closer to the developing countries' position than to the EU on all of this. The reason is not any newfound philanthropic thrust to the Bush administration: it's just that American agribusiness is big enough and efficient enough to compete in a low-or-no tariff world. European farmers, by and large, are not. For the US, a liberal farm market is a business opportunity. For the EU, it would be a bureaucratic dust bowl.

Which, I think, is pretty interesting. Most people tend to assume that the US is the baddie at the WTO. Bush country and all that. But the reality is that if anyone looks isolated in all this it's Europe. The difference between the US and the Brazil/India proposals are mostly technical in nature - if it was up to them, they could sit down and work out a compromise in half an hour. The real, substantive gap in agriculture is between the US/Brazil/India on the one hand and the EU on the other.