December 15, 2005

The WTO Turned on its Head

It's day 3 in Hong Kong and I have to say this conference is full of surprises. Figuring I'd been spending enough time with third world types, I decided to go to the International Manufacturers' Association press conference. I walk into the room and realize I am the only "journalist" who's turned up. So I sit down and there they all are, the heads of every major employers' federation in Europe and North America, lined up in front of me. Undeterred, the chairman launches straight into the "press conference" except, well, there are about 20 of them and only one of me. So I get to ask all the questions, these guys just take turns answering.

It was totally bizarre, really: a press conference in reverse. Still - and even though I was totally unprepared to be put on the spot like that - it's not a chance you pass up. So I started asking questions. And let me tell you, I got a lot of frustration in response.

See, these guys came to Hong Kong to talk about industrial tariffs, about service liberalization, about the stuff giant multinationals care about. But nobody's talking about that. All the negotiations are focused on agriculture. The big employers' federations are totally sidelined, and seemingly at a loss as to how to get a handle on the agenda again. It's definitely not a good sign when they call a press conference and the only news organization that turns up is VenEconomy.

It's symptomatic, though: what we're seeing is the WTO turned on its head. All the old cliches about the WTO as multinational conspiracy look more and more out of touch. When I started researching this stuff, one of my professors told me that 90% of the trick to multilateral negotiations is taking control of the agenda. The multinationals used to have it, but they lost it, and they seem totally bewildered about what went wrong. In Hong Kong, the big developing countries have taken hold of the agenda and they're just not going to let go. It's fascinating.

The big story of the day is definitely the increasing isolation of the EU, though. More and more the US position on agriculture sounds like the developing countries' position. You can see this in the language negotiators are using when they talk to the press: Brazil and India have been describing agriculture as the "key that could unlock the negotiations" and, this morning, US Trade Representative Rob Portman used exactly that phrase. Brazil and India insist that the first priority is establishing 2010 as a definite deadline for eliminating all agricultural export subsidies. Portman agrees emphatically.

The Europeans, meanwhile, keep insisting on "balance" between agriculture and other issues, and they keep dithering on a deadline on agricultural export subsidies. Thing is, nobody's biting.

All of this is unprecedented. Never had developing countries taken the lead in a WTO ministerial like they're doing this week. Never had the big developed countries looked as divided as they do now. And, certainly, never had we seen the US take sides - in general terms, if not on the details - with the developing countries rather than with Europe.

At the same time, India and Brazil are very much aware that many developing countries - and especially the least developed countries - are worried they'll get sold out. In 2004, the US and the EU clearly tried to engineer an agreement that took on India and Brazil's concerns, but nobody else's. India and Brazil are not playing along this week. India's trade minister, Kamal Nath, is spending a lot of time coordinating with the other developing countries to make sure they present a unified position. The LDC delegates I've spoken to seem, if not exactly comfortable, at least reasonably reassured that India and Brazil are not going to cut a deal without consulting them first.

In the end, it doesn't really change anything, because the EU is totally entrenched in its stance and it's not going to budge without big concessions. So nobody really expects a deal on full negotiating modalities to come out of this, which was supposed to be the point. What's clear, though, is that when it's all said and done the EU is going to have to take the fall for the failure of the talks.

Which is why Celso Amorim, the Brazilian foreign minister, is one happy camper in Hong Kong. The Europeans thought they could divide the developing country block, picking them off with selective concessions. A lot of LDCs see their offers on "aid for trade" in just that light. It's emphatically not working. If nothing else, Hong Kong is decisively consolidating the joint Indian-Brazilian leadership of the developing country block.