January 2002
Free Market Reflections on the WTO Meeting in Doha
by Owen Lippert
The first thing to remember about international trade agreements is that they are not about trade. They deal with what governments do to trade. The recent World Trade Organization meeting in Doha, Qatar proved no exception. The trade ministers' Ministerial Declaration released on November 14th is long on defining the rights of governments to intervene in international trade and short on the individual's right to engage in commerce. Still, the ministers did manage to launch a new, five-year round of trade liberalization talks. For that one should be graciously thankful, particularly as the war in Afghanistan provided plenty of reason to call off the event.
I attended the meeting in Doha. Here I will offer some of my observations on what happened and on the emerging dynamic of non-governmental organizations (NGOs) and trade negotiations.
An unanswered question going into the Doha meeting was whether or not the 140 trade ministers could even agree to launch a new round, whatever its content. They had failed to launch the "millennium round" at the infamous WTO meeting in Seattle in November 1999. The "stain of Seattle," as the United States trade representative Robert Zoellick called it, did not result from the well-publicized protests in the streets. To be sure, the masked hooligans smashing Starbucks outlets did not help. But President Bill Clinton was the real culprit. Rather than stand up to US union leaders, Clinton put forward their demands for labour and environmental standards. The developing countries rightfully saw Clinton's action as domestic grandstanding and withheld their support for a new round under such conditions.
Two years later, the developing countries had not changed their minds that labour and environment standards represented the "back door" protectionism of rich countries. The election of George W. Bush as president resolved the Seattle impasse by putting economic growth ahead of protectionism as the keystone of US trade policy.
Four substantive issues remained unresolved as the ministers flew into Doha. Foremost was reaching an agreement on the latitude under the 1995 WTO agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) to deal with the HIV/AIDS crisis in sub-Saharan Africa. Second was the perennial irritant of reducing agricultural trade barriers, including export subsidies. Third was the so-called "Singapore issues" dealing with investment and competition rules. Fourth was the last-minute attempt by the European Union to subject WTO trade agreements to environmental treaty obligations.
The issue of TRIPS and public health had received the most coverage prior to Doha. In June, a group of African nations, supported by Brazil and India, had proposed suspending the TRIPS restrictions on manufacturing copies patented drugs, as well as exporting those copied drugs to countries that respect the patents on them. The US, Switzerland, and Canada resisted this implicit re-negotiation of TRIPS. The EU decided to play broker between the positions. This encouraged the countries wanting changes and irritated the Germans and British whose interests lay with the US.
I believed going into the meeting that the TRIPS issue would prove a "deal breaker." What I and others had not anticipated was how far the US was prepared to move in order to launch a Doha Round. When the TRIPS issue had its initial airing in the Council of the Whole (COW), all sides remained apart. The Friend of the Chair, the Mexican WTO ambassador, then struck a committee to find a compromise. The committee initially was stacked against the US. After a protest by Pierre Pettigrew, Canada's trade minister, Japan joined the committee on the US side. The committee at first did not make much progress. Then, in a surprise move, Zoellick initiated a bilateral meeting with Brazil. Between them, they reached a compromise.
Their compromise text more closely resembled Brazil's initial position than that of the US; it reconfirmed that countries could issue compulsory licenses in the event of a public health "crisis." What they could not resolve is whether countries could import copied drugs from other countries, such as India, that do not have to offer patent protection until 2005. In the end, they sent the question to the trade ministers who monitor TRIPS for an answer by January 2003. All told, TRIPS survived a major challenge intact and will continue as the premiere set of international rules on intellectual property.
The agreement on TRIPS and public health generated the momentum to resolve the other issues. The EU had hoped that it could garner enough developing country support on the TRIPS issue in order to deflect the attempts to put agricultural export subsidies on the agenda. The EU appeared ready to compromise every principle of free trade in order to protect the militant and politically powerful French farmers. The French anti-MacDonald's agitator, Jose Bove, was there, but received only a fraction of the coverage he received in Seattle. With TRIPS out of the way, the EU had no allies on its export subsidies. The EU had to agree that the Doha Round would negotiate export subsidies.
Canada opposes export subsidies on the face of it. However, Canada may not be completely clean on this issue. I argued at Doha that Canada's milk marketing system provides an indirect export subsidy through having artificially high domestic prices. Representatives of Canada's milk industry, the largest number of Canadian delegates at Doha, disagreed vehemently. I heard various mutterings that I was being un-patriotic (and questions as to why a Chilean NGO was attending Canadian briefings). The WTO was supposed to provide a clear answer to whether milk marketing boards provide an export subsidy in a December 7th 2001 dispute resolution panel appellate decision. The panel fudged their answer and we can expect more trade litigation on the question.
The Singapore issues were quickly disposed of as the developing countries put up a united front. That left the environment as the last issue on the table. The EU kept up the pressure for subordinating WTO agreements to international environmental treaties. India, having already exhausted the patience of other countries, ultimately agreed to the EU demand for a reference to international environmental treaties in the negotiation of a Doha Round trade treaty.
The last-minute accession to the EU on the environment poses a particular threat to free trade in the long run. One can easily imagine France banning the import of any agricultural product on the basis of some self-centered reading of the "precautionary principle." Something to the effect that if a good cannot be proven not to be harmful to French rural property values, no risks should be taken. It proved too hard to keep ministers focused on the risk of no-risk when the planes were revving up on the tarmac and everybody just wanted to get home.
I have one final observation. The NGO protests failed at Doha not because of Qatari police pressure (there wasn't any) but because no one other than the media was listening. Maude Barlow had her picture taken, which was the extent of her impact. Yes, many developing countries did consult with HIV/AIDS activists on the TRIPS question, but on the major trade issues they kept their own counsel. The African negotiators, far from being naïve and outgunned, appeared particularly well briefed and effective.
Doha signals that it is back to business: the business of letting business trade.
Owen Lippert (owenl@fraserinstitute.ca) is a Senior Fellow in Law and Markets at The Fraser Institute. Currently based in Chile, he received his Ph.D. in History from the University of Notre Dame, Indiana.
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