Magazine

The WTO: This Time, Poor Nations Will Be Setting the Agenda


Two months ago, in the pre-September 11 world, the upcoming World Trade Organization meeting in Doha, Qatar, was shaping up as a major media event, inciting the passions of both antiglobalism agitators and free-market hawks. But as Nov. 9 nears, the confab is attracting little notice. With the world focused on the U.S. war on terrorism, many observers even assumed the meeting would be canceled, given its risky location in the Middle East.

The shift in attention may do the WTO good. Far from being a nonevent, the first WTO meeting since the 1999 debacle in Seattle could launch a new round of negotiations to lower tariffs and other trade barriers. A major motivation: Growth in world trade, which helped power economic expansion in the 1990s, is stalling, spreading misery from Silicon Valley to Thailand to Mexico. "A signal that the world's trading nations are committed to open markets--and will resist protectionism--would inject confidence and energy into financial markets," says U.S. Trade Representative Robert B. Zoellick.

SHIFTING PRIORITIES. This time, though, don't expect Washington to dominate the agenda. A lot has changed since 1999, when the U.S. unsuccessfully pushed WTO members to rubber-stamp everything from ending farm subsidies to dropping barriers to services exports. Instead, the West will be much more accommodating to the poorer countries. If successful, Doha could become known as a "development round." That means greater emphasis on lowering barriers in the U.S., Europe, and Japan to imports of food, apparel, lumber, and other goods in which poor nations can compete. For now, Washington also will likely back off on demands that developing nations adhere to a 2005 deadline for tough drug patent protection. And to soothe Europe, the U.S. has been acquiescing on demands that food exports list any bioengineered ingredients.

Why the go-softly approach? For one, developing nations--which control 120 of the body's 142 votes--have grown more assertive, forming coalitions to push their demands and blocking initiatives of wealthier nations. Also, Washington needs any and all allies in its anti-terrorism fight. This is no time to hammer countries like Indonesia, Pakistan, and India on trade. What's more, the U.S. has lost the moral high ground on key issues. Take Washington's implied threat to override Bayer's patent on the anthrax-fighting antibiotic Cipro and buy generics. Eventually, Bayer agreed to slash its price to the U.S. But by suggesting national interests supercede patent rights, the U.S. undercut its opposition to a bid by developing countries for greater leverage to bypass patents to confront their own health crises. President Bush's promise to consider imposing duties on steel imports, meanwhile, smacks of protectionism. That would hit Russia and India, now U.S. allies, hard.

The World Bank figures full trade liberalization would boost poor nations' incomes by over $500 billion by 2015. Yet developing countries are getting more sympathy for complaints they haven't gained as much as rich countries from the last round of trade-opening initiatives. R. Seshasayee of the Confederation of Indian Industry even asserts that until pledges on trade in garments and foods are honored "in letter and spirit, there's no point in moving forward."

Doha itself won't produce major breakthroughs. Given the threats now facing the world, the priority is to keep the process from collapsing altogether. "If we have another failure like Seattle, it will be difficult ever to get the organization back on its feet," says one WTO official. Whatever happens, Washington won't be calling all the shots anymore. By Paul Magnusson in Washington, with Manjeet Kripalani in Bombay

EDITED BY Edited by Pete Engardio


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