Doha Failure

The Editor
Australian Financial Review

Australian Trade Minister Vaile is mistaken to put his faith in bilateral deals following the collapse of the WTO negotiations. ‘Doha collapse puts focus on trade deals” AFR 24 July, p.1. This is not a time to retreat into bilateral deals, which are even more unfair to developing countries and medium sized economies like Australia, as shown by the Australia-US Free Trade Agreement. Rather, we should ask why the WTO seems incapable of meeting its commitments to the majority of its members who are developing countries and what changes are needed to achieve a fairer multilateral trading system.

WTO negotiations have failed because industrialized countries, including Australia, have failed to meet their promises that the negotiations would provide genuine benefits and reduce poverty in developing countries.

The US and the EU have failed to make convincing offers on reductions in unfair agricultural subsidies. For example, the US offer on agricultural subsidies in reality preserved subsidies at their current levels. But the US and the EU made unreasonable demands on developing countries for large reductions on tariffs on industrial goods leading to unemployment. Australia supported radical deregulation of essential services that would have reduced governments’ ability to ensure access for all to those services.

Developing country governments were right to reject this as a bad deal. Studies by prominent economists like Joseph Stiglitz, former chief economist of the World Bank, show that rapid liberalisation and deregulation in low-income economies with high unemployment does not contribute to economic growth but worsens poverty. Other more recent studies, including from the World Bank itself, have confirmed that many developing countries had little to gain from the current trade proposals, with most of the gains flowing to rich countries.

WTO processes also remain exclusive and undemocratic. The decision to abandon the talks was made after a meeting of only six of the 149 members of the WTO, the US, the European Union, Japan, Australia, Brazil and India.

We need to rethink multilateral trade rules and develop a more inclusive system that delivers genuine gains for developing countries and enables all governments to retain their central role in fostering local development and regulating essential services.

Dr Patricia Ranald
Principal Policy Officer
Public Interest Advocacy Centre
Level 9, 299 Elizabeth St
Sydney NSW 2000
Ph: 02 8898 6514
Fax: 02 8898 6555