The big trading game

Tuesday 29. July World Trade Organization (WTO) negotiations broke down in Geneva. Are we now seeing the contours of a new world order as Foreign Minister Jonas Gahr Støre has claimed this week?

- Yes, there are many indications of that. This round of negotiations was initially defined as a round of development. It was thus said that a new agreement would benefit poor countries. The draft agreements did not follow up, rich countries have stood too steep on their demands, while the poor have had to give up too much. On Tuesday night, the developing countries showed power, and said that this is too bad, says Ruth Haug, who is head of Noragric at the University of Environment and Life Sciences.

- So then we can call it a development round anyway, not because of the draft agreement, but because the developing countries really showed that they have influence?

- Yes, you can say that.

Several around the table

Haug receives support from Church Secretary General Atle Sommerfeldt
– This shows that the time when the US and the EU could dictate to the rest of the world is over. Now there are other athletes who demand their rightful place, he says.

He believes the collapse shows that the WTO is not one-sided tool for rich countries.
– Thus, some of the criticism of the WTO from parts of the left has now turned out to be wrong.

Arne Melchior, who is a senior researcher at the Norwegian Foreign Policy Institute (Nupi), also sees the break in the negotiations as a setback.
– Now the ministers must return to their peasant teams and parliaments. They can be tied up until the next time in ways that will complicate a possible new round of negotiations, he says.

At the same time, he believes that more has been achieved during the past week than in the past two years as a whole, and that new countries have shown muscle in the negotiations.
In the previous round, which ended in 1993, the basis for an agreement in the field of agriculture was laid in talks between the USA and the EU.

In recent weeks, however, the talks have taken place in a superpower group that also includes India and China. This shows that the industrialized countries can no longer discuss themselves in the chamber.

Rolf Jens Brunstad, who is a professor at the Norwegian School of Economics, also agrees that the breach in Geneva shows how the transatlantic axis in international politics has become less important.
– That we are facing a shift of power away from the EU and the US, is probably true, but if you mean by a new world order that we see the end of globalization as we know it, I think you are wrong, he says.

The fact that China and India have become economic superpowers causes the center of gravity to tip.
– But that it should have any significance in the direction of the development towards more and freer trade, I doubt that, because it is precisely free trade and globalization that has led these countries to where they are today, says Brunstad.

He does not hope for such a development, either.
– No, in that case we are heading towards a global depression, as we had in the 30s.

He still sees good opportunities for the negotiations to start again.
– It is possible that India has played a little too high a game here. India is the country of the new great powers that has come the furthest in the new economy. And in this area, they are probably interested in more rules of the game. In that case, it can give hope that a new attempt will be made. If we go back and look at what happened when they agreed last time, ie in the Uruguay Round, we will see that even then in reality there was a breach before the US and the EU sat down and agreed on the so-called Blair House agreement. in the agricultural sector. It is possible that something like this happens again.

- But in that case, will there be other players sitting around the table?

- Yes, it is true that the transatlantic axis is not as dominant as before. If you take a slightly cynical perspective, this is reminiscent of a situation where the males in a herd of animals must establish the ranking. When the old bull loses control, it takes some time before a new power relationship is established.

- What you are saying is that we may face a period of more uncertainty and less predictability in global politics, perhaps especially when it comes to how world trade should be organized?

Without a worldwide understanding of how international trade flows should be organized, one could end up with several trade wars and the formation of trade blocs. We saw this in the 1920s and 30s, and it led to the world economy drying up. Now it is a long way there, but the danger that history can repeat itself in this way is present without an agreement, says Brunstad

Dag Ekelberg, the deputy leader of the Civita think tank, agrees that power relations have changed, and that the breach in Geneva's negotiations clearly illustrates this.
– But I sincerely hope that this is not the collapse of a world order. In that case, we will again end up in a situation where the special interests in the rich countries get the raw ground alone, he says

Nevertheless, he is opening up that free trade-oriented globalization is also under pressure.
– The last year has seen signs of a more protectionist rhetoric in several countries: in the American election campaign, for example. Perhaps the climate of ideas is changing in the direction of more protectionism, and in that case it will be an interesting challenge for us at Civita, he says.

Fear dumping

There are various opinions on the draft agreement that lay on the table when the negotiations broke down on Tuesday, but many highlight the fear of agricultural dumping as the cause of the breach.

In the end, it was India who set foot. India has more poor people than all of Africa combined, and wants the opportunity to protect themselves from heavily subsidized goods from rich countries. Today's situation with high prices for agricultural products has arisen in the past year, and before that the situation was completely different. Prices on the world market were artificially low. Poor countries were outcompeted despite producing cheaper goods than rich countries, which dumped heavily subsidized goods on the world market. This is what is called agricultural dumping.

It is not only the direct export subsidies that contributed to agricultural dumping, but also agricultural subsidies related to production contributed to the dumping, because there are no mechanisms that prevent subsidized goods from entering the world market.

Magnus Bjørnsen is political deputy leader in the Common Council of Africa. He believes that the draft agreement that lay on the table was not good enough and that the developing countries had to give too much, while rich countries gave too little, both in industry and agriculture.
– Because fish is strangely enough treated as an industrial commodity in the WTO, Norway is actively pushing for too strong tariff cuts, so that in the future we will be guaranteed market access for our own farmed salmon to the middle class in Asia and Latin America, says Bjørnsen

He also believes that the West's production-driven subsidies must go down.
– Here, the draft agreement proposes some reduction, but at the same time, for example, the United States is allowed to continue with high support for its own agriculture. It is hypocritical to blame the collapse on India and other developing countries.

Melchior believes that the draft agreement that was submitted to the agreement was significantly dampened in relation to the promises that this should be a development round. But it was the case that the industrialized countries accepted large cuts in the agricultural sector, which, despite footnotes and exceptions, meant an important reform of the international trade system. The complete list of commodities is premature, as the details are unknown, but the draft agreement provided better market access for developing countries, he says.

Ruth Haug believes that it was right by India to say no and that the dumping problem is a major cause.
– If the US and other rich countries had gone further in cutting their production subsidies to farmers, India would not have had to fear that subsidized goods from rich countries could be dumped on the world market and help destroy prices. In that case, India would not have had the same need to protect its farmers. We must also keep in mind that we in the West have built ourselves up behind protectionist customs walls, and developing countries should be exempted from protecting themselves with customs in a construction phase.

Ekelberg from Civita disagrees.
– There are very divided opinions about what western countries actually did. Norway, for example, became rich because of trade, and not protectionism. This argument has been described by many, and rightly so, I think, as a smokescreen that in fact protects special interests. In addition, a question immediately arises as to when any temporary customs barriers should be removed. If you have first introduced subsidies and customs protection, there is a large political cost associated with reducing them again, and that is something the collapse of the WTO shows quite clearly, he says.

Ekelberg is disappointed with the breach and believes the developing countries are losing the most.
– Several calculations have been made that show what poor countries would earn if they came to fruition with the development round. These are huge numbers: According to the WTO, it would provide a worldwide saving of 620 billion dollars a year, of which 300 billion dollars would benefit developing countries. According to the World Bank, 100 million people could have been lifted out of poverty, he says.
In addition to increased trade, an agreement would also promote stability, Ekelberg believes.

- It would create greater discipline, so that no one could overnight double or triple the tariffs, as they can quite legally reach.

- What do you think about the draft agreement that was available?

- As I saw it, it meant quite a sharp improvement when it comes to trade in agricultural products. Had it been the result, the agreement would have promoted developing countries' export opportunities. And if developing countries increase their share of world trade by just one percent, they will make $ 70 billion. That is five times more than what Africa receives in total aid.

- Norway should have taken the lead and said that all production subsidies that may cross national borders must go away, and in that way did what we could to get other countries to put pressure on the usa and eu to get subsidized food from the world market ?

- I mean it. The difference between rhetoric and actual action that one sees from, among others, the United States is an outing, and is an expression of a double standard: on the one hand, the banner of free trade is raised. On the other hand, the United States pursues a protectionist policy in certain areas.
Melchior points out that the tariff barriers are actually highest among developing countries, and that there are many conflicting interests among the countries in the South.

- When poor countries talk about protecting their businesses, they also worry about competition from other developing countries. Some, for example, perceive textiles as a vulnerable product, and then they obviously do not fear Norway or other western countries, but each other, he says.

- The accusations that India and China trained the negotiations came already on Monday, when the US delegation leader Susan Schwab held a press conference, and it has continued ever since. Others have placed the responsibility on the rich countries because they made unreasonable demands. What is your opinion on the division of responsibilities?

- The conflicts of interest in the WTO are many and intersecting. The G10 and Norway contributed in their own way by advocating for free trade in some areas, but by demanding tariffs of over 100 per cent on certain agricultural goods. We got away cheap because we are a small country, even though we make demands that are extreme in context. Had the United States demanded the same, it would have been moonlit, says the Nupi researcher.

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