The Doha round and the persistency of Constituency-economics

Introduction

Can the Doha round be understood as just another occasion when the bars and locks on the “cage of global finance” (Lindblom 1977) are reinforced? Or is it actually the case that, door after door, developing countries are finding the keys to the locks and trading their way out of poverty? Expected to be concluded in 2004, the Doha round has dragged on until 2007 and its conclusion remains uncertain. Right from the start, rich countries rhetorically committed themselves to abolishing what they recognized as major obstacles to the development of poor countries - the presence of extensive direct and indirect mechanisms of trade distortion disfavouring the developing world. These distortions were pushed through by tough bargaining by rich countries, particularly at the Uruguay round, and have slowly been challenged of late with mixed results.
Developed nations, and above all the United States (US) and the European Union (EU), were indeed the initial sponsors behind global trade but developing nations and particularly the emerging markets of the BRICS (Brazil, Russia, India, China, South Africa) and the G20+ no longer stand back and limit themselves to playing the “amendment game” at the table of trade negotiations. The agenda is now also being written up by a handful of big players from the emerging world. The result has, up until 2007, been little more than “stalemate” in Qatar although small development-victories have slowly been achieved recently. After an introduction of Doha as a follow-up to the General Agreement on Tariffs and Trade (GATT) and a sub-product of the World Trade Organization (WTO), I will discuss the context-specifity of the impact of trade negotiations on a heterogeneous developing world. From there I will debate how the Doha negotiations have provided an environment that is rich in both threats and opportunities to the developmental ambitions of the developing world. One particularly important area being negotiated – the one of trade in services and knowledge - is then more extensively explored. Lastly, I will carry out an assessment of the room for manoeuvre of the developing world at the negotiation table through the eyes of the G20+ group.


Doha within the unbalanced reshuffle of the international order

The GATT has been in place since 1947. It started as an intergovernmental agreement to facilitate in the regulation of trade and was later integrated into the more thorough framework of the WTO – an international organization of its own. GATT’s stated objective has been from the start, to “facilitate the reduction of barriers of trade and ensure greater equality with respect to conditions of market access for contracting parties” (Hoekman 2002: 13). It was not, however, until the Dillon round in 1960 that the scope of the matters being negotiated within the GATT system broadened and went beyond deals strictly concerning tariffs. Alternatively to the multilateral GATT system, countries have traditionally had the option of going for bilateral agreements and deals between regional trading blocks. The interplay between what is happening at Doha and Special Differential Trade Agreements is a “world of its own” but I will not explore it extensively in this piece. It is important however to keep in mind that the alternative to the single simpler multilateral package being negotiated in Doha is a more uncoordinated and intricate set of deals.
One of the main reasons why it is important to put the mixed picture of parallel developing worlds into evidence is because the effects of trade are necessarily context-specific. Although this piece explores issues of trade for developing countries at the macro-level, it is important to remember that any generalization is no substitute for detailed analysis of the impact of multilateral trade regimes in particular countries, communities or sectors. This is particularly the case when analysing Non-Trade Barriers (NTBs). Revenues from traditional tariffs go straight to government coffers for redistribution. Conversely, when NTBs are in place, it is particular sectors or companies hosted by the government that indirectly benefit, making the impacts of trade slightly more complex and harder to assess. In the cases in which extensive economic empowerment to lower-income labour forces is provided by these sectors or companies, a poorly planned removal of NTBs can harm development, particularly in the shorter-term. Overall, trade can indeed influence development by impacting on several issues such as employment, wages, inequality, volatility, economic growth, government revenues and commodity prices.
After acknowledging the context-specificity of the impact of trade, let us now look at how China’s manufacturing and India’s Information Technology software and services are currently shaking the world economy. These are countries whose region, when compared to Sub-Saharan Africa, shows just how mixed the picture in development and trade-dependencies currently is. The unprecedented rise of China and India as emerging market forces presents a large set of challenges and opportunities that are simultaneously delicate, complex and comprehensive. An effective divide in the developing world becomes obvious when you put the characteristics of these two massive economies next to those of some African countries. China and India first and foremost advance their particular interests and play the game of constituency-economics in the international negotiation table; a game that, as will be seen in the last section, is part of the explanation for cooperation and bandwagoning through coalition-building in the developing world. This means that not only are African economies sensitive to tremendous competition from these “giants”, but they are also in a much weaker bargaining position in trade negotiations vis-a-vis the developed world. Africa remains more extensively dependent on the European Union and the United States’ performance for market stability and on their markets as export-outlets. This reality is evident when one compares the trade orientation by destination of different regions of the developing world. The graph in Figure 1 (IMF 2007: 124) shows just how much more dependant sub-Saharan Africa is than Asia in its exports to the EU and the US. Recently the continent is also becoming more and more reliant on rising Chinese and Indian demand for primary commodities, observed in the increase of the category “other” in the graph for the period of 2001 onwards.

Assessing the space for development – Threats and opportunities at Doha

According to an April 2007 IMF report, developing countries expect to keep growing strongly thanks to benign global financial conditions and high commodity prices. Developing countries are on the cusp of a significant economic upturn. This is positive news but one should keep in mind the old truthful cliché that, although a “precondition for it”, growth does not immediately translate into development. Another frequently mentioned problem with the current outlook is that a considerable part of growth is primary commodities-based, which can be problematic in the longer term (Farfan 2005). In addition, as I have observed, the developing world does not constitute a single homogeneous block.
In WTO talks such as Doha, when countries agree to open up already developed sectors or industries in developing countries, this significantly improves sector and industry efficiency and competitiveness through market adjustments brought about by competition. Also, lower trade-tariffs can bring down domestic prices, which can benefit consumers, particularly poorer ones. In addition WTO negotiations, when able to tackle residual constituency-protectionism of rich countries and unreliable industries in the developing world, can foster development. This is important since, when exercised in a non-transparent manner, protectionism can open the way to installed corporate lobbies that “pressure governments into pursuing policies that benefit them but not the general good” (Legrain 2003:1354). WTO negotiations, including the Doha round can therefore, in some particular instances, reduce poverty in the developing world. Another means by which it can do so is by cutting on complicated and time-related wastes in trade, namely through a simplification and harmonization of customs administration procedures and by bringing down costs. Domestic trade facilitation, improving customs administration, can boost developing countries’ export to richer countries and foster development.
Although the playing field is levelled, the question over the restructuring of the WTO and the current procedural agreements of how international trade rules are devised is important. Some “question marks” can be put on a few features of the ritual of negotiation, particularly when it comes to issues of agenda-setting. The fact remains that the WTO encompasses a very democratic model of consensual politics, perhaps even over-democratic. Every member has veto power and that brings about the “blessing” and the “curse” of consensual politics. This consensual politics is a “double-edged sword”. On the one hand it does compel actors to compromise but one the other hand it can foment lengthy and stubborn negotiations, whereby those that are the least in need of a new agreement are favoured. The sheer number of stakeholders negotiating and holding a veto in the WTO does at the end of the day make the reaching of a consensus a challenging task and gives in principle no particular privileges to developing countries. One of the technical difficulties at the negotiating table disfavouring both developed and developing countries, but at times consciously used by developed countries in their benefit has been language barriers. English was the conference language, despite French and Spanish also being official WTO languages. Interpretation facilities were restricted to the big conference rooms, while it was in the smaller rooms that the important negotiations took place. Delegates from developing countries frequently criticized this negotiation model as representing a revival of the elitist green room[1] process. In addition there were too many meetings and it was sometimes unclear where these were held, who was being consulted and on what basis (Jwara & Kwa 2003). More worryingly, many of the most crucial decisions were made in the absence of several developing countries’ ministers, as negotiations went into over-time, and not everyone was able to reschedule their flights. Moreover, Berneo and Davis (2005) observe how developing countries, while representing 2/3 of WTO members, initiate only 1/3 of disputes filed in the organization. This demonstrates the difficulties poorer countries come across in terms of their style and leverage in negotiation. They often lack the necessary knowledge and experience to be successful in such undertakings, something that is also reflected in major trade negotiations such as Doha. This is a chronic problem the WTO should try and address once and for all.
Finally, the classical issue for developing countries at Doha has been the farm subsidies that developing countries use to bolster their own farmers and which distort world prices in agricultural products, bringing them artificially down. This damaged the profit margins of farmers in the developing world, constraining their export-capabilities. At the beginning of September 2007, after an initial US$17 billion proposal being rejected by Brasil and India, the United States finally declared its willingness to limit its subsidies to a level between US$13 billion and US$16.4 billion (IHT 2007). This was the first time that the US accepted publicly that would in principle bring farmers payments below US$23 billion. Although it does go to show that rich countries are in fact interested in concluding the round successfully, there are two main reasons why developing countries welcomed the news with scepticism. Firstly, given that the fast-track powers of the American President have expired, the commitment by the US chief negotiator Robert Zoellick still needs to be approved by the American congress. Secondly, its impact on the real American expenditure in farm subsidies is likely to be nil in the short-term. In 2006, the US spent only US$11 billion out of much larger negotiated sum of US$19.1 billion (IHT 2007 B). This piece of news has however to be understood within the wider chronology of trade negotiations and if it comes through will represent an important step in the future towards cutting down on the rich countries’ ability to distort markets.
Trade in services and technological learning - a sensitive, untapped world
Figure 2Services and knowledge-intensive industries hold the greatest added-value in the value-chains of the current international economic order. These industries are complex, capital intensive and demanding for host states but they are also invaluable economic multipliers of the countries’ competitiveness and in the development of their socio-economic indicators. The services sector forms the backbone of a knowledge-based economy, which means that looking at the earnings from the production and commercialization of knowledge is a good indicator of development. A look at the 2007 UNCTAD Least Developed Countries report shows that the outcome of the trade relations at the Doha Round concerning this industry is absolutely vital for Developing countries. The cover of that important report displays the map in Figure 2 with territory size showing the proportion of worldwide earnings (in purchasing power parity) from royalties and license fees that are earned there. Let us now try and break down the trade debates behind the reality represented in the map.

Services have been part of multilateral trade negotiations since 2000. By 2004, 30 to 40 per cent of workers in the developing world were employed in the sector. This percentage rises up to 70 in the case of developed countries (UNCTAD 2007). The trend is for services to progressively take over agriculture as the most significant sector of the economy, this is also the case for developing countries. The Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement, also discussed in Doha should be mentioned. The deal covers a whole range of intellectual property rights but for a large part of Sub-Saharan Africa, the HIV/AID epidemic has meant that all eyes are on the impact of TRIPS on the pharmaceutical industry and on other healthcare innovations. So that development is not forestalled by intellectual property rights, developed countries at the Doha have allowed for countries to declare a national emergency and institute what is known as compulsory licensing - the right to make a drug without paying royalties to the patent holder. However, many developing countries simply do not have the resources, infrastructure or legal framework necessary to deal effectively with the implementation of the TRIPS agreement and, as such, find it hard to make those rules work in their favour. As seen in the map in Figure 2, knowledge and technological know-how remains asymmetrically the property of developed countries. At the end of the day, in the cases where these countries hold low levels of technological learning[2], more than directly damaging their economies, instant liberalization in high-end labour service markets and in intellectual property rights is rather ineffective. It can easily lead to an increase in the marginalization (UNCTAD 2007 p.57) of the developing world, particularly of Least Developed Countries. Lack of technological and knowledge learning will invariably perpetuate a vicious cycle of underdevelopment as represented on Figure 3 below.



Development-focused trade liberalization is therefore dependent on: concrete expansion of service export opportunities; and improved efficiency and productivity of services sector in LDCs and ODCs through technological learning and not mere knowledge and technology transfer. The Doha Round is not addressing this reality.
The implications at stake when trade in services is being discussed must also be understood within the migration-development nexus debate. Even though there are negative consequences of labour migration, such as brain-drain, the positive impact could be substantial for developing countries. Recent reports show that “liberalizing the movement of workers could amount to 156 billion dollars if developed countries increased their quota of workers from the developing world by 3%” (Kategekwa 2006:3). The graph in figure 4 (IMF 2007:163) taken out of IMF’s World Economic outlook, shows just how migration and exchanges in labour between developed and developing world still vastly lags behind traditional exchanges in goods and services. This is very much due to the severe restrictions still in place for those wishing to migrate from the developing to the developed world. Again, the current trade negotiations at Doha seem unlikely to present any major breakthroughs for this situation.



Looking for room to manoeuvre – The G20+ and the rise of a proactive developing world

The inevitability of what I call “constituency-economics”, originally reflected in Putnam’s two-level game theory (Putnam 1988), becomes evident when traders, principally traders from rich countries, start alluding to their home constituencies as having insurmountable interests they need to uphold and defend on the international stage. I argue that the development dimension of the Doha Round has been defined by the clash between the constituency-economics of rich countries and attempts by the developing world to build new avenues of cooperation. The term “constituency-economics” alludes to the persistence of a “zero-sum” game in the politics of international trade, something that Krugman (1997) also acknowledges. This is important on two levels. Firstly, it shows how crucial it is for developing countries to come together and coordinate their trade stances by forming coalitions and bandwagoning. Secondly, it explains why, as we have seen, developed countries have been “shying away” from multilateralism and pushing on their bilateral and Preferential Trade Agreement Agenda. The bilateral and multilateral alternatives of international trade are, in one way or another, mutually exclusive and in direct competition with each other. In this context, the G20+ comes about as an important example of South-South cooperation and of remarkable stance coordination for a variety of reasons. It was the first time that China assumed a more proactive and leading role. It also brought together very diverse regional powers, something that is notable not just in harnessing synergy in economic trade bargaining but also in the symbolic underpinnings of the coalition and in the moral weight it carries, representing over half of the world population (Narlikar & Tussie 2004: 953). The G20+[3] brings together actors that are as significant in the emerging international order as they are heterogeneous.
The previous sections have explored just how developing countries’ ambitions for space and flexibility encounter a “zero-sum” game as in one way or another they clash with the defensive arguments of rich countries. In a curious development, the latter have recently tended to become protectionist, losing their traditional role of liberalizing leadership in the organization. American-led liberalization of multilateral trade, witnessed particularly in the Uruguay round, has now come to a standstill. Lobby groups from uncompetitive sectors such as steel, textile and farming, important for the constituencies of those negotiating the deal, pushed the Americans and Europeans to put the “brakes on” liberalization and become more protectionist. Indeed, as Brazilian foreign minister Celso Amorim observed, “the proposals set forth by the G20+, which Washington holds responsible for the meeting’s failure to reach an agreement are 70 to 80 percent in line with the positions held by the United States at the start of the Doha Round” (IHT 2007). The EU has gone through a very similar transformation, with the added detail that it is far more worried with its own integration process to the East.
This picture gives the G20+ a window of opportunity to simultaneously lead trade negotiations and invert the traditional bargaining stances. This switch has now put developing nations as leading promoters of broad trade liberalization with small adaptations, and rich countries resisting it. We are witnessing, in the words of Mario Marconini, former Brazilian Secretary of Foreign Trade, a “shift in paradigm” (IHT 2007). An interesting argument put forward by Daniel Tarullo (2006:48) is that, since Doha and the extensive benefits earned at Uruguay round, big multinationals no longer require further liberalization for the consolidation of their profitability. He observes that these companies have been far less assertive in their lobbying for the completion of these international deals than they used to be. The telling story of how the G20+ maintained cohesion at Cancun despite many believing in the impossibility of it happening (Tussie & Narlikar:2004) is a rather encouraging example of how slowly developing countries are taking their development into their own hands.
Coalition-forming by developing countries has dramatically increased recently but has been around from at least the middle of the 1960s. It has traditionally assumed a reactive form, triggered by unsatisfactory deals proposed by rich countries. One of the initial groups of rich countries in the Doha round was named the Quad members group, constituting the US, EU, Canada and Japan. The first international coalition of developing countries was the G77 formed in 1964, comprising the promoters of the early non-aligned movement. Nowadays, in addition to regional economic organizations such as MERCOSUR and ASEAN, parallel to the G77 and the G20+ there are organization as diverse as the Small and Vulnerable Economies (SVE), the African group, G3+3, NAMA11, G10 and the LMG group. Serrano and Prieu (2006) conclude that middle-range powers also tend to use the “tools” of coalition-making and regionalism in the WTO as a means to advance their leadership in their particular regions. This explains the participation in a high number of coalitions of middle range powers such as Brazil, Indonesia, China and Argentina as is illustrated in the graph in Figure 5 (Serrano and Prieu 2006). Ultimately, economic exchanges primarily respond to the pressures of constituency-economics. The same can be said for the rule-setting of trade negotiations that underpin them. The Doha round saw, once again, individual negotiators representing the perceived interests of their constituency. It is in this mindset that developed countries sit down to discuss, draft and amend the texts and figures of the rules of trade relations. Developmental objectives are invariably relegated, at best, to second place in the agenda.

Conclusion

The main point I have wished to put across is that developing countries tend to find little improvements in space and trade-flexibility to reach their developmental goals unless they harness bargaining power through economic competitiveness and diplomatic coordination, usually through regionalism and coalition-building. Realpolitik has not been replaced by Developolitik at Doha after a simple branding exercise termed the round developmental. The rhetoric however, has been put to some use by developing countries. It has been a platform to which developing countries go back whenever they advance their discontentment with the developmental impact that rich countries’ “constituency-economics” has on their prospects for development. In the case of the Doha round, the hypocrisy surrounding the term has also been the major argument put forward by the developing world whenever the negotiations seem to be breaking down. Future development through trade negotiations will need to be conscious of the diversity in the economies of the developing world. It will also need to harness the potential in technological and knowledge learning as well as in liberalizing a services trade and migration that benefits the developing world. These two issues have so far either been damaged or ignored at the negotiation table and progress has been too slow. Finally, although not without its pitfalls, developing world coalition endeavours such as the G20+ are to be welcomed. They constitute initiatives that, when well coordinated and devising proactive and constructive proposals for trade rules, can bring diverse developing states together. The developing world will necessary rely on the leadership of the emerging markets leverage for pushing forward a more development-friendly WTO trade framework and overcome the constituency-economics of the rich world.

References

Bermeo, S & Davis, C. 2005 “Who Files? Developing Country Participation in GATT/WTO Adjudication” Prepared for presentation to the conference “WTO Dispute Settlement and Developing Countries: Use, Implication, Strategies, Reforms” University of Wisconsin-Madison, May 20-21 2005
Farfan, O. 2005 “Understanding and Escaping Commodity-Dependency: A Global Value Chain Perspective” Prepared for the Investment Climate Unit International Finance Corporation in October 2005
Hoekman, B. 2002 Economic Development and the WTO after Doha, World Bank Publishers Prepared for “The Political Economy of Policy Reform,” a festschrift in honor of J. Michael Finger edited by Doug Nelson
IHT (International Herald Tribune) 2007 “Philippine leader says bilateral trade agreements ‘2nd-best solution’ next to WTO deal” (online) http://www.iht.com/bin/print.php?id=7577891 [28.Sept]
IHT (International Herald Tribune) 2007 B “U.S. ends 3-year silence at WTO on farm subsidies, says it complies with rules” (online) http://www.iht.com/articles/ap/2007/10/04/business/EU-FIN-ECO-WTO-US-Farm-Subsidies.php [28 sept]
IMF (International Monetary Fund) 2007 “World Economic Outlook- Spillovers and Cycles in the Global Economy” April 2007
Jwara, F. & Kwa, A. 2003. Behind the Scenes At the WTO: The Real World Of International Trade Negotiations. UK: Zed Books
Kategekwa, J. 2006 “Extension of Mode 4 commitments to include unskilled workers in the WTO. A win win situation, especially for LDCs” Paper prepared for the OECD Development Centre Panel on Migration and Development. WTO Public Forum 2006
Krugman P. 1997 “What should trade negotiators negotiate about?” Journal of Economic Literature Vol. 25 March
Legrain, P. 2006 “Why NAMA Liberalisation is good for Developing Countries” in The World Economy, Vol.9, No.10 Oxford: Blackwell
Lindblom, C. 1977 Politics and Markets: The World’s Political and Economic Systems, New York: Basic Books
Narlikar, A. & Tussie, D. 2004 “The G20 at the Cancun Ministerial: Developing Countries and their evolving coalitions in the WTO” in World Economy 2004 Vol.27 No.7, Oxford: Blackwell Publishing
Putnam, R. 1988 "Diplomacy and Domestic Politics: The Logic of Two-Level Games." International Organization Vol. 42 Summer :427-460.
Serrano, O. & Prieur, J. 2006 “Coalitions of Developing Countries in the WTO: Why Regionalism Matters?” Paper presented at the WTO Seminar at the Department of Political Science at the Graduate Institute of International Studies in Geneva in May 2006 www.hei.unige.ch/sections/sp/agenda/wto/wto2006/Developing%20Countries%20Coalitions%20in%20the%20WTO%20vrai.pdf [9 October 2007]
Tarullo, D. 2006 “The end of the Big Trade Deal” in International Economy Summer 2006
UNCTAD. 2007. Handbook of Statistics http://www.unctad.org/Templates/webflyer.asp?docid=8674&intItemID=4314&lang=1&mode=downloads [27.Sept]

[1] The “Green Room” is a phrase taken from the informal name of the director-general’s conference room. It is used to refer to meetings of 20–40 delegations, usually at the level of heads of delegations.
[2] Note the difference between knowledge/technology transfer and knowledge/technology learning - the latter implies a sustained building of knowledge and innovation capacity at home. Not just a one-shot temporary transfer of knowledge or technology geared towards short-term goals.
[3] It currently comprises Argentina, Bolivia, Brazil, Chile, China, Cuba, Ecuador, Egypt, Guatemala, India, Indonesia, Mexico, Nigeria, Pakistan, Paraguay, Peru, Philippines, South Africa, Tanzania, Thailand, Uruguay, Venezuela, ZImbabwe

In what way is Susan Strange’s notion of “structural power” evident in the current multilateral trade negotiations?







Ragnhild Hoel • Kristin Skagen • Louise

Moe • Olav Aardal • Daniel Alvarenga

Introduction

The Doha round was expected to be concluded in 2004. Fast forwarding three years into 2007 the endeavour carries on. Right at the start, rich countries rhetorically committed themselves to abolish one of the major obstacles to the development of LDCs (Least Developed Countries) and ODCs (Other Developing Countries) - the presence of extensive direct and indirect mechanisms of trade distortion disfavouring the developing world. These distortions were pushed through by tough bargaining by rich countries and sometimes seem like the status quo, they have however been slowly challenged as of late. Adapting Strange’s (2004:24-25) conceptualization of structural power, the ideological, economic and technical power to “shape and determine the structures of the global political economy within which other states, their political institutions, their scientists and other professional people have to operate” is today being dispersed. Developed nations were indeed the prime movers behind global trade but developing nations and particularly the emerging markets of the BRICS (Brazil, Russia, India, China, South Africa) no longer stand back and limit themselves to playing the “amendment game” at the table of trade negotiations. The result has, up until 2007, been little more than “stalemate” in Qatar although small development-victories have slowly been achieved recently.


The aim of this paper is to analyze the global political economy of the current multilateral trade negotiations, using Strange’s notion of structural power. We start out by looking at the way in which structural power works, before briefly analyzing the Doha round and the theoretical debate over if there has been a shift in the distribution of structural power in the architecture of international trade. In order to focus the scope of our reflection we will not look at the pillar of trade in agriculture, an important but already extensively explored one. Instead we finalize our piece with how structural power is present in the dimensions of Trade Related Intellectual Property Rights and Services (TRIPS) and Trade in Services of the current negotiations.

Controlling Beliefs – What is Structural power?

Quite different from a direct and visible form of power-exercise, structural power works through shaping the framework within which states interact with each other. Structural power is hence not about the explicit use of force, but rather about the ability to set the agenda. The state, or group of states, who posses structural power, have control of the political agenda, and thereby substantial control of what issues will be objects of political debates and decision making (Strange 2004).

A shift in structural power on a global scale can be identified, as the developing countries have grown stronger and become more visible on the international arena since the 1990s. The developing world was not meaningfully involved in multilateral trade negotiations before the launch of the Uruguay Round and the creation of the World Trade Organization (WTO). At this point the markets of the larger developing countries had gained enough significance for the developed world, and they were therefore brought into the negotiations (Mattoo & Subramanian 2004; Drapner & Sally 2005).


In the aftermath of the Uruguay round, the WTO was criticized for harming the interests of the developing world, and it is against this backdrop that the Doha round must be understood. The declaration of the Doha round as a developmental round was a way of nurturing public relations (Jwara & Kwa 2003). This is in line with Strange’s understanding of structural power as primarily concerned with setting the agenda (Strange 2004), since the ability to do so necessarily rest upon a basis of ideological support. It is questionable, however, to what extent the agenda of the Doha round is in fact developmental, and also, how fundamental and overarching the changes in structural power between north and south are.

The Doha round and its backdrop



Before a round of multilateral trade negotiations starts, there must be a meeting of delegates from all WTO countries who discuss the agenda of the forthcoming round. The Seattle Ministerial Meeting commenced in December 1999, and was intended to launch a new round of WTO negotiations. This intention did not materialize, due to a number of important factors. Even before the meeting started, conflicting interests of various WTO members led to heated debate over the selection of a new WTO director general. Insufficient attention was hence given to the normal preparations, leading to a bad starting point for ensuring a successful meeting (Winham 2005).


Another crucial factor that contributed to the failure in Seattle was the continued use of ‘Green Room’ discussions. As the developing countries had begun to participate more actively in WTO talks, the organisation adopted the so-called ‘concentric circles model’. This meant that once the number of participants in a meeting exceeded a certain number, the efficiency level of the group would start plummeting. Instead, an ‘inner circle’ of members would be chosen to discuss, debate and negotiate the different issues. Once again the powerful developed countries were involved with a few of the middle-sized and large developing countries, and the rest were left frustrated (Blackhurst 2000).


By 1999 India and Brazil, traditional leaders among the developing countries, including South Africa, Nigeria and Egypt were starting to push through their agenda. They were participants in the ‘Green Room’ discussions. However, they were all middle-sized developing countries, and their interests were in some respects very different from the smaller developing economies. The United States (US) and the European Union (EU) also had disagreements and combined with organisational faults, insufficiencies and differences, an agreement in Seattle proved impossible (Page 2001).


The meeting that was to launch the Doha Round started in November 2001. The agenda was pre-negotiated and well prepared. Particularly important issues were: agriculture; implementation and execution of previously agreed upon policies; and the growing concern for easier and cheaper access to medicines needed to combat diseases in poorer countries – especially HIV/AIDS. Developing countries feared that the TRIPS agreement, backed especially by the major pharmaceutical companies and the US, would prevent such access (Jwara & Kwa 2003).


Throughout the meeting, language proved to be a major barrier. English was the conference language, despite French and Spanish also being official WTO languages. Interpretation facilities were confined to the big conference rooms only, while it was in the smaller rooms that the real action took place. Six facilitators had been chosen to deal with issues that required intensive discussion in the smaller rooms. Delegates from most developing countries saw this as the revival of the green room process. In addition there were too many meetings, and it was not clear where these were held and who was being consulted on what basis (Jwara & Kwa 2003).


The US and the EU promoted a set of ‘new issues’, such as transparency in government procurement and trade facilitation. Most of the developing countries rejected negotiation on ‘new issues’, and saw flexibility within the TRIPS agreement as far more crucial. However, the date for an agreement on the TRIPS issue was extended to 2016. An agreement outphasing all forms of agricultural export subsidies was eventually reached, although including the words “without prejudging the outcome of the negotiations”, otherwise no deal would have been achieved (Jwara & Kwa 2003:103). Many of the most crucial decisions were made in the absence of several developing countries’ ministers, as negotiations went into over-time, and not everyone was able to reschedule their flights. A green room meeting was finally held, where only the most influential actors participated. Eventually a conference document was accepted by all, although by some more willingly than others (Jwara & Kwa 2003).


The first meeting of the Doha round was held in Cancun, Mexico, in 2003. The four key areas for negotiations were agriculture, industrial goods, trade in services, and updated customs codes. However, a bloc of developing nations led by Brazil and supported by China, which became known as G-22, managed to bring the conference to a halt after five days. This was due to agricultural disputes and disagreement concerning the ‘new issues’, representing an important step for developing countries, even though the poorest countries continued to have little influence (Peterson 2003). The second meeting was held in Hong Kong in December 2005. Hong Kong was to reverse the process of a widening gap between rich and poor countries, by giving developing countries real access to rich countries’ markets for agricultural goods and industrial products. However, the deadline for the elimination of export subsidies was only set to 2013 (Halle & Mann 2006).

New Players - Old Rules



While it is true that a change towards a stronger role of the developing world has taken place, it is equally true that structural power inequality between the developed world and the developing world remains significant, while inequalities between the ‘developing countries’ furthermore are increasing (Alden & Vieira 2005). Moreover, in order to understand the differences in structural power on a global scale, one cannot understand the developing world as one category. While India, China, Brazil and South Africa have gained significantly more power in international trade negotiations, a large number of WTO members are small and very poor, and therefore structurally disadvantaged (Mattoo & Subramanian 2004). Robert Cox, writing in 1981, proposed the possibility of a Third World coalition, as a counterbalance to the core country hegemony. Such counter hegemony would according to Cox “consist of a coherent view of an alternative world order, backed by concentration of power sufficient to maintain a challenge to core countries” (Cox in Alden & Vieira 2005:1090). While it is clear that the clique of the hegemons of “Southern” countries pursuing strategic cooperation is challenging the positions of the leading states of the “North” (Alden & Vieira 2005), it is, however, less clear if this challenge is associated with a ‘coherent view of an alternative world order’.


Alden & Vieira (2005) hold that the creation of a ‘trilateralist’ diplomatic partnership, between the three middle-income countries South Africa, Brazil and India, reflects an important increase of the power of the developing world in the time of globalization, as does the booming Chinese economy, and the Chinese involvement in Africa (Alden & Viera 2005; Alden 2005). However, the uneven record of cooperation between countries in the “South” and the increasing economic inequality and diversity between ‘developing countries’, indicates that we may have witnessed a restructuring of power on a global scale, but substantial differences in structural power are persisting (Alden & Vieira 2005). According to Rodrik (2001:7), part of the reason for this is to be found in the very structures of the WTO, which favor the developed world –and thereby maintain structurally based power inequalities- since “there is little in the structures of the negotiations to ensure that their outcomes are consistent with developmental goals, let alone that they seek to further development”. In the same vein, we will argue that the increase of power of the larger developing countries has happened within the logic of negotiations in terms of ‘market access’, rather than altering this logic. That is, these changes do not reflect a true change in structural power or in the ‘logic of the game’, but rather show that some of the larger developing economies have gained more resources and are therefore better at playing the old game. Accordingly, Sally & Drapner (2005) define the increased power of the developing countries as a ‘negative’ bargaining one, meaning the ability to obstruct an agreement. Such power is, however, inferior to the positive structural power to control the agenda-setting and shape of the framework within which states interact (Strange 2004).


The fact that countries negotiate market access on a reciprocal basis means that poor countries with small markets are per definition structurally disadvantaged in these negotiations (Mattoo & Subramanian 2004). The WTO is meant to be an arena where negotiations follow certain rules, but as illustrated above, a lot of the work of pushing the agenda of a trade negotiation within the WTO is done between the meetings (Jwara & Kwa 2003). Because of the structural power inequalities, the poorest countries do not become engaged in meaningful international trade negotiations, but rather submit to the requirements of their stronger trading partners, who in return grant them enhanced market access (Jwara & Kwa 2003; Mattoo & Subramanian 2004).


Crudely put, this leaves us with a general picture of the developed countries controlling the agenda. Simultaneously the least developed countries try to reap as much benefits as possible resulting from an agenda which, taken as a whole, is not theirs. As the GATT turned into the WTO, the agenda became much broader, and, according to Bhagwati (2005(a)), issues unrelated to trade were added to the agenda of the WTO. Again, it is significant how these issues are biased towards favouring the developed world, which illustrates the continuous structural power inequalities (Bhagwati 2005(a); Jawara & Kwa 2003).


One example of how rich developed countries are setting the agenda at the cost of the developing countries is the TRIPS agreement. The agreement taken by itself, resulted in a reduction of the welfare of the developing countries (Panagariya 1999). Moreover, Bhagwati (2005(b)) makes the argument that intellectual property does not belong on the WTO agenda, since it only deals with collecting royalties and does not involve trade directly.

Intellectual Property Rights – A story of structural inequality





The TRIPS agreement was created in order to protect intellectual property rights by giving patent holders the sole right to an invention for twenty years, and countries in breach of it may face international trade sanctions. Although TRIPS covers all intellectual property rights, it has been the aspect of pharmaceuticals and other healthcare innovations that has been of particular concern to the developing countries in the Doha round, especially those that are hit the hardest by HIV/AIDS (Lanoszka 2003). Because the TRIPS agreement allow for private owners of inventions/drugs, these owners can charge higher prices which can prevent people from the developing countries from getting potentially life-saving medication (Cahill 2001). To combat this, the TRIPS agreement allows for countries to declare a national emergency and institute what is known as compulsory licensing, which is the right to make a drug without paying royalties to the patent holder. On paper, this seems fair and it could perhaps suggest an acknowledgement by the developed countries of their moral responsibility to make sure life-saving drugs are available and affordable for everyone.


However, many developing countries simply do not have the resources, infrastructure or legal framework necessary to deal effectively with the implementation of the TRIPS agreement and as such find it hard to make those rules work in their favor. Out of the 98 developing countries party to the WTO in 95, 25 did not have any patent laws concerning pharmaceutical products, and out of those that did, 56 of them had patent rights for a much shorter period than the 20 years given by the TRIPS agreement (Braga 1996, in Lanoszka 2003). In addition, most developing countries have historically relied heavily on compulsory licensing to deal with public health issues. Therefore, the inclusion of the TRIPS agreement into the WTO meant that many developing countries had to amend their existing Intellectual Property Rights (IPRS) legislation or simply draft new laws (Lanoszka 2003). Although this is true also for many developed countries, it presents a particular challenge for the developing countries because the “standards of protection of intellectual property are modeled on western legal practice and are set at a level comparable to those in the developed countries” (Lanoszka 2003:182). There is also a disparity in the level of development and research capabilities between the developed and the developing countries, and as such the TRIPS agreement can be said to contribute to the increase in economic strength of the developed countries (Lanoszka 2003). It can therefore be argued that the TRIPS agreement in itself, by definition, constitutes an example of structural power, and how the developed countries are able to set the rules by which the developing countries must play. The element of structural power concerning the TRIPS agreement that pertains to the Doha round specifically becomes evident upon examining recent actions by the developed countries.


Since the TRIPS agreement was signed, the industrialized nations have attempted to focus attention on primarily securing IPRS for the companies based in their own country, and as a result have largely ignored their obligations to “disseminate technological knowledge to address the developmental objectives of the poorer countries” (Mukerji 2000:53-57, in Lanoszka 03:186). The US, which is the leading advocate in patent holder rights have repeatedly threatened to retaliate against “any trading partner who makes use of the national emergency clause” (Abbott 2005:324). The US also filed complaints in the WTO against both Brazil and Argentina for what they saw as violations of the TRIPS agreement (Lanoszka 2003:186).


Because of international pressure stemming from the increasing severity of the HIV/AIDS situation, together with the ambiguity of the TRIPS agreement concerning compulsory licensing and parallel imports of generic drugs, the Doha Declaration set out a goal to rectify this situation of inaccessibility. The declaration reads “We agree that the TRIPS agreement does not and should not prevent Members from taking measures to protect public health…and to ensure access to medicines for all”. Scholars and commentators have however pointed out that the declaration did not resolve the question of imports of generic medicines for countries that lack manufacturing capabilities (Lanoszka 2003). Although the developed countries along with the pharmaceutical industry publicly supported the declaration, pharmaceutical companies have since lobbied actively in Canada to restrict implementing legislation, and the US has sought to limit the scope of the declaration.In the negations following the declaration, the US has insisted that the text only refers to identified diseases, and not future ones, and that a distinction should be made between infectious and non-infectious diseases (Abbott 2005).


On the face of it developing countries have received more attention, but it could be argued that the declaration serves as little more than lip service, designed to improve the “moral image” of the developed countries. As such the element of structural power is still present.

Trade in Services – An untapped world



Services have been part of multilateral trade negotiations since 2000. By 2004, 30 to 40 per cent of workers in the developing world were employed in the sector. This percentage rises up to 70 in the case of developed countries (UNCTAD 2007). The trend is for services to progressively take over agriculture as the most significant sector of the economy, this is also the case for LDCs and ODCs. Services and knowledge-intensive industries hold the greatest added-value in the value-chains of the current international economic architecture. These industries are complex, capital intensive and demanding for host states but they are also invaluable economic multipliers of the countries competitiveness and in the development of their socio-economic indicators. The centrality of this particular aspect for the developing world is striking (UNCTAD 2007).


Strange’s notion of structural power is evident in the Doha Round trade negotiations of services in several points. First of all any concessions pertaining cuts in farm subsidies were invariably dependent on the opening up of the developing country’s market to industrial products and the services market. The stalemate in the negotiations that followed can be understood as a refusal by parts of the developing world to allow the chronic structural power leverage of the developed countries to once again dominate the outcome of the rules of trade. Being as it is that these countries hold greatest comparative advantage in services sector, it is understandable why it is the case that this is the first dossier they bring into the table in negotiations with “finance insurance, consumer goods, logistics, audits, and legal affairs being the main targets” (Zuming 2007:28). Conversely, restrictions endure on second-tier services pertaining semi-skilled workers in which developing countries could potentially have an advantage vis-à-vis the developed world, such as tourism, construction, professional services and music (Njinkeu & Ogunkola 2002:9).


The implications at stake when trade in services is being discussed must also be understood within the migration-development nexus debate. Even though there are negative consequences of labour migration, such as brain-drain, the positive impact could be substantial for developing countries (Nyberg-Sørensen et al, 2002). Recent reports show that “liberalizing the movement of workers could amount to 156 billion dollars if developed countries increased their quota of workers from the developing world by 3%” (Kategekwa 2006:3). However, political pressures from the installed interests of inward-looking lobby groups, xenophobia and protectionist demagogy together with plain realpolitik from parts of the developed “North” prevents liberalization of labour migration. The structural power leverage of the developed world is again obvious.


Economic diplomacy has indeed fixated in relative gains instead of being replaced by noteworthy structural changes in the rules of the trade game looking for absolute improvement in the world economy while also giving particular attention to the “cries” of LDCs. This can arguably start being done by means of for example: smaller “intelligent” aid packages coordinated with the greater issues of fairer trade rules; easier migration for semi-skilled workers; and minimum standards of technological learning prior to progressive technological liberalization for the developing world. A development-focused liberalization is dependent on concrete expansion of service export opportunities; and improved efficiency and productivity of services sector in LDCs and ODCs through technological learning and not mere knowledge and technology transfer.

Conclusion



We have seen that the developing countries have been awarded more attention in the current multilateral trade negotiations than in the Uruguay round. Developmental issues have been put to the forefront of the agenda, and there has also been an increase in overall awareness of the particular challenges to the implementation of the WTO framework in developing countries. HIV/AIDS has brought the public health aspect of TRIPS to the forefront, resulting in the Doha Declaration seeking to clarify the ambiguity of TRIPS. Furthermore, developing countries seem to take more advantage of the bargaining power provided by consensus-style decision-making in the WTO. There has also been an emergence of south-south coalitions, examplified by the BRICS, slowly counterbalancing the dominance of the North. On the downside, their emergence can bring about new lines of fragmentation within the developing world widening the gaps between those actors that can have a challenging voice at the negotiation table and those that are chronically excluded. Whether the concerns of those left out will be represented by the BRICS and other emerging economies at the table, remains doubtful.


A thorough analysis of the current trade negotiations indicates that the element of structural power inequalities is far from absent. Although the Doha declaration explicitly stated that TRIPS did not exclude countries from taking appropriate steps to secure public health, developed countries have since used their position and influence to limit the scope of the Declaration. Furthermore, developing countries` bargaining power is restricted to negative power, through their ability to block decisions. Positive bargaining power, meaning the ability to dictate what is on the bargaining table, lies very much still with developed countries. Thus structural power is reiterated.

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