Hong Kong Course Grade = Incomplete
As a professor, I grade my students at the end of each class. On occasion a student partially fulfills course requirements but just can’t finish all the work as planned. If circumstances merit, rather than flunk the student, an Incomplete grade is given. The Hong Kong Ministerial is just such a ‘student.’ There was enough progress to keep going, but it is a little too early to tell if the WTO will successfully complete ‘the course.’ As of now, the Hong Kong grade is ‘I’ for Incomplete.
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As these things go, modest progress is about all that could have been expected in Hong Kong. After all, this ‘course’ is a rather extraordinary one, requiring a group project with 149—now 150—group members. Tonga became the 150 th member this week. Teamwork is doable when the group has 3 or 4 or 5 or even 10 members. But a team of 150—that’s something else. And each of the 150 trade missions represents, however imperfectly, an entire nation, with each nation having its own complex mix of multiple powers and priorities. Not all groups feel well represented, and the marginalized sometimes have little choice but to express their views in the streets.
So, what did get done in Hong Kong? There was some very partial movement on agriculture, the pivotal issue of the Doha Round. It was agreed to eliminate agricultural export subsidies by 2013. It was hoped that this would occur by 2010, but 2013 was the best that could be adopted. One commodity, cotton, was singled out for accelerated attention because of the disastrous impact that cotton policies have had on a number of African cotton producing nations. Cotton export subsidies by richer nations will be phased out by 2006. Also, there was an agreement to end tariffs and quotas on most imports from 50 of the world’s poorest nations, an agreement to end subsidies that contribute to over-fishing, and a plan for the US, the EU and Japan to provide several billion dollars a year in aid to developing countries to help them compete in global trade.
Is this enough to justify calling Doha a development round? Not quite. Many key issues have not yet been addressed, perhaps most significantly the topic of domestic agricultural subsidies. It was encouraging, at least symbolically, that 110 developing countries joined together in a show of unity to remind the Ministerial that economic development was to be the point of this round. At an emotional press conference, representatives of these 110 countries stood their ground. What will come of this inspiring demonstration of togetherness is yet to be known. Many in the third world have grown weary of symbolic victories that in the end offer little substantive help in their quest for economic progress.
WTO Director-General Pascal Lamy estimates that with the December 18th Hong Kong Declaration, the Doha Round is now 60 percent complete. He is an optimist. But even accepting his optimistic number, that means that in four years, 60% of the work has been done, an average pace of 15% per year. With one more year to go if the round is to be completed by the end of 2006 or early 2007, the pace needs to pick up, especially given that the hardest stuff is yet to come. And the developing countries will need to see considerably more results than they have thus far. Even The Wall Street Journal calls the Hong Kong deal a ‘bust’ for the world’s poor.
The marginalized of the world, both inside and outside the negotiations, are waiting. The whole point of trade liberalization is that it creates the potential for win-win rearrangements of production around the globe. In my opinion, it is time for history’s winners to show more willingness to give, both within and across borders.
Economists don’t promote the idea of free-trade so that some can win and others can lose. The only defensible case for trade requires that the necessary condition of liberalization be coupled with sufficient readjustments, both within and among countries, to truly achieve win-win outcomes. Poor countries need rich countries to let go, especially in the area of agriculture. And the citizens in all countries, rich and poor, need a sufficiently robust public commitment to programs that allow gains from trade to truly be felt by everyone. Without a commitment to just and equitable outcomes, the economic case for trade liberalization is insupportable, as may be the entire structure of multilateral trade negotiation if the Doha Development Agenda cannot be completed. The progress report this week is ‘barely passing.’
Tom Head is Professor of Economics at George Fox University, Newberg, Oregon, USA. He serves on the Quaker United Nations Committee—Geneva and is at the Hong Kong WTO Ministerial Conference as a member of the Quaker Peace & Social Witness delegation.
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