The WTO completed 20 years this April, but there is little to celebrate as industrialised countries increasingly turn their backs on WTO multilateralism.
The US launched the Trans-Pacific Partnership (TPP) in 2010 which has 12 states (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vietnam) in the Asia-Pacific region participating in negotiations on comprehensive regional agreement in the fields of trade and investment.
Although the negotiating texts are still secret, it is known that the TPP goes further than the WTO in all areas. More specifically, tariffs on industrial goods are to be reduced to zero, and services, especially financial services and investments, are to be liberalised.
Investments, protected through controversial investor-state dispute settlement mechanisms, allow only the investor to take legal action, not the host country. It strengthens patent protection such that it would render access to generic drugs and seeds more difficult. The US is keen that India join the TPP but experts have warned India not to give in to US “pressure” as it will “damage” the access of medicines in developing nations, particularly its generic medicines industry. The accord covers nearly 40 per cent of global economic output and one-third of all world trade.
Laetitia Rispel, a public health expert from South Africa, says: “India really restricts the number of patents that are granted and that is important in providing medicines to other developing countries. Just making medicines and not granting patents would make the pharmaceutical industry richer and with TPP that would be harmed.”
In 2013, the US and the European Union opened a new front: negotiations on the Transatlantic Trade and Investment Partnership (TTIP). Because customs tariffs between the US and EU are already very low, the focus lies on harmonising various regulations.
Huge opposition European NGOs are vehemently opposed to the TTIP for fear that it will undermine social and environmental standards and consumer protection, all of which are much more effectively developed in the EU.
The most controversial part of the agreement relates to investment protection. The aim of the US is for investment disputes to be settled by largely non-transparent arbitration bodies. Given the opposition from civil society and individual countries, the EU has launched an online consultation and suspended negotiations on this until the 100,000 responses received have been evaluated.
Alongside these regional mega-agreements, work is also proceeding on plurilaterally thematic agreements. The leadership in these cases rests mostly with the industrialised countries. In 2012, some 50 countries, including the US, EU and Switzerland , launched negotiations on a comprehensive services agreement, the Trade in Services Agreement (TISA). TISA could deregulate whole swathes of the economy and open them up to privatisation.
New directions All these agreements aim for the broadest possible privatisation, deregulation and liberalisation of the world economy. They may set new standards that will be applied to all countries — including those not even involved in the negotiations. These mega-agreements constitute a thinly veiled attack on China, India and South Africa, all countries that, in the WTO framework, oppose the liberalisation of trade in industrial goods, services, government procurement and investments, and are stubbornly insisting on more just global rules in agriculture.
In short, trade flows are to be channelled in a new direction, to the disadvantage of the emerging countries in the South. Mexico's textile industry, which is bound by FTAs with both blocs, could be squashed between the European and the US industries if the TTIP is adopted. With the TTIP, the US would step up its citrus fruit exports to the EU, which currently imports from Egypt, Morocco and South Africa. Reduced exports from least developed countries would mean a 3 per cent contraction of their GDP.
Major emerging countries are not taking part in these negotiations — at least for now. Should there be a breakthrough with TISA, industrialised countries could finally lose all interest in the WTO Doha Round. The emerging and developing countries would be robbed of their most powerful lever for negotiating better conditions in the agriculture sector.
The writer is the author of ‘World Trade Organisation: Implications for Indian Economy’