[WTO Talkes Doha Round] Managing Globalization: WTO chief fields queries from readers

from the International Herald Tribune

Global free-trade talks, known as the Doha round, are facing a new, end-of- June deadline for progress. The International Herald Tribune's global economics columnist, Daniel Altman, recently moderated an online discussion between readers and the director general of the World Trade Organization, Pascal Lamy, on issues surrounding the talks.

Here are the questions and excerpts of Lamy's responses to them posted at blogs.iht.com/globalization.

To what degree have bilateral and regional trade agreements hampered progress in the Doha round negotiations?

Jonathan Dingel, United States

So far they have not proven a distraction. Bilateral agreements are not in and of themselves a bad thing. But they don't cover important areas. Trade-distorting farm subsidies, for example, will never be covered in a bilateral agreement. Such agreements, furthermore, can create disparate rules which can be confusing to entrepreneurs. Often the poorest countries are left on the sidelines with respect to bilateral negotiations. The bilateral route is open to the United States, the European Union, India or China but not for the vast majority of poor countries. Furthermore, developing countries have a limited clout in bilateral negotiations with developed countries. In the WTO by contrast, developing countries have worked together to establish much more powerful platforms from which to negotiate with developed countries. The WTO is a kind of UN for trade, but without a security council!

Trade among the poor

Given the (general) consensus behind the benefits of south- south foreign direct investment flows, how can these be encouraged through international trade policy?

Marc Andrew, United Kingdom

In fact, WTO members were faced with a choice on whether to include negotiations on investment rules in the Doha round. Members decided this was not the time for such negotiations to commence. Even so, I am of the view that scaling down trade barriers and creating new trade rules through the Doha round would spark greater south-south trade and investment. Investment being often the flip side of trade. In fact, this negotiation has shown that the traditional north-south focus of the trade talks is now solidly accompanied by an equally intense south-south angle.

What do you think about the argument that says that the only solution to the "race to the bottom paradox" is setting a global minimum wage (and other global labor and ecological standards)? Do you think that the WTO can, or should, be a force that pushes in that direction?

Shimri Zameret, Israel

The question of labor standards has confronted our members before. At the Singapore ministerial conference in 1996, WTO members agreed not to take steps that would undermine the comparative advantage developing countries have with respect to labor costs. Attempts to link trade rules and core labor standards as per the International Labor Organization (ILO) failed at the launch of these talks in Doha in 2001 due to a lack of consensus. But this does not mean that the WTO and the ILO should not enhance their collaboration. In fact, our two secretariats are currently working together on a report concerning the impact of trade on work.

How is the WTO working towards the international recognition of credentials and experience to facilitate the mobility of labor? What should we learn from the European model?

Michael Izen, Canada

This very question is the subject of intensive negotiations right now at the WTO. As part of the negotiations on opening trade in services, WTO members are discussing the temporary movement of professionals across borders. Part of these negotiations concerns mutual recognition of credentials, standards and practices. These are not easy negotiations because often people confuse this with the issue of immigration. The two are not the same, but as you know the fact that the immigration debate in North America and Europe has been contentious does not make matters better.

In the public's perception, the WTO is concerned mostly with managing international commerce in a very basic manner, i.e. which considers all goods and countries to be essentially comparable, and equivalent. Why is there no room for an ethical dimension? Must we accept cheap goods originating in countries where the workers are denied basic rights, safe and healthy workplaces, and political freedoms? If so, does this not mean that the WTO, in effect, is merely a husband for the trade interests of super-wealthy corporations and billionaires, at the expense of propagating what the Monde Diplomatique calls "social dumping" (Ignacio Ramonet, January 2006)?

Peter Marteinson, Canada

Part of the problem has been that the international community has not accepted the notion of applying economic sanctions against countries for failure to meet labor standards. It's not clear that sanctions would be more effective in addressing the problem than incentives to improve workplace conditions.

"Social dumping," as you call it, would also need to be more precisely defined by an international consensus. You can expect that Canada and Bangladesh, for instance, may not easily agree on such a concept.

On the question of cheap goods, it is true that goods manufactured in many developing countries tend to be cheaper than goods made in the West. Lower labor costs are among the few areas where poor countries have comparative advantage over their industrial country partners. Economists widely agree that trade is an essential element in assisting countries in their efforts to climb the ladder of development and alleviate poverty. There are many examples of the beneficial effects of trade in this respect. Economic development can also be a catalyst for political reform as we have seen in places like South Korea.