The Doha knot

PASCAL LAMY (LEFT), Director-General of the WTO, with Bruno Ferrari, Mexican Secretary of Economy, at a press conference in the framework of the G20 Trade Ministerial meeting in Puerto Vallarta, Mexico, on April 20. The G20 meeting beginning in Los Cabos, Mexico, on June 18 will be the next major event that will pick up the themes detailed at UNCTAD XIII.-RONALDO SCHEMIDT /AFP PASCAL LAMY (LEFT), Director-General of the WTO, with Bruno Ferrari, Mexican Secretary of Economy, at a press conference in the framework of the G20 Trade Ministerial meeting in Puerto Vallarta, Mexico, on April 20. The G20 meeting beginning in Los Cabos, Mexico, on June 18 will be the next major event that will pick up the themes detailed at UNCTAD XIII.

The most important outcome of UNCTAD XIII is the emergence of the Global South as a potent force.

AFTER months of tense negotiation, the 13th quadrennial conference of the United Nations Conference on Trade and Development (UNCTAD) concluded on April 26 in Doha, Qatar. The Global North's main representatives went to Doha poised to constrain UNCTAD. The United States, the European Union and Switzerland pressured the UNCTAD secretariat to back off from an analysis of the causes of the financial crisis and from an analysis of the long-term problems posed by the domination of finance over social life.

The Global North went to UNCTAD XIII from many directions. It tried to use the question of internal reform of the organisation as a threat against the staff. Complaints about duplication in the U.N. system go back to the 1960s, when the U.S. tried at that time to prevent UNCTAD from being born (in 1964). The North suggested that UNCTAD's budget could be trimmed so that it might return to work on its mandate and not to take up issues already dealt with in other U.N. organisations.

Here the Global North neglected to note that the other U.N. organisations, such as the International Monetary Fund (IMF) and the World Bank, are closely aligned to the U.S. and Europe and are not beholden to the South. Such a pushback against UNCTAD has not been seen since at least the 1970s (see Frontline, May 18). Unfortunately for the Global North, the main countries of the South gathered to defend UNCTAD. The most important outcome of Doha was not the final document, but the emergence of the South as a potent force.

The negotiations on the final document went on until 5 p.m. on the last day, holding up the closing ceremony, as the text had to be translated. The final document called Doha Mandate is named optimistically. Coming out of such a contentious process, with the North smarting, the Doha Mandate was nonetheless quite an achievement. All the sections that the North attempted to strike down (on hunger and food security) made their way into the final document. The North wanted to walk away from one particular paragraph that was in the final document of UNCTAD XII, which took place in Accra, Ghana, in 2008.

Developing countries should pursue development strategies that are compatible with their specific conditions within the framework of an enabling state, which is a state that deploys its administrative and political means for the task of economic development, efficiently focussing human and financial resources. Such a state should also provide for the positive interaction between the public and private sectors (paragraph 115, Accra Accord).

Part of the fight at Doha was over the ratification of the Accra Accord, and centrally whether this philosophical attitude to the enabling state should be accepted. Along the grain of the dominant neoliberal thinking, the North wanted to substitute this interventionist idea for a more laissez faire notion of the state. The North's draft suggested that rather than an enabling state, UNCTAD should be tasked with the promotion of an effective state, working with private, non-profit and other stakeholders to help forge a coherent development strategy and provide the right enabling environment for productive economic activity. The debate between the effective state and the enabling state fractured along North-South lines. The final text was a compromise, with neither side able to fully have its way.

Each country has the primary responsibility for its own economic and social development, and national development efforts need to be supported by an enabling international economic environment. The state, having an important role to play, working with private, non-profit and other stakeholders, can help forge a coherent development strategy and provide an enabling environment for productive economic activity (paragraph 12, Doha Mandate).

Fragments from each draft entered the paragraph, with the argument unsettled. Given the poor negotiating position of the G77 + China, the main negotiating arm of the South, this is, however, quite a feat. Norman Girvan, former board member of the South Centre and former Secretary-General of the Association of Caribbean States, told this correspondent: In the context of the sustained efforts of the North in the run-up to the conference to emasculate UNCTAD's mandate, and taking into account the formidable political and economic resources at their disposal to divide the South, I share the view of those who judge it to be a victory for the South. It only goes to show that maintaining a firm, united position by the South is the only way to win even modest gains in global forums. Division is fatal.

The G77 was able to stave off the strong-arm tactics of the North and leave intact UNCTAD's original mandate, including its ability to conduct research that would enable a better understanding of the financial crisis and provide policy tools for states to intervene in people-centred development and not finance-centred globalisation.

The highlight of the conference, Heiner Flassbeck, Director of UNCTAD's Division on Globalisation and Development Strategies, told Frontline, was the fiercely contested negotiation of the Doha Mandate. Regardless of the specifics of the text as adopted, for me the process that created it was more significant. The specifics were not so central because the real debate was not on practical policy matters. It was on the broader principle of how to understand the international framework for economic policy and what UNCTAD should be permitted to do to make that framework amenable to genuine people-centred development.

The attempt that was mounted to exclude UNCTAD from working on global macro-economic, financial and monetary issues was not new, Flassbeck said, but its advocates came out much more aggressively than ever before. I cannot but conclude that UNCTAD's work, and here mainly the work of my division, has been perceived as professionally strong, but too critical to be allowed in the international chorus of Washington Consensus-like voices.

The North's cavil about UNCTAD's duplication of the work of the World Trade Organisation (WTO) or the IMF was specious. Unlike the WTO and the IMF, sections within UNCTAD, such as the Division on Globalisation, produce high-level empirical work that is grounded in a theoretical framework unwilling to cheerlead neoliberal policymaking and finance-driven globalisation. The North had a political objection to UNCTAD and not a bureaucratic one.

During the debt crisis of the 1980s, a weakened Global South saw UNCTAD's secretariat partly sequestered to the interests of the Global North. From 1974, the U.N. Centre for Transnational Corporations (UNCTC) had been hard at work building up a database on transnational corporations and setting up a code of conduct for them.

By 1992, the UNCTC was brought into UNCTAD where its mandate was radically transformed. Instead of being a watchdog of transnational firms, the UNCTC put its resources to helping transnational firms enter the South.

It was in this period that vast sections of UNCTAD became interested in channelling foreign direct investment (FDI) into the South. At Doha, many of the seminars were precisely on this theme, providing technical and political support for transnational firms and for FDI in the countries of the South. Some of this work is done by the International Trade Centre, a joint project of the WTO and UNCTAD.

By the 1990s and into the 2000s, UNCTAD's core positions were whittled down as it absorbed the general neoliberal orientation. It was no surprise when the Thai politician Supachai Panitchpakdi left the directorship of the WTO in 2005 to head UNCTAD.

While the Doha Mandate strengthens the Division on Globalisation, it does not weaken the general thrust of this other side of UNCTAD. Flassbeck told Frontline that the difficult negotiations at Doha might be seen by responsible people in UNCTAD as an opportunity for renewing UNCTAD and indeed for revitalising G77, which has rediscovered the value of UNCTAD as a source of second opinion on global economic issues, or a think-tank for developing countries', as one delegate put it in the closing ceremony.

If Flassbeck is correct, then the larger countries of the South, namely India and China as well as Brazil and South Africa, might bring this new political will to bear on other aspects of the North's policy agenda and on a rehabilitation of the critical work on transnational corporations and foreign direct investment. None of these states has demonstrated an appetite to challenge the neoliberal policy agenda of the North. What they have done, however, is to resist the North's attempt to shape the trade environment more fundamentally to the advantage of transnational firms than to the farmers and miners of raw materials and primary commodities in the South.

New trade narrative

After Doha the next major event to pick up these themes will be the G20 meeting in Los Cabos, Mexico, on June 18-19. The agenda for that meeting, which was leaked, was drafted by Pascal Lamy, the Director-General of the WTO, and Angel Gurria, the Secretary-General of the North-dominated Organisation for Economic Cooperation and Development (OECD). This agenda seeks to provide a new trade narrative. This new narrative will try to strengthen global supply chains and value addition while moving away from the give and take' setting in which trade discussions happen. In other words, the G20 meeting is to create a paradigm that avoids negotiations (give and take) and to establish a climate that benefits smooth global value chains which would benefit the transnational firms. A preview of the debate took place at Doha, where Costa Rica's Minister of Trade Anabel Gonzalez Campabadal argued that her country's success in the microchip sector was predicated on easy entry into the supply chains.

Lamy concurred, saying that these value chains reduced the price of the entry ticket for countries such as Costa Rica to international trade networks. It is perhaps important to mention that Anabel Gonzalez worked at the WTO as the Director of the Agriculture and Commodities Division before she assumed the government post. South African Minister of Trade Rob Davies entered the discussion to point out that these value chains have a tendency to perpetuate the old divides, with the South producing the primary goods and consuming finished goods.

The WTO Ambassadors from Brazil and India agreed with Davies. They prefer to see manufacturing within the South as a driver of development, the core position established by UNCTAD.

UNCTAD XIII was memorable for a revitalised G77 and for the growing confidence from Brazil, India, China and South Africa to stand up for a southern consensus. It remains to be seen if this awakening will continue at Los Cabos, and into next year, when the WTO will seek a new head after Lamy leaves office. Having failed to unite behind a candidate from the South for the IMF, for the World Bank and (seemingly) for the International Labour Organisation (whose election is on May 28), it will be notable to see if the momentum of Doha propels the South to select its candidate for the WTO.