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Resuscitating the OMC: the macro agreements at Geneva
While the August holidays took
place in El Salvador and the local media covered the news about delinquency,
deaths, traffic accidents, the shopping fever at fairs and malls, and about
the business of the financial and the commercial sectors, inside the context
of the world’s market an event took place and it was intentionally missed by
the most important communication media of the country. It was a new
agreement signed by the countries that are part of the World’s Trade
Organization (OMC, in Spanish), in Geneva, Switzerland, something that
restructures and gives a new life to the actions of this organization in
search for the liberalization of the world’s trade activities. The
international press referred to the event as a “historic agreement”, since,
for the first time, in a series of widely advertised failures of the OMC, a
group of frame-agreements were approved to open the doors to a
liberalization of the global trade. The texts of the agreement were ratified
by the ministers of the 147 countries that are members of this organization
on Saturday, July 31st, after a number of negotiations that were made in a
period of two weeks, which finally came to an end in an uninterrupted
session of 24 hours on the last day.
This group of agreements has a special meaning for the group of nations that
are part of the OMC, and, among which, el Salvador is included mainly in
connection to taboo themes such as the agricultural subsidies. The General
Director of the OMC, Supachai Panitchpakdi, stated that “For the first time,
the governments of the members have agreed to eliminate the subsidies from
the exportation of the agricultural products for a certain date. They have
agreed to substantially reduce the internal aid that distorts the commerce
inside the agricultural sectors”. Apparently, in this summit they have begun
to touch the Gordian knot of the recent disputes for a free world trade: the
inequity and the injustice of commerce between the developed nations and
those that are less developed, on issues such as the agricultural
liberalization and the access to the markets. However, the agreement is
nothing more than the beginning of a long and an uncertain way, because it
is based on political wills that do not always come with a guarantee
certificate. The positive tone is supplied by Dr. Panitchpakdi, since he
said that the governments have agreed to “establish the necessary
negotiations to simplify the commercial procedures and the work of the
customs’ service”. He also predicts that there will be some progress made on
the liberalization of agriculture; the access to the markets for the non-agricultural
products; the matters connected with development and an easy flow of
commerce; the negotiations about regulations, services, the environment, the
reform of the solution procedures for the disagreements, and the protection
of the intellectual property.
The paradox of free trade without freedom or justice
According to the economist Francisco Ibisate, from the Economics Department
of the UCA, this agreement is undoubtedly “historic”, but most of all,
“surprising” and “fragile”, and, therefore, it is necessary to understand it
with a “prudent euphoria”. Everything that the OMC has gone through in order
to seek for a way to liberalize the world’s trade has been difficult and
controversial, mainly because of the lack of equity in the configuration of
its decisions, mostly leaded by the wealthy and the developed countries,
such as the United States, the European block, and Japan. For Ibisate, this
frame-agreement “could dramatically modify the arrogant behavior of the most
powerful countries and the asymmetrical relations that have characterized
the recent summits of the OMC, and the uneven negotiations of the free trade
agreements, and/or those of the Free Trade Agreement Area of the Americas
(ALCA, in Spanish).
What can be inferred from this summit that, in spite of the many
implications that it has for the world’s trade, the Salvadoran media do not
know much about? The OMC implicitly accepts that the world’s trade has a
biased tendency in favor of the wealthiest and the most developed countries,
and that therefore this impasse has to end; those that have to be more open
are the developed countries if they wish to achieve a true free trade in the
world. It is so paradoxical how evident it is now that, according to the
history of the OMC in the last five years, this group of frame-agreements
has not arrived because of the inertia of the political good will of the
developed nations, but it is a specific acknowledgement to the pressure role
played by the group of 20 (G-20), that is the group of poor countries that
are trying to reach higher levels of development and gathered to have an
influence on the commercial decisions monopolized by the developed countries.
Our government was part of this group until the former minister of Economy,
Miguel Lacayo, walked away from it.
These truths had already been reported by pacific demonstrators during the
former summits organized by the OMC in Seattle, Doha, and Cancun. However,
this did not seem to be enough to “move the people’s will to do something”
or to create political agreements, especially not on behalf of the developed
countries. As Jose Bove, a French leader, stated it a couple of months ago
during the 11th Conference of the United Nations about Commerce and
Development (in Sao Paulo, Brazil): “the rules of the World’s Trade
Organization only favor a minority of the international companies and close
the doors to the small companies, since only six companies get a hold of 90%
of the soy, the corn, and the wheat market, among other products; therefore
the ones that get most of the benefits are the developed nations”.
Geneva: good promises, an uncertain will
For the economic analysts, the reforms of the group of frame-agreements
signed in Geneva, are focused on agriculture, and therefore they should be
interested in countries such as El Salvador. According to Francisco Ibisate,
three types of disloyal policies were touched, and, in summary, they involve
the present unfair actions of the developed countries in the context of the
world trade:
1. The mass subsidies for the exportations (an aspect vehemently underlined
by the
G-20 as one of the sins committed by countries such as the United States and
the members of the European Union)
2. The credits for the agricultural exportations (used especially by the
United States)
3. The monopolies of the State’s companies for exportation (the cases of
Canada and Australia).
There is a frame in which the general agreements are more interested in, and
which has been designated as “annex A”. Here they examine “A frame to
establish the modalities connected with agriculture”, and they indicate that
this is the foundation for the future negotiations, since it is framed
inside the “long-term objective about the Agreement of Agriculture in order
to establish an equitable system of commerce aimed to the market through a
program of fundamental reforms”, as for example the “substantial reduction
of the internal aid that causes the distortion of commerce” (point 6); “the
reduction of all the types of subsidies for the exportation with the
objective to make a progressive removal” (point 17). According to point 22
of the frame “the developed countries that are members will receive benefits
such as a longer application period for the progressive removal of all the
forms of subsidies for exportation” and “more of a substantial improvement
of the access to the markets” (point 27).
In other words, the intention is that the developed countries are able to
reduce the total of subsidies by approximately 20%, as a first stage during
the first year of the agreement, in order that the farmers that receive more
subventions are those able to become duty-free first. Allegedly, the most
considerable reductions will be applied to those products that receive more
protection; however this action has a limit, since there are certain
products that will not be affected, and they are usually called “sensitive
products” for the most powerful countries; as for instance what rice means
to Japan, and what milk, sugar, and red meat mean to Europe.
In this context, there are certain critics that go beyond those who oppose
to the actions of the OMC that have been published by the international
press. For instance, a publication called International Perspective
indicates that “the text adopted in the Geneva meeting was almost identical
to the text rejected by a meeting of the OMC during the last year in Cancun.
For instance, about the critical problem of the subsidies of the North
American cotton, the only variation was a couple of lines that offer a vague
promise of future negotiations”. On the other hand –according to a
publication called Socialist Worker-, organizations such as the Movement for
the World’s Development have indicated that “the United States and the
European Union have not set dates to withdraw the subsidies of exportation”.
Prudence is a key feature that will have to be adopted by the group of less
developed countries as in the G-20 in reference to the frame-agreement
reached in Geneva, that is, if they want to prevent the promises from
becoming “a lack of will”. In any case, the international newspapers have
underlined the fact that “this is better than nothing”, and this enables the
G-20 (leaded by Brazil, China, and India, which all together they add up to
40% of the world’s population) to turn things around in the scenery of the
world’s commercial context and celebrate this event in a successful manner.
According to Le Soir, a newspaper of Brussels, “the less developed countries
have remained in the same place in matters of their agricultural
exportations. This stubbornness has brought some results since the finished
agreement foresees the negotiation of a possibility to remove the subsidies
from the exportations that favor the European farmers. A few years ago,
these news would have been unthinkable, but the credits of this achievement
(although it is not much) must be fairly rewarded to the G-20, which has
ratified its credibility, not as a “subversive” group, but, as Le Monde, a
French newspaper, indicates, as a “negotiator”.
For El Salvador, and for the former minister of Economy, Miguel Lacayo, this
is incredibly ironic, since he eagerly defended the possibility to turn away
and not be part of the G-20, in order to get closer to the interests of the
developed countries, such as the United States. By doing this, he turned
away, and he left several crucial affairs of the country on hold, mainly
important for the weak Salvadoran agricultural sector. Even the director of
the OMC indicated that the key movement to reconfigure the negotiations of
the free market has been the “political courage” of the countries that
belong to the aforementioned organization. That is why that now that the
truth is out in the open, as Ibisate indicated, “what is important is that
now, after Cancun, the G-20 has more members and that it has become stronger,
this is a group that has struggled and it has managed to achieve the Geneva
agreement. Miguel Lacayo has made a fool out of himself”.
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