November 30, 2009

WTO Agreements Offer Gains Mostly for Rich Countries, More Obstacles to Financial Regulation.

For Immediate Release: November 30, 2009
Contact: Dan Beeton, 202-239-1460

Washington, D.C.- As countries around the world craft and implement policies to stimulate economic recovery in the wake of the worst world recession since the Great Depression, governments must preserve critical policy space and not become further constrained by new agreements under the World Trade Organization (WTO), CEPR's Director of International Programs, Deborah James, said today from Geneva, Switzerland. The WTO is preparing for a new Ministerial in Geneva November 30 - December 2, coinciding with the 10-year-anniversary of the Seattle protests which shut down WTO negotiations in 1999. WTO Director General Pascal Lamy has convened this Ministerial despite few changes in political positions within areas of negotiation since last year's "mini-Ministerial" in July, and seems to have significantly lowered expectations for this meeting. Some analysts believe that the WTO does not want to risk yet another high-profile Ministerial failure as happened in Seattle in 1999, in Cancun in 2003, and in Hong Kong in 2005.

"Contrary to promoting economic development, the financial, food, and other crises have shown that the WTO agenda has been going in the wrong direction," James said.

James also noted that independent analysis of the gains from completion of the WTO's Doha Round of negotiations show very limited economic gains but large potential costs, especially for developing countries. As noted by the recent analysis from the South Centre and the Global Development and Environment Institute (GDAE) at Tufts University, the most realistic projections for these gains are still those of the World Bank. These showed total global gains of $96 billion by 2015, with only $16 billion going to developing countries.

For developing countries, this amounts to just $3.13 in per capita income -- less than a penny per day per person. The gains to rich countries, according to the World Bank, are also extremely small.

The agenda for this Ministerial will focus not only on the unfinished "Doha Round" of WTO expansion, but also on assessing the WTO's contribution to solutions to the global crises. James also questioned whether the WTO, with its current agreements, is an appropriate vehicle to help mitigate the effects of the world recession:

"The WTO's push for deregulation has almost certainly contributed to the current economic and financial crises, and the WTO agenda would actually worsen them through initiatives such as increased financial services liberalization," Deborah James said. "Countries around the world agree on the need for greater financial regulation to ensure that the recent financial crisis -- triggered by the collapse of an $8 trillion U.S. housing bubble - does not happen again. Yet even current WTO agreements on financial services prohibit some essential regulatory measures."

James also noted that several other WTO agreements, including the General Agreement on Trade in Services (GATS) and the Agreement on Agriculture (AoA), and non-agricultural market access (NAMA) negotiations, could further erode public service sectors, food security policies, and key sectors for jobs creation in many countries, respectively.