The WTO, Summer 2010

The World Trade Organization (WTO) has been central to my research agenda for a long time now. I am currently in the process of completing a book manuscript that examines African participation and influence in global economic governance. I begin with the assumption that they have to work through coalitions, and then proceed to consider how different institutional environments impact their ability to form and maintain such coalitions. I find that those institutional environments can vary in several important ways, including how specific international and regional institutions overlap. For instance, when institutional environments require rule-making to take place across multiple institutions (such as the case of trade-related food safety measures, where rules are made at the WTO, Codex-Alimentarius Commission and elsewhere), then the obstacles to forming and maintaining coalitions increase. And, indeed, we see African states have more difficulties in impacting rule-making in such environments.

Given the centrality of the WTO to most areas of economic governance, I pay close attention to on-going developments in that organization. This past summer, several stories grabbed my attention: the status of the on-going Doha Round of negotiations, Lamy’s attempts to invigorate that round with a “cocktail approach”, and the on-going struggle to reform trade-distorting US domestic cotton support. This post touches on those themes and several others.

Doha Round Status

The Doha Round is not dead, though reports of its demise recur on a regular basis. One needs to remember that multilateral trade negotiating rounds have always taken a long time to conclude (last time, the Uruguay Round began in 1986 and only officially concluded in 1994). Additionally, there are now many more member states and economic power is more diffuse than it was during past rounds. So it should be no surprise that there have been a number of obstacles to concluding the current round of negotiations. Indeed, towards the beginning of the summer, attempts to conclude the Doha Round seemed to take another blow, as the G8 abandoned a pledge to conclude trade negotiations this year. However, some also cautiously report on continued progress, including sources in India (for instance, The Economic Times).

Director-General Pascal Lamy’s recent report to the WTO General Council tries to frame the WTO’s Doha Round and “Aid for Trade” as important contributions to the UN’s Millennium Development Goals. However, his main strategy for keeping Doha alive seems to be linked to beverages…

“Shaken, Not Stirred.” Cocktail Approaches to Negotiations

My attention has been captured lately by Director-General Pascal Lamy’s new strategy in multilateral negotiations: the cocktail approach. He seems very excited about it. There are three core ingredients to this cocktail: (1) Chair-led consultations, (2) informal bilateral discussions, and (3) consultations with Lamy. He speaks of these dynamics as occurring both horizontally and vertically. The idea, apparently, is that these ingredients are already here, and that what is needed is for us to shake them vigorously (perhaps Lamy has an affinity for Bond, since he says that simply stirring this favorite cocktail of his is not enough).

Generally speaking, his method would involve:“Chair-led processes within the Negotiating Groups, maintaining an overview of the entire negotiating landscape (transparency and inclusiveness), and smaller groups in variable geometry and bilateral contacts remain necessary and essential –moving towards a more horizontal view of the issues (negotiating groups and the TNC remaining the anchor of the negotiating process).”

This is not the first time a cocktail approach has been used to encourage progress in WTO negotiations. The idea goes back at least to Tim Josling and Allan Rae who describe its application to agriculture negotiations back in 1999. The idea, they suggested,was to take current tariff levels and treat each level with a different modality. For instance, states could eliminate tariffs where current levels are below 5%, but for tarriffs that are extremely high (say, 300%) states may agree to simply allow space for bargaining. In their analysis applying the “cocktail” approach did have some benefit for African states. Their approach was embraced by a number of negotiators in the early phases of the Doha Round and continues to be mentioned today.

Looking at the broader negotiation literature, cocktails have had other metaphorical use. Cocktail can refer to a hybrid approach in negotiating tactics by individual actors intent on pushing or securing an advantage (see Matos et al. 1998).

Cotton

I am also asked, when I speak about the role African states play on the cotton issue, whether they are merely following another state’s lead (Brazil). I always say that this might be the case with dispute settlement, where African states have only acted as third-party supporters of Brazil’s activities. However, African states have clearly been leading players in using cotton as an issue to press for greater advantage in negotiations on agriculture in the Doha Round. If Brazil’s strategy has been to use judicial processes, African states have tried to push for a legislated solution.

This summer it became even clearer that Brazil stands alone on the cotton issue. It seems to have forgotten the rhetoric of how the “South”, including Africa, is hurt by wrong-headed agricultural policies in the industrialized “North”. Indeed, Brazil’s cotton farmers now apparently are being paid US subsidies. In return for not applying WTO-authorised trade sanctions, Brazil has decided to accept payment from the US to its farmers. As the Financial Times notes, this just makes them new stakeholders in the US Farm Bill. This is too bad, as Brazilian sanctions, while generating a number of negative externalities for Brazilian consumers and American exporters, could also have generated positive externalities for Africa’s more needy cotton farmers.

The WTO is not just the Doha Round

While the apparent lack of progress in the Doha Round might seem to signal a lack of commitment by the international community to this organization, it is far from being the case that the WTO’s relevance relies only on that round.

For one thing, the WTO administers a number of international agreements. One of those, which member states do not have to sign, is the Government Procurement Agreement. This agreement tries to encourage transparency and the principle of non-discrimination in government procurement. Signing the agreement ensures formal access to government procurement contracts in other signatory countries. The United States is one of 40 such countries. So, as the Financial Times reported, it is not surprising that China is actively trying to negotiate access to the agreement. Accession requires the consent of the current parties (Article XXIV, 2).

Indeed, the WTO has played a central role in economic disputes between the US and China in recent years. See, for instance, recent US concerns about China’s garments and textiles.

The WTO also plays a central role in many economic disputes between Europe and the United States. Two of those disputes, one about European subsidies for Airbus andanother about tariffs on certain electronic products, both resulted in WTO panel decisions that favored the US, though Europe is appealing at least the Airbus decision.

My colleague, Peter Rutland, has a nice piece in the Financial Times about Russia’s bid to enter the WTO. It is, as he notes, “embarrassing” that Russia is the only major economy not included in the 153-member organization. He notes many of the important obstacles to that bid: some member countries (Georgia) don’t like Russia very much these days, Russian leaders don’t always seem particularly committed to the process, and the United States has raised a number of objections along the way. Rutland’s piece is partly a reminder that some of these and other challenges remain, even as US President Obama announced last month a joint commitment with Russia to see the bid through. I think that much of this analysis is right, but I would add one more obstacle to Russia’s bid: the on-going Doha Round. If Russia were to join, it would also have a major voice in the on-going negotiations (especially if they continue to drag out). Russia is a big enough player that it could upset many of the deals and alliances that have been made over the last decade. That could be both good and bad for progress in the negotiations. But is is unlikely that it would be neutral.

News and comment: Nigerian rumored to have been killed in China

The Wall Street Journal (clip below), CNN and a number of other sources are reporting that at least 100 Africans were involved in protests over immigration enforcement in China.  The spark was apparently the death of a Nigerian who was killed during an immigration raid.

China’s increasing ties with Africa is a subject that I am turning to in my current research.  But while my own research–and that of many others–tends to focus on China’s impact on Africa, we may neglect the potential for Africans to impact China.  This is a small reminder that there is a story to be told.  According to The Guardian, an estimated 20,000 Africans live in Guangzhou (the site of the unrest).

clipped from blogs.wsj.com

China has seen its fair share of anti-foreigner protests, from the Boxer Rebellion to the May Fourth movement, and, in more recent decades, more generically termed demonstrations against Americans, Africans, Japanese and the French.

Yet for all the expat grumbling about living in China, public protests by foreign residents are virtually unknown, perhaps tempered by the awareness that we are here by choice, live in relative comfort, and would likely achieve little more than a swift deportation.

But, reflecting the very different world in which some migrants live, Wednesday saw a rare protest by over 100 African residents of the southern city of Guangzhou.

According to Xinhua, at least one person died during a brawl that erupted after police raided a Guangzhou clothing market to check passports and visas.

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Reminder of my Watsan days

An old Peace Corps friend posted this link on Facebook.  It reminded me of the work I did as a Peace Corps Volunteer in Ghana.  In many parts of rural Africa it is still normal to have no access to a toilet or latrine, and it is still normal to get water from unsafe sources.  It would be great to see more attention placed on this issue, but it tends to get ignored (as are children in much of Africa).

clipped from news.bbc.co.uk

Children sanitation alert issued

By Matt McGrath BBC science reporter

Burmese children in the slum area of Rangoon


In 2004, diarrhoea killed 1.8m people, WaterAid says

Millions of children’s lives are being put at risk each year because aid agencies and governments make wrong choices about health care priorities.

This is the conclusion of a new report from the charity WaterAid.

It says that diarrhoea caused by poor sanitation is killing many more children than HIV/Aids, tuberculosis and malaria combined.

The report says the global spending on HIV/Aids hugely outweighs the amounts spent on providing better sanitation.

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New Ghana Film: Picture Perfect

I’m not usually one for romantic films, but the good reviews make this sound interesting. Hope it makes it to the theaters over here! Thanks to Abena Osseo-Asare, a Berkeley colleague, for sharing this on Facebook!


clipped from www.davidajao.com

Movie Review: The Perfect Picture


Posted on 19. Apr, 2009 by Oluniyi David Ajao in Ghana, Personal Diary, Showbiz

I had the privilege of watching the latest & hottest Ghanaian movie in town yesterday afternoon at Silverbird Cinema in Accra. Several hours later, I am still catching my breath. The first time I read about this movie via a friend on Facebook, I wondered to myself: “What audacity? How could anyone risk titling a movie THE PERFECT PICTURE?” The producers of the movie by using a title like that are opening their work to a thorough scrutiny from the public and would receive heavy criticism should the movie contain the slightest shade of mediocrity.

A snapshot of The Perfect Picture website

A snapshot of The Perfect Picture website


I had high expectations before watching the movie. Why? There was a special website for the movie: http://theperfectpicturemovie.com Now, this is uncommon in Africa, and very rare in Ghana.

  blog it

News and Comment: the G20 and Africa Part 2

The G20 has a lot of issues on its plate and at the top of the list, obviously, is the on-going financial crisis.  I have already commented on the problems African countries face in getting their voices heard. On that point, Africa may have an ally in Pope Benedict who, recently returned from his Africa travels, noted the problems of adequate representation from those “who suffer most from the harmful effects of a crisis for which they do not bear responsibility”. The Pope suggests states rely on the UN and associated institutions. Jeffrey Sachs has also jumped on this bandwagon, noting that while South Africa will be present “South Africa by itself represents South Africa”.  And we all know that South Africa is not a “typical” African country (if there is such a thing).

On the point of South Africa, it might be useful to remember that President Motlanthe himself may not be in the strongest position to represent his country’s interests, given all the recent upheaval within the South African political system and the temporary nature of his position as President.

NGOs, such as Oxfam, are trying to use their influence to encourage the G20 to commit to aiding Africa as it deals with the crisis. Duncan Green, head of research for Oxfam, highlights their main requests of the G20 in a recent blog post. He comments as well on a leaked copy of a G20 communique, obtained by the Financial Times.  Indeed, the way these conferences usually go, it is likely that at least some of the major decisions have already been negotiated ahead of time. Which leaves one to wonder whether adding an African voice at this point could make a difference.

The World Bank has published figures (reported on BBC News) that somewhat echo the gloomy global economic forecasts of the IMF and OECD.

The forecast predicts that developing countries will need $1.3tn in external financing to repay debt and cover balance of payments problems, and may fall short.

The idea that African countries, in particular, could be major losers in this crisis has been underscored by a number of analysts and commentators including Egypt’s finance minister, Oxfam’s Duncan Green (commenting on the case of Zambia), and Kofi Anan (who argues that the crisis “hits Africa twice”).

Other G20 news:

Apparently, protestors see the G20 meeting as an opportunity to demonstrate their unhappiness with a wide range of global issues, from the financial crisis to the “siege of Gaza” to the wars in Afghanistan and Iraq.  While I understand their frustrations with global leadership on these matters, I don’t think it helps their cause to get into fights with the British police.  Apparently, these frustrations are being vented worldwide.

China is trying to exhibit its leadership potential as well.  This has included lobbying for a new “super-sovereign reserve currency to replace the U.S. dollar”, the provision of advice to rich countries, and lobbying to stop states from moving towards trade and investment protectionism.

The Chinese are not the only ones worried about protectionism. Pascal Lamy, head of the WTO, has warned that moves towards protectionism may further impact the already troubled Doha round of trade negotiations.

News and Comment: The G20 and Africa

In my Africa in World Politics class this week, I’ve been talking about the role of African states in global economic governance. This has been a focus of my own research, stressing the important roles coalitions can play, but how those roles are strongly influenced by the institutional and strategic environments that states operate in.  At the World Bank or IMF, African coalitions tend to have no impact due at least partly to the power and voting structure of those institutions. At the WTO, coalitions have had major impacts in negotiations (the Cairns Group in the Uruguay Round, the “Cotton Four” group of African countries more recently).

Right now many of the important issues regarding our global economy are being debated by a forum of industrialized and emerging market countries, the G20. Their meeting in London next month, appropriately is targeted at dealing with the current financial crisis and its spillover effects.There is one African state member of that group, South Africa, and other African states are expected to be present in less formal roles as well.

There is some hope that African issues will have a place on the agenda at the G20 meeting. But as Kofi Annan argues in a guest column on AllAfrica.com, Africa needs to have more systematic representation at the G20 if the G20 is going to be an important decision-making forum. Also, African states need to continue their hard lobbying for greater voice at the IMF and World Bank, especially given the important role the IMF plays in developing the norms of the global financial system.  My suggestion would be that African states concentrate on encouraging decision-making rules that favor coalitional behavior.  If the lessons of the WTO tell us anything, it is that some institutional settings provide greater scope for developing country influence than others.


See also: Daniel Bradlow’s post at Opinio Juris

Research Notes: commodity prices and impacts on Africa

SSRN’s email system delivered this week into my inbox a set of abstracts from the World Bank Policy Research Working Paper Series.  This collection (all published in October 2008) speaks specifically to the potential impact of commodity price changes on African countries. These are critical issues for most African countries which are heavily dependent on the trade in commodities. But as a recent paper (2009) by Jacks, O’Rourke and Williamson highlights, commodity price volatility has not increased over time (they go back to the 1700s) and may even decrease with “world market integration”.

All of the SSRN papers are part of a larger program at the World Bank:

World Bank’s Development Dialogue on Values and Ethics: Africa Food and Oil Price Crises

One paper by Wodon et al. is central to the overall project and finds that not only may poverty rates increase in much of Africa, but that those who are already poor may find themselves even worse off than they already are. Another study by Parra and Wodon was even more pessimistic about the prospects for Ghana when looking at the potential multiplier effects of high energy prices.  Of course, energy prices have fallen quite a bit since they conducted their study. But their study surprisingly resembles another one conducted by Arndt et al. in Mozambique and which appeared in the journal of Agricultural Economics last year.

Generally, the findings are not that surprising and they echo other recent research (such as that by their colleagues Ivanic and Martin). However, that consensus is not unchallenged. See, for instance, Aksoy and Isik-Dikmelik.

One minor problem I have is their claim that we can generalize from their West and Central Africa findings to conclude that Africa “as a whole” could have 30 million more poor people with a 50 percent increase in “selected food prices”.  Even within their sub-regions variance was relatively high (a 1.8% increase in Ghana’s poverty headcount versus a 9.6% increase in Senegal).

Overall, the work of this group is a valuable empirical addition to our understanding of the links between commodity prices and poverty.