WTO talks collapse: where next for world trade?

After the collapse of world trade talks in Geneva today (24 July), ActionAid looks at the future of the global trading system.

Aftab Alam Khan, head of ActionAid's Trade Justice Campaign, said, "We must now look to the future for global trade - which remains a central element in the fight against poverty. There must now be root-and-branch reform of the WTO if it is to be a force for good in the world, rather than a forum for the rich to exploit the poor."

Subsidies

Any deal stitched together by the EU and US would not have ended trade-distorting subsidies that cause the dumping of farm goods in Africa. ActionAid estimates that the EU and US still spend $100 billion per year on farm subsidies that undercut producers in poor countries. All rich countries promised was a re-packaging of existing domestic support rather than real cuts to the amount of money going to rich farmers and corporations. There is no guarantee that the rest of the WTO membership would have accepted it.

Doesn't this mean that Africa won't get a trade deal to help make poverty history?

That was never on the table. The US and Japan vetoed a deal for 100% duty-free, quota-free access for the world's poorest countries and the US and EU failed to offer real cuts to their enormous farm subsidies, particularly on cotton.

Further, rich countries' aggressive stance in the talks on goods and services sought to place African governments in a strait-jacket that would prevent them from choosing the best policies to end poverty, empower women and protect the environment.

Who's to blame?

The US has replaced the EU as the current chief baddie, but both are equally to blame. By refusing to cut its farm subsidies whatever the circumstances the US put the final nail in the coffin of the development round. But most of the other nails had been hammered in by the EU by making minimal subsidy cuts while asking for massive concessions from developing countries.

Will there be a flood of bilateral trade agreements now that the WTO negotiations are in cold storage?

No. Rich countries have always pursued bilateral trade agreements in parallel to WTO talks. And the US fast-track negotiating authority that expires in 2007 applies to bilateral trade agreements too. ActionAid remains opposed to unfair bilateral deals.

Is this the end of the multilateral trading system?

No. The WTO will still exist - it is only these particular negotiations that have been put on ice. But their suspension does offer an opportunity for root-and-branch reform that bans exclusive meetings and makes the organisation more inclusive and democratic.