Perhaps the EU and USA never liked the WTO’s Doha round

I covered the Doha summit for a German newspaper. The negotiations were tense, and for a while it looked as if they wouldn’t lead anywhere. Then an agreement was struck that allowed governments to grant pharmaceutical companies licences to produce generic versions of patented drugs if those drugs were needed to safeguard public health. Moreover, governments were also allowed to import such generic drugs from abroad.

At the time, the HIV/AIDS crisis was still escalating, and these steps were very important. I recall a Brazilian delegate telling an activist from a non-governmental organisation in Doha that this agreement was “excellent”, and I was fast convinced that he was right. Indeed, AIDS treatment costs soon dropped dramatically thanks to generics. In Doha, Brazil was one of the countries that challenged patents on life-saving AIDS drugs because patent protection made treatment unaffordably expensive in developing countries. The term emerging markets wasn’t used much back then.

From that point on, the negotiations did not seem that tense anymore. It was clear moreover, that the vast majorities of governments represented at the summit wanted an agreement that could serve as a sign of unity after the 9/11 terror attacks on New York and Washington. Al Qaida had destroyed the World Trade Center only a few weeks before the summit, and the USA had responded by invading Afghanistan.  

In spite of the longing for unity, however, there was no agreement on the so-called Singapore issues. The advanced nations, led as usual by the EU and the USA in trade matters, wanted binding international regulations concerning trade and investment, trade and competition, government procurement and trade facilitation. The developing world, led by a vociferous India, was adamantly opposed, arguing that such rules would restrict governments’ policy space and thus the scope for catching up with established economic powers.

In the end, the EU and the USA agreed to launch a round of negotiations that did not include the Singapore issues. In retrospect, I think their diplomats probably hoped they would be able to put those issues on the agenda again soon. I remember a business journalist from Germany saying that the developing countries would come to their senses soon. His reasoning was that China was about to become a full-blown member soon, and its more business-like attitude would limit Indian leadership at future WTO summits.

He was wrong. China fast teamed up with India, taking the same stances. That was not that surprising since the two huge Asian countries have similar interests.

The Doha round never really took off. Global leaders have stated again and again how important it is to conclude it, but they haven’t moved it forward. My hunch is that, in 2001, the EU and the US delegations felt that they had made a big concession by allowing drug patents to be bypassed, but did not get anything in return. They fast embarked on all manner of bilateral trade deals, sidestepping  the multilateral WTO.

Many observers now consider WTO talks to be something like a dead-end street. I don’t expect the Nairobi summit to make a difference. Things were quite different in 2001. Globalisation sceptics around the world considered the TWO a monster that was controlled by the rich nations and kept the developing ones poor.

The WTO was started 20 years ago. All members have one vote. Decisions require consensus. The trade order that was defined 20 years ago has actually served emerging markets quite well – though not all developing countries have been able to benefit. It certainly is not the monster it was believed to be.

The WTO has lost momentum, but it has not become an irrelevant institution. It’s system for settling disputes is quite powerful. The WTO can sanction countries that don’t play by the rules. This is something other multilateral organisations should probably be able to do too. Global governance would be easier to bring about. I wish the recent deal struck in Paris to limit climate change had at least half as many teeth as the WTO. Apart from naming and shaming, it has no teeth.