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Doha - there's a lot more than £200 at stake

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Paul Mason | 11:37 UK time, Thursday, 10 July 2008

I always get worried when politicians start putting a monetary figure on the benefits of a controversial policy. Gordon Brown did this in Tokyo yesterday when he said that concluding the Doha trade round would reduce British families' food bills by an average £200 a year.
I'm trying to piece together the maths to justify this but in the meantime there's a lot more at stake in this than the price of a frozen pizza. If the Doha round is not concluded at the ministerial meeting that begins in Geneva on 21 July the whole 20 year process of liberalising global trade will be stalled. And some say finished....

...The Doha trade round began in 2001. The essential deal being sought is that developing countries open up their non-agricultural markets to goods and services from richer countries, and rich countries dismantle the agri-protectionist regimes - in Europe the CAP - which keep our food prices high and third world farmers poor.
But there's devil in the detail. The deal on services also involves another set of negotiations called GATS. In return for access to global south services markets, eg the Indian insurance market - countries like India and China are pushing for progress on something called Mode 4 of GATS - the "free temporary movement of skilled workers".
Consider this from the Indian Asian News Service in April: "British Prime Minister Gordon Brown ... recently discussed with US President George W. Bush the need to move on Mode4 - a key Indian demand that calls for rich nations to allow the free temporary movement of skilled workers across countries and regions. Britain was also calling on its EU partners to "give ground" on Mode4."
I can see advantages to this , and I can see disadvantages: one disadvantage could be - and maybe Britain's trade negotiators can provide the stats - that skilled wages in this country would fall just as unskilled wages have been depressed by the arrival of legal economic migrants from the A8 countries of the EU.
WTO trade deals are unusual in this fragmented world because they become international law: if Bush signs up to a deal in Geneva, a future president Obama - who has said he will use trade protectionism to defend American jobs - can't change it. In fact the US could be prosecuted if he did and rival states could exact retribution in kind, legally.
The problem is the whole game has changed since Doha: in the first place we have a looming economic downturn, which may become recession; on top of that we have massive food inflation, food shortage and food insecurity - in part caused by economic growth in the third world, and in part by the policy of digging up agricultural land and planting biofuels on a massive scale.
Even the trade debate ran purely along the dimensions of trade economics it was controversial: NGOs have consistently said the rich world was imposing an unfair deal in the Doha round. But now there is massive political pressure in the home countries of the trade ministers involved over food security, jobs and inflation. That's why the politicians keep referring to Geneva 08 as "make or break"; if there is no deal this summer there may be a more protectionist policy in the White House by next year - and in Europe you are already seeing, as with the Mandelson versus Sarkozy spat we had on Newsnight - elected politicians putting pressure on the unelected trade negotiators. In turn, that is because the politicians are under pressure from voters.
So if we are putting price tags on various parts of the Doha deal, you would also want to ask what Britain is giving away. How much a year, for example, might we see the salaries of skilled British workers decline by if there is "free temporary movement" of computer programmers, TV cameracrews, architects, teachers etc? I have not so far met any politician prepared to stick a price tag on it.
Another legitimate question for the British/EU negotiators would be what the European alliance of manufacturing associations called a "continuous erosion of ambitions in the negotiations since the start of the Round in 2001" i.e. a deal that leaves European factories prey to competition from India, China and Brazil while these countries get 15 years to gradually reduce their own import controls.
These are big, epoch defining issues, yet they are not being discussed; politics and the media seem incapable of getting their heads around them.
Ultimately trade negotiations are, to borrow the Clausewitz dictum, a form of war conducted by other means: certainly a form of ruthless competition. However there is no guarantee that when the British government or the EU goes in to bat at Geneva that UK households come off a net £200 better or worse.
The developed world, in particular the EU service industry, wants to rip open the markets of the big developing countries: for example a foreigner can't own a newspaper in China, the Indian insurance sector, growing massively, sits invitingly behind protectionist barriers that may be pushed over at Geneva; the big developing countries, though they claim to speak for the classic third world, in fact pursue their own highly aggressive manufacturing strategies - strategies on which their governments, from Lula to Hu Jin Tao, live or die.
My concern with the Geneva meeting is not just that the haggling goes on behind closed doors, and if influenced at all then influenced by lobby groups - from NGOs to trade associations. It is that there is little public understanding of what might come out of Geneva.
Arguably the biggest salient economic change of the last five years in this country has been the arrival of migrant workers from A8 countries in the EU; they've brought new kinds of beer, fixed people's plumbing but - says the Bank of England - depressed the wage bargaining power of lower income workers to the extent that this was the first economic recovery cycle since 1945 where there was no wage push inflation.
But there was very little political debate in the UK prior to this, and I stress this is just one issue - there are many - where what's decided in Geneva could change our lives.
If Geneva fails of course the results could be equally stark: all proponents of economic trade liberalisation tell you that if it stops it goes backwards. If we hit recession before there is a comprehensive world trade deal then the next 10 or 20 years may be dominated by bilateral deals and protectionism - just as the 1930s were following the Wall Street Crash. During that decade global trade actually declined.
It goes without saying that a recurrence of such an event might move the spending power of British households by a sum greater than £200 a year.

Comments

  • Comment number 1.

    DOHA DOH!

    If, as I suspect, 'Judiciously Adjusted Democracy' on the British template, wherever it holds sway in the world, distils to the top of government a mix of wannabe Machiavellis and gottabe Homer Simpsons, then neither Doha nor any other exotic junket will fix the world. (As for Gordon's £200 pounds - is it chance that that is around the vehicle tax hike? Well - he said he was going to be transparent.) Just imagine all the knaves running rings round the fools, while their respective countries pray none of them ever return. Is that why it's a Doha 'round'? With Britain in its current chaotic state, Gordon should stay home and work his magic here. When we have demonstrated to the world how to save £200 per head, under Gordon's prudent leadership, they will all follow our lead. Won't they?

  • Comment number 2.

    HORATIO IS STILL ASLEEP

    From relative ignorance of world trade, I can see Paul has a point about the practicalities of closed door decisions that will affect us.

    However, underlying any agreements, there is the PSYCHOLOGY of the participants. It is chilling that such negotiations have been labelled 'war by other means'. It is my assertion that you will find, among the negotiators, some very strangely configured minds, to match the ones we all associate with war-proper. THAT is where the real danger lies. Just look at the characteristics that our 'leaders' (current and previous) display!
    Spare a moment to think about what is most important to this man when negotiating on the world stage. Is it us?
    THIS is what we should be addressing. At Westminster we find these strange individuals at the top of politics, aping 'leader-speak Blairstyle' and displaying a degree of mortgaged identity that is bizarre. From their strange ranks they choose the best performers, IN THEIR CRAZY TERMS, to go abroad and play World Monopoly with Britain as Hat or, more likely, Boot. We have already been incrementally (the accent on MENTALLY) sold down the EU river. If we don't expose the Westminster charade for what it is and stop elevating the deluded and deranged, 'DOH' will be all we AND THE WORLD have left. The lynch pin of our rotten politics is the party system. Yet again I say: SPOIL PARTY GAMES.

  • Comment number 3.

    Paul

    yes there are a lot more on the line than 200 british pounds at stake...

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