FROM DOHA TO JOHANNESBURG: GLOBAL GOVERNANCE USURPED

The World Trade Organization's new mandate raises a key question for next year's UN World Summit on Sustainable Development: Who will decide our common future?

By Victor Menotti*

Exactly what was decided at the November 2001 WTO Ministerial in Doha is still unclear, even for the 144 governments who signed the final declaration. As of December, trade ministers continue arguing over whether or not the final declaration actually launches negotiations on the so-called Singapore issues (investment, competition, government procurement, and trade facilitation). If negotiation of these issues is recognized as officially launched, the WTO may soon be able to prevent citizens from using their governments to regulate foreign investment or to channel tax dollars toward poverty alleviation and conserving natural systems. Liberating global capital from serving the needs of people and nature would represent the ultimate triumph for the world trade body whose very mission is to exclude civil society from shaping economic systems. Launching negotiations on the Singapore issues would expand WTO's mandate to set global rules for both private investment and public spending, two key sources of financing development. If taken, these WTO decisions will have enormous influence over the outcomes of the 2002 United Nation's World Summit in Sustainable Development (WSSD, or Rio Plus Ten) in Johannesburg .

But even without the Singapore issues, what has become increasingly clear is the realization that governments gathered in Doha handed the WTO an historic new mandate that will expand its powers over fundamental questions whose answers will ultimately define our common future. Unless civil society fights back, Doha will have resolved the question of global governance, with WTO becoming the arbiter of all things.

At the very least, the Doha agenda has empowered WTO to:
1. eliminate more conservation and community development policies as unfair "barriers" to trade;
2. intensify destructive export activities in forestry, fisheries, mining, fossil fuels, and other natural resources.
3. determine who gets the remnants of collapsing natural resources, starting with the world's depleted fisheries;
4. define, apparently unilaterally, its relationship with multilateral environmental agreements;
Below is an overview of the implications of the Doha agenda for the following issues: energy, fisheries and forestry

While the oil and gas sector is largely exempt from current WTO rules, the broader energy sector could be penetrated by WTO's proposed expansion. To understand how WTO might cover the energy sector, it is useful to look at how other existing trade agreements have already handled the subject, as well as how proposed expansions of WTO powers could advance into energy.

ENERGY IN OTHER INTERNATIONAL TRADE AGREEMENTS

Most relevant are the rules established by the United States for Canada under the existing North American Free Trade Agreement. NAFTA is widely considered to be the "state of the art" in trade deals because it goes more deeply into restricting government powers than any other agreement to date. As Maude Barlow explains in the IFG Special Report "The Free Trade Area of the Americas," NAFTA removed Canada's control over its vast energy resources by:

o establishing rights for foreign companies to invest in the energy sector;
o stripping Canada's National Energy Board of its powers and dismantled the "vital-supply safeguard" that required Canada to maintain a twenty-five year surplus of natural gas (the US maintained its 25 year reserve for national security purposes);
o imposing a system of "proportional sharing" that guaranteed Canadian energy
supplies to the US, in perpetuity;
o lifting requirements for export applicants to file an impact assessment;
o banning export taxes (a major source of government revenue);
o banning preferential pricing for domestic customers.

As a result, Canada's exports to the US more than quadrupled in a decade while oil exports doubled. Now, President Bush is preparing to deepen access to Mexico's energy resources via expanded NAFTA talks. The US has also introduced this energy policy framework throughout the hemisphere, covering Venezuela, Colombia, Ecuador, via the so-called Free Trade Area of the Americas (FTAA). Building acceptance of this agenda in regional trade fora is important for introducing the topic, and similar agenda, at the global level in the WTO.

INCREASING FOSSIL FUEL USE BY EXPANDING WTO

WTO's could penetrate the energy sector by either creatively expanding existing agreements, or by introducing new subject areas for negotiation. Below are three negotiating themes (Services, Investment, and Competition) currently in the WTO, in which new rules over energy and oil could expand to remove the ability of citizen's to use their governments to control the oil and gas industry.

ENERGY AND GATS

The General Agreement on Trade in Services, or GATS, is an existing accord in the WTO which is mandated to restrict government actions in a broad range of "services" via WTO-enforced trade sanctions. The WTO's current work plan calls for an expansion of GATS, and negotiators in Geneva have been proposing which sectors might be covered in an expanded set of rules.

Even before September 11, US President George W. Bush had made accessing new energy resources a top priority in his administration's new energy plan. The Bush White House has explicit plans to use GATS negotiations to widen access to gas and oil reserves. The key policy document (see www.bushenergy.com) laying out the policy goals and strategies reads, "The US has called upon WTO members to open markets eligible for private participation in the entire range of energy services, from exploration tot he final customer. The energy service proposal would ensure non-discriminatory access to foreign provider energy services. Equally important, the US proposal suggests that WTO members consider how to create a pro-competitive regulatory environment for energy services, so that opaque or discriminatory regulatory practices do not undermine their commitments to open their domestic markets to foreign service providers…The National Energy Policy Document (NEPD) group recommends that the President direct the Secretaries of Commerce, Energy, and the US Trade Representative, to support a sectoral initiative to expand investment and trade in energy-related goods and services that will enhance exploration, production, and refining, as well as the development of new technologies."

Canada has already submitted the following proposal to WTO Energy Services negotiations:

"oil and gas services include a wide range of services, such as: drilling services; derrick erection; repair and dismantling services; services necessary for oil or gas extraction such as well casing; cementing, pumping and plugging wells; as well as specialized fire extinguishing services…In addition to services incidental to mining, different related oil and gas services may be included in real estate services, rental/leasing services, technical testing and analysis services, services incidental to energy distribution, related scientific and technical consulting services, and construction and related engineering services...

"Typical obstacles to trade in energy services include:
-restrictions for the entry and stay of energy services managers, professionals and experts;
-restrictions for the entry of the equipment and tools needed to provide the service;
-arbitrary business and licensing requirements; and
-absence of transparence of regulatory framework."

It is clear from GATS energy proposals such as the one above that nearly everything related to oil and gas is on the negotiating table in Geneva. One only needs to compare how these "services" compare with those of the world's largest players in the industry, such as Halliburton Energy Services, formerly overseen by Dick Cheney until he became Vice President in the Bush White House. Halliburton describes itself as a company whose "capabilities range from initial evaluation of producing formations to drilling, completion, production enhancement and well maintenance." Enron Corporation, another leading energy services giant, until its spectacular collapse in November 2001, also played a leading role in advising the Bush negotiators on how to advance the fossil fuels agenda via the WTO.

ENERGY AND INVESTMENT

The Bush energy plan goes on to say that, "The NEPD group recommends that the President direct the Secretaries of State, Commerce, and Energy to use our membership in WTO to implement a system of clear, open, and transparent rules and procedures governing foreign investment, to level the playing field for US companies overseas and to reduce barriers to trade and investment."

A proposed expansion of WTO investment rules is an important, yet still disputed, part of the WTO's new Work Programme. Among other things, the new WTO investment agenda aims to:

- establish the right of foreigners to invest in any sector, including energy;
- establish the right of foreign investors to receive the same treatment as domestic companies, so-called National Treatment (which WTO currently applies only to goods an services, not investments) Any benefit offered to domestic companies, i.e., preferential tax breaks or interest free loans, would also have to be made available to foreign investors. Other restrictions, such as Venezuela's recent limits on joint ventures and foreign ownership would likely be banned;
- establish rights for foreign investors in the event of privatizing state-owned assets, whereby they would be offered terms no less preferable than those offered to domestic investors;
- ban performance requirements, which are measures that make foreign investors leave on certain outcomes, such as retaining a portion of profits to be reinvested domestically, or operating for a minimum period of time.

An important question to ask in considering these issues is, for instance, how might major foreign investors gain new leverage over the country's control of its own energy supplies when new WTO investment rules are applied? Under the new WTO investment rules, authorities charged with regulating foreign investment, such as the Supreme Council on Investment in Saudi Arabia (who is currently bidding for WTO entry) or Venezuela's foreign investment review board, could become politically irrelevant.

ENERGY AND COMPETITION

WTO's competition agenda could eliminate government practices that protect national monopolies, both state owned and private, for example Petroleros de Venezuela, Mexico's PEMEX, or Aramco of Saudi Arabia. To promote competition, WTO would impose disciplines on what governments can and can not do, including activities of state-owned businesses, resulting in the break up. The benefits of exploiting those energy resources would be transferred from nations like Mexico and Venezuela to global energy corporations. American and European energy companies would surely consolidate their power over these resources, making harder to challenge their manipulating the debates over global climate change.

FISHERIES

The world's fisheries are spiraling into total collapse due to overexploitation by industrial trawlers that literally mine the oceans. The European Commission says that at least 12 different fish stocks were now close to collapse and that dramatic cuts in quotas are imminent. Governments have finally acknowledged that their subsidies have played a central role in financing the enormous over-capacity in the industry. However, their plan to address what is arguably the planet's most advanced natural resource collapse is to extend WTO disciplines over the industry, incorporating various elements of the Doha agenda: expanding exports (tariff elimination), de-regulation (non-tariff measures) wider access to fisheries resources (competition), privatization of fishing quotas (investment), and scaling back government financing (Subsidies and Anti-Dumping).

The last item is of particular concern because it establishes a dangerous precedent for the WTO to become the arbiter of natural resource collapses and determine who will benefit from the remnants (See "Subsidies" below).

FISHERIES AND MARKET ACCESS

WTO's market access agenda combines two dangerous impacts that undermine sustainable fisheries: 1) the expansion of exports and consumption of fish whose stocks are possibly being depleted, and 2) the deregulation of legal protections that ensure the sustainability of fisheries and the local communities who survive off them.

1. Tariff Elimination: Lowering tariffs in the absence of adequate safeguards for marine ecosystems and fisher peoples will only accelerate the death spiral of the world's fisheries. No one has yet assessed the health impacts on species that are being prioritized for tariff elimination, yet day after day the UN Food and Agriculture Organization finds more bad news about dwindling stocks. Nor has anyone even consulted the fishing communities themselves, such as the Pacific Coast Federation of Fishermen's Associations in the US or the National Forum of Fishers in India, about what issues they want addressed in trade policy. It seems the only ones who are aware of the WTO fisheries agenda are the very importers, processors, and distributors who are driving the agenda for market access via the WTO. For them, eliminating tariffs would be tantamount to a tax cut on the goods they trade, with no guarantees that the savings get passed to consumers.

2. Non Tariff Measures: NTMs can be any government measure, policy, or practice that has the effect of "distorting" trade, such as harvesting restrictions, bans on destructive gear, embargoes on species suspected of disease, residency requirements (fish here, live here), or even ecolabels. APEC has already surveyed the various NTMs in Pacific Rim markets, with a view to taking it to WTO as a framework for negotiations on market access. Governments have yet to make this report public, as it could reveal a laundry list of regulatory measures being targeted for elimination via WTO negotiations. The NTM agenda is the final push to remove all government control from regulating fisheries, where any policy objective, such as resource conservation or community development, becomes subservient to expanding trade.

FISHERIES SUBSIDIES

This item on the Doha agenda, which at first glance may appear innocuous if not helpful, could turn out to be the tip of a corporate iceberg bound for capturing the remnants of the planet's collapsing resources. While governments absolutely need to cut subsidies and reduce overcapacity in the fishing industry (too many boats chasing too few fish), the WTO is not the appropriate venue to handle this subject. Letting a trade body, whose main constituents are global trading firms and not people tied to the land and sea, decide which subsidies are allowable almost ensures that what happened with small farmers under WTO's last round will now be repeated with the world's small fishers.

Beyond WTO's well-documented history of cutting subsidies for the poor while further enriching the rich, the true WTO agenda for fisheries subsidies is revealed by who has been at the table in the discussion to date. Attempts by national networks of fisher peoples organizations to get to the table have been ignored, while the US trade association of importers, processors, and distributors (the National Fisheries Institute) has long been an official advisor to US trade negotiators. Few NGOs wanted to give the WTO anything that would expand its powers over new areas of policymaking, let alone allow WTO to greenwash its image. Yet that is exactly the spin out of Doha, as WTO claims a "win-win" for trade and environment.

The World Wildlife Fund seemed to play the leading role in putting fisheries subsidies on the WTO agenda, despite being informed repeatedly of the concerns of small fishermen's organizations.

The Doha text inserts the subject of fisheries subsidies under the section calling for the strengthening of the Agreements on Subsidies and Countervailing Measures (Anti-Dumping). But it has no explicit conservation mandate, nor even an implied one. Indeed, its only specific directive is the "taking into account the importance of this sector to developing countries," which likely signals an orientation toward maximizing exports of fish products from poor countries, where, not coincidentally, rich countries are increasingly investing in fisheries because they have over-fished their own territories.

Subsides disciplines via WTO is a subject also being considered by other natural resource industries, including forestry. The US forest industry has already asked the American government to document the role of subsidies in the global industry, building the case that other nations enjoy an unfair advantage. Depending on how the fisheries subject develops, other industries may be encouraged or discouraged from introducing their agenda into WTO. One can compare it to asking hedge fund managers to design a new architecture for global finance. This prospect is precisely the danger of giving the WTO new mandates to sort out ecological crises that have been the direct results of export-oriented development policies.

FISHERIES AND INVESTMENT

One of the most rapidly advancing domestic policies for dealing with depleting fisheries is the creation of so-called Individual Transfer Quotas. ITQs' effectively privatize fisheries, making possible an enormous concentration of resources if combined with the WTO's investment agenda. By dividing up the allowable catch of a fishery into quotas, and giving individuals the right to either catch those fish or sell the rights to someone else who will. Many fishing communities, especially small fisher people, criticize ITQs because they privatize the catch and concentrate resources in the hands of the one with the most purchasing power, which can often be a multinational enterprise. In some places where ITQs are being implemented at the nation level, parliaments are attaching conditionalities to ensure large players do not swallow up everyone's quota. But when WTO's investment agenda is applied, many of these conditionalities will become viewed as barriers to free investment that need to eliminated. The safeguards that made fisheries privatization palatable at the national level could be made illegal in the global policy arena of WTO.

FISHERIES AND COMPETITION

Many nations still prevent foreign entities from fishing in domestic waters, either protecting them for local fisherpeople, or, more likely, for domestic industrial fishing operators who export, such as in South Africa. WTO's competition agenda could break-up these domestic monopolies, removing local control to allow the entry of foreign fishing ships.

FORESTS

FORESTS AND MARKET ACCESS

Tariffs: One of the issues of great concern to protesters in Seattle was the Global Free Logging Agreement. Forest and trade campaigners succeeded in getting the USTR to publish its first ever environmental assessment of trade liberalization before 1999 Ministerial.

Non-Tariff Measures: NTMs are broadly defined as any measure that "distorts" trade. Even potentially distorting measures, such as eco-labels, are under the microscope for the impacts on trade. APEC has inventoried so-called NTMs in the forestry, fishery, and other sectors throughout the 34 nations of the Pacific Rim. The USTR plans to use this laundry list as a "negotiating framework" for market access talks in Geneva.

In the midst of Seattle's teargas and police riots, forest activists managed to extract a written commitment from the White House that forest conservation measures would be defended in trade negotiations. Not only does the Bush White House need to follow through with that promise but other governments need to take up similar positions, less of cross-deregulation that will "discipline" everything from harvesting restrictions to residency requirements to endangered species protections.

Another fundamental question for all natural resource management is how to conserve ecosystems and livelihoods when one can not control what is entering and exiting the country? WTO's Article XI (Elimination of Quantitative Restrictions, or QRs) prevents nations from limiting both the export and import of natural resources (either raw or processed). North America's forests and forest workers are feeling the impacts of the QR ban. Canada's rampant clearcutting, failure to enforce protections for fish habitat, absence of protections for endangered species, and subsidized timber from public lands make it nearly impossible for US producers to compete. As Canadian softwood exports flood the US (making up one-third of the US market), small US mills are being driven out of business while forcing the survivors to log even more recklessly. US measures to impose countervailing tariffs and quotas are being challenged by Canada in the WTO. If producers from a nation as rich and powerful as the US can not survive, how then are smaller (and often more responsible) producers in less powerful nations expected to survive. WTO's ban on QRs punishes responsible producers while rewarding the most destructive.

* Victor Menotti is with the International Forum on Globalisation.