Global Policy Forum

By Larry Elliott

The cheque's in the post. It's the oldest lie in the book, and it was told with a straight face by the smooth talkers from Brussels and Washington when they cajoled the developing world into launching a new round of trade talks at the World Trade Organisation conference in Doha last November.

A year ago, the world's focus was not on Doha but on the fall of Kabul. But after the violent clashes surrounding the 1999 WTO meeting in Seattle and the September 11 attacks, a deal to begin enlarging the scope of global markets through the WTO was seen as a virility symbol of multilateralism. So, like an unfaithful millionaire caught cheating on his wife, the west laid it on with a trowel. It begged forgiveness for its past indiscretions, the way in which it had hoovered up all the goodies from bouts of market opening. Yes, the Americans and the Europeans said, we know that we've treated you shabbily. Yes, we know that you have every right to be mad. We couldn't really complain if you gave up on us altogether. But give us one more chance because this time - honest - it will all be different.

Poor countries were suspicious of this. Eventually, however, they were wooed by the peace offerings: the pledges to get rid of the handouts to farmers, to make it easier for goods from the developing world to penetrate rich country markets, and to ensure that public health in Africa, Latin America and Asia would take precedence over the claims of patent holders.

The message to countries such as Ethiopia, where 15 million people are now suffering from famine, was that free trade was the way to prosperity. But for the west, opening up markets is what chastity was to St Augustine, highly desirable but not yet. As such, Doha was the triumph of spin over substance, even down to the name given to the negotiations. In the past, most rounds had been named after the place where they were launched. There has been a Uruguay round, a Tokyo round, even in the very early days a Torquay round. This time, to show that they really meant what they said, the rich countries said that Doha would be the start of the "development round".

Well, that was a year ago. Predictably, the reality has failed to live up to the rhetoric. The west whispered sweet nothings in Doha, but its behaviour has changed not one jot. Actually, that's wrong. It has changed - for the worse. Barely was the ink dry on the Doha declaration than the backsliding began. George Bush's farm bill and the squalid deal cooked up to perpetuate the common agricultural policy have shown that pork barrel politics count for more than the development needs of poor countries. The US has beefed up the protection of its steel industry and the big guns of the pharmaceutical industry have been lobbying hard to defend the system for protecting western intellectual property rights established by the Uruguay round.

On agriculture, it has not just been a case of business as usual; more like the west opening up a few new branches of Subsidies R Us. Handouts to the US cotton industry, running at $4bn a year, have lowered the world price by 25%, causing damage to producers in West Africa. Burkina Faso and Mali are losing more from US trade policies than they receive in aid and debt relief combined.

The west's duplicity comes at a cost, however, and that is that the negotiations are now in trouble. The mood at the WTO's headquarters has been soured by the selfishness of the EU and the US; so much so that the negotiators from Brussels and Washington realise that their own goals - cracking open new markets for their multinationals - are at risk. An elite group of trade ministers has been meeting in Sydney this week to assess the progress made since Doha and to chart a course for a gather ing of all 145 WTO member states in Cancun next September, scheduled to be the halfway point in the talks. There was talk yesterday of ensuring that developing countries receive cheap drugs to tackle HIV/Aids, malaria and TB, but this was a blatant short-term fix to forestall an immediate crisis.

Most of the previous rounds have broken down at some point, and unless there is some meaningful progress in the areas affecting developing countries there is a strong possibility that the crisis for the Doha round could come within the next six months. Countries that specialise in exporting farm produce are especially miffed at the way the EU and the US are dumping their excess produce on world markets. As one trade observer put it, the ministerial meeting in Cancun could become the equivalent of a visit to Relate for 145 trade ministers.

What are the consequences of all this? First, if it is right that opening up markets is the key to faster development for the world's poorest countries, the west's behaviour is both damaging and nauseatingly hypocritical.

Second, it suggests that all the impassioned talk in Doha about the need for the WTO to send out a message to terrorists about the integrity of the multilateral system was pure baloney. Foreign policy is an arm of trade policy, as Iraq - with all its coveted oil - is about to find out. The rich countries are proving poor defenders of multilateralism, and if they continue to behave with such cynicism, the global trading system will disintegrate. For all its weaknesses, the WTO offers a better hope of a decent deal for the developing world than a system in which bilateral deals are struck between the strong and the weak.

Third, voters in the west need to be aware of the consequences of pandering to powerful interest groups. George Bush's farm bill is not about saving a new generation of Tom Joads from dustbowl economics. Jacques Chirac's defence of the CAP is not really about safeguarding the smallholder in Gascony. The bulk of these subsidies don't go to poor farmers, but to barley barons and giant agribusinesses in Europe and America.

In a funny way, however, the west's selfishness may turn out to be a positive development. Why? Because it is abundantly clear that the way international trade works has nothing to do with textbook economic theory. The west talks about free trade, but its approach can be summed up in four words: you liberalise, we subsidise. Developing countries should take note of this. History shows that the US did not industrialise rapidly in the second half of the 19th century by throwing open its markets to foreign competition. Far from it: there was a 40% tariff on imported manufactures. Germany, Japan, Taiwan and South Korea all adopted the same cautious approach to liberalisation, with strong government intervention to build up industrial strength in well-protected domestic markets.

At present, there seems not the slightest prospect of the west delivering on its Doha promises. It seems far keener on forcing poor countries to liberalise their fledgling service sectors than on doing anything about farm subsidies, about the high tariffs on labour-intensive manufactured goods and about the stranglehold of the big drugs companies on the availability of low-cost medicines. If this remains the case, poor countries should beware of being seduced once again by the west's pillow talk. Having fallen for "the cheque's in the post", the developing world should remember the second oldest lie in the book: "I'll still respect you in the morning."

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