WTO – a Paper Tiger? Part II


3: Agriculture: wolf or tiger?

Also in the area of ​​agriculture, there is a corresponding gap between the legal obligations the countries negotiate and what is practiced – between bound and actual customs. While developing countries are most “inflated” in the industrial area, the air is more evenly distributed in the agricultural area.

For agriculture, we can use Norway as an example. The level of customs duties for agriculture is confusing because volume tariff quotas are often used: a country only allows for the import of a certain annual quantity of a good from a specific country. Although Norway has zero applied customs duties on just over 1/3 of agricultural goods, customs duties on other goods are high. On average, customs duties applied to agricultural goods imported into Norway are 83%. Bound customs duties average 149% – almost twice as high. The results depend on the calculation method, and we have used an average of different calculations. In other words, there is also significant “air in the tariffs” for agricultural products. While many shout wolves, there may be talk of paper tigers.

The gap between formalities and reality may also apply to subsidies . According to some calculations, cuts in subsidies of 75% could in practice mean reductions of less than 20%. Norway also has a lot to do here. We do not downplay the possible effects of the WTO negotiations on Norwegian agriculture, but it is also important here to be aware of the difference between practice and the legal ties that are being negotiated.

The difference between agreement (law) and reality is partly a price the WTO countries had to pay to reach an agreement in the Uruguay Round. The countries agreed a lot for all member states to sign the results of the negotiations.

  • In order to get the developing countries to bind the tariffs for industry, everyone had to accept that the binding took place at partly high levels.
  • In order to reach an agreement that quotas for agriculture should be replaced by tariffs, everyone here also agreed that the countries introduced high tariffs.
  • In order to reach agreement in the agricultural area, it was also necessary to accept a number of “footnotes” – exception rules – which undermined the effect of the agreement.

The problems of reaching an agreement in the WTO negotiations are thus also one of the reasons why the organization has to a greater extent become a “paper tiger”. It remains to be seen whether this will also be the result of the Doha Round. This time too, there are plenty of proposals for exceptions and special rules that may mean that the agreement has less to say in practice.

4: Services

Some WTO critics have painted the devil on the wall when it comes to GATS, among other things for fear that the WTO / GATS will affect public services and make them worse. The most characteristic feature of GATS is hardly how strong interventions GATS means, but rather how small changes the agreement has led to in practice.

Most analyzes point in the direction that previously assumed GATS obligations are by and large only a “binding of the status quo” – the current state is “locked in”. The most important service liberalization has probably taken place in other contexts – within the OECD and the EEA (see margin). The ongoing negotiations in the Doha Round have been slow in the area of ​​services. While possible gains from service liberalization were previously highlighted as a possible consequence of the Doha Round, such gains are simply omitted in the World Bank’s latest calculations. According to Aviationopedia, GATS stands for General Agreement on Trade in Services.

During the meeting in Hong Kong – to the protests of WTO critics – it was agreed that the negotiations should be organized in a way that can provide greater chances for more liberalization. However, it is highly uncertain whether this is enough. As a result of low wages and abundant access to cheap labor, developing countries have a great interest in increased access to provide services by giving people from developing countries temporary residence in other WTO countries. However, this interest conflicts with fears from the western trade union movement to lose jobs to cheaper labor imported from developing countries. This is the form of service liberalization that has come shortest. It is politically controversial to carry out such liberalization in rich countries, and this could limit the extent of service liberalization.