A new world order

Translation from Norwegian

On Tuesday evening, a disappointed Jonas Gahr Støre took the plane to Oslo and jotted down his thoughts on the seven years world leaders have spent trying to reach agreement in the WTO.

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I look around the table where 35 ministers are sitting. It is now the evening of Tuesday 29 July 2008, the ninth day of talks in the final lap of seven years’ negotiations on a new global agreement on trade. Everyone is visibly exhausted. We know we have not succeeded. Together, we now have to put our failure into words.

I am reminded of Present at the Creation, the memoirs of Dean Acheson, who was US Secretary of State after the Second World War. He witnessed the establishment of a new world order that included the UN and other new international organisations. Now I ask myself whether I have been “present at the collapse” of that world order.

For seven years, the countries of the world have been negotiating an agreement intended to promote trade, cut tariffs and remove other barriers to trade, with a special emphasis on opportunities for developing countries. For the first time, these countries were to be the focus of a round of trade negotiations. The rich countries were to take on greater obligations, and the poorest countries were to be shielded. The developing countries were to be helped to build their own capacity for trade – Aid for Trade. Tariffs for fish and industrial products were to be cut.

And for the first time, agriculture was put firmly on the agenda: the rich countries were to cut domestic production subsidies, export subsidies and tariffs. Countries with rapidly growing economies were to be given better market access. And there were plans to resolve a long list of other outstanding trade issues.

The WTO was to find a package solution to all these issues. The WTO has 153 members, and makes decisions on the basis of consensus. This is a hugely complex process, in which all countries must make a contribution, and all of them must gain something. There have been ups and downs during the years. I took part in a week of negotiations in Hong Kong in December 2005. We made some progress there, but this was followed by setbacks in Geneva in the summer of 2006.

Now we have met for one last effort. WTO Director-General Pascal Lamy took a chance when he convened the meeting. There are still very divergent views in important areas. The US is embarking on an election campaign. The members of the European Commission, which negotiates on behalf of the 27 EU member states, will be replaced next summer. There is political unrest in India and Japan. But Mr Lamy chose to present the ministers with a challenge. For the past nine days we have been making good progress, clearing outstanding issues out of the way, and finding compromises. We began to believe that the negotiations would be successful – until now, when we have had to recognise that we have reached stalemate.

There were a number of outstanding issues to be resolved. Norway agreed to large cuts in agricultural tariffs in return for adequate protection of sensitive sectors. A good solution appeared to be within reach, which would have ensured that we could maintain a viable agricultural sector in all parts of the country and at the same time be part of the international trade regime. Thus, Norway was not the stumbling block for a new agreement.

The issue that stands as a symbol of our failure nevertheless shows that the world order is changing. India and China are demanding a safeguard mechanism that would be triggered by a surge in agricultural imports. The US considered that the proposed conditions that would trigger the mechanism were too lenient, so that it would limit trade. The US and other countries such as Australia, New Zealand and Brazil want increased market access for exports from their efficient agricultural sectors. Many developing countries are justifiably concerned about the consequences. We tried to find a compromise, but the US and India refused to give way. Mr Lamy had to recognise that we had come to a dead end. At least for now.

The world is witnessing a shift of power in the arena of the economy and world trade. New states with growing economies and political ambitions are asserting themselves. For the past nine days, around the clock, I have been part of a series of trials of strength in today’s world of power politics. But rather than on a battlefield, they are taking place round the negotiating table where rights and obligations in world trade are shared out.

This was where we were supposed to show that the countries of the world can shoulder responsibility. A world economy with major problems could have done with a positive signal.

And even more important – we could have paved the way for the next major round of negotiations, that on climate change in Copenhagen next year. In negotiations focusing on development and poverty, the rich countries must be prepared to shoulder greater burdens, while the developing countries accept their share of the responsibility.

Perhaps I was present at the collapse of a world order. But at the same time, I witnessed the birth of a new order – a world order where all countries are present and demand their rights, and that requires an almost unlimited willingness to negotiate, make compromises and find sustainable solutions.

Only a few years ago, it was the US and the EU that decided the outcome of such conflicts. If they agreed on a solution, it was generally accepted. Those days are over. Round this table, nobody can ignore countries such as India and Brazil. Together, they speak on behalf of about 100 developing countries. Colleagues from Kenya, Mauritius and Lesotho are sitting here with me. They have the power to influence events. They can say no – and one of them did just that on Tuesday evening.

And for the first time, there is a new country in the circle of major countries that call the shots – China. China speaks as a developing country, and together with India it has been demanding rights for the developing countries.

Even though the two countries have lifted millions of people out of poverty, there are, for example, many more people living in poverty in India than in the whole of Africa. But there is much more to China. In private talks with colleagues from Asia, I have heard that it is not exports from the US and the EU they fear most. It is the Chinese export juggernaut. And European car manufacturers that have built factories in India are warning that India should not reduce tariffs on industrial goods. They are afraid of being swept off the market by Chinese exports.

We recognise that the situation is serious, but responsible leaders must also look to the future. We must not lose everything we have achieved through negotiations over the last seven years. None of the solutions we have agreed on in this period will take effect until we reach agreement on the entire package.

So we must make every effort to resume the negotiations once the dust has settled after today’s collapse. We must retain the WTO as a key organisation in the world economy. Norway was able to put an end to the EU’s unjustified measures on Norwegian salmon exports through a decision in the WTO.

At the other end of the scale, countries in West Africa are counting on the WTO to pressure the US into reducing the high level of subsidies on exports of cotton, which are wiping out the cotton industry in poor African countries.

Thus, we must use our failure in Geneva as a spur for the development of a world order in keeping with a new age. One that involves more states, a shift in the power balance, and essential new tasks relating to climate change, the environment, labour rights and the fight against poverty. What happened in Geneva this week must not be the end of the matter. It must be a step on the road towards a solution that all countries can accept and take ownership of. Norway will take its share of responsibility.