Tracing the Repeated Failure of Doha Development Trade Round from a Neo- Gramscian Perspective

Transcription

1 Tracing the Repeated Failure of Doha Development Trade Round from a Neo- Gramscian Perspective This paper analyzes the repeated failure of the Doha Round talks in world trade since 2001 from a neo-gramscian perspective. The lack of progress and breakdown of multilateral trade negotiations reflect an emerging new architecture of power politics in the international economy. Four major players in world trade, the US, the EU, Japan and Canada, used to have a significant impact in terms of shaping the agenda of the multilateral trade negotiations as well as defining the outcomes. However, in the context of the WTO, emerging powers such as India, Brazil, and China began to confront the dominance of these countries. Developing and developed countries have contending views on the agenda issues, marked by confrontation on the former s refusal to open non-agricultural markets and industrialized states refusal to open their agricultural markets. By undertaking a discourse analysis of statements of major social forces such as market-oriented capital groups, bureaucrats, and political leaders, the paper argues that both sides employ certain strategies and discourses to coerce or to persuade the opposing parties. Hence, the multilateral trade negotiations emerge as zones of exercising hegemony through discursive and strategic measures rather than being an area to produce common norms, values and policies for the well being of all members in the world trade regime. Keywords: hegemony, international trade, social forces, emerging powers, NGOs Introduction With the establishment of the World Trade Organization (WTO) as the successor of the General Agreement on Tariffs and Trade (GATT) in 1994, the multilateral trade regime has been drastically restructured and expanded. The new legal structure extended the mandate of the GATT to new areas such as services, intellectual property rights, and investment measures. To ensure the compliance of the member states with these new legal disciplines, the WTO was endowed with a strengthened dispute settlement body whose juridical decisions are binding on member states. The inception of the WTO with such a broader mandate and a much stronger enforcement mechanism signifies the radical evolution in the governance of world trade. The new structure of the WTO reflects the shift in the global historical structure from post-war pax Americana to the neoliberal order that imposes market disciplines on states by locking in new institutional measures (Altay, 2011). Endeavors to further expand the normative and legal scope of the trade regime continued after the establishment of the WTO. Developed countries led by the European Union (EU) proposed to launch a Millennium Round that would result in deeper market integration through the inclusion of new issues such as investment, competition, trade facilitation, and government procurement, the so-called Singapore issues. In order to lock-in liberalization commitments in such areas, the Doha Development Round was launched in November However, this further attempt of broadening the scope of the world trade governance has been increasingly challenged by a large set of actors that created a new context for trade agendas. Particularly the clash of ideas between developing and developed countries over the future agenda of the WTO drove various social forces into a continuous struggle of ideas, discourses and power relations. 1

2 The most significant struggles have been experienced between developed nations led by the EU, the United States and the major developing countries represented mainly by India, Brazil, and China. Developed countries that significantly benefitted from the new structure of the world trade called for further deepening and widening of world trade governance (Cohn, 2002: ). However, due to the dissatisfaction from the Uruguay Round agreements, developing countries started to voice their concerns on the future of world trade and called for a balanced restructuring of the system. The attempt of furthering the neoliberal transformation of the trade regime was also encountered by non-governmental organizations (NGOS) that successfully leveraged the mounting discontent among developing countries. NGOs have been able to act as moral agents capable of setting the trade agenda and restricting the room for maneuver for the transnational corporations (TNCs) in pursuing corporate interests through trade policies. The resistance of NGOs restricted the ability of TNCs to build a strong transnational coalition to expand the neoliberal agenda. Because of the contradictions that emerged within the realm of civil society in the form of a backlash against globalization and challenges against neoliberal hegemony, the further transformation of the trade regime stalled. Since the Doha Round negotiations started in 2001, talks have failed over a divide on major issues, such as agriculture, industrial tariffs, non-tariff barriers, and Singapore issues. The negotiations collapsed in 2003 in Cancun, Mexico, when a bloc of developing countries and several NGOs expressed their displeasure over the inclusion of new issues to the multilateral trade regime. After the failure of the Cancun Ministerial conference, negotiations were revived with the 2004 Framework Agreement. However, the talks stumbled in the December 2005 ministerial meeting in Hong Kong and the negotiations again reached a standstill at the General Council Meeting in Geneva in July 2006 when Pascal Lamy, the WTO General Director, suspended the negotiations. The attempt to revive the Doha Round in July 2008 ended equally in failure and little substantive progress has been made since then. This paper applies a neo-gramscian theoretical framework to understand the dynamics of the failure of the further transformation of the multilateral trade regime. It analyzes the failure of regime transformation by looking at the changes that take place in broader historical structures. As will be elaborated in more detail in the following section, from a neo-gramscian perspective, the emergence and changes of international regimes primarily depend on the shifts in the material basis and ideational framework of historical structures and world orders. The world orders are argued to be created by social forces that are also seen as the driving force of the changes in international regimes (Altay, 2011). Accordingly, this paper considers WTO multilateral negotiations not only as an instrument of international law making but as an ongoing hegemonic struggle of social forces, their material interests and ideas in a changing world economy and global order. Unlike the existing literature on international regimes that generally focuses on the analysis of the materialistic interests of rational actors with no reference to the discursive engagement between the actors during the negotiations, the paper uses the qualitative instruments of discourse analysis and looks into the intersubjective social context of Doha negotiations and the participation of social forces to the process through their agenda-setting activities. The analysis of the role of social forces in the transformation of the trade regime is conducted through tracking the processes of dissemination of ideas that penetrated into negotiations. The analysis of these ideational inputs were carried out through an examination of how certain 2

3 problems were defined and solutions were framed and by interpreting which sets of ideas were dominant in a specific time. The following part provides an account of existing approaches to analyze international regimes and outlines the theoretical approach adopted throughout this work. Going Beyond Power and Interest-based Explanations: Understanding the Dynamics of the Regime Transformation from a neo-gramscian Framework The concept of international regimes can be defined as sets of implicit or explicit principles, norms, rules, and decision-making procedures around which actors expectations converge in a given area of international relations (Krasner, 1983:2). In the IR/IPE literature, neo-realists, neo-liberal institutionalists, and constructivists study international regimes through power-based interest-based and knowledge-based perspectives, respectively. According to the power-based theories developed by neo-realist scholars, the rise or decline of hegemonic powers causes the strengthening or weakening of the regimes and shapes the liberal nature of the economic order. Regimes and international order are understood as international public goods provided by a hegemonic state (Stein, 1993). It is why neo-realist scholars attribute the creation of the post-war international order to the US leadership and the economic disorder in the 1970s to the decline of U.S. hegemony (Krasner, 1983; Gilpin, 1981). Under the hegemonic stability theory, neorealist scholars attribute the rise of new protectionism in trade in the 1970s and the collapse of the Bretton Woods monetary system to the decline of the US hegemony. The concept of hegemony in neorealist application implies leadership, predominance, or domination of a particular state. It is the dissemination of power which determines the outcomes and changes within regimes. Such power-based regime theories discounted the political power of non-state actors or they viewed it as a constituent of state power. This is primarily because of the ontological perspective regarding the states as unitary agents of power in the pursuit of the maximization of national interest in the anarchical international system (Haggard and Simons, 1987: 499). With the rise of the interest-based theories, the focus of analysis shifted from power to interests (Keohane, 1984; Snidal, 1985). Keohane (1984) highlighted the possibility, importance and necessity of cooperation among states despite the decline of US hegemony. Neo-liberals proposed that regimes could be created and survive even in the absence of a single hegemonic power because of the preference of constituting states to produce public goods (Snidal, 1985). They also contend that states presumably obey norms, rules and procedures of the regimes because doing so is to their benefit (Keohane, 1984). In both neorealism and neoliberalism, interests and identities of the states are considered to be determined a priori and considered exogenous to the analysis (Ruggie, 2002:13). These material-based studies that concentrate on power and interests of states have also discounted the role of ideational factors in shaping the preferences of actors as well as the normative content of the regimes. This crucial gap in regime studies was filled by the knowledge-based theorists (Hasenclever et al. 1997). Constructivist scholars intended to bring in knowledge and ideas as another explanatory variable in understanding interstate cooperation. They challenged positivist epistemology and structural ontologies by proposing ideas as an 3

4 autonomous structural environment within which actors interests, identities and interaction are formed (Neufeld 1995). However, as Bieler (2001:94) argues, constructivist approaches underconceptualize the association between ideas and material structure which is crucial to comprehend the transformation of the trade regime. Although constructivists (Wendt, 1992) emphasize how a particular idea can gain dominance, they fail to explain why certain ideas dominate over others at a particular moment in time (Bieler, 2006:124; Bieler and Morton, 2008:103). To overcome the constructivist s inability to bound material and normative aspects of reality, neo-gramscian perspective conceives ideas as material social processes, which serve particular interests within a specific hegemonic discourse (Bieler and Morton, 2008:103; Cox, 1996a:132). What is emphasized, therefore, is how liberal economic ideas serve to legitimize certain interests. Similar to constructivist perspective, Neo-Gramscian approaches consider international regimes or institutions as intersubjective entities but they emphasize their embeddedness in the material and ideational world. Based upon an intersubjective ontology and historicist epistemology, Neo-Gramscian scholars do not take institutions and social power-relations for granted, but puts them into question by dealing with their origins and how and whether they might be changing (Cox, 1981: 89). Historical change is understood as a reciprocal relationship between social forces and historical structures. Historical structures are socially constructed inter-subjective frameworks for action that involve the interaction among ideas, material capabilities, and institutions (Cox, 1996b:149). Based on this interaction, structures that are formed by collective human activity over time, in turn shape the thoughts and actions of agents by imposing pressures and constraints (Cox, 1995:33). These pressures do not, however, determine actions in any direct or mechanical way since it is agents that intersubjectively decide whether to adjust or resist structural constraints. Thus, structure can be thought as both determined by and determining the agency (Bieler, 2006:123). Such dialectical or reciprocal relations between structure and agents overcome the understanding of structural change resulting solely from external pressure. Instead of attributing a causal role to external factors, the method of historical structures help to identify which social forces and what particular objectives lie behind change (Bieler, 2006:123; van Apeldoorn, 2002:2). It particularly avoids reductionism by putting emphasis on the open-ended struggle among various social forces over the realization of change (Gill and Law, 1989:475; Gill, 1993). In line with an emphasis on the interaction between structure and agency, neo-gramscian approaches focus on social forces as the most important collective actors. These social forces include those that identify their interests with the globalization of production and capital such as the top owners and key executives of transnational corporations (TNCs) and private financial institutions who manage transnational capital; bureaucratic managers and technicians who administer the international financial institutions (IFIs) such as the IMF and the World Bank; leading politicians and globalizing bureaucrats inside the state structure, particularly those who work for state agencies that are in close contact with the global economy; media corporations, and organic intellectuals (Cox, 1987; Gill and Law, 1988; Sklair, 2001; Robinson, 2004; 2001; Gill, 2003). These transnational social forces that became the bases of power within and across states (Cox,1987:4) favor the logic of market supremacy and act as key actors of shaping the ideological framework of the world 4

5 order and associated international regimes (Overbeek, 2004: 118; Bieler and Morton, 2001:212). The social forces take part in the regime change not only through a direct internal exercise of power over the states and promoting their interests upward, but also through shaping the very ideational context within which the states build up their identities, interests, rights and obligations. Particularly, TNCs are regarded as forces that produce policy formulas and promote them to the states through building coalitions within and across borders with business, government and civil society actors. They contribute to the formation of transnational compromises regarding the requirements of global economy and ultimately generate a dominant global discourse, designed to inform public policy-making throughout the world (Baker, 1999:81; Carroll and Carson, 2006:53-58; Cox, 2006:41). To gain the consent of subordinate actors, their strategies include alliance building through production and dissemination of certain ideas that are presented as serving the needs and interests of societal actors (Deckwirth, 2007). The neo-gramscian perspective analyzes the consensus formation process of social forces through the concept of hegemony. Based on Gramsci s work (1971), it can be understood as the dominance of a certain way of life and thought that is diffused throughout society by the ruling groups and classes to pursue their interests in such a way that they are seen by ruled groups and classes as common or general interests (Gramsci, 1971: , 182; Cox, 1996a:133; Morton, 2007:113). It thus refers to a relation between social forces, in which one group takes a leading role in gaining the active consent of other classes and groups through moral and intellectual leadership (Gramsci, 1971). This process also requires inevitable sacrifices from immediate interests, and engagement with other groups in the form of alliances (Gramsci 1971: ; 238-9). Gramsci introduced the concept of historic bloc to define the organic and ethical alliance that is required for building hegemony. The historic bloc reflects an alliance in which different class interests are incorporated into an active and largely legitimate system of rule (Gramsci, 1971:366). It is organized around a set of hegemonic ideas that forms the basis for an alliance between various social groups (Gramsci 1971:366). To construct hegemony and historic blocs, hegemonic classes need organic intellectuals who can develop overwhelming political formulas consolidated with sophisticated theories that support a coherent world view (Gramsci 1971:330). Using all available channels in civil society, such as media, publishing houses, and education, organic intellectuals work to disseminate their formulas throughout society. Building hegemony is thus a long-run process that entails strategic planning, engagement in sound alliances, and intellectual efforts to create consensus among wider society. The power and interest-based perspectives fail to consider this consensus formation process of social forces. Thus, in their analysis, the process by which certain ideas were diffused, accepted, and adopted by policymakers and various social groups remains largely unexplored. The role of ideas is crucial in the organization of hegemony since they play an important role in shaping political struggles and outcomes. In a hegemonic struggle, several ideas confront each other until one of them tends to prevail; and the prevailing ideas contribute to the establishment of intellectual and moral unity and thus facilitate the dominant group s enforcing hegemony over subordinate ones (Gramsci, 1971: ). For Cox (1981: ) ideas refer to both historically conditioned intersubjective meanings that play a significant role in the consolidation of hegemony and 5

6 agent-specific collective ideas that contain particular views of what is good, just, and legitimate in a society. Ideas in the form of inter-subjective meanings are accepted as part of the global political economy itself (Bieler and Morton, 2003:479; Bieler, 2006:123). This is significant because ideas, developed for example by organic intellectuals, can play a crucial role in forging hegemony by legitimizing particular policies (Bieler and Morton, 2003:479; Bieler, 2006:123). From a neo-gramscian perspective, the power of ideas and discourse is not enough to ensure compliance with liberal economic policies; legal or administrative enforcement is required (Gill, 1996:216). Ideational and material shifts in the global economy have thus been complemented with the creation or empowerment of institutions, which are particular amalgams of certain ideas and material power (Cox, 1993). International institutions are vital for the operation of hegemony because they embody the rules which facilitate the expansion of hegemonic world orders; they are themselves the product of the hegemonic world order; they ideologically legitimate the norms of the world order; they co-opt elites from peripheral states; and, they absorb counter-hegemonic ideas (Cox, 1983:172). Institutions also complement market discipline with binding constraints or rules which are crucial for sustaining neo-liberal arrangements by ensuring that certain kinds of political change in the future become more difficult (Gill, 1992:165; 1998). Such a conceptualization of institutions is called new constitutionalism, which refers to the construction of legal or constitutional devices to remove or insulate substantially the new economic institutions from popular scrutiny or democratic accountability (Gill, 1992:165). Based upon these insights, it can be argued that the attempt of further deepening the WTO with new rules through the Doha Round reflects an attempt of transnational social forces to lock in new market disciplines on states. Nevertheless, the failure of the Doha negotiations illustrates the limits to their power of further transforming the trade regime as the emergence of new economic powers such as India, China, and Brazil together with the contestation of neoliberal hegemony, institutions and policies by a large set of civil society actors created a new context for trade agendas. Changing Historical Structure, Social Forces, and the WTO after the Uruguay Round The demise of the Bretton Woods system of fixed exchange rates together with the oil shocks that quickly followed contributed to the deregulation of financial markets with the lifting of restrictions on cross-border capital flows (Helleiner, 1994; Kirshner, 2003:651). This material shift resulted in an intensified transnationalization of production via foreign direct investment, subcontracting, global commodity chains and transnationalization of finance expressed in the establishment of a globally integrated financial market (Bieler, 2008: 86). These developments were coupled with the revival of liberal economic ideas that imposed market norms and disciplines over the states (Baker, 1999). This ideological shift was reflected not only in the policies of states, but also in the intersubjective frameworks of international regimes. In parallel with this transformation in the world order such as the changes in the production sphere, in political power configurations, and the ideological framework, the institutional structure of the GATT, the social purpose of the regime and its fundamental norms and principles changed (Altay, 2011). The WTO created a new comprehensive legal and institutional structure through which the principle of embedded liberalism was replaced with a neoliberal social purpose. With the 6

7 Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs), the General Agreement on Trade in Services (GATS) as well as the Agreement on Trade-Related Investment Measures (TRIMs), the WTO created strict disciplines for protectionist measures and prioritized global market integration to further open up new market opportunities in formerly protected areas. Thus, the WTO can be seen as characterizing the institutionalization of new constitutional measures codifying the reconfiguration of the world order (Altay, 2011:334). It can also be argued that the WTO reflected the institutionalization of the neo-liberal hegemony that recognizes the priority of markets in generating economic welfare while restricting or redefining the roles of the states to regulate economy. The major social forces that played an active role in the establishment of the WTO regime were a number of US based TNCs which mobilized in the mid-1970s and engaged in an encompassing agenda-setting initiative. For instance, to handle services regulations as barriers to trade, a small coalition of TNCs arose in the period between 1973 and 1979 to ensure the legal recognition of services as a trade issue (Altay, 2011:117). The business coalition was built up under the leadership of US finance giants such as AIG, American Express, and Citicorp, and included other companies operating in telecommunications, construction, tourism, professional services, and film industry (Kelsey, 2008:78). The TNC coalition s case for services was disseminated across Europe and other countries. In Europe, the European Roundtable of Industrialists (ERT) and the Union of Industrial and Employers' Confederations of Europe (UNICE) emerged as active players in converging national business interests into a collective European corporate vision and supported the services case before and during the Uruguay Round (Altay, 2011: ). Similar coalitions also proliferated in different locations such as in Australia, Hong Kong, New Zealand and Argentina in a time span of less than a decade (El-Etreby, 2008). Building a policy network, supporting new academic research, and utilizing the media, particularly American capital groups aimed to change the established mindset of trade in goods with a new framework of trade in goods and services by building coalitions with other firms and policy-makers, and through engaging in knowledge-production and education of governments and the general public (Altay, 2011:117). Business leaders in their public speeches, contacts with policy-makers and in their media appearances highlighted services as a major source of wealth and employment for the United States and other advanced economies (Altay, 2011:142). The campaigners also engaged in conferences, interviews and articles in newspapers to establish the new pattern of thinking and to disseminate their case within civil society. Hence, the TNCs established a hegemonic mental framework that gradually changed the intersubjective meanings of trade and protectionism within the core capitalist nations (Altay, 2011:118). The new way of thinking was shared by a larger set of actors in the OECD region by the mid-1980s ultimately reached the status of intersubjective meaning within the trade regime after the launch of the Uruguay Round talks in Before and during the Uruguay Round, developing countries also gradually adopted the idea of tradability of services which was promoted by the TNC coalition. The TNCs influenced the ideational context within which developing countries revisited their preferences and negotiation positions (Altay, 2011:203). This was influential in developing countries giving their consent for the establishment of the WTO with a broader mandate including services, intellectual property rights, and investment. Benefiting from the new trade regime TNCs in developed world continued to pressure their respective governments in terms of further strengthening the rules in 7

8 international trade in such areas as competition, investment, trade facilitation, and government procurement (Deutsch, 2001:35-36). In neo-gramscian terms, the hegemonic social forces in the world trade regime were determined to strengthen their domination and their advantages through inclusion of new rules into the regime. In their attempt to integrate the Singapore issues into the agenda of future negotiations, TNCs sent their representatives to WTO gatherings and also put pressure on national delegations. Scholte et al (2001: 118 cited in Kapoor, 2004:530) state that 65 percent of the civic organizations accredited to attend the Singapore Ministerial Conference represented business interests. Smith and Moran (1999:68 cited in Kapoor, 2004:530) also indicate that More than five hundred corporation and business representatives were given official credentials as trade advisors to the US delegation in Seattle. In WTO gatherings, TNCs employed the language of possible economic benefits of those rules for all countries. They strategically argued that implementation of stronger rules concerning the government procurement, competition, investment, and trade facilitation process would fasten the transnational economic activities, and that, in turn, would directly contribute to the well being of economies of developed and developing countries (Boyd, 2002: ). The developing countries, on the other hand, had a different vision concerning the future of negotiations at the WTO. Although developing countries themselves gradually adopted neoliberal reforms and gave their consent for the creation of the WTO with a broader mandate, they were concerned about the implementation of the WTO package (Finger & Schuler, 2001: ). Especially, implementing the TRIPS and TRIMS Agreements turned out to be burdensome for many developing countries since these accords required substantial domestic legal and institutional adjustment. The TRIPS Agreement created political tensions in many developing countries as it required the reform of patent and health care regimes towards a market-based system with stronger intellectual property rights protection (May, 2002:98-101). The TRIMS Agreement envisaged the elimination of investment measures such as local content requirements, trade balancing measures and export restrictions heavily used by developing countries (Gallagher, 2007:72). As a result, developing countries called to action against the increased burden of the implementation of the Uruguay Round and called for development-oriented revisions in the Uruguay Round agreements (Narlikar, 2003: ). In the first ministerial conference that convened in Singapore in 1996, the debate between developed and developing countries revolved around whether and how the multilateral trade regime should be extended to new issue areas. Developing countries strongly opposed to negotiate the Singapore issues without solving the existing problems in the system. With their rising share in the world trade and economy developing countries actively participated in the agenda-setting in an unprecedented level (Narlikar, 2003). Particularly, the Like Minded Group (LMG) emerged in 1996 as one of the most active developing country coalitions that aimed to bloc the inclusion of Singapore issues into the agenda while attempting to divert attention towards the implementation problems (Narlikar, 2003: ). By developing their own discourse over the scope and content of the new round, they effectively entered into bargaining with the developed counterparts in Singapore, Geneva and Seattle Ministerial Conferences (Narlikar, 2003). The position of developing countries was strengthened with the rise of NGOs as significant actors in setting the WTO agenda. In the Seattle Conference of 1999, the WTO was attacked by a wide variety of actors from environmentalists to labor 8

9 unions and development oriented NGOs critical of the democracy deficit of the institution. Although NGOs cannot be regarded as a coherent body of actors with a collective agenda, they became influential in shaping governments positions on a wide range of issues from labor concerns and environment to sustainable development. After a two-year preparation period effectively taking into account the demands of developing countries and trying to ensure the integration of NGOs in the process, WTO members agreed to launch the Doha Development Agenda. The Doha consensus represented recognition of the new power and negotiation dynamics surfacing at Seattle and afterwards as it required developed countries to give significant concessions to developing countries and civil society actors. The Doha Round launched in 2001 reflected a compromise that balanced development concerns with further market access negotiations. The Doha Ministerial Declarations contained a broad mandate for negotiations regarding developmentrelated concerns such as special and differential treatment clauses, TRIPS-related matters (traditional knowledge, folklore and patentability of plant varieties and biodiversity), and the implementation of the Uruguay Round Agreements (WTO, 2001a). The Doha package also included a separate Ministerial Declaration on the TRIPS Agreement and Public Health aiming towards facilitating access of least developed countries to pharmaceutical products essential for epidemics such as HIV/AIDS, a significant issue for many African states (WTO, 2001b). Doha Round Negotiations In the Doha Ministerial, large group of developing countries campaigned for the relaxation of the TRIPs rules in the areas concerning public health and they succeeded to change the key provisions of the TRIPs Agreement at the end of the Doha Round. In their success to revise the existing provisions of the TRIPs Agreement, the key thing was developing countries ability to introduce a new knowledge based discourse that linked public health and TRIPs Agreement with each other. As a result, in response to the discourse on the relationship between trade and intellectual property rights of hegemonic social forces, developing countries framed a counter discourse through claiming the connection between intellectual property rights and public health. African Group, composed by forty-one countries, took the leadership role in the bargaining with the developed countries, particularly the US, on reforming the existing rules in TRIPs Agreement during the Doha Ministerial. Zimbabwe, the leader of the African Group, called for the right to access medicines and relaxation of the TRIPs rules (Mutlu, 2008:102). The call from the African Group facilitated the expansion of the group into sixty members that included Brazil and India that later on took the leadership role. The shared idea on the right to access medicines sustained the coherence within the group. The presence of valuable pharmaceutical industries in Brazil and India provided opportunity to engage in technical work, and the group succeeded to produce detailed and validly grounded proposals (Odell & Sell, 2006: 98-99). In other words, the shared common sense on access to medicines produced a consensus. Developing countries succeeded to carry this intersubjectively shared belief on public health to the mass media in industrialized countries. This directly contributed to the activism of NGOs and civil society organizations (Sell & Prakash, 2004: ). 9

10 Consequently, an alliance was built between developing countries and developed country NGOs based on the shared idea on the linkage between intellectual property rights and public health. The strategy of building a broader alliance in their resistance to the hegemony of transnational capital in the realm of TRIPs Agreement and public health tilted the balance towards developing countries in the Doha Ministerial. Although developing countries were able to relax the TRIPs agreement with regard to public health issues, the key interests of developing countries on agriculture, textile and implementation related problems could not be brought into a feasible solution. Indeed, the key development related concerns of developing countries were not taken into account by the developed countries during Doha Round negotiations. Despite the strong resistance of the developing countries, it was agreed that the Singapore Issues would be an integral part of the new round of multilateral trade negotiations. African Group and G-77 of developing countries raised a strong opposition against the Singapore issues and instead called for the removal of market access barriers, export subsidies, and domestic support in agriculture. Primarily concerned with the export subsidies used by the EU and Japan, developing countries argued that those subsidies totally distort trade in agriculture and push agricultural sector into crisis in developing world (Panagariya, 2002:1209). Developing country negotiators insisted that although the EU had made reforms in CAP, these reforms were still far from removing protectionist measures. They criticized that the direct export subsidies just shifted to the subsidies for rural development and food safety (Anderson, 2001: 32-34). On the other hand, the EU and Japan rejected the immediate removal of export subsidies, and they just called for a feasible time table to reform their agricultural sectors. Moreover, the EU Trade Commissioner stated that if developing countries want concessions in agriculture, they should offer something in environment and Singapore issues (Kwa & Jawara, 2004:105). In this respect, the self interested calculations of the EU undermined the developmental importance of agricultural trade for developing and less developed countries. This implies that the agreed agenda at Doha as the agenda for a Development Round does not go beyond the rhetoric. Reframing Power Relations and the Battle at Cancun Ministerial Conference In the WTO Ministerial Conference held in Cancun, Mexico, 2003, agenda items were discussed in a political setting expressive of a new configuration of power in the trading system where emerging economies were able to exert their influence more forcefully in shaping the multilateral agenda and the negotiation processes. The Cancun ministerial showed that the centre of power in the WTO was no longer the Quad with the US, EU, Canada and Japan. Most emerging economies became a dominant force in global economic growth and trade. Countries such as Brazil, India and China became leading producers and exporters in key sectors, such as chemicals, information technology, car parts, pharmaceuticals, and environmental goods (Schwab, 2011). These countries continue to expand in size which alters the balance of economic power as well as levels of economic integration. These new relations of forces significantly had an impact on the Doha negotiations. 10

11 Brazil, India, South Africa and China led the G-20 which emerged as an issue based coalition centrally focused on the negotiations in agriculture, but at the same time it had a hybrid structure in its membership. For instance, Nigeria as a member of the G-20 was also a member of the African Caribbean Group (ACP), a block coalition of less developed countries of Africa and the Carribean (Narlikar and Tussie, 2004: ). Some G-20 countries also had overlapping membership with the Coalition on Strategic Products and Special Safeguard Mechanism which proposed that developing countries be allowed to define unilaterally what the particular special product was for each country and be granted special treatment on it. The combination of these coalitions such as ACP, African Group, Strategic Products Group and G-20 was the G-90. The major advantage of multiple memberships among these coalitions was that developing countries were able to build inter-group dialogue, and they supported each other during the negotiations of different chapters of the DDA. Thus, they have been able to reach a compromise among each other and they succeeded in adopting a coherent stance on a common ground besides their diverging sometimes conflicting interests (Narlıkar and Wilkinson, 2004:457). The G-20 took positions against further market opening in the name of developing countries and demanded a more equitable international order and a better access to the EU and US markets for agricultural products. Developing countries collectively mobilized their resources in terms of preparing proposals and formulating alternative policies, and engaged in hard bargaining with their developed counterparts. However, increasing activism of developing countries failed to produce expected outcomes due to the weak commitment on the part of developed countries. Despite the pressure of developing countries to remove export subsidies immediately, the US Congress put in force new domestic subsidies through the 2002 Farm Bill. The introduction of the Farm Bill changed the interests in the US towards a more protectionist approach and the US cooperated with the EU in the discussions on agriculture. They jointly proposed an extended period for the removal of export subsidies. The joint proposal of the US and the EU on agriculture attracted major objections by the developing countries, and India and Brazil prepared a counterproposal that urged for the need to liberalize agriculture. They at the same time underlined the necessity to take necessary measures for net-food importing countries of developing world (Narlikar and Tussie, 2004: ). The proposal took the support of the coalition of G-20. The presence of India and Brazil as the co-leaders of the group further contributed to the well functioning of the group. With significant amount of technical and human capital, these two countries played the catalyst role in enhancing communication within the group and supplying information and technical assistance in the process of proposal making (Hurrell and Narlikar, 2006: ). Despite the agriculture s different levels of importance in their national economies, the members of the G-20 succeeded to overcome their self interested calculations and established a counter discourse and strategy against the proposals of the US and the EU. In the broader debate over agriculture, a group of four African cotton producers launched the Cotton initiative with a call for the global elimination of subsidies in this sector immediately (Narlikar and Wilkinson, 2004:456-7). The cotton sector constituted more than half of the economic activity in those countries, and they were the major exporters of world cotton. In this respect, the support mechanisms of the US, the second major exporter of cotton, provided to the cotton producers caused decline in world cotton prices while the protectionist measures applied to the cotton 11

12 imports prevented these African countries to enter into the US market (Anderson and Valenzuela, 2007). As a result of those negative measures, the level of poverty as well as hunger increased dramatically in these four countries, and they called for urgent action in re-balancing the world trade in cotton. During the Cancun Ministerial, developing countries announced their dissatisfaction from the chair text due to the lack of clarity concerning the negotiations in agriculture and overemphasis on Singapore issues (Wilkinson, 2004: 151). With the beginning of formal negotiations on Singapore issues, the African Group and LDC Group strongly opposed to the inclusion of those issues into the Development Round s agenda. In response to their demands, the EU, South Korea, Singapore, and Japan strongly demanded that they will not sit at the negotiation table unless there had been progress in the negotiations on Singapore issues (Baldwin, 2006). As a result, as will be analyzed in the case of the investment issue, the hegemonic struggle among opposing social forces led to the collapse of negotiations at the Cancun Conference.. Investment Issue and Hegemonic Struggle of Social Forces in the Doha Round Negotiations After the failure of the Multilateral Agreement Initiative (MAI) and the Asian financial crisis, the EU, Japan, Canada, Switzerland, South Korea and Hong Kong attempted to direct the WTO agenda to include investment rules (Altay, 2011:246). Particularly, European TNCs lobbied the European Commission to push for an ambitious WTO framework on investment after the launch of the Doha talks in They asked for an accord that would have a broad scope for the definition of investment and contain provisions ensuring transparency, protection and nondiscriminatory liberalization including pre-establishment provisions. These social forces tried to get the consent of developing countries by establishing a positive and complementary link between trade and foreign direct investment (EU, 1997a: 1, 4; 1997b: 2, 5; OECD, 1997; 2, 4). They elaborated this argument with empirical data, academic research and references to the OECD that emphasized contributions of FDI to host economies by enabling transfer of technology and managerial skills, stimulating export growth and diversification, and economic restructuring (WTO, 1998a; 1998b; OECD, 1998). The proponents of a WTO treaty on investment also criticized market interventions in the form of incentives and technology transfer requirements which were arguably distorting investment patterns and trade flows without yielding expected outcomes for the host economies (WGTI, 1998a:6; 1999a; 4; 1999b: 3). The EU argued that these regulations needed to be disciplined in order to guarantee a liberal, transparent and non-discriminatory investment environment (WGTI 1999a; 3). The EU also emphasized that investors sought certainty and predictability of investment rules and conditions which were crucial in determining the destination of FDI, and that transparency was hampered by an unstable patchwork of international rules (WGTI, 1997a 6; 1999a: 21). On the other hand, India joined by other developing countries resisted the expansion of the trade regime to investment rules (Altay, 2011:255). India and Egypt argued that existing levels of economic development and the domestic entrepreneurial, industrial, and technological capacities of economies were factors in determining the benefits (WGTI, 1998a:6; 1998b:1; 1999a: 6-7, 15). India with 12

13 support from other members contended that each country needed necessary freedom of space to develop a mix of policies including performance requirements and incentives to attract and direct FDI to selected industries or regions in light of unique needs and preferences (WGTI, 1999a:3; 1999b:2). India also challenged the applicability of trade norms from a theoretical point of view by arguing that such logic would have worked and benefited both host and home countries only if perfect economic conditions existed in the world market (India, 2002a cited in Altay, 2011: 302). For India (2000 and 2002 cited in Altay, 2011:303), in an imperfect world developing countries needed adequate flexibility to regulate FDI to ensure its benefits to growth and development. Moreover, India (2000 and 2002) questioned why trade norms were proposed for the movement of capital but not labor. In this context, there was no convergence of positions between the supporters and the opponents of the investment issue. Together with the tension in agriculture, the opposition camp extended its reach with the declaration of a group of countries including China, India, Malaysia, Nigeria and Bangladesh as well as India stating that there was no explicit consensus to start negotiations in Singapore issues (Altay, 2011:315). They made it clear that unless progress was recorded in agriculture, the Southern alliances were unwilling to concede on these issues. India joined by 70 countries repeated the lack of a mature basis to launch the talks. The position of these developing countries was strengthened with the rise of the NGOs as one of the most influential actors contesting the inclusion of the investment issue to the WTO agenda. NGO Resistance and the Failure of the Investment Agenda at the WTO The neo-gramscian framework not only identifies the sources of change but also the forces for resistance against change. From a neo-gramscian perspective, the institutionalization of a self-regulating market generated significant resistance in global civil society in the 1990s (Gill, 2000; Morton, 2003; Morton, 2007; Bieler, 2008). Harsh criticisms were extended towards the IMF, World Bank and WTO for promoting neoliberal disciplines and structural adjustment programs which have had negative impacts on economic development, income distribution, social, environmental, and public health policies. The WTO was criticized for its lack of transparency in decision-making and the subsequent lack of democratic accountability and legitimacy. For instance, in early 1997, a network orchestrated by the NGOs such as Friends of the Earth, Public Citizen, and the Third World Network with support of environmentalist, labor unions, consumer groups and other citizen organizations organized an influential anti-mai campaign (Tieleman, 2004:1-3). They criticized the MAI text for potential erosion of the sovereignty of the states and for the creation of a legal context for corporate-led exploitation of labor and environment (Tieleman, 2004:11). NGOs also became influential in setting the WTO agenda before and after Seattle by organizing public campaigns against the Millennium Round. The rise of the NGOs expanded the zones of discussion with regard to the governance of world trade since many of those organizations brought new issues such as labor rights and environmental protection into the agenda of the WTO (Schott, 2000:11-13). A pan- European network called Seattle to Brussels was created by 99 NGOs from 19 European countries that sent an open letter to Trade Commissioner Pascal Lamy in May 2001 strongly criticizing the WTO for prioritizing the interests of TNCs rather than farmers, small scale producers and other stakeholders; and for the 13

14 nontransparent and exclusive nature of public consultations (Altay, 2011). The NGOs requested the WTO to halt its initiative for the new round particularly opposing the inclusion of competition and investment issues. (Altay, 2011:307). Environmentalists, labor unions, development NGOs and other civil society actors critical of neoliberalism tried to legitimize their views on the potential risks of an investment treaty by engaging in close contacts with the negotiators and through providing analysis via websites such as Investment Watch and several high-profile international meetings, conferences and workshops in Geneva and Africa (Murphy, 2007:11-2). The existence of these actors as counter-hegemonic forces contesting neoliberal hegemony was a major factor in deepening controversies within the transnational historic bloc and obstructing the generation of a cohesive policy formula for a multilateral WTO accord on investment in core capitalist states (Altay, 2011:350). NGOs active interest and involvement in the WTO agenda pushed negotiating governments and business groups to adjust their strategies by taking into account NGO inputs, reactions, and actions (Altay, 2011:306). As a result, the fundamental elements of the transnational historic bloc, TNCs, were divided in their preferences and could not generate a strong collective vision or coalition on the investment issue as they did during the Uruguay Round negotiations (Altay, 2011:349). Despite the strong support of European business for the investment case, US business groups called for removing investment from the WTO talks in The US government accordingly proposed the unbundling of the four issues and starting talks only in government procurement and trade facilitation (Altay, 2011:315). The revised draft text released by the Conference chairman left investment out of the package in the Cancun Ministerial conference (WTO, 2003). Green room consultations continued until the last day, during which the EU had to come to terms with the unbundling of the Singapore topics by accepting to leave competition and investment out of the round (Altay, 2011:316). However, this proposal was rejected by Korea and Japan who insisted on opening the talks in all four issues. On the other hand, India and other opponents including the African Union opposed all topics (Altay, 2011:316). Consequently, the Conference Chair Mexican Foreign Minister Luis Ernesto Derbez adjourned the summit without releasing a consensus declaration (Altay, 2011:316). The July 2004 Framework and Changing Power Structure The failure in Cancun resulted in the interruption of the Doha Round for months until a General Council Decision was taken in July With the July 2004 Framework known as the July Package, member states agreed to a framework on agriculture and NAMA, and a commitment to keep talking about extension of services and TRIPs. Agreement was also reached on the contentious Singapore Issues, in which negotiators agreed to drop investment, competition and government procurement from the agenda with a statement noting that these issues will not form part of the Work Program, therefore no work towards negotiations on any of these issues will take place during the Doha Round (WTO, 2004). The launching of the July 2004 Framework after the collapse in Cancun was the beginning of a new term in the balance of power within the WTO. It was not the usual Quad countries that negotiated the July Package (U.S., EU, Japan, and Canada). Recognizing the importance of India and Brazil as leaders of the G20, the July Package included the Five Interested Parties (FIP), comprising the US, EU, 14