What’s the link between land grabs, trade rules and climate change? Good new briefing from Sophia Murphy

You can rely on Sophia Murphy for crisp, credible analyses of agricultural trade and food issues. Her latest paper, Land Grabs and Fragile Food Systems, is up to her usual standard. She locates the current row over land grabs in some broader debates that have rather fallen off the agenda, namely globalization and trade rules. Made me come over all nostalgic for the WTO-bashing of yesteryear.

Sophia argues that the globalization and the free trade agreements of the last 20 years have combined with fears over climate change to create the conditions for the current wave of land grabs. But the immediate trigger was the 2008 food price spike, which eroded the confidence of food-importing countries like Saudi Arabia and Kuwait that they could rely on the trading system to feed their people (so many of them started grabbing land instead).

The problem with the WTO is that its insistence on removing import tariffs (which we campaigned on when prices were low) was not matched by any effort to discipline export controls, making it completely irrelevant when prices rose and exporting countries slapped on export taxes to try and keep the food at home, thereby compounding the price spike. Sophia also takes a swing at the WTO’s inability/unwillingness to do anything about corporate concentration in the food sector. When the price spike hit ‘the four companies that between them control an estimated 75 percent or more of the inter­national grain trade saw their profits soar.’

Failures in other areas have aggravated the problem. Food reserves have been run down, biofuels have added a new degree of uncertainty by tying food prices to those of oil and gas (when fossil fuel prices rise, more land gets turned over to biofuels, so less food is produced, so food prices rise). Climate change, both current and rapidly approaching, has only added to that sense of vulnerability on food security.

How to reduce the pressures that are driving the wave of land grabs? The report has a rather convincing policy shopping list arising from this analysis:

• Reformed trade rules that ensure export measures are subject to transparency and predictability requirements and that allow all countries policy space for food security policies. She also proposes ways to ease food price spikes by reducing biofuel production during price surges
• Publicly-managed grain reserves to dampen the effects of supply shocks
• Readily accessible funding for the poorest food importers, which would be triggered automatically when prices increase sharply in international markets
• The development of strong national and international laws to govern investment in land, respecting the principles and guidelines set out in the Voluntary Guidelines on Land Tenure. Tanzania’s recently announced limits on how much land foreign and domestic investors can lease is a hopeful example of a national government taking the initiative to get serious about regulation.

At 12 pages, a very useful addition to the land grabs literature. And in case you missed it here’s what the fuss is about.

Food fight at the WTO: de Schutter v Lamy on whether trade leads to food security

The WTO ministerial (there was a ministerial?) was predictably forgettable, apart from the accession of Russia (the last major economy still to sign up) and a pretty outspoken attack on WTO boss Pascal Lamy (right) by UN Food Security czar Olivier de Schutter (below), who accused Lamy of ‘defending an outdated vision of food security’.

‘We must ensure that the debate starts from the correct premise. This premise must acknowledge the dangers for poor countries in relying excessively on trade. We must also assess the compatibility of WTO disciplines and the Doha agenda with the food security agenda. Without such a fundamental reassessment, we will remain wedded to food systems where the most efficient producers with the biggest economies of scale are relied upon to feed food-deficit regions, and where the divide only gets bigger.

This may look like food security on paper, but it is an approach that has failed spectacularly. The reality on the ground is that vulnerable populations are consigned to endemic hunger and poverty. 
 
The food bills of the Least Developed Countries (LDCs) increased five- or six-fold between 1992 and 2008. Imports now account for around 25 per cent of their current food consumption. These countries are caught in a vicious cycle. The more they are told to rely on trade, the less they invest in domestic agriculture. And the less they support their own farmers, the more they have to rely on trade.

By promoting this trade-centric approach, we miss the simplest of win-wins. If we were to support developing world small-holders, who are often the poorest groups, we could enable them to move out of poverty, and enable local food production to meet local needs. In this context, trade would complement local production, not justify its abandonment. The urban poor would have access to fresh and nutritious foods, and the gap between the farmgate price and the retail price would narrow. This however requires policy space to limit price volatility at domestic level: it is this policy space that the WTO rules are reducing.

The policies currently shaped by the international trade regime are not supportive of these small-scale farmers. Instead, we impose a lose-lose upon them. They do not benefit from the opportunities that access to international markets represents for some. But it is they who are the victims of the pressure on land, water and natural resources on which they depend, for which they increasingly have to compete with the agro-export sector.

In the long term, poor net-food-importing countries will not be helped by being fed. They will be helped by being able to feed themselves. This is the consensus of the post-global food price crisis world that even the G20 has recognized. It is disappointing that the WTO continues to fight the battles of the past.”

Lamy replied with a letter (“I fundamentally disagree with your assertion that countries need to limit reliance on international trade to achieve food security objectives. On the contrary…”) and a detailed critique by WTO staff of de Schutter’s paper, “The World Trade Organization and the Post-Global Food Crisis Agenda: Putting Food Security First in the International Food System”. 

Interesting seeing how much more critical of trade-based food security a number of commentators (and governments) have become since the food price crisis. I remember being told in the early 90s by Costa Rica’s Central Bank governor that there was no reason why his country should grow any food at all – much better to export pineapples and buy food cheap from the US. Now governments have seen how volatile world prices can be, they have come to see the wisdom of rebalancing trade and domestic production. I still don’t buy the food sovereignty line about farmers in all countries having the ‘right to produce’ – that ignores issues of prices and consumers – but the debate has definitely moved away from seeing trade as the answer to everything.

One other postscript on the ministerial. The ODI’s Yurendra Basnett argues that it’s time for the ‘decoupling of the WTO and trade liberalisation’. Based on this exchange, good luck with that, …..

A nostalgic debate on globalization and development

When did talking on the subject of ‘globalization and development’ start to feel so retro? I got that distinct sensation at a lunchtime discussion at IPPR yesterday. The trench warfare of yesteryear – on the WTO, the Doha round, trade liberalization, protectionism etc, has somehow acquired a nostalgic glow. Most odd.

In the room were a random collection of NGOs, think tankers and centre-left types, all chaired by coming man Will Straw (son of Jack), who’s chairing a set of discussions leading to a report in January on global governance and globalization. The project is headed by former EU Trade Commissioner and UK Business Secretary, Peter Mandelson and describes its purpose as ‘to re-examine who benefits from globalisation and how a more even distribution of these benefits – both between countries and within countries – can be encouraged.’ Yep, a very last-decade kind of gig.

The ensuing discussion mixed a reprise of some of the topics the NGOs have been banging on about ever since Seattle (1999), (and on which they have largely been proved right), but with some interesting new additions.

The old tunes:

Development is deeply pluralist – different countries follow different paths, involving a wide variety of institutional recipes, with different amounts of state and market; autocracy and democracy etc. But the role of the state is often central, as is technological upgrading to higher value economic activities. Implications? The global system, including aid, must encourage pluralism, not try to narrow it down through aid conditions or imposed rules on trade and investment liberalization or restrictive intellectual property laws. A Global Debate with no right answer is more productive than a Consensus in Washington or anywhere else. (Dani Rodrik was the most-referenced guru).

The ‘new’ ones:

Managing climate change has become a more central litmus test of global governance than trade and investment.

We have to think of the global system as – erm – a system. Is increasing volatility and importance of risk/resilience (eg climate, finance, food prices) a sign that it is too tightly coupled and if so, which connections need to be loosened through the creation of circuit breakers/fire breaks? Complexity and systems theory have become much more prominent in this debate than they were a decade ago (and no wonder, given the financial crisis).

Linked to that emphasis on volatility is a revived focus on shock absorbers – policies and institutions that cushion poor people against shocks, whether personal or societal. That includes social protection, access to finance and insurance, and disaster risk reduction.
Equity is about much more than income – access to environmental goods and services (like the right to emit carbon) is going to be increasingly contested. Pricing carbon may be a sensible way to curb emissions, but only if it doesn’t lead to a world of carbon haves and have-nots.

Global Governance is about much more than a simple shift from G8 to G20. We seem to have ended up with a form of ‘a la carte multilateralism’ – substantial conversations in some areas, paralysed ones in others, and an absence of discussion in the rest. The architecture varies from G-192 (UN) to G-zero (no-one in charge) depending on the issue.

My favourite line? As the UK prepares for its inevitable slide down the global pecking order, it should focus on values, human rights, and good global citizenship – it can start by approaching any foreign policy issue with the question ‘What would Norway do?’

More History, less Maths – FP2P flashback

OK, I’m off on holidays this week, so thought I’d retrieve a few posts from the early months of the blog, back in 2008, when hardly anyone read it – recycling is a virtue after all. First up, some thoughts from July 2008 on the use of history – I’m still looking for suggestions on this….

More history, less maths. That’s a phrase that for me summed up several years of debating the role of trade in development during the Doha round of WTO negotiations. 

While CGE modelling, conducted by the elite number crunchers of the economics profession, churned out ammunition for liberalizers in the shape of inflated figures for putative gains from the indiscriminate opening up of markets (see Lance Taylor and Rudiger von Arnim’s paper  for Oxfam, critiquing the abuse of CGE in trade debates), historians uncovered an entirely different story about the role of trade in development. The classic text on this is ‘Kicking Away the Ladder’ , by my friend Ha-Joon Chang, an economic historian from Cambridge. Ha-Joon, who brilliantly captures the vital role of the state in the industrial take-off of virtually every ‘now developed country’. The concern is that many of the policies they used (infant industry protection, regulating foreign investment) are in danger of becoming illegal under WTO and other trade rules. It was fascinating watching how this message galvanized developing country delegates at the WTO, who felt far more confident in opposing the double standards of the EU and US when they realized that history was on their side.

Since then, I’ve come across similarly useful ‘lessons of history’ exercises in other areas. A great study by Santosh Mehrotra and Richard Jolly on the role of the state in guaranteeing healthcare and education for all; recent work by UNRISD looking at the broader lessons of history for social policy. Ha-Joon is currently coordinating an ambitious study for the FAO on agricultural policy in successful economies in Europe and elsewhere (Oxfam has also published a paper by Michael Stockbridge on the lessons of agricultural trade policies in take-off countries, making a qualified industrial policy argument for agriculture, as does the work of Dorward, Morrison, Kydd and Urey at Imperial College ).

The value of historical analysis is increasingly recognized – for example by Justin Lin, the World Bank’s new chief economist (see last month’s blog on Justin’s refreshing views). This is linked to renewed interest in power, politics and institution-building – all of which often matter more than particular policies in guaranteeing success, but are largely invisible to CGE-style mathematical wizardry. So if history is such a gold mine for policy wonks, why not get serious and start a ‘lessons of history’ programme? There are probably dozens of issues that would benefit from a historical analysis. Off the top of my head:

· Civil service reform: what have been the politics and economics of the shift to (more or less) meritocratic bureaucracies?
· Environmental legislation: Back in the 1940s, my grandmother died in the London smog, what policies and institutions ensured that kind of thing no longer happens (or at least only rarely) in the UK and other rich economies?

Then there’s access to justice, reconstruction after conflicts, equal rights legislation, financial sector regulation, competition policy, universal secondary education, curbing private and public sector corruption and so on.

What other candidates would people suggest for historical excavation? All we need is a few million dollars, so we can sit a bunch of bright people in a room, brainstorm on priority issues, and commission a ‘Lessons of History’ series. Any offers?

The Globalization Paradox, a great new book from Dani Rodrik

Dani Rodrik is one of the handful of heterodox heroes, prominent economists who took on the lazy thinking of the Washington Consensus in its prime, and continue to dance productively on its grave. His latest book, The Globalization Paradox: Why Global Markets, States and Democracy Can’t Coexist, feels like a Big Book, one that may shape a new way of thinking about the global economy.

It draws together several strands of Rodrik’s previous work on the WTO, growth take-offs, and the origins of the Global Financial Crisis into a single coherent whole. The result is one of the best critiques I’ve seen of the Washington Consensus. As he points out, with a paralysed global trade round, the collapse in financial globalization, and the rise of un-liberal China, the ‘stabilize, liberalize, privatize’ mantra of the early 1990s is wracked by self-doubt and well past its sell by date. A paradigm shift would seem imminent, but the old ways linger on partly for lack of a clear alternative. In The Globalization Paradox, Rodrik tries to address that gap.

The central argument is that the global economy faces a ‘trilemma’. We cannot simultaneously pursue democracy, national self-determination and what he terms the ‘hyperglobalization’ of the last 30 years. You can have any two of three: nation states can hyperglobalize, opening up fully to global flows of capital and goods, but the result will include periodic crises and popular unrest that will have to be crushed if openness is to be preserved – democracy is inevitably the loser.

For Rodrik, the preferred combination is a no-brainer: ‘democracy and national self-determination should trump hyperglobalization’, which should be put back in its box. Instead we should return to a new version of the ‘shallow multilateralism’ of the Bretton Woods system that held sway from 1950-80 and delivered unprecedented growth and social progress, with its pluralistic acceptance of capital controls, national opt-outs and industrial policy – what is now called ‘policy space’. That room for manoeuvre, and acceptance of diversity, is essential to restore stability to the global economy, disrupted by the monoculture of liberalization and one-size-fits all thinking. Rodrik likens this ‘thin version of globalization’ to keeping the windows open, but with a mosquito screen. You get the fresh air, but keep out the bugs.

Beyond that, he rehearses his ‘growth diagnostics’ – that the road to success lies not in the ever-lengthening shopping lists of reforms advocated by the globalizers, but instead in identifying the ‘binding constraints’ – the most important bottlenecks in the economy – and focussing all your energy on them. As each bottleneck is dealt with, another will appear and must be tackled in turn. He credits such approaches (rather than the subsequent liberalization) for India’s remarkable economic take-off since the 1980s.

But his ‘so what’ chapters go much further than this, first setting out seven general ‘principles for a new globalization’ and then looking specifically at how they could be applied to four big challenges: trade, finance, the rise of China and migration (the one area where he passionately advocates more, rather than less, globalization).

Rodrik doesn’t just dwell on policies and institutions, but on mindsets. In particular, he takes up Isaiah Berlin’s division of thinkers into two camps – the foxes who know lots of small things, and the hedgehogs who know one big thing. Rodrik is a militant fox, and blames many of the failures of the economics profession on its tendency to rampant hedgehogism – economists who, while aware of the nuances and caveats on any argument, still default back to ‘better to liberalize than not’. Or as Rodrik acerbically asks ‘why do economists’ analytical minds turn to mush when they talk about trade policy in the real world?’ When their recommendations don’t work, the hedgehogs say ‘that’s because we didn’t liberalize enough’ – after all ‘there is always something on the list that they haven’t gotten quite right and on which the crisis can be blamed’. Post Washington Consensus hedgehogisms include microfinance and individual property rights.

The style is conversational, but sweeping and authoritative – professorial in the positive sense. Rodrik is less of a polemicist than Ha-Joon Chang, preferring to stay inside the tent, but he can pack a polite punch when necessary.

It’s also historical – on top of the contemporary debates, you get the grand historical sweep of globalization from the 17th Century to the present deftly thrown in. If you haven’t read Rodrik’s previous work, this is a good place to start.

I found the book more of a work of synthesis than genuinely surprising. One exception was his striking observations on China, where he ties the present arguments over global imbalances directly to China’s entry to the WTO. At that point, it had to drop its old forms of industrial policy (quotas, subsidies etc) and went for an undervalued currency that acted as an effective export subsidy and import tax combined. Result? Global instability. By his reckoning, eliminating the undervaluation of the Renmimbi would knock 2% a year off China’s GDP – no wonder its leaders are resisting pressures to devalue. Scrapping WTO restrictions and allowing China to return to a wider range of industrial policies would allow it to achieve its growth without destabilizing the global economy.

Rodrik is only mortal, and an economist at that, so I felt mildly frustrated that even though he dwells on the central role of the state, he didn’t get into how effective states emerge, or are blocked, and what can be done about that. Without an effective state to heed his advice, you’re rather in ‘assume a can opener’ territory. He also proposes a pretty crude division of the world into democracies and non-democracies, with different rules for the two, which I’m not sure would withstand much scrutiny.

But these are minor quibbles – the book is excellent. Last word to Rodrik:

“We can and should tell a different story about globalization. Instead of viewing it as a system that requires a single set of institutions or one principal economic superpower, we should accept it as a collection of diverse nations whose interactions are regulated by a thin layer of simple, transparent and commonsense traffic rules. This vision will not construct a path toward a ‘flat’ world – a borderless world economy. Nothing will. What it wil do is enable a healthy, sustainable world economy that leaves room for democracies to determine their own futures.”

And here he is launching the book at the Peterson Institute a couple of months ago. Powerpoint for the presentation is here

If you still want more, Rodrik posted a number of other reviews on his blog. Or you could just read his book.

The death of Doha? But the WTO lives on.

This piece of mine appeared on the Guardian development page yesterday (plus here, I include a few afterthoughts at the end)

The battle of Seattle, 1999

“The Doha round of global trade talks, launched by the World Trade Organisation (WTO) in November 2001 amid a surge of solidarity after the 9/11 attacks, is experiencing the long slide into irrelevance that is characteristic of the international system, where zombie institutions and processes abound. I attended the extraordinary inauguration of the round in the Qatari capital, Doha, as an NGO delegate. US Navy Seals were patrolling offshore, and the delegates visibly flinched whenever a plane flew overhead.

The launch of the round (in contrast to the collapse of the previous WTO meeting in Seattle in 1999) owed as much to that need to show inter-governmental solidarity as to any great need for a further set of trade talks to add to those that set up the WTO at the end of the previous Uruguay round. After the hype of the launch, the talks stalled at another collapsed summit in Cancún, Mexico, and then slowly dragged to their current standstill.

Last week, the latest WTO get-together in Geneva could have killed them off, but instead proposed yet another final heave. The chances of success look minimal. Does it matter? Yes and no. Yes, because the world needs a multilateral trade system that can at least partially restrain abuses by the most powerful players. It is important to stress that the WTO is not the same as the Doha round. For all its flaws, it is a functioning institution overseeing a set of agreements on trade and investment. If anything, the debilitating experience of the Doha round has weakened the WTO, and killing off the round might strengthen it.

No, because the world has moved on to an extraordinary extent since 2001 (remember the anti-globalisation movement?) The rise of the emerging economies has made the north-south rhetoric of many players in the talks increasingly meaningless (and it was never that convincing to begin with); the trade agenda has been overtaken by climate change, resource constraints, wildly fluctuating food prices and financial crises – where the impact of WTO muscle-flexing is as likely to be negative as positive.

But if the WTO’s members ever finally muster the courage to declare the parrot round dead, some good stuff could be lost in the shape of some of the unfinished business which developing countries and their NGO supporters were highlighting so publicly in Doha, Cancún and elsewhere. That includes setting in stone rules that allow the poorest countries to export their goods free of tariffs; making sure new member countries joining the WTO aren’t bullied into making major concessions not demanded of existing members; and not forcing the poorest countries to prematurely open up their markets at the expense of their own producers and eventual developmental take-off.

So what to do? On balance, it would probably be better to declare the round dead, but the multilateral system very much alive, and shift political capital to what matters most in 2011, rather than sticking with the exhausting legacy of a 10-year-old political gesture. As for trade campaigners, don’t worry – there is a swathe of arguably more important things to be getting on with, such as regional and bilateral trade deals that favour the strongest players, the dominance of handfuls of giant corporations in many global markets, to which Glencore is just the latest addition, or the wave of land grabs, as rich countries without fertile land buy up land in poor countries on which to grow their own food, irrespective of the impact on local people. Such trade realities have always been at least as important as trade rules, and they aren’t going anywhere fast.”

Writing this piece gave me a distinctly retro/nostalgic feeling. The WTO and its ministerial meetings dominated my life from the tear gas and chaos of Seattle (1999, my first ministerial), via the high security of Doha (2001), another theatrical collapse in Cancún (2003) to the damp squib of Hong Kong (2005). In that time I learned to speak the weird gobbledygook of trade negotiators, churned out policy papers on agricultural trade, industrial tariffs and the rest, and probably spent too much time schmoozing with the lobbyists and delegates at the WTO HQ in Geneva.

As did many other NGO colleagues - so was it all worth it, if the round is now dead on its feet? I think so – NGO campaigns often seem most effective in preventing bad stuff from happening, and that’s arguably what we helped to achieve in the Doha round – working with coalitions of developing countries to see off assaults on their access to knowledge and affordable medicines (via intellectual property laws) or their ‘policy space’ (via premature liberalization). Along the way, the developing countries grew ever stronger, and the liberalizers’ supreme arrogance (and historical amnesia – see Ha-Joon Chang) began to crumble.

Overly self-important? The NGOs may have taken themselves too seriously – the real players were always the WTO members themselves, but I think we helped developing country governments in two main ways – skilled media work and contacts, and allies ready and willing to lobby the rich countries from within. In these measurement-obsessed times, this is all highly speculative – we know neither the counterfactual (what would have happened if there had been no campaigning on the Doha round), nor the attribution (what role, if any, did civil society campaigns play in what did or did not happen). But I think it made a difference. And now, please can we move on?

Africa’s four different kinds of economies

I’m a sucker for typologies. I guess they’re a wonk’s equivalent of those ‘what were the ten best punk/ska/heavy metal albums of all time?’ discussions in the pub. Here’s a nice one from ‘Lions on the Move’, a breathlessly upbeat new McKinsey report on Africa. It finds four clusters of African economies + a few outliers. Click on the scatterplot for a clearer picture.

The clusters are
1. Undiversified oil exporters (Angola, Libya)

2. Diversified, successful exporters (South Africa, Tunisia)

3. Transition countries (Ghana, Kenya, Senegal) en route to joining group 2

4. What are somewhat euphemistically called ‘pre-transition’ countries like DRC and Ethiopia

McKinsey uses a measure of economic diversification and exports per capita as the two axes. The colour of the blobs shows GDP per capita, the size of the blob shows total GDP. As you go up the y axis to higher levels of exports per capita, GDP per cap also grows, but countries split into two groups – the oil exporters and the diversified economies.

It’s noticeable that the two classic ‘African success stories’, Botswana and Mauritius, don’t sit neatly in any of the clusters. Botswana has high exports per capita from diamonds, but has managed to diversify somewhat, while Mauritius is more diversified and a bigger exporter than even the ‘diversified countries’.

Of course, compared to yesterday’s post, this is all terribly static. Would be great to see how these clusters have evolved over time. Anyone want to have a go?

How much does US corn dumping cost Mexican farmers?

Remember dumping – the rich country farm subsidies that allow them to dump their products in poor countries at artificially cheap prices, thereby wiping out local agriculture? Tim Wise on the Triple Crisis blog has been running the numbers on the impact of NAFTA (US-Canada-Mexico Free Trade Agreement, in force since 1994). He calls it a the ‘controlled experiment’ “because NAFTA liberalized agricultural trade dramatically over a short period of time, Mexico imports most basic grains and meats almost exclusively from the United States, and Mexican farmers grow many of the crops that compete with the imports. In such a case, one can easily see the increase in U.S. exports, the drop in Mexican producer prices, and it is reasonable to assume that the U.S. export price is the reference price for these products in Mexico.”

To find out the damage done by dumping, he estimated the extent to which U.S. export prices to Mexico were below U.S. farmer costs of production (plus transportation and handling), then calculated the extent to which Mexican producer prices were lowered by U.S. dumping, and then estimated how much more Mexican producers would have earned if they had received non-dumping prices – at least high enough to cover U.S. costs of production.

Here’s the conclusion:

“We estimated the nine-year cost (1997-2005) to Mexican producers at $12.8 billion (in 2000 US$), $1.4 billion per year.  To put these numbers in context, the annual losses are more than 10% of the value of all Mexican agricultural exports to the United States (including beer, which Mexico, oddly, classifies as its most important agricultural export).  The losses from U.S. dumping surpass the total value of Mexico’s annual tomato exports to the United States, widely touted as Mexico’s biggest NAFTA success story in agriculture.

Corn [that’s maize to us Brits] farmers suffered the highest losses. U.S. exports increased 413%, arrived at prices 19% below production costs, and real producer prices in Mexico declined 66%. We estimated losses to Mexican corn farmers of $6.6 billion over the nine-year period, over $700 million per year. These losses amount to $99/hectare per year, a crushing blow to struggling smallholders.”

Full paper here

Seattle + 10 = Copenhagen?

I went out for a celebratory (if that’s the word) drink this week with a heroic band of Seattle Survivors. Ten years ago we were besuited NGO delegates at the notorious WTO ministerial, which collapsed in a welter of tear gas and turtles (or at least people dressed in turtle suits protesting at WTO rulings on the environment). It’s been fascinating watching the ‘battle in Seattle’ become mythologised as some kind of mass uprising against globalization – at the height of the chaos, I did a rough count of the number of activists blocking off access to the conference centre and it came to a couple of thousand at most, and the violence involved no more than a few dozen black-clad, but journo-photogenic anarchists. In the end, the ministerial

police using pepper spray against protestors

collapsed because the Seattle police in their Robocop outfits over-reacted to a ridiculous extent, making up for their lack of plans or equipment for crowd control (they had no crash barriers) by lobbing random volleys of teargas and pepper spray at non-violent protestors (and the odd government minister). Bill Clinton didn’t help when he alienated the developing countries by arguing for a labour clause on the eve of the conference.

It’s hard to imagine anything similar happening in Copenhagen next week, but it is worth comparing the current climate talks with the travails of the Doha round of trade talks that began at the next WTO meeting after Seattle (and staggered on in Geneva this week at yet another ministerial, largely ignored by the press). Like trade talks, climate negotiations have huge implications for domestic lobbies such as industry and finance, so will be much more heavily fought over than agreements on aid or debt that don’t have the same immediate impact. Like trade, the climate change talks involve shifting constellations of developing countries, trying to reconcile the need for unity with the huge objective differences (in terms of emissions and immediate vulnerability) between countries such as China and Bangladesh. Their opponents will try and exploit these differences, playing divide and rule to weaken any agreement.

But there are two big, and scary, differences. In the WTO, blocking bad agreements is not too bad a result – stopping unnecessarily expensive burdens being placed on poor countries, or forced liberalization or encroachment on their ‘policy space’. And for weaker players, it is often easier to stop bad things happening than to get agreement on good things. In the climate talks, only winning a good agreement will be enough – a far harder challenge. And while delay in trade talks is not too much of a problem, in climate change, delay is expensive, if not catastrophic. The IEA argues that every year of delay in moving towards the required trajectory of emission reductions adds an extra $500bn of costs.

A Kal cartoon in the Economist summarizes what happens if Copenhagen goes the way of Doha – if someone’s going to make a ‘Battle in Seattle’ style film, can they call it ‘Doha’d with a vengeance’, with Bruce Willis as Yvo de Boer?

Trade v climate change: what should developing countries be asked to do?

Last week, Oxfam published its proposals on how the burden of reducing carbon emissions should be shared between countries, both rich and poor. What struck me was the contrast with the stance Oxfam and other NGOs have taken in their advocacy on trade at the WTO and numerous other trade agreements. There, they have focused on what the rich countries must do (cut their subsidies, remove barriers to developing country exports), while stressing the importance of  retaining ‘policy space’ for developing countries to protect infant industries and generally practice an active industrial policy. The case for treating rich and poor countries differently is justified by history – industrial policy is an essential part of virtually all successful development take offs, as Dani Rodrik and Ha-Joon Chang have argued. But even though ‘developing countries’ in the WTO include everyone from Singapore to Mali, NGOs have assiduously avoided getting into discussions of ‘differentiation’ between different groups of developing countries, as this is seen (with good reason) as a divide and rule tactic practiced by the North.

Climate change is different, because (unlike trade) there is an absolute ceiling on the amount of emissions that the atmosphere can absorb without catastrophic warming. That means all significant emitters, even poor ones, will have to share the burden of reducing their emissions. Now Oxfam has bitten the bullet and laid out some ideas on how developing countries could be expected to contribute. Here are the bones of the argument set out in the paper:

‘Until developed countries take a leadership role consistent with their responsibility for emitting the vast majority of the atmospheric build-up of CO2 over the last century, and show that economic well-being and welfare can be maintained while drastically cutting emissions, developing countries cannot be expected to take the same kind or level of action as developed countries. Countries such as the UK and Germany have shown that it is possible to maintain economic growth while reducing emissions; other developed countries must also set this example.’

‘Yet even if industrialised countries were to cease all emissions from today, developing-country emissions alone would overshoot the 2°C pathway by 2020 on current trends. We now face a far greater climate challenge than when the Kyoto Protocol was first agreed over 10 years ago. Unbridled emissions growth in developing countries is no longer an option.’

‘A pathway to keep warming well within 2°C demands both that emissions in industrialised countries are reduced, well below the 1990 baseline adopted by the UN Climate Convention, and that emissions growth in developing countries be limited below ‘business-as-usual’ trajectories.’

‘The next commitment period that is agreed in Copenhagen needs to be a trust-building period that, as Stern argues, ‘…rewards developing countries for reducing emissions, but does not punish them for failing to do so’.’ So we’re not proposing ceilings for developing countries yet – rich countries first have to show good faith in cutting their own emissions.

Until that happens, the key to developing countries reducing their emissions is cash from the rich countries: ‘In order to receive funding, developing countries would create and submit a national mitigation plan. The national mitigation plan would identify the mitigation actions that the country proposes, the incremental costs of these actions, and the tonnes of carbon emissions that will be avoided (reduced) as a result.’ Developing countries should be financed on a sliding scale – the poorest countries should be 100% financed, the less poor ones partially financed.

By how much should developing countries reduce their emissions? Obviously that depends on whether the rich countries do their bit. If rich countries were to reduce their emissions by 40% below 1990 levels, that would provide sufficient ‘space’ to allow developing countries to continue to increase their emissions, albeit at a slower rate (something like 30 per cent below ‘business-as-usual’, although only a handful of experts have published relevant estimates).

Politically, this is pretty sensitive. The danger is that it feeds into efforts by opponents of climate change action to turn the negotiations into a ‘you go first’ stalemate between the rich countries and the big emitters in the South. But I think the emphasis on funding during a prior stage of trust building strikes a nice balance between the politics and the science.