The Fakhfakh government announced a fundraising hotline to collect donations for the national health system and revealed the reorganizing of budget spending priorities in order to reallocate an overall amount of 2,500 billion TND ($860 million) to support small and medium enterprises (SME) and companies suffering from the economic shutdown. The government also agreed to transfer 200 TND ($68) as a social safety net to the 600,000 poorest families for the month of April. So far, an additional 1.4 million Tunisians requested this aid, and the number of applications for emergency cash assistance is expected to rise. The government extended this monthly allocation to May as the targeted lockdown was extended. Other emergency policies include mortgage and loan freeze for middle-income households, a freeze of social contributions from the private sector from three to six months, and a reduction by the central bank of the interest rate by 100 basis points in order to preserve the demand side. However, these measures were generally perceived as insufficient especially with attempts of banks and companies to violate the imposed measures and the agreement with the government to maintain salary payments for workers forced into confinement. Therefore, a great discontent emerged between different classes (workers and business owners), between the private and public sector, and between different unions due to the general belief that some will pay more for the others^[2].

This feeling of injustice is not unfounded as social and fiscal injustice have persisted during decades of economic and fiscal policies guided by austerity measures imposed by international financial institutions (IFIs) and donor countries, and even more so after the 2011 revolution. As a result, workers’ rights have been undermined and their struggles criminalized^[3].

This situation is exacerbated by the government officials’ belief that guaranteeing salary payments in Tunisian Dinar, social transfers to the poorest, and doing “Whatever it takes” to preserve jobs and income for workers and households, can only be done through taxation, or new debts or by collecting donations, or through threatening the rentiers capitalist class by a hypothetical wealth tax measure.

While Tunisia is a currency issuer state and is not fiscally constrained, the Central Bank of Tunisia (CBT) could have accommodated the government’s plan to stabilize the income of the most vulnerable people without fearing inflation, especially in this context of international trade contraction, instead of allowing banks and the financial sector to take advantage of this crisis by seeking more profits, from high-interest rate lending to the state, and by investing public money in non-productive sectors.

This is a political decision that could have been made by the Chief of Government when legislative power was delegated to him at the end of March, but unfortunately such a proposal –of allowing the CBT to accommodate government deficit limited to 5% of GDP- was strangely deleted from the last version of the delegation law.

A new loan with new conditions

Regrettably, the government made another political decision to prioritize external debt servicing and to acquire even more external debt.  Indeed, on the 14th of April, Tunisia and the IMF announced an agreement for the disbursement of a new loan: The Rapid Financing Instrument (RFI) worth $745 million – the second-biggest disbursement by an African country after Côte d’Ivoire – to support “the government’s efforts to contain the pandemic.”

Taking a closer look at the letter of intent^[4] jointly signed and sent by the finance minister and the central bank governor, we find that the loan is conditional, despite the government claiming otherwise. In fact, there are immediate and future commitments that predicate the continuation of the same dependency policies that may jeopardize any attempt by Tunisia to create a more resilient and sovereign economic model.

Indeed, the immediate commitment consists of a reduction of investment in non-priority projects without any clear definition of such projects. The announced budget cuts included the canceling the procurement of cars for government officials, flours and roses for the presidential palace, but most impactful, the reduction of fuel subsidies^[5], the increase in the price of tobacco, the increase in water distribution cost, and the freezing of subsidized fuel and food vouchers for public servants. Already one day of work was cut from workers’ payroll in the private and public sector as a compulsory contribution to the government’s efforts to “collect” funds, this one-day salary cut included healthcare workers and workers in essential and strategic sectors who continued to serve during the pandemic. Farmers also contributed with 1% of their turnover on the wholesale markets, while banks, financial institutions, and large profitable corporations were left free to contribute to the donations fund voluntarily based on their goodwill.

All of these measures will have a negative impact on the income of the vast majority of the marginalized people, unemployed, low wage workers, but also the middle class, which is mostly composed of public employees, while the capitalist class continues to enjoy the special fiscal status that provides them with tax cuts, especially for companies whose activity is 100% export-oriented.

The government also committed to increasing natural gas prices after the Covid-19 crisis eases. Authorities will put a strain on its workforce by freezing promotions and limiting overtime hours in the public sector to prevent any new wage bill surge for 2020. The government is also negotiating with the Tunisian General Labor Union (UGTT) so that any planned salary increases for 2021 will not exceed the inflation rate. In addition, an audit of the public sector will be performed to reduce absenteeism and ‘ghost’ workers. This may announce hard bargaining times between the government and the national union as the weight of the crisis will mainly be borne by labor, not capital. The UGTT played a major role during the last round of IMF negotiations to push back against reforms that were mainly targeting public sector privatization, wage cuts and a reduction in the number of public sector employees working in local administrations, and strategic sectors like water, energy, transport, education, and health.

As for the limited participation of private banks and financial institutions in the national effort to support SMEs and households, and the non-compliance of some banks to the CBT’s decisions to freezing loan payments, the Ministry of Finance, Nizar Yaïche, reiterated the holy principle of CBT independence. This principle, included in the new statute of the CBT, was also imposed by the 2016 loan agreement with the IMF whose main objective was to prohibit the CBT from directly financing government deficits via treasury bond purchases and to maintain legal independence in policymaking from the central government, even though most of CBT policies are guided by the IMF staff priorities and in agreement with their recommendations.

Although central banks of advanced economies have undertaken massive if not unlimited liquidity injections, to support their economies and support workers whose livelihoods have been adversely affected, this option has been denied for Tunisia. The IMF had the Central Bank of Tunisia commit to not interfering in the foreign exchange market, or limiting foreign transfers (dividends, debt repayments), trade transactions, or entering into bilateral payment arrangements with other countries. Moreover, the IMF imposed that any loan guarantees or subsidies to companies should be borne by the government rather than the Central Bank. With these prescriptions, the IMF clearly plays the role of a self-appointed watchdog of global capitalism. What worries the IMF is the leeway that countries like Tunisia could leverage with their sovereign currency, should their central bank unleash more robust counter-inflationist policies and national rights-based economic stimulus targeting full employment and rebuilding local productive capacity. That is why policing central banks have always been central to the IMF conditionalities.

As for future commitments, the government is planning to permanently reduce subsidies for electricity and natural gas, and to make social safety nets are offered on a temporary rather than permanent basis. This is part of the general neoliberal orientation maintained by the IMF to cancel governmental subsidies as they are considered distortions to market equilibrium. These reforms may certainly apply later to the few products that are still subsidized in Tunisia, namely wheat and semolina flour, sugar, vegetal oils, milk, and tomato paste (the latter are price-settled), all of which are really important food staples for Tunisian consumers, as shown during the COVID-19 crisis. Price-subsidized basic products are a sensitive issue for most Tunisians since the monthly minimum wage for a Tunisian worker is only 403 TND ($140 per month) for 48 hours/week. For a long time, subsidizing basic commodities was a necessary strategic decision for governments to maintain social peace in an economic environment of a race to the bottom wage policies.

Last but not least, to obtain this RFI disbursement, the Tunisian government committed to starting a new IMF program (Extended Fund Facility) in the third quarter of 2020, which will also include a number of painful reforms, as Nizar Yaïche, the Finance Minister stated in his recent interview with Bloomberg News.

While this Covid-19 pandemic allowed debt servicing relief for 25 African countries, Tunisia was excluded from this debt relief program announced by the G20. On the contrary, the new IMF loan is expected to be a lever to other loans from the G7 and international financial markets. The European Commission also announced a new Macro-Financial Assistance (MFA) of €600 million that will help fill the gap of debt servicing tranches which will be due in 2020 and 2021. These MFAs, like former ones that “benefited” Tunisia, were also a European Commission tool to secure its trade-related interests.

It must be noted that the amount allocated to debt servicing in the government’s budget exceeds 11 billion TND ($3,78 billion) for 2020, which is one-quarter of the government’s budget, more than six times the budget allocated for the ministry of higher education and scientific research, 35 times the investment allocation for education, and five times the budget of the ministry of health^[6]. In 2019, more than 4,000 health workers left public health services and were not replaced.

Can Modern Monetary Theory solve Africa’s debt crisis ?

This deal with the IMF is, in reality, imposing an unwarranted burden on government spending, and as a consequence, will tighten the government’s fiscal policy space which would hinder the prioritizing of health, education, universal public services for its population. However, more deceivingly, this deal is making it less likely for Tunisia to launch any new green infrastructure and a job guarantee program^[7] that may act as a stimulus and a stabilizer of economic activity; which could, in turn, protect people’s lives and dignity, especially if the central bank continues its high-interest rate policy focus, and ignores its role in financing the budget deficit or supporting any national rights-based recovery program.

The recent decision of the G20 to relieve some financial constraints on the poorest countries that are liable to find themselves in default is only aiming to avoid an imminent ‘sovereign debt default domino effect’ without addressing the structural deficiencies of developing countries or addressing the root causes of their balance of payment (BoP) deficits^[8].  At the same time, they would approve new concessional loans to countries with fewer financial difficulties, well-controlled markets (like Tunisia), and continue making these loans conditional based upon limiting government spending and deficits, excluding the central bank as an important policy tool, and making sure there are no capital controls or constraints on trade.  This strategy maintains the dependency relationship with creditor countries who need market access in developing countries where they can sell high value-added products, and where they can buy cheap factors of production and resources at stable and affordable prices.

Is this strategy sustainable?

One might, however, wonder to what extent and under which circumstances can this strategy be sustainable. The answer may be found in the blog post[9] of the IMF managing director Kristalina Georgieva who stated “But more lending may not always be the best solution for every country. The crisis is adding to high debt burdens and many could find themselves on an unsustainable path. We, therefore, need to contemplate new approaches, working closely with other international institutions, as well as the private sector, to help countries steer through this crisis and emerge more resilient.”

In reality, “supporting the government’s efforts to contain the pandemic”, could be understood in IMF’s terms as directing the government’s efforts to secure private and multilateral debt servicing, international trade, capital transfers for international investors and opening the door to more lucrative, speculative, rentier profit-making private investments, through private-public partnerships in strategic sectors, further commodification of public goods, and greenwashing that will ultimately lead to more capital accumulation.

To make it clear, the imperialist countries controlling these multilateral institutions (like the IMF, the World Bank, the WTO, ..) are desperately trying to maintain their dominance and the privileged status of their currencies in an increasingly multi polarized world for the benefit of the financialized transnational capitalist classes.[10]

Nevertheless, one hope still persists for most Tunisians: that the revolution of dignity achieves two out of three objectives for which people died, jobs and dignity.

If there is something to learn from this pandemic, it is that today more than ever, a job guarantee program is needed: namely, a green economic program supported by the government, the central bank, and public banks, and in cooperation with the private sector (subject to workers’ rights and environmental protection), managed locally, relying on the real resources and productive capacity of the country, and addressing the real needs of its population, respectful of its climate specificities and water scarcity. Guaranteeing jobs in sustainable agriculture – aiming at ensuring food sovereignty, safe and affordable food – jobs in green infrastructure, using solar, wind and hydroelectric energy to end the fossil fuel economy, and investing in the high value-added industry, in healthcare, childcare, eldercare, education, culture, community building, R&D, and in the local pharmaceutical industry to delink the dependence on big pharma’s speculation on people’s health.

Jobs, decent wages, and bold social rights to restore economic sovereignty and a healthy environment are now necessary for Tunisia’s post-covid-19 recovery. This is the only way for the government to address the root causes of the balance of payment structural deficiencies and the only political ground for the progressive movements’ struggle to end decades of economic dependency. Recent initiatives from Tunisian women and men, engineers, unemployed, students, researchers, practitioners, textile workers, farmers, and civil society during the Covid-19 pandemic to develop solidary local, innovative and autonomous solutions to save our lives are proof that a sovereign, prosperous, and sustainable Tunisia is not an impossible reality, but is rather within reach.

^[1] By End of May the number of total cases counted to 1,084 cases, and 48 deaths, which makes Tunisia one of the few successful countries in managing the pandemic.

^[2] https://orientxxi.info/magazine/tunisie-qui-paie-le-prix-du-coronavirus,3784?fbclid=IwAR0bx85c0zHiY0Hf1NnTsw_ALPXmFnR4N1dKxHNaljiQNyN5mRyQ3Rj8Uq0

^[3] See https://rosaluxna.org/wp-content/uploads/2020/02/What-Democracy-for-Tunisian-Workers.pdf

^[4] https://www.imf.org/~/media/Files/Publications/CR/2020/English/1TUNEA2020001.ashx

^[5] While international fuel prices were collapsing, the internal market prices were very slightly declining, in reality, the consumer is paying an internal price per liter higher than the international price, which makes the consumer subsidizing the government’s loss from falling quantities and not the way around.

^[6] http://www.finances.gov.tn/sites/default/files/2020-02/Loi_finances_2020_fr.pdf

^[7] To learn more about Job Guarantee program for developing countries, African economic and monetary sovereignty, colonialism and independence see the work of Fadhel Kaboub and Ndongo Samba Sylla

http://macroncheese.com/the-spectrum-of-monetary-sovereignty-in-developing-nations-with-ndongo-samba-sylla-and-fadhel-kaboub

https://www.youtube.com/watch?v=HctT4HjgChY

https://urpe.wordpress.com/2019/02/07/fadhel-kaboub-on-monetary-sovereignty-colonialism-and-independence/

https://www.youtube.com/watch?v=xD6mUDRwZ7k

https://www.rosalux.de/en/news/id/41681/modern-monetary-theory-in-the-periphery?cHash=1400f4d40c2caba146cfcd7cd8d19bcc

^[8] Ndongo Samba Sylla explains here how Senegal and other non-monetarily sovereign African countries are trapped in a permanent external debt cycle https://www.rosalux.de/en/news/id/42302/how-foreign-debt-undermines-sovereignty?cHash=71f2e5caaec2a503268898ea98b7db2a

[9] https://blogs.imf.org/2020/04/20/a-global-crisis-like-no-other-needs-a-global-response-like-no-other/

[10] For more information on the Bretton Woods institutions’ response to covid-19 crisis, see the biannual analysis of the World Bank and IMF Spring and Annual Meetings of the Bretton Woods project : https://www.brettonwoodsproject.org/2020/04/spring-meetings-amid-covid-19/

See also the works of Radhika Desai on Geopolitical Economy, and multipolarity and her more recent commentaries on WHAT IS TO BE DONE? A MANIFESTO FOR POLITICS AMID THE PANDEMIC AND BEYOND https://canadiandimension.com/articles/view/political-hope-rises

The 258 civil society organizations (CSOs) that sent an open letter to the World Trade Organization (WTO) and its members could not be more concerned. On April 17, 2020, when they asked the WTO to stop all trade and investment treaty negotiations during the COVID-19 outbreak and refocus on access to medical supplies and saving lives, the virus death toll surged past the 150,000 mark.

Trade and health: a prisoner’s dilemma

On the same day, the WTO organized a virtual meeting, in which its director general stressed the importance of “maintaining open markets for trade in laying the groundwork for a strong recovery.” The virtual meeting also discussed if the WTO members “would be open to formal decision-making through virtual meetings or written procedures until traditional in-person gatherings can resume.”

The letter’s endorsers that represent social movements in 150 countries, such as the United States, Brazil, India, Australia, many European countries and Tunisia, said they were shocked by “the business as usual” attitude of the WTO. For them, not only does the institution’s agenda ignore technological deficiencies of some developing countries, but it also diverts the efforts and resources from the most important purpose of combating the virus.

Many of these CSOs, such as the Third World Network, Oxfam, Greenpeace, Arab NGO Network for Development and the Tunisian Observatory of Economy, have been advocating for a fair distribution of world resources and fighting against the adverse impact of free trade on social welfare, especially in the Global South.

The Covid-19 pandemic just seems to revive these concerns. Indeed, access to affordable medicine often stumbles on the binding rules of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs). Adopted in 1994, the latter expanded the scope of intellectual property rights, especially in terms of patent protection and conferred more powers to patent holders.

Despite its binding effect, TRIPs offers flexibilities such as compulsory licensing for public health purposes. Barr al Aman has recently stressed the importance of this flexibility and urged the Tunisian government to use compulsory licenses if the prices of health products are excessively expensive and / or if the quantities made available to Tunisia are not sufficient to cover the urgent national need.

Soigner le COVID-19, l’urgence d’une licence obligatoire

However, for many countries the use of the flexibilities is not that easy. According to a study conducted by the WHO and the South Center in 2005, “a number of provisions in recently concluded FTAs between developed countries (essentially the US) and developing countries, pose a real risk of undermining an effective use of TRIPs flexibilities in developing countries for public health purposes.”

Therefore, besides the discrepancy in the priorities scale of both its issuers and its receivers, the open letter brings back governments, drug companies and the public opinion back to an essential question: will intellectual property hinder the access to the potential COVID-19 medicines and other vital medical supplies?

“From the point of view of intellectual property, of course, a tension exists – and it is a tension that exists around access,” Francis Curry, the director general of the World Intellectual Property Organization (WIPO) said back in 2015, at a symposium on innovation and access to medicine held jointly with the WTO and the World Health Organization (WHO) in Geneva.

Curry then added: “on the one hand, what intellectual property does economically is making access a salable commodity, and that is the basis of markets in technology and creative works. But on the other hand, access as a salable commodity… raises questions about the cost and possibility of access.”

A deep-rooted paradox

The roots of this paradox are deep and old. Since the enactment of the first modern patent law in Venice in 1447, there has been a heated debate over the moral and philosophical foundation of patents and other forms of intellectual property such as copyright, trademarks and trade secrets.

As explained by the Stanford Encyclopedia of Philosophy “patent protection is the strongest form of intellectual property protection, in that a twenty-year exclusive monopoly is granted to the owner over any expression or implementation of the protected work.”

The idea of monopoly over ideas was endorsed by philosophers like John Locke (1632 – 1704) and G.W.F. Hegel (1770 – 1831).

The English theorist claims that individuals are entitled to control the fruits of their labor (including their intellectual labor).

The German thinker has rather a personality-based justification as he argues “that individuals have moral claims to their own talents, feelings, character traits, and experiences.”

Another philosophical justification for intellectual property is to be sought in utilitarianism. The utilitarian point of view was explained in the Virginia law review, by Jeanne C. Fromer Associate Professor at Fordham Law School. “Copyright and patent laws are premised on providing creators with just enough incentive to create artistic, scientific, and technological works of value to society at large by preventing certain would-be copiers‘ free-riding behavior,” she wrote.

Do these arguments hold up when the patented intangible work is the formula of a saving-life drug?

Dr. Yusuf Hamied’s answer would be no. When Harvard Business School (HBS) interviewed the founder of the Indian pharmaceutical company Cipla in 2013, he said:

There should be no monopoly… [we are] willing to pay the originator [of drugs] a suitable compensation and India should not be deprived of newer drugs and be at the mercy of the innovators.”

If the HBS featured Dr. Hamied for its Creating Emerging Markets Project, it is because of the man’s exceptional battle against the human immunodeficiency viruses (HIV) that causes acquired immunodeficiency syndrome (AIDS).

Back in 2001, Cipla mixed three molecules– Nevirapine, Didanosine and Zidovudine and came up with a new anti-HIV drug. Dr. Hamied then gave his antiretroviral therapy (ART) to humanitarian organizations and poor Asian and African governments for $350 a year.

That price was thirty times lower than market prices. Suddenly, big multinational pharmaceutical groups were left with their useless patents and with financial shortfalls of billions of dollars. Full of wrath at seeing their monopolies collapse, western multinationals had to lower their AIDS treatment prices by 80%.

While western business groups and media accused Dr. Hamied of piracy, the United Nations organizations described him as India’s Robin Hood of drugs.

When Dr. Hamied gave that interview, the world was still dazed by the 2009 swine flu pandemic and its estimated death toll of 284,000 victims. So, he intuitively evoked the example of the Oseltamivir; the antiviral drug used to prevent and treat swine flu, other subtypes of influenza A and influenza B.

The patent on the Oseltamivir in the US was then held by the Swiss multinational Roche. An epidemic before the patent’s expiry date (2016) would have meant, according to Dr. Hamied, that the destiny of the world would have been in the hands of one company.

In a concluding remark that encapsulated his business philosophy, the Indian scientist said:  “I am a firm believer that if you are in the health care business like supplies, it is not a business per se; it is a business plus you are saving lives. So it has to have a humanitarian angle to it.”

Santé: la bataille autour de la transparence sur le prix des médicaments

This dispute happens as international trade has become the stage of a violent confrontation between the US and China: a “trade war” which is paralyzing the WTO, particularly as this multilateral institution is attempting to reform itself.

We interviewed Ms Aileen Kwa, a researcher, trade negotiations expert and advocate, heading the Trade for Development Program at the South Center* to learn more about the complexities of the crisis.

What reform is the US putting on the table?

There are four main reforms that were requested by the US and the developed countries. The first reform is relating to the WTO’s rule of consensus regarding decision making. According to this rule, no negotiation can take place unless there is a consensus on its negotiation agenda between all the members a process they want to reform.
The second element of the reform states that several developing countries should not avail trade flexibilities (S&D treatment).
A third element they have been insisting on is what they call transparency and notification measures: the necessity that members make all notifications formally. The proposal indicates that members who default on notifications should be punished.
And the last is about bringing new issues to the discussion, e-commerce for example.

And how did developing countries respond to these suggestions?

Regarding transparency and notification, developing countries were clear that they do not agree on additional notifications. It is impossible for developing countries to abide by the notifications’ requirements. Responding formally to everything, attending meetings and engaging with officials in the capitals of our countries is a resource-intensive process, whereas many of us, including Tunisia’s delegation, are under-represented. Tunisia has only one delegate, trying to cover all the WTO committees and negotiations. It’s an impossible situation.

With regards to other reform suggestions, developing countries had their position on how the reform of the WTO should be; they presented a proposal of which Tunisia was co-sponsor.

The aim of this proposal was to say that the idea of a WTO reform is not a new question. The developing countries had been asking for it since the first round of negotiations called “the Uruguay round” (1986-1994). Therefore, there was already a set of reforms, and a suggested reform agenda from the perspective of developing countries, that was not taken into consideration and which aims at addressing many of the imbalances coming out of the Uruguay round.

The proposal stresses that there are a lot of WTO principles that developing countries want to preserve including consensus decision making. It also reminds us of the issues that developing countries want to discuss such as S&D treatment, aspects of agriculture’s development, implementation issues, and balancing some of the imbalances from the GATT agreement.

But how did all this “battle of reforms” start?

After the Buenos Aires Ministerial Conference in 2017, some developed countries (the EU, Japan, and the US) got frustrated at the fact that developing countries, especially India, South Africa and the Africa Group were not in favour of launching negotiation in some new trade area that they suggested, especially e-commerce. In their opinion, developing countries used the consensus decision-making of the WTO to stop the negotiations on new areas within the WTO.

As a result, during the Ministerial Conference they set up, what is called a plurilateral initiative in the areas of e-commerce, investment facilitation among others. During those meeting, members of developing, developed and least developed countries of the WTO who have accepted to negotiate these topics, will gather and discuss ways forward.

They also started to meet in trilateral form – US, EU and Japan- at the Ministerial level in order to discuss these same issues as well as a reform of the WTO. A big part of the reform they agree on is how to bypass the consensus format of decision making in the WTO in order to continue these plurilateral discussions and negotiate issues of their interest without going through the consensus process. They would later bring the outcome to the multilateral format.

Developing countries view this as a problem, because it would be contrary to the rules of the WTO and will not accept the outcome. It was however not possible to stop these meetings. The breaking point has not come yet: the situation will most likely get more complicated when they finish their negotiation and decide to bring it to the multilateral level.

What did developing countries think of the USA July memorandum on the elimination of what they called “Unfair trade benefits”?

The memorandum was very threatening, yet funny. The US submitted the proposal to reform access of developing countries to the trade flexibilities under the Special & Differential treatment twice this year, in January and in May.

Developing countries refused the US proposal and they made it clear why they think the proposal is unfair and why they still deserve S&D treatment.

But despite their opposition, the USA submitted this same proposal again in July, and of course, did not get support for it. A few days after this, the memorandum was released.

The Special and Differential (S&D) Treatment

These are special rights and flexibilities granted to developing countries under the WTO due to their development status. These flexibilities offer the privilege of maintaining some tariffs to protect the local economy or enjoy longer transition periods to implement WTO rules. These provisions allow more policy space for developing countries to strengthen their economic fabric.

For instance, developing countries were given until January 2000 to adjust their legislations and implement the TRIPs provision. Least Developed Countries were given more time, until 2006 to adapt their legal frameworks and enforce protection of Intellectual property rights.

Why do Developing countries refuse this reform?

The US proposal argued that the poverty rates dropped in Developing countries, and that shall make them equal to developed countries in applying the WTO trade measures. That means they will no longer enjoy flexible implementation calendars, neither should their exported products benefit from preferential treatments, among other flexibilities.

This argument may be true if we use the $2 poverty threshold used by the World Bank. However, if we use $5 or $7 per day as the poverty threshold -which is a more accurate measure according to experts-, the number of poor people increases tremendously, and we can see that people in poverty are still overwhelmingly concentrated in developing countries, including in the most efficient/blooming economies like China. This is why Developing countries find the US proposal unfair and are opposed to it.

Do you think this reform can get through despite developing countries opposition?

It is quite hard to answer. I think the US was very ambitious with its reform. As a powerful country, the US can ask for a lot of things, exert political pressure and get away with almost everything. But how much can they continue pressuring a group of developing countries? I very much doubt that countries like India or China will give up on their position.
Developing countries also have their reform agenda. They argue that the Uruguay round, which is the first trade negotiations round, concluded in 1994, ended up with several imbalances in fields like Agriculture, and Intellectual property, and that it gave developed countries many flexibilities which are not available to developing countries, like reverse S&D treatment.

In their Trade Policy Review, the US mentions the WTO reforms are one of the pillars of its policy. What could possibly happen in case there is no agreement?

If the US under the Trump Administration continues to put pressure in the next ministerial conference which will be held in Astana, Kazakhstan in 2020, I think this will cause everything else to collapse.

This goes beyond the WTO. Once you turn your back on the WTO, you also do so on other multilateral forums. What about the United Nations Framework Convention on Climate Change (UNFCCC) negotiations? This is not only about the WTO, but about a big systemic shift.

The US still refuses to take part in renewing the WTO Appellate body, the WTO organ in charge of settling trade disputes, which is threatening to become dysfunctional by December 10th. Is this another mean of pressuring the passing of the reforms they want?

I used to think that the US used this method as a bargaining trick but now I am more inclined to think that the US just does not want to revive the Appellate Body, even if the reforms go through. They simply do not want an appellate body which in some cases has ruled against the US.

Why do developing countries refuse to launch negotiations about issues like e-commerce?

The stakes in negotiating e-commerce are huge. What the US wants is “free data flows” which consist in opening up our digital markets. When the data flows freely, so will the online goods and services. This bypasses any of the tariffs that we have in place right now, as well as the GATT limitations. Today, the products and services concerned might be limited but tomorrow it can be anything under the sun.

This is the heart of the problem. A lot of developing countries are not yet aware of what the game is about. The narrative that is presented to them is that e-commerce is very good for the economy, that it is a reality going forward, that they and the WTO should keep up to with the 21st century, and that all countries need to have trade rules for their digital economy. They are promised programs of assistance in building their digital capacity.

If there is no agreement, do you think we will witness a bigger wave of bilateral treaties in which these measures are discussed?

I think, regardless of what will happen in the WTO, bilateral agreements will continue anyway. They are struggling a lot in any case. Since the Uruguay round, bilateralism was used as a threat by developed countries against developing countries. They would say “if you don’t agree on this in the WTO, we will go through FTAs.” And in fact, they concluded the Uruguay round and launched the NAFTA the same year. I think that they will continue trying to get what they can get in any forum.

How did the Doha round die? Is there any chance of revival?

The negotiations of the Doha round have been suspended to a large degree because some countries would prefer it not to exist. But the Doha round was never formally closed. In every single ministerial conference since its launch, the Ministers would reaffirm the Doha round, before they continue to negotiate. The US is saying that the Doha round died in Nairobi. But there is no formal decision or statement which states this. So technically and legally, the Doha round continues.

Do developing countries still want to negotiate?

Yes, they still want to negotiate the development issues on the Doha round. It is the opposition of several developed countries which prevented further negotiations. But in the end, they cannot dispute the fact that there are still pending, unsolved Doha issues. And it is in our right to call on these mandates for further negotiations.

* South Center is a research-oriented developing countries organization based in Geneva, working on assisting developing countries in presenting development-centered policies in international policy forums.

This interview was conducted in Summer 2019.

Mohamed Haddad supervised, An Hoang-Xuan & Khansa Ben Tarjem reviewed this paper.