Why governments have failed on global trading

The Doha Round of the World Trade Organisation is dead, but the Australian Government is still whacking away at it, trying to get it to stand up.

Governments in the developed world have shifted substantially from being public administrators of national budgets to significant actors in a global political economy.

As public administrators they were required to act in accordance with a set of rules that included theories of social equity and justice, along with the establishment of policies for economic well-being and political stability.

The shift away from local public administration towards global political economy changed the way national governments thought about themselves, and about how they delivered policy to stakeholders.

Rather than presenting a strategic balance in policy that was both derived from, and inspired by, a diffuse number of stakeholder groups, governments set out to achieve bigger aspirational targets that pitched them into an environment that they were unable to understand or to manage.

They were led onto this stony path by narrow stakeholder self interest.

As administrators, they had neither the tools nor the ability to build the tools that were required to sustain a shift from the local to the global.

But, having made the shift, and being unable to cope, they still had to persuade their wider stakeholder interests that they were representative, and that they were capable of both administering their local economy and directing and managing a global economy.

Governments began communication campaigns that attempted to explain their actions in populist terms: they argued the vital importance of issues such as a reduction in global poverty, and increases in world health and education as outcomes that required the transfer of technology and labour from their developed countries to the developing countries in which these miracles would take place.

And equally importantly, they argued that they alone could not achieve a high level of success. They needed the support of all developed world nations - the members of the WTO. This was the kicker.

The implied message was that they were prepared to take action on behalf of their own citizens and those of the developing world, but only if their “colleague” countries did the same thing.

But, as we know, countries are not colleagues. They are in direct economic competition for all types of resources from capital, to technology, to labour and beyond.

The communication campaigns had multiple layers that needed decoding. For the close stakeholders - the transnational corporations - the message was clear. Governments said “we will do everything we can to make this work”. For the more distant stakeholders - citizens - the message was equally clear, but less able to be understood.

Governments said “we will do out best to apply your will to our policies - the will that says we want to help people in the developing world living in poverty and being torn apart by civil and other wars - but in the end we are only one government”.

“We can’t achieve much if we don’t get the support of the rest of the developed world”.

This message filtered downwards to be interpreted by citizens as a potential threat to their own well-being.

So they decided that while it was important to want to help people in the developing world, it could happen only if their government received the support it needed from the rest of the developed world.

After all, no one expects that living standards in the developed world should drop to achieve some success in raising the living standards of those in the developing world.

The position now is one in which we find national governments in developed countries attempting to argue two competing ideas: that globalisation of trade is still a good thing, and that regionalisation of trade is also a good thing.

The rhetoric of the global, however, is being outflanked by the actions of governments at regional level.

While the discussion about the potential for global success to be achieved as a policy goal of joint developed-country action, those same countries are rushing about their regions stitching up deals with their neighbours for cross border trade, to the exclusion of those they don’t like.

These actions are not the actions of countries intent upon the development of a global trading system.

They are the actions of public administrators who want to make friends with powerful transnational capital.

They are the actions of organisations, established to administer public goods and services, that have no idea how to move outside that frame and into a global sphere in which the rules of the game are so different that they might as well have been written by Martians.

The solution to the problem is relatively simple.

Governments represent the interests of a wide variety of stakeholders ranging from average citizens to transnational capital. But the democratic process allows them to remain in government only when they are elected by a majority of citizens. They are not elected by a majority of corporations, nor a majority within a farm lobby, nor by environmental action groups. But all these stakeholders play a crucial role in forming the opinions of the individual citizen.

If governments are to represent the interests of citizens in world fora such as the WTO, they must first represent themselves more transparently to citizen stakeholders rather than acting as the representatives of global capital.

In this the French appear to be acting more transparently on behalf of their citizens and farmers than any other developed country.

For Australia, the collapse of the Doha Round along with the possibility that Australian citizens might have supported all types of issues that lead to a reduction in poverty in developing countries was lost in the government’s rhetoric that it was a lone voice, unable to act due to the power wielded by the EU and the US.

But this is a ridiculous proposition that undermines the whole idea of informed citizenship.

Two months after the collapse of the Doha round, the Australian Government is still locked into a no-win game, attempting to persuade a now cynical nation that it can re-ignite the talks when the Cairns Group meets in Queensland on September 20-22.

Good luck.