WTO turned by America into 'Mafia racket'

The US has been accused of undermining the World Trade Organisation and making it act like a "Mafia protection racket". Jagdish Bhagwati, professor of economics at the University of Columbia in New York, said the US policy of striking bilateral deals was undermining the Doha trade negotiations.

Speaking as US trade representative Robert Zoellick was in Europe last week to set the agenda for September's trade summit in Cancun, Mexico, Professor Bhagwati pointed out that 200 bilateral trade accords had already been agreed.

The US has struck deals with Chile and Singapore, and is close to announcing deals with Morocco and South Africa. These frequently impose strict conditions, often to do with changes to intellectual property (IP) law and the liberalisation of financial markets.

"The United States is using clever tactics. In addition to aggressive safeguards to its IP, US negotiators are starting to impose strict financial conditions upon trading partners," said Professor Bhagwati. The US then used the WTO to police these agreements, while often ignoring trade rules itself, as it did last year with steel tariffs. "The WTO is like a royalty protection agency, acting like a Mafia protection racket."

Professor Bhagwati argues that the complex trade agreements are "like insurance policies" and that developing countries often find the legalistic terms hard to decipher.

Lobby groups point to the dangers of these bilateral trade accords. Steve Tibbett, head of campaigns and policy at War on Want, said: "Negotiations over intellectual property rights, export subsidies and capital flows are the true spoils of war in a global economy. The failure of multilateral trade talks at September's WTO summit will have grave consequences for poor countries. Standing alone against the economic might of the US, they don't stand a chance."