WITH the World Trade Organisation locked in an unending battle between the developed and developing countries over which principles should govern the exchange of commodities and services between trading partners, it seems that free trade agreements may soon overtake it.

In other words, the WTO is poised to lose its institutional status, if not its legitimacy, in case it continues to be unable to break the current impasse over Doha talks and evolve a fair regime of trading arrangements acceptable to all the member countries.

But some observers are of the view that WTO’s persistent failure to end the crisis suits the West and that’s one reason why it has not shown much anxiety, much less panic, to urgently overcome it.

The fact that the western media had been predicting lack of a positive outcome each time its biennial meeting takes place has been a case of both wishful as well as factual reporting.

For the rich states, the WTO is, in fact, becoming a big liability because of its principle of observing democratic norms in its proceedings and taking decisions with a consensus. It means they will have to concede on each issue to the developing and poor countries and that no decision in their favour is likely to come because non-rich states are in a majority.

Keeping this unpleasant reality in view, the United States, Europe and other industrialised powers have, in recent years, been stepping up their efforts to go for bilateral free trade agreements (FTAs) and bilateral investment treaties (BITs) with other countries, the developing ones in particular. Their interest in bilateral deals has been as greater as has been deeper the deadlock in global trade talks at the WTO.

A major advantage in turning to the FTAs is that these commit partner (developing) countries not only to accelerated liberalisation of trade in goods, such as agricultural products, but also bring in new rules for trade in services, intellectual property rights, investment, etc.

Negotiated outside the multilateral system, away from public scrutiny, they provide even greater freedom to the rich countries to push developing countries to adopt policies that are much worse than what is agreed to at the WTO.

The advantage of bilateralism over multilateralism lies in its speed and scope. For this reason, some countries that had long given up the bilateral approach are now actively returning to it enthusiastically.

Although Europe began going for such deals since the 1950s and the United States signed its first accord in 1985, more than 200 bilateral agreements have so far been concluded worldwide, most of them in recent years. And the indications are that the number of bilateral agreements will reach 300 by the end of 2006.

The proliferation of bilateral agreements is a recent phenomenon in Asia. Before 1995, only three countries, according to the Asian Development Bank, were involved. By 2005, the bank has notified over 27 agreements to the WTO. A total of 36 agreements have now been formally notified.

Since 1985, the United States has completed ten such agreements (with Canada, the Nafta, Jordan, Chile, Singapore, Australia, Morocco, El Salvador, Nicaragua, and Honduras). Four others approved by Congress have yet to come into effect (with Bahrain, Guatemala, the Dominican Republic, and Costa Rica). Three more FTAs are under consideration (Oman, Peru and Colombia) and talks have been held with eleven other countries.

The US is using such deals to bully smaller states because the latter are too eager to have access to the large American market. The US insists on tough labour standards and intellectual property rules which surprisingly go far in excess of WTO requirements.

The Office of the US Trade Representative (USTR) is trying to beat the clock by concluding as many deals as possible well before President Bush’s Trade Promotion Authority – a special power given to the US president to negotiate and sign trade deals – expires in July 2007.

Meanwhile, the world’s most powerful governments are competing more and more to sign bilateral deals with the same countries to serve their geopolitical and military agenda and provide some kind of ‘alternative’ to the WTO.

Pakistan is also eager to have an FTA with the United States but the latter wants a bilateral investment treaty prior to that, and there had been a series of negotiations over the terms of the proposed deal which are very harsh from Pakistan’s point of view.

An interesting feature of these talks is that these are held in secrecy and are frequently postponed. Now the fifth round of these talks will take place in the first week of October when a high-level delegation led by the assistant United States Trade Representative (USTR) would come to Pakistan for this purpose.

Besides, Pakistan intends to have free trade agreements with Singapore, China and Malaysia by the end of 2006. It already has a free trade agreement with Sri Lanka and negotiations are underway with Thailand, Indonesia, Iran and Bangladesh.

The growing trend for FTAs is a complex global phenomenon but they are on the rise between the rich and developing countries as well as between the developing countries themselves. The North-South deals are considered comprehensive as they cover many issues and quickly open up new opportunities for the multinationals to extract more profits from developing countries.

They also tend to dismantle protective barriers set up by the developing states through privatisation, deregulation and by claiming jurisdiction over disputes away from national courts. The agreements between the developing countries are less oriented towards an overhaul of national laws.

The FTAs concluded by the developed countries with developing countries have to be precise and not one-sided. The poor countries allow their natural resources to be plundered and offering cheap labour to the multinationals.

Seeing the promise of greater access to US or European markets and finding the WTO paralysed in a deadlock and unable to help them reach the desired markets, governments of many developing countries are eager to sign such agreements as a way out to help their economy.

It is interesting to note that emerging powers of the developing world — China and India — are also pursuing FTAs as a way to gain influence in Asia and beyond. In Latin America too, FTAs are becoming common, especially between Mercosur, the Andean Community and the new alliance between Venezuela, Bolivia and Cuba.

The term ‘free trade agreement’ is a misleading concept. There is nothing free as these agreements are essentially designed to give the multinational corporations a host of privileges such as the right to dictate the terms of their investments in the partner developing countries, right to buy state industries, deliver local services such as education and health, right to get access to natural and energy sources and the right to sue the host government if it does not fully meet its commitments and their wishes.

Critics say FTAs are also highly geopolitical treaties, aimed at cementing political alliances between specific countries. For instance, the agreements signed with the US are closely linked to American military and national security interests, requiring support for its foreign policy.

Then, the secrecy surrounding these agreements is often more intensive than any Green Room process at the WTO. The public and its parliamentary representatives are routinely denied the right to see any text before it is signed. In FTAs with the US, some countries are even obliged to keep the negotiations details secret for several years.

For all the talk about democracy, in the West FTAs are concluded in an anti-democratic ambience, unlike the atmosphere at least in the WTO where decisions are taken in a democratic manner. So, the very act of holding bilateral negotiations is an illusion because FTAs are essentially imposed on the partner developing countries, rather than negotiated.

A common feature of these agreements is the provision that gives the multinationals the power to effectively sue governments for any claimed acts or omissions which they say amounts to interfering with their rights as investors. These include the right to “anticipate” a profit. Investor-state disputes are said to be on the rise.

Under bilateral investment treaties, Bolivia and Argentina have been sued by Bechtel and Azurix (a former Enron subsidiary) respectively, for hundreds of millions of dollars although it were the people of these two countries who were denied proper water services by these companies. These cases are not referred to national courts under national laws, but are contested through closed-door arbitration proceedings at the World Bank’s International Centre for the Settlement of Investment Disputes.