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Least developed spell out clear objections

by Chakravarthi Raghavan

Geneva, 5 Oct 2001 - The least developed countries at the WTO have clearly spelt out their objections to the launch of any new negotiations at the WTO on the Singapore or other new issues and said they would be unable to participate in negotiations on a broad agenda or implement new obligations.

The LDC views on the draft declaration were laid out on 2 October at the informal General Council meeting by Amb. Ali Mchumo of Tanzania (the spokes-nation in the WTO for the LDCs) - a copy of the text has now been made available to media and others, perhaps to dispel spread of misinformation.

Mchumo cited extensively from the Zanzibar declaration of LDC ministers and said the LDCs have been calling for the recognition of the imbalances and problems generated by the present WTO system and rules and the need for their correction.  However these problems were not adequately reflected in the Declaration, including the preamble. Nor were adequate remedies being put forward in the document.

The LDC Ministers in Zanzibar had also said that they are not prepared for negotiations on the Singapore and other new issues, and that they are also unable to participate in negotiations on a broad agenda nor implement new obligations due to the LDCs’ limited capacity.

“Yet,” complained Mchumo, “the draft declaration is proposing a broad-based negotiating agenda that includes many new issues that imply a heavy burden of new obligations for LDCs and other developing countries.

“We therefore propose that major changes be made to the draft declaration,” Mchumo said.

In making some general points, the LDC statement said that firstly, the principles for special and differential treatment provisions should be spelt out in detail and these should be based on the need to assist developing countries (including LDCs) to achieve their development objectives.

Secondly, the separation of the Ministerial Declaration from the Decision on Implementation Issues, might lead to downplaying or downgrading the importance of implementation issues, which could end up by being treated on a separate track. This unfortunate situation could be remedied by “mainstreaming” the implementation issues and bringing them into the Ministerial Declaration itself.

Thirdly, the section on LDCs is too weak, and does not deal with the important issues of implementation, accession and the need to bind trade preferences for LDCs. The need to overcome supply side constraints is not emphasised enough.

Fourthly, the section on technical assistance and capacity building emphasises the need to assist LDCs to understand and implement WTO rules, but does not emphasise the need to address the supply side concerns.

Fifthly, the difficulties faced by developing countries seeking accession to the WTO are not dealt with in this draft.

In some detailed comments, the LDC statement, referred to the preambular paras and said that in the paras 1-5 and 8, there were “many nice words” about the contributions of the trading system and WTO. It was undeniable that the trading system has several positive aspects.

“However the preamble is imbalanced in not recognising the points made by LDCs and other developing countries on the downside in the operations and implementation of the system, such as the imbalances in the rules, the inequitable distribution of benefits and losses, the lack of tangible benefits to poorer countries, the massive losses to poor countries and poor people from the continuous decline in commodity prices and terms of trade, or the threats to livelihood and jobs when small firms and small farmers are unable to cope with the flood of cheap imports.

“In short, the marginalisation of LDCs and some other developing countries should be mentioned so that there is recognition of these problems by Ministers with the view to resolving them.”

Drawing attention to the Zanzibar document of the LDC Ministers, entitled the LDCs’ Development Agenda at the 4th WTO Ministerial Conference, Mchumo said the LDCs would like to see prominence given to the concept and the substance of a Development Agenda, which should be the overarching framework for the next stage of the WTO’s development, and which therefore should be the overarching framework of the Doha Declaration.

“In recent months there have been many statements made by the WTO director general and by our developed country partners about how the next phase of the WTO’s discussions must be centred on development. Therefore the declaration, in its preambular section, as well as throughout all its sections, must centre on development concerns.”

The preamble should include the key points relating to Ministers agreeing to implement a Development Agenda at the WTO in the next phase of organisation’s evolution, “aimed at mainstreaming development concerns in the WTO, and to enable development to take center stage in the WTO.”

The Development Agenda should include: satisfactorily addressing the wide range of implementation issues; operationalising the special and differential treatment; ensuring trade policy flexibility to accommodate the interests of LDCs and other developing countries; securing meaningful preferential market access for LDCs; taking full account of the interests of LDCs and other developing countries in the built-in agenda and mandated reviews; fairer procedures and conditions for LDCs and developing countries seeking accession; effective capacity building; and ensuring an inclusive and transparent negotiating process.

This was a full agenda that could adequately take up the time of the WTO membership in the next several years.

While the agriculture was still to be elaborated, from the LDC point of view, Agriculture was the critical issue on which many other issues depend. But the section is at present empty.

The points to be included from the LDC perspective was the ending or severe curbing of subsidies in industrial countries as these enabled cheap food products from the rich countries to flood into the poorer countries. “Export subsidies for products of particular export interest to LDCs should be abolished before the review of the Second Phase of the agriculture negotiations in March 2002,” Mchumo said, and added that. LDCs also expect the implementation of bound duty-free and quota-free market access conditions to exports of LDCs covering all agricultural products in their primary, semi-processed and processed forms.  LDCs should also be allowed to review and if necessary to readjust their bound tariff rates, in cases where the implementation of the reform process has led a situation where their small farmers’ livelihoods are affected by import competition. The right of the small and poor farmers in LDCs to be protected from cheap imports threatening their livelihoods should be recognised.

On the subject of market access for non-agricultural products, Mchumo said that during the stocktaking meeting in July 2001, the LDCs had highlighted the problem of de-industrialisation faced by many LDCs as a result of removal or reduction of tariffs in the industrial sector. In many LDCs, there has been the closure of many local firms in many sectors, and the loss of manufacturing jobs.  In view of this major problem, “we view with concern and we are unable to accept para 13 on negotiations on non-agricultural products.”

LDCs require more time before agreeing to fresh negotiations in this area, and object in particular to the sentence that “product coverage shall be comprehensive and without a priori exclusions”. The “concession” to developing countries and LDCs that their commitments will involve “less than full reciprocity” is insufficient and ambiguous.

“Instead of negotiations, a study process (through a working group) can be initiated to examine the effects that previous tariff reductions have had on the economies and social development of LDCs and other developing countries, including the impact on local firms, on employment and government revenue. The study process should also examine the possible effects of future tariff reductions on countries. The study process could among other things determine whether there should be negotiations in this area. In the discussions, it should be made clear that exemptions from further liberalisation commitments will be given to LDCs and to other developing countries that have been and would be adversely affected by liberalisation measures.”

The LDCs also expressed “extreme disappointment” with the text on TRIPS, and found it “basically empty of content, ignoring the evidence of problems generated in recent years and the need to resolve these many problems.”

The para on TRIPS paras should be amended, by adding: “Ministers agree that the review process (under Article 27.3) should clarify that all living organisms, including plants, animals and parts of plants and animals, including gene sequences, and biological and other natural processes for the production of plants, animals and their parts, shall not be granted patents.”

“It should also be clarified that Members have the option to select their own sui generis system (appropriate national system of protection) for plant variety protection, including systems that accord due recognition to traditional knowledge and traditional practices, and the rights of farmers to use, save and exchange seeds and to sell their harvest. It should be clarified that nothing in the TRIPS agreement prevents Members from taking measures to ensure food security and safeguard farmers’ livelihoods in developing countries. It should affirm that the TRIPS Agreement shall not be interpreted in a manner than endangers food security. The sui generis system can also be in line with the OAU model law on community rights and biodiversity, the Convention on Biological Diversity‘ and the FAO International Undertaking on Plant Genetic Resources.

“Exclusion from patentability shall be extended to medicines which Member countries deem necessary to treat life threatening and serious ailments such as HIV/AIDS, malaria and cholera, as well as poverty-related diseases in developing countries, in order to contribute to the access of the poor to affordable treatment.

“Public health: We affirm our common understanding that nothing in the TRIPS Agreement prevents Members from taking measures to protect public health. In line with this common understanding, we endorse a clarification and interpretation of the TRIPS Agreement (as contained in the Ministerial Declaration on TRIPS and Public Health) that will allow and encourage Members, particularly developing countries and LDCs, to avail themselves to the widest range of policy options for the protection and promotion of public health.

“Articles 7 and 8: We affirm that each provision of the TRIPS Agreement shall be read and interpreted in light of its objectives, principles and purpose, as set out in Articles 7 and 8 of the TRIPS Agreement.

“Technology Transfer: We affirm that the provisions of Art. 66.2 of the TRIPS Agreement are obligatory and instruct the TRIPS Council to consider and implement immediate means of fulfilling the objectives of this provision.

“Before January 2002, developed country Members shall put into effect meaningful incentives to their enterprises for the transfer of technology in pursuance with their commitments under Article 66.2 of TRIPS. Notification of these measures shall be provided at the first meeting of the TRIPS Council in 2002, using the same procedures of notification as those in Article 63.2.”

The Ministers should also instruct the TRIPS Council to identify and implement additional measures (other than the provision of incentives) to make effective the obligation to transfer technology to LDCs; this decision should be made at the latest one year after the 4th Ministerial.

As for Non-violation complaints, the Ministers should agree “that Article 64.2 shall be modified so as to make it clear that subparagraphs 1(b) and 1(c) OF Art XXIII of GATT 1994 shall not apply to the TRIPS agreement.”

In other respects, the transitional period for LDCs in the TRIPS agreement shall be extended so long as they retain the status of an LDC, in view of the lack of capacity of LDCs to implement and benefit from the agreement, and also in view of their weak technology base and capacity.

On the Singapore issues, Mchumo said the LDCs cannot agree with the parts of the Draft-relating to the Singapore issues. At Zanzibar, the LDC Ministers indicated that the four “Singapore issues” were not yet ripe for negotiations as the issues were complex and the LDCs were not able to fully understand the implications for them. Therefore the LDCs were unable to accept para 18 (on Trade and Investment), but prefer the option of para 19 for focused study. The implications of rules in this area have not been fully discussed nor understood.

As for Trade and Competition, the LDCs were unable to accept para 20, and would rather prefer the option of para 21.

On transparency in government procurement, the LDCs were unable to accept para 22, and they were not prepared to launch negotiations in this area; the study process in the working groups has to continue.

On trade facilitation too, the LDCs were unable to accept para 23, and were not prepared to launch negotiations in this area.

“LDCs are of the view that trade facilitation measures are necessary and beneficial and but they share the view that this area does not require new rule making. Hence the study process in the working group should continue.”

On anti-dumping and countervailing actions, Mchumo said the LDC Ministers had said at Zanzibar that LDCs were neither able to defend their industries against dumped and subsidised imports nor to protect the legitimate interests of their exporters: Hence simplified procedures for taking anti-dumping and anti-subsidy actions should be devised for the use of LDCs. Also, the best endeavour provisions of Art 15 of the Agreement on Anti-Dumping (AAD) should be operationalised so as to impart stability to the initiatives undertaken to improve market access for LDCs. An agreed interpretation of Art 5:8 of the AAD, should be adopted to raise the threshold for the volume of imports from LDCs from 3 per cent to 7 per cent, and exempting them from cumulation. There should also be an agreed interpretation of Art 27:10 of the ASCM to increase the threshold for imports from LDCs from 4 per cent to 10 per cent and exempting them from cumulation.

The Para 33 of the draft on technical cooperation was weak Technical assistance to help countries understand the WTO rules and implement obligations was not sufficient.

The declaration should have formulations, as suggested by LDCs in Zanzibar, that there should be provision of technical assistance and capacity building programmes for LDCs in order to address the supply side constraints for them.

A few days ago, the LDCs had the opportunity to preview the new WTO strategy for technical assistance and capacity building, fully incorporating LDC concerns.  The paragraph in the Draft declaration “at best falls short of that strategy. “

Thanking the GC chair for including a section on LDCs, Mchumo said that while the Para 34 contained some good points, it did not adequately reflect the need for concrete commitments.

The text should have the further points:

“* We take note of the outcome of the Third United Nations Conference on the Least Developed Countries and of the LDCs Trade Ministers Meeting in Zanzibar, and stress that full integration of the Least Developed Countries in the Multilateral Trading System shall require fundamental and comprehensive contribution by the WTO members. We therefore agree to:

·        Make a binding commitment on duty free and quota free market access for all products originating from LDCs with realistic and flexible Rules of Origin to match the level of industrial capacity of the LDCs;

·        Apply a standstill to all contingency protection measures on market access for export products of LDCs;

·        Bind and fully implement all existing the S& D provisions in favour of the Least Developed Countries, and to adopt new provisions (which shall also be bound) that are needed for the development of the LDCs;

·        Accord increased technical assistance, including through integrated framework in the development, strengthening and diversification of production and exports of goods and services of the Least Developed Countries under a regular budget;

·        Provide technical and financial support to LDCs prior to the introduction of any new TBT or SPS measure in those LDCs which whose exports would be adversely affected.

·        Withdraw all quantitative restrictions on all textile and clothing products from the LDCs beginning from 1 January 2002;

·        Not expect reciprocity from the least developed countries in making commitments and to provide sufficient flexibility to LDCs in the implementation of their obligations.

·        Facilitate the accession of LDCs into the WTO with a more streamlined process of accession, under terms consistent with their development, financial and trade needs. The LDC countries seeking accession should not be asked to undertake commitments higher than those undertaken by LDC members of the WTO, and the transitional periods mandated by WTO Agreements applied to them should start from the date of accession.

As for the last section of the draft declaration, on “organization and management of the Work Programme” (paras 36-42), the LDC Ministers at Zanzibar were very clear “that LDCs are not in a position to undertake broad based negotiations involving many new issues due to lack of capacity to negotiate and implement new commitments.”

“What we interpret in this section is that we are preparing for a broad based programme of negotiations and with the inclusion of a number of new issues for which we are not prepared as already indicated. Counting on new areas of negotiations alone, there are more than 8 clusters, not to talk of the mandated negotiations and on implementation issues. Clearly, this is a heavy burden which LDCs are not ready to undertake and we would urge you to review this section in order to bring about a programme which our Ministers called “manageable” and that will fully accommodate LDCs’ interests.” – SUNS4982

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

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