G77, China thwart EU attempt to reinterpret Doha
Developing countries have blocked a move by industrialized states to smuggle the latter’s agenda on the “Singapore issues” into the proposed outcome of an upcoming development finance summit. The developed countries’ attempt to secure the backing of the UN Financing for Development Conference for WTO negotiations on the contentious new issues was successfully warded off by the G77 and China at recent preparatory talks ahead of the March meeting.
by Martin Khor
NEW YORK: Developing countries have thwarted an intense attempt by developed countries to get the UN Conference on Financing for Development (FfD) to endorse and welcome negotiations in the WTO towards new multilateral agreements on the “Singapore issues” (investment, competition, transparency in government procurement, and trade facilitation).
The attempt, led by the European Union and supported by the United States, Canada and other developed countries, was made at the final preparatory committee (prepcom) meeting (in New York on 14-27 January) for the Conference (to be held in Monterrey, Mexico on 21-22 March).
Developing countries, under the umbrella of the Group of 77 and China, succeeded in turning away the attempt to add new paragraphs, sentences and language in several parts of the second version of the Draft Monterrey Consensus that had been prepared by the facilitator and placed before delegations at the start of the prepcom.
During the negotiations on this document, the European Commission, which represented the EU on trade issues, proposed additions or amendments to many parts of the text which attempted to portray the outcome of the WTO’s Doha Ministerial Conference as having agreed to launch negotiations on the Singapore issues.
Some of the EU’s proposed amendments made reference to the Doha Ministerial Declaration (which stated that negotiations on the four issues would begin after the Fifth Ministerial on the basis of an explicit consensus on the modalities of negotiations), whilst omitting to mention the statement by the Doha Conference Chairman, the Trade and Economy Minister of Qatar, clarifying that the explicit consensus is indeed needed before negotiations can begin on the four issues. (This clarification by the Chairman at the closing session of the Doha meeting, which was a compromise to take account of the objections to the Doha text of about 15 developing countries, meant that a consensus on the issue of whether to have negotiations, and not merely a consensus on the modalities of negotiations, is required before any negotiations can begin.)
Non-governmental organizations present at the FfD prepcom, when addressing the plenary discussions, pointed out that the Doha outcome included both the Declaration and the Chairman’s statement, and that it would be misleading and dishonest for any delegation to attempt to portray that the Doha Ministerial had agreed to begin negotiations on the Singapore issues.
The NGOs, in a statement to the plenary, warned that any attempt by the developed countries to reinterpret or renegotiate the Doha outcome on the new issues would unnecessarily bring a large controversy into the FfD process. That controversy should be settled in the WTO rather than imported into a conference that was meant to deal primarily with finance issues.
Proposals and objections
During the negotiations, the EU, backed by several other developed countries, put forward proposals in many parts of the text to advance its agenda of getting the FfD Conference to welcome the need and importance for multilateral agreements or rules on the Singapore issues. The G77 and China, under the chairmanship of Venezuela, opposed all the proposals.
After the first round of discussions, a new draft text was produced on 19 January which included the EU proposals in square brackets or in bold print (depicting they had not yet been accepted).
The relevant proposals (and the G77 position on them and also on a few parts of the facilitator’s text) were as follows:
* In a section on foreign direct investment and other private flows, in paragraph 19, the G77 objected to the original facilitator’s text that special efforts are required in such priority areas as international investment agreements. The EU proposed that the priority areas requiring special efforts should also include competition policy. The G77 objected.
* Also in para 19, the EU proposed the following addition (in bold): “These efforts can be enhanced through effective and well-coordinated technical assistance, including its relation to policy analysis and clarification of main issues that will be addressed in the negotiations of a Multilateral Framework on FDI, as envisaged in the Doha Ministerial Declaration.” The G77 objected to this inclusion.
* In para 21, after a line on “We welcome all efforts to encourage good corporate citizenship,” the EU proposed adding: “In this context, policies to promote investment should include rights in the workplace as regulated in ILO Conventions.” The G77 did not agree, and there was a lengthy and intense series of discussions on the issue of labour in an informal “contact group.”
* In a section on international trade, in para 23, the facilitator’s text had read: “We thus welcome the WTO’s decisions to place the needs and interests of developing countries at the heart of the WTO Work Programme and commit ourselves to their implementation.” The EU and US proposed to add “negotiations of the Doha Development Agenda” after the words “at the heart of”. The G77 objected on the grounds that these proposed words were not in the Doha Declaration and changed the meaning of the agreed Doha text.
* The facilitator’s draft of para 57 (on enhancing participation of developing countries in international decision-making processes) referred to the WTO and the need to ensure that any “steering group” is representative of the full WTO membership. The G77 commented that since there was no “steering group” in the WTO, the term should be replaced by “consultations.” This was accepted.
* In a negotiating text dated 24 January, in a section on systemic issues, the EU had proposed adding a new paragraph (58ter) on the need to increase cooperation to combat financing mechanisms on terrorism, counter financial crime and combat harmful tax practices. It added the sentence: “We welcome a WTO agreement on transparency in public procurement.” This sentence was objected to by the G77.
The prepcom was scheduled to end with an agreed text of the Monterrey Consensus on Friday 25 January. However, due to several remaining sticking points, the discussions went on in informal groups till the early hours of Sunday 27 January. The UN Secretariat now has released a draft text of the Monterrey Consensus dated 27 January (11.00 am). A reading of the text shows that the G77 and China were successful in having the EU proposals on WTO issues (as mentioned above) rejected.
The following is the text of the relevant paragraphs on trade (27 January version):
“19. To attract and enhance inflows of productive capital, countries need to continue their efforts to achieve a transparent, stable and predictable investment climate, with proper contract enforcement and respect for property rights, embedded in sound macroeco-nomic policies and institutions that allow businesses, both domestic and international, to operate efficiently and profitably and with maximum development impact. Special efforts are required in such priority areas as economic policy and regulatory frameworks for promoting and protecting investments, including the areas of human resource development, avoidance of double taxation, corporate governance, accounting standards, and the promotion of a competitive environment. Other mechanisms, such as public/private partnerships and investment agreements, can be important. We emphasize the need for strengthened, adequately resourced technical assistance and productive capacity building programmes, as requested by recipients.
“21. While Governments provide the framework for their operation, businesses, for their part, are expected to engage as reliable and consistent partners in the development process. We urge businesses to take into account not only the economic and financial but also the developmental, social, gender and environmental implications of their undertakings. In this spirit, we invite banks and other financial institutions, in developing countries as well as developed countries, to foster innovative developmental financing approaches. We welcome all efforts to encourage good corporate citizenship and note the initiative undertaken in the United Nations to promote global partnerships.
“23. A universal, rule-based, open, non-discriminatory and equitable multilateral trading system, as well as meaningful trade liberalization can substantially stimulate development worldwide, benefiting countries at all stages of development. In this regard, we reaffirm our commitment towards trade liberalization and to ensure that trade plays its full part in promoting economic growth, employment and development for all. We thus welcome the WTO’s decisions to place the needs and interests of developing countries at the heart of the WTO Work Programme, and commit ourselves to their implementation.
“24. To benefit fully from trade, which in many cases is the single most important external source of development financing, the establishment or enhancement of appropriate institutions and policies in developing countries, as well as countries with economies in transition, is needed. Meaningful trade liberalization is an important element in the sustainable development strategy of a country. Increased trade and foreign direct investment could boost economic growth and could be a significant source of employment.
“25. We acknowledge the issues of particular concern to developing countries and countries with economies in transition in international trade to enhance their capacity to finance their development. These include: trade barriers, trade-distorting subsidies and other trade-distorting measures, particularly in sectors of special export interest to developing countries, including: agriculture; the abuse of anti-dumping measures; technical barriers and sanitary and phytosanitary measures; trade liberalization in labour intensive manufactures; trade liberalization in agricultural products, trade in services; tariff peaks, high tariffs and tariff escalation, as well as non-tariff barriers; the movement of natural persons; the lack of recognition of intellectual property rights for the protection of traditional knowledge and folklore; the transfer of knowledge and technology; the implementation and interpretation of the TRIPS Agreement in a manner supportive of public health; and the need for special and differential treatment provisions for developing countries in trade agreements to be made more precise, effective and operational.
“26. To ensure that world trade supports development to the benefit of all countries, we encourage WTO members to implement the outcome of the WTO’s Fourth Ministerial Conference.
“26bis. We further undertake to facilitate the accession of all developing countries, particularly the LDCs, as well as countries with economies in transition that apply for WTO membership.
“26ter. We will implement the commitments made in Doha to address the marginalization of the least developed countries in international trade as well as the work programme adopted to examine issues related to the trade of small economies.
“27. We also commit ourselves to enhancing the role of regional and sub-regional agreements and free trade areas, consistent with the multilateral trading system, in the construction of a better world trading system. We urge international financial institutions, including the regional development banks, to continue to support projects that promote sub-regional and regional integration among developing countries and countries with economies in transition.
“28. We recognize the importance of enhanced and predictable access to all markets for the exports of developing countries, including SIDS, landlocked, and transit developing countries and countries in Africa, as well as countries with economies in transition.
“28bis. We call on developed countries that have not already done so, to work towards the objective of providing duty-free and quota-free access for all LDCs’ exports, as envisaged in the Programme of Action for the LDCs adopted in Brussels. Consideration of proposals for developing countries to contribute to improved market access for LDCs would also be helpful.
“28ter. We further recognize the importance for developing countries as well as countries with economies in transition to consider reducing trade barriers among themselves.
“29. In cooperation with the interested governments and their financial institutions and to further support national efforts to benefit from trade opportunities and effectively integrate into the multilateral trading system, we invite multilateral and bilateral financial and development institutions, to expand and coordinate their efforts, with increased resources, for gradually removing supply-side constraints; improve trade infrastructure; diversify export capacity and support an increase in the technological content of exports; strengthen institutional development and enhance overall productivity and competitiveness. To this end, we further invite bilateral donors and the international and regional financial institutions, together with the relevant United Nations agencies, funds and programmes, to reinforce the support for trade-related training, capacity and institution building and trade-supporting services. Special consideration should be given to least developed countries, landlocked developing countries, small island developing States, African development, transit developing countries and countries with economies in transition, including through the Integrated Framework for Trade-Related Technical Assistance to Least Developed Countries and its follow-up, the Joint Integrated Technical Assistance Programme, the WTO Doha Development Agenda Global Trust Fund, as well as the activities of the International Trade Centre.
“30. Multilateral assistance is also needed to mitigate the consequences of depressed export revenues of countries that still depend heavily on commodity exports. Thus, we recognize the recent review of the IMF Compensatory Financing Facility and we will continue to assess its effectiveness. It is also important to empower developing country commodity producers to insure themselves against risk, including against natural disasters. We further invite bilateral donors and multilateral aid agencies to strengthen their support to export diversification programmes in these countries.
“31. In support of the process launched in Doha, immediate attention should go to strengthening and ensuring the meaningful and full participation of developing countries, especially the LDCs, in multilateral trade negotiations. In particular, developing countries need assistance in order to participate effectively in the WTO Work Programme and negotiating process through enhanced cooperation of all relevant stakeholders, including UNCTAD, the WTO and the World Bank. To these ends, we underscore the importance of effective, secure and predictable financing of trade-related technical assistance and capacity building
“57. A first priority is to find pragmatic and innovative ways to further enhance the effective participation of developing countries and countries with economies in transition in international dialogues and decision-making processes. Within the mandates and means of the respective institutions and fora, we encourage the following actions:
l World Trade Organization: To ensure that any consultation is representative of the full WTO membership and participation is based on clear, simple and objective criteria.
“58ter. We urge as a matter of priority all states, which have not yet done so, to consider becoming parties to the international convention for suppression of the financing of terrorism and call for increased cooperation with the same objective.” (SUNS5052)