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Development promises of Doha not fulfilled

Developing countries’ concerns are in danger of falling by the wayside as the WTO totters through the implementation of its Doha work programme. Such was the worrying scenario painted by some discussants in a panel session at the WTO symposium

GENEVA: The promises made at the Doha Ministerial Conference in November 2001 of putting development at the heart of the WTO work programme (launched by the Ministerial Declaration) have so far  turned out to be empty rhetoric, and since Doha, the WTO had in fact ignored  the interests of developing countries, some panellists at the WTO public symposium charged on 18 June.

The 18 June morning session was on “Fulfilling the Doha Development Agenda: Key issues for developing countries” and had four discussants: US academic and free-trade advocate Prof. Jagdish Bhagwati; a British government official, Mrs. Diana Melrose, who heads the International Trade Department in the Department for International Development (DfID); civil society activist and Director of the Third World Network, Mr. Martin Khor; and the head of the South African delegation to the WTO, Mr. Faizel Ismail. The Deputy Secretary-General of the United Nations Conference on Trade and Development (UNCTAD), Mr. Carlos Fortin, was the moderator.

The commitments made at Doha to meet the demands from developing countries on implementation issues and on strengthening and making operational the provisions on special and differential treatment (SDT) in WTO agreements had not been fulfilled, said Khor.

Nor had their interests been reflected in the ongoing negotiations on agriculture and non-agricultural market access (NAMA). “Instead, the developed countries are pushing hard to get a Cancun decision to negotiate new issues, against the wishes of a majority of developing countries, and the developed countries may again use unfair procedures and tactics to achieve their goal,” Khor warned.

Another discussant, Bhagwati of Columbia University, warned of the dangers of lobby groups and their governments trying to put non-trade issues inside the WTO’s ambit.

“If the multilateral trading system is captured by the developed countries and gets totally distorted, with a dagger aimed at developing countries, then where are we going?” he asked. “New issues are coming into the WTO,” Bhagwati said, “in the name of trade due to the lobbies of the North.”

Melrose from the UK Department for International Development said it was disturbing that after Doha there had been “least progress made on issues that matter to the developing countries.” She cited the missed deadlines on agriculture, TRIPS and public health, and SDT.

Faizel said the WTO rules reflected the priorities of developed countries, often at the expense of the priorities of developing countries.  The failed deadlines in the WTO negotiations, he added, had undone all the balances in the Doha programme, and “all the issues will now go to Cancun, and (they) threaten to block one another like logs in the river.”

Opening the session, the moderator and chairperson, Fortin, said that, in UNCTAD’s view, the key issues (on the development agenda) were market access for developing countries, developing development-friendly rules, transition issues such as helping developing countries to export, and support to developing countries to face their commitments and take advantage of opportunities.

Trade-related?

Bhagwati said he was suspicious when people sought to bring in so-called “trade-related” issues into the WTO.  Citing the case of intellectual property, he said it was actually a royalty-collection device. The pharmaceutical drug lobby called it “trade-related” as that sounded good, like taking a holiday in the Bahamas.

“But really, it has nothing to do with trade,” said Bhagwati. “It got into the WTO because of muscle power.  They captured the USTR (office of the US Trade Representative).  It’s a rip-off.  Now the USTR is accused of holding up the Doha agenda, so they try to shift attention to the Europeans on the agriculture issue.”

The US is now being blamed for the intellectual-property problem in the WTO but they need not have been if intellectual property had been left as a self-standing issue outside the WTO, he said.

“Now the USTR is suffering; it is good as it is sweet revenge. You started it and you suffer for it,” he remarked.  “They have had to reopen the issue due to AIDS and anthrax.”

Bhagwati added that it was the corporate lobby that got intellectual property into the WTO and now the WTO is being blamed, but the NGOs should instead go after the USTR rather than the WTO.

He also criticized the USTR for putting restrictions on the ability of countries to use capital controls, through bilateral agreements like the ones it had concluded with Singapore and Chile.

“If the trading system is captured by the North and gets totally distorted and becomes a dagger aimed at the developing countries, then where are we going?” he asked. “New issues are coming into the WTO in the name of trade due to the lobbies of the North.”

Empty rhetoric

Khor said that the Doha Ministerial Declaration had stated that developing countries’ needs and interests would be at the heart of its programme. But this had turned out to be empty rhetoric.

He said that a distinction should be made between trade, trade policy and trade rules. Trade could benefit or harm countries, depending on whether it is done properly, and whether internal and external conditions as well as the terms of trade were right. Countries could suffer if their export prices fell, or if their local firms and farms were not ready to compete with cheap imports.

Sometimes less trade rather than more could be better. For example, if coffee prices fall because of an oversupply, a reduction in export volume would benefit producing countries as this would raise prices and revenues.

Trade policy should be tailored to fit the realities of trade, and the pace, sequencing and choice of sectors for opening up to imports were crucial.  Trade rules should be made to allow for the options that developing countries should have to make appropriate trade policies, which in turn should be tailored to meet trade realities and conditions.  In general, stronger countries can afford and can benefit from liberalization whilst weaker countries need more time and leeway to protect their weak enterprises and farms.

Unfortunately, said Khor, the WTO rules seem designed to help the rich countries to practise protectionism (as agreements or their implementation on textiles, agriculture and TRIPS showed) whilst the developing countries were pressurized by WTO rules and negotiations, as well as by World Bank and IMF conditionalities, to liberalize rapidly.

As a result, in many developing countries, there has been deindustrialization and displacement of farmers from their livelihoods.

Khor said the WTO’s priority should be in rebalancing the rules, but the developed countries did not even accept that the rules were imbalanced and wanted to further exact a price from developing countries in exchange for cooperating on implementation issues.

“But developing countries have already paid a price in the Uruguay Round with TRIPS, services and TRIMs; but they did not reap the supposed benefits that they were supposed to get in agriculture or textiles,” he said. “Now they are asked to pay again in the form of new agreements on investment, competition and ‘transparency’ in government procurement in exchange for yet another promise of benefits in agriculture that they were supposed to have already got.”

In fact, said Khor, the EU and the US could not give real concessions in agriculture as their subsidy programmes were already set through internal processes. But they may again pretend to make “progress” by shifting the domestic support from one box or category to another. In reality, the subsidies, of whatever colour box, would remain trade-distorting, whatever the claims to the contrary.  Therefore they were offering nothing for something really big.

Commenting on the post-Doha talks, Khor said there had been no progress on the even limited reform programme contained in implementation and SDT.  On TRIPS, there was no progress on paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health, nor in the review of Article 27.3(b) of the TRIPS Agreement.

In agriculture, there was no attempt, in the draft negotiating modalities put forward by the chairman of the talks, to really curb domestic support as the “green box” subsidies escaped discipline, and there were very limited measures to help developing countries’ farmers. As such, the serious imbalances and injustices in the Agriculture Agreement would continue.

Khor also criticized the proposals and the chairman’s draft elements for modalities in the negotiations on non-agricultural market access, and said they imposed much steeper tariff cuts on developing countries. This went against the Doha mandate of “less than full reciprocity” for developing countries.  Moreover, developing countries were being called upon to bind most of their tariff lines, subjecting most of their industrial products to tariff reduction.

The result of the present approaches would be that for most developing countries, their imports would increase more than their exports, and for many the deindustrialization process would continue.

Khor said the developed countries had not shown any real interest in development. Instead, through their actions, they showed that their main priority was gaining more access to the markets of developing countries through existing and new rules. He warned that if negotiations were to start on the “Singapore issues”, the WTO would become even more imbalanced as the new agreements would overwhelmingly benefit the developed countries, and developing countries would be taking on additional obligations that would prevent and restrict them from implementing development policies.

“We would then have new discussions on a second generation of problems of implementation, and more lamenting about the lack of special and differential treatment,” Khor said, adding that at Cancun the Singapore issues should be dropped from the WTO programme; at the most, there should only be continuation of discussions instead of starting negotiations.

Khor added that the WTO’s overloaded programme and its non-transparent decision-making procedures were unfair to developing countries, and this lay at the heart of the WTO’s problems.  He called for the establishment of proper procedures, particularly at Ministerial Conferences.  Only if the process is fair can there be hope that the WTO can become more oriented to development, he concluded.

Least progress

Melrose said that the developing countries’ key issues in the Doha agenda were market access in agriculture and special safeguards for their farmers, resolving the remaining problem in the area of TRIPS and public health, SDT, market access for textiles, and Mode 4 (labour movement) in services.

However, in the talks so far, there had been “least progress on the issues that matter most to developing countries,” she remarked, citing the missed deadlines on agriculture, TRIPS and public health, SDT and non-agricultural market access.

Melrose said the obstacles to progress included the lack of political will in the North to take on powerful domestic interest groups, the polarized positions on the extent of liberalization, the breadth of the round and its ambitious timetable, and the serious capacity constraints of poorer countries to negotiate meaningfully.

There was thus a need for actions in a number of areas before Cancun, Melrose said, listing them as: the political leadership to take difficult decisions and EU states agreeing to reforms to the bloc’s Common Agricultural Policy (CAP); the US agreeing to support the 16 December text on TRIPS and public health; developed countries agreeing to a substantial package on SDT, and NGOs voicing more support for issues of developing countries.

Developed-country privileges

Faizel presented a critical view of globalization, and said that developed countries continue to be the main beneficiaries and they had claimed special and differential treatment (for themselves) in the trading system since 1947 and continued to enjoy these privileges at the expense of developing countries.

The growth potential of most developing countries had been stifled by trade distortions caused by the trade policies of developed countries.

“The WTO rules asserted by developed countries seek to deny developing countries the right to use policy choices that these countries themselves used successfully to develop their economies,” Faizel said.

He added that the demandeurs of the proposed investment agreement “propose to use a concept of non-discrimination and national treatment that will prevent developing countries (from guiding) investment to less developed regions and empower local communities.  This concept would prevent the black communities in South Africa (from using) the influence of the state to empower previously disadvantaged people.  Thus the notion of the right to establishment would need to be balanced by the performance obligations of investors.”

Faizel said the Doha agenda was constructed in a balanced way, with a deliberate staging of interim deadlines, that would resolve upfront the issues of developing countries - implementation, SDT and TRIPS.  The deadline for agreeing to agriculture modalities was also set deliberately to unlock the political will for Members to engage in preparations for a decision in Cancun on launching negotiations on the Singapore issues, he added.

“In failing to meet these deadlines, the balance in the process has been disrupted, with possible negative repercussions on the substance of the negotiations. This raises questions on our ability to conclude the round within the agreed time frame,” he said. Because of the failed deadlines, all the balances have been undone and all the issues will go to Cancun and threaten to block one another like logs in the river, he added.

Pro-business agenda

At question time, John Hilary of ActionAid commented on Melrose’s observation that the breadth of the negotiating round is a key obstacle to progress.  With regard to this, “the EU’s agenda on the Singapore issues is the predominant threat to the development outcome of this round,” he said. “The EC has told NGOs that their key agenda is a pro-business agenda which has nothing to do with development. We find it obscene that poor countries have to give such concessions to the rich.”

A Member of the Kenya Parliament thanked civil society for “coming to the rescue” of developing countries as the WTO deals with the executive arms of government, which usually do not consult Parliaments. He asked by what process the WTO could restore the state’s right to intervene in the market.

“When they promote competition between Kenya and the US, it is like asking Mike Tyson to fight with an 8-year-old boy.”

A participant from the Kuwait oil company commented that developed countries were benefiting from being members of their own regional agreements. Alluding to the discussions on competition in the WTO, he remarked: “OPEC (Organization of Petroleum-Exporting Countries) is not a hardcore cartel, it is the OECD (Organization for Economic Cooperation and Development) that is a hardcore cartel.”

Faizel said the developing countries were not demandeurs for the Singapore issues.  They were made to pay acceptance of negotiating these issues as the price for genuine liberalization in agriculture. The EU said if these issues are not put in, they could not convince their constituencies to reform on agriculture.

“For developing countries, there is a link between progress on other issues and the Singapore issues.  If they do not move on agriculture, it is not likely they will get the Singapore issues.”

In relationship to competition policy, Bhagwati said that the GATT principle says that there must be total parity.  Remarking that provisions on “hardcore cartels” were the minimum that EC Trade Commissioner Pascal Lamy wanted to have in a WTO competition agreement, Bhagwati asked: “But what about OPEC?  Will you rule that out?  If some developing countries want to develop some monopoly power to extract some trade gains, is that allowed?”

“Generally I recognize the virtue of competition,” Bhagwati said. “But there is a problem that very large companies can become a de facto monopoly as they happen to be ahead of the curve.”

Answering a question about erosion of preferences, Bhagwati said he feared that if developing countries went in for SDT, the big players would play one developing country against another.  “If you get preferences from them, they will collect something from you,” he said, adding that SDT is good only for helping in the pace of adjustment. Thus SDT should not be in the form of preferences but in having a longer time frame.

In response, Khor said that the experience of developing countries showed that a longer grace period for implementing obligations was very inadequate as a form of SDT.

There should be other meaningful forms of SDT, such as developing countries being exempted from obligations, being able to choose their own rate of implementing the obligations, or having a lower level of obligation.  Moreover, developed countries should also make binding commitments to help developing countries, including in building their supply capacity. (TWN/SUNS5368) 

 

 

 

 


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