TWN Info Service on WTO and Trade Issues (May05/4)

10 May 2005

Report 1 on WTO Symposium:

WTO symposium debates virtues or otherwise of liberalisation
The WTO organised a public symposium on 20-22 April on The WTO After 10 Years:

Global Problems and Multilateral Solutions. It was attended by more than a thousand people.

Below is the first of three reports on some of the activities that took place at the symposium.

With best wishes
Martin Khor


WTO symposium debates virtues or otherwise of liberalisation

By Martin Khor, TWN

A three-day Public Symposium organised by the WTO started on 20 April with opening speeches by the European Commission President Jose-Manuel Barroso and the President of Rwanda Paul Kagame and a panel discussion on the WTO's institutional challenges.

The theme of the symposium is "WTO After 10 Years: Global problems and multilateral solutions." Many of the speakers spoke in a spirit rather celebratory of the 10th anniversary of the WTO's founding, but this could also be due to the choice of persons chosen to be speakers.

Barraso as well as former GATT director-general Peter Sutherland advocated making a distinction between developing countries in relation to the level of WTO obligations. Several developed country speakers extolled the success of the WTO, and asked developing countries to realise that if they further liberalised it would only be to their own good.

However, other speakers (including the Rwandan President, the Archbishop of Capetown and some NGOs) pointed out that the trade share and living conditions of poorer countries had worsened and that further liberalisation commitments would cause developing countries more damage.

Barroso said he saw the WTO as a gifted 10-year-old rather than old man GATT dressed in new clothes trying to look youthful. The WTO is the most advanced multilateral institution, he said, pointing to the dispute settlement mechanism as a unique tool giving teeth to a rules-based system allowing disputes to be settled constructively.

He praised the WTO for now linking trade to development, and gave credit to the EU for being "at the forefront" to fight for a Doha development agenda where trade is not an end in itself. "As far as I'm concerned this Round will not have succeeded if it does not integrate developing countries better into the world economy," he declared.

He also said the EU welcomes the establishment of developing country alliances such as the G20 and G90, as the operation of coalitions is essential to the future rationalisation of decision-making processes in the WTO.

However, he expressed the EU's concern about the pace of negotiations especially in services and industrial tariffs, and said, "we cannot afford to be complacent." The negotiations must move forward "in parallel" on agriculture, NAMA, services, trade facilitation and rules.

He gave credit to the EU for taking the lead on agriculture with an undertaking to eliminate export subsidies and challenged others, in particular the G20 developing countries to "match our ambition by putting forward equally ambitious offers for industrial and services market access. We all have to give in order also to take."

Rwandan President, Paul Kagame, by contrast, tried to show how poorer countries have taken very little if anything at all from the trade system. He said that despite global trade growth, "many member countries of the WTO are not benefiting from the global trading system," with living conditions having deteriorated in parts of Africa.

Although the multilateral trade system is recognised as the best model, however, African countries are yet to benefit from this system. After ten years of the WTO, we need to ask critical questions: Is development really at the heart of the Doha development agenda? Is the WTO delivering for the poor and least developed countries? Are negotiations driven only by the need to increase market access for a few members, or market access and development for all?"

Answers should be measured against capacity building as well as enhanced market access, he said. "Today the trading system is skewed in favour of some countries at the expense of others. This is morally wrong and has far reaching consequences for the countries' development and security."

"Due to the inequitable trading system, our countries are increasingly dependent on aid, creating an aid dependency cycle." The countries' concerns with the multilateral trade system include "unfavourable trade conditions, unfair trade rules, barriers to market access including tariff peaks and escalation, and distortions in agriculture trade due to subsidies in developed countries." These distortions increase poverty levels.

He agreed that trade should also open among countries of the South, and called for removal of barriers among African countries. He also called on "rapidly growing developing countries" to show leadership and the ability to engage for "mutually beneficial and essential compromises" to promote the trade agenda, and to assist weak countries through South-South cooperation.

He agreed that countries engaging in open trade do better, but added that trade liberalisation alone is insufficient. He warned that without companion policies to build institutions and trading capacity, "trade liberalisation could actually create a perverse allocation of resources and deepen poverty."

"Many African countries have faced this situation, explaining why over the past 20 years even as Africa has liberalised, its share of global trade shrank from 6% to 2%. It is thus urgent for the international community to understand this is why low income countries have emphasised the need for a progressive and sequential liberalisation process."

At a later session on WTO's institutional challenges, Peter Sutherland, former GATT and WTO Director General and Chair of the present Director General's Consultative Group on the future of WTO, said those who play games with or hold up the negotiations are playing with high stakes as failure would be deeply damaging to developing countries.

He described as a "negative approach" the view (including that promoted by some NGOs) that if developing countries are to liberalise their regime, it is their sovereign right to do so in their own time without the threat by WTO. The Doha agenda is festooned with special and differential treatment (S and D), so-called implementation issues and opt out for LDCs, due to this kind of thinking.

This negative approach, according to Sutherland, says that the name of the game is to get through the negotiations unharmed, without obligations, and with preferences intact. This, he said, is "not desirable." The Round must have balanced results, with the industrial countries being able to show something. There must be something given by "large advanced developing countries", or else the deal won't work. Perpetual insulation from WTO rules won't help reform in developing countries.

He agreed that in many cases poor countries cannot afford to reform, and the question is under what conditions does the WTO's role become positive. There is a view that reforms don't work until fundamentals are in place. The WTO has relevance to these fundamentals, as there is a range of WTO agreements that impinge on the pre-requisites, for example, services in relation to health and finance, and TRIPS affecting technology transfer. The WTO can thus be as relevant to developing countries as it is to large firms.

Referring to the Consultative Group report recommendation that the WTO set up a consultative body of senior officials, he said such a body is needed for development issues to be properly discussed in the WTO as the normal negotiating process within WTO is not conducive for discussions on broader political and economic issues.

Archbishop of Capetown N. Ndungane said the greatest institutional challenge for the WTO is to "put people first." Referring to the AIDS crisis, he said the WTO has done too little. Referring to the TRIPS agreement and recent developments on patents and health, he said there is still limited flexibility in the IPR rules, which is complex to operationalise in practice and does not respond to the needs of anti-retroviral treatment.

The trade system can respond better. While the WTO may be working and contribute to growth, "it is important to ask for who it works." Archbishop Ndungane said the system favours the rich, poor countries' share in trade has halved and it is a myth that increased wealth is enjoyed by all. He said an UNCTAD report showed that $2.4 billion a day is lost to developing countries due to blocked market access, and extreme poverty has risen in Southern Africa.

Ndungane said he was optimistic that a change would come in 2005 due to rising world public opinion. There had been just actions all over the world due to the Global Week of Action, with many groups campaigning for Trade Justice and to make Poverty History, he said.

The Human Rights Declaration, in its article 25, had recognised everyone's right to the fundamentals of life. WTO members are obliged to protect these rights, and the organisation could perpetuate the current system or make a difference for people to have access to the fundamentals of life. Saying that the WTO can do better, he said the S and D principle must be addressed effectively and the "paper provisions must become human reality."

Another former WTO director-general, Renato Ruggiero, said the WTO has been a success. Although some arguments of the critics of WTO merit attention, the WTO's success cannot be overlooked. Although the benefits are not shared equally, with the LDCs not gaining, there were also the big gains in India and China, he said.

According to him, the WTO has three priorities: improve the LDCs' situation, strengthen the central role of the dispute settlement system, and restore the primacy of the multilateral system over bilateral agreements.

James Bacchus, former member of the WTO Appellate Body, made a strong plea to tackle its foremost challenge of credibility, which is critical to its future. He appealed to WTO members to "open up the doors" of the WTO to the public and the media.

"My best advice is to open the doors and let the public in, to see the WTO at work, show it has a human face, or else the WTO won't get public support," he said. "Only with more open doors will we achieve the goals of open trade."

He suggested that proceedings of panels, Appellate Body, the Dispute Settlement Body and the General Council be open to the public. He added he was not suggesting that deliberations of the panel or trade negotiations be opened or that NGOs and private parties have official standing as members have, and he understood the reservation of developing countries that fear they would be elbowed aside by well-funded Northern organisations.

"But we can open up in the right way. The WTO calls its proceedings confidential but the world says it is secret." Closing the doors would be self defeating and it gives credibility to those who criticise the WTO. "How can we say there's an impartial rule of law if the public cannot see that it's fair, impartial and working for them?" he concluded.

The Korean Trade Minister, Kim Hyun-chong, remarked on three challenges facing the WTO: the proliferation of free trade agreements, the demand for more focus on development, and the need for a strengthened institution.

He said he did not doubt the primacy of multilateralism, however bilateral agreements (which Korea is now entering into) were also useful. On development, he agreed there should be more attention paid to it, for example, by prioritising products of interest to developing countries. However on SDT, he had reservations on exemptions or lesser obligations to developing countries. While there was short term pain, liberalisation results in more competition.

He added that Korea underwent painful reform but succeeded in getting rid of corruption and curtailing trade union activity. It was a blessing that Korea had a financial crisis and indeed it might have been good if it went on longer so that there would have been more profound structural reform.

John Hilary of War on Want (UK) and chair of the Trade Justice Movement, replying to Sutherland's reference to the challenge to WTO from NGOs, said that a challenge to the current negotiations is not the same as a challenge to the multilateral trading system.

Textbook economics does not work for developing countries in the agriculture negotiations, and this is similar in the NAMA negotiations where more is being demanded from the developing countries than the developed countries, thus raising the danger of deindustrialisation in the developing countries. Hilary charged that the WTO was perpetuating unjust trade and a continuation of this would contribute to and not alleviate world poverty.

Referring to the Sutherland report on WTO's future, Hilary said it distinguished between friendly NGOs and those that were deemed not to be friendly, and that it recommended that the WTO form partnerships only with friendly NGOs. He asked that this opinion be revised.

A Senator from Pakistan questioned Sutherland why he had concluded that developing countries are not ready for reform.

Sutherland replied that he agreed that developing countries had huge challenges in reforming. He advocated that in dealing with developing countries, there is need to distinguish them by their levels of development. LDCs may not be required to open up to trade which should be required of developing countries, he said. The Doha Round should not be a one-way traffic and it is in the interest of developing countries to open up to reform, so they should not see it as a concession that is dangerous but something that helps them.

Regarding NGOs, Sutherland said it is important to dialogue with and be open to NGOs as they bring to light the needs of developing countries, for example. However, his report said that those who seek to destroy the institution should not have the same degree of dialogue.

A Canadian, representing farmers, responded to Sutherland that if you choose between NGOs to seek out those who are seeking to destroy, can you also make a choice between rules in the WTO that are destructive and those that are not? The same logic should apply, he said.

At another session, on trade, economics and growth, Dr Mariama Williams from the Institute for Law and Economics and DAWN, said there is a pervasive underlying mercantilism coupled with a pecuniary approach to competition in the WTO discussions, which explains why it is so difficult to get the development dimension in the Doha Round and the unwillingness of rich countries to resolve the outstanding implementation issues that are so critical to development.

She said the current negotiations on NAMA showed this. "If the current push for drastic and draconian tariff slashing, whatever the formula, succeeds, the ultimate result will be that developing countries lose out in the manufacturing sector," she said.

"This scenario has already been played out under IMF/World Bank structural adjustment programmes, which cut tariffs on industrial goods in some African countries resulting in rapid deindustrialisation.

"A potential impact of NAMA is that developing countries may be locked into primary commodities and extractive activities. Thus, if developing countries are not careful, they are headed towards a very familiar direction: back into the not so distant future."

She also said that the relationship between trade and gender relations is complex, but that gender considerations are important for the success of trade and growth policies.