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TWN Info Service on WTO and Trade Issues (May05/6)

10 May 2005


Report 3 on WTO Symposium

DEVELOPMENT ABSENT IN THE DOHA TALKS,  ACCORDING TO SPEAKERS AT SYMPOSIUM SESSION

Although development is supposed to be at the centre of the Doha Work Programme, in reality the development dimension has not been adequately implemented, or may be absent altogether, in the current Doha negotiations, according to several panelists at a session on development during the WTO's public symposium held in Geneva on 20-22 April.

Some of the panelists in fact found that the Doha work programme in some areas, especially industrial tariffs, was likely to produce outcomes that would be against development interests.

The session, "Development perspectives on the current WTO negotiations", was organized by the Third World Network as part of the WTO's public symposium, "WTO After 10 Years: Global problems and multilateral solutions."

Below is a report of the session.

With best wishes
Martin Khor
TWN

___________________________

Development absent in Doha talks, WTO symposium told By Martin Khor, TWN, Geneva

The development dimension has not been adequately implemented, or may be absent altogether, in the current Doha negotiations, according to several panelists at a session on development during the WTO's public symposium held on 20-22 April.

Some of the panelists in fact found that the Doha work programme in some areas, especially industrial tariffs, was likely to produce outcomes that would be against development interests.

The session, "Development perspectives on the current WTO negotiations", was organized by the Third World Network as part of the WTO's public symposium, "WTO After 10 Years: Global problems and multilateral solutions."

Dr Nagesh Kumar, director-general of the New Delhi-based Research and Information System for Developing Countries, said the developing countries had taken on heavier commitments than developed countries during the Uruguay Round with new obligations in the TRIMs, TRIPS and GATS agreements that involved the narrowing of their policy space and income transfers from the countries.

Their terms of trade had fallen, their share of world trade declined (if China and oil are not counted) and their growth experience was poorer in the 1990s than the 1980s. The fruits of globalization were not shared equitably.

The Doha Agenda starting in 2001 had raised expectations that it would be a Development Round, with the focus on development concerns, and developing countries expected that their concerns would be addressed and the balance of gains would be in their favour. However, said Nagesh, it had not turned out that way at all.

In agriculture, despite the Doha mandate, there was reluctance by developed countries to eliminate export subsidies (where an end date is not yet fixed) or reduce domestic support, said Nagesh. But in market access they are pushing developing countries to commit to high tariff reduction so that the developed countries' farms can secure market access. The developing countries cannot afford subsidies, so they can only use tariffs to support their large masses of farmers. By asking for deep tariff cuts, their sensitivities are being ignored.

Nagesh said that in the NAMA talks, although there is the Doha mandate that the modalities are to be based on "less than full reciprocity" for developing countries' commitments, in fact, the developed countries are seeking the opposite, i. e. more than full reciprocity from developing countries. The formulae put forward are based on the non-linear concept where higher tariff rates are brought down more. As developing countries have higher tariffs, they would have to reduce their tariffs by more, resulting in more than full reciprocity in their commitments.

He added that there was very little progress on special and differential treatment issues, which is all the more surprising since this is supposed to be a Development Agenda. Thus, overall, he concluded, very little has been done in the Round so far for development. If the Uruguay Round is a guide, this is not surprising. But he hoped that the Round will end differently.

John Hilary, policy director of War on Want and policy chair of the UK Trade Justice Movement, said that an internal EC document of October 2004 revealed that its priority was an aggressive offensive push for opening developing countries' markets through NAMA and services talks, and that development was not mentioned.

He criticized the developed countries for insisting on pushing developing countries to drastically cut their industrial tariffs. He recalled that the joint proposal on NAMA by the US, Canada and the EU on the eve of the Cancun Ministerial (aimed at getting commercially meaningful access to developing countries) was adopted, despite opposition by developing countries, in the July 2004 package.

The developed countries are now speeding up the NAMA talks to get a tariff-cutting formula agreed by the end of June, and they are also insisting that the flexibilities (in para 8 of the NAMA text) will have to be forfeited unless the countries agree to a harder formula. The LDCs are also asked to raise their tariff bindings significantly.

On services, Hilary said the developed countries were now turning on the pressure, even on LDCs, to make offers. Moreover, there is a threat that the current GATS framework based on a positive list approach (there are commitments only if placed on a list) could be overturned through a "benchmarking" process which groups sectors together for joint liberalization across whole clusters of sectors, a proposal that had come from the US services companies.

Hilary concluded that the rhetoric of development contradicts the reality that developing countries' markets are being forced open for the North's corporations. He interpreted the EC President Jose-Manuel Barroso's message at the symposium as "we believe in development but the poor countries also have to pay." This, he said, was unjust.

The developing countries had paid far more than developed countries in the Uruguay Round. In NAMA, they are asked to pay far more again. Yet the Northern corporations are piling on pressure for even more market access. "We need to challenge the rhetoric of the Doha Development Agenda and prove there is a real development outcome," he concluded.

Charles Abugre, Christian Aid policy director, challenged the basis of projections by the World Bank and other agencies of the massive gains from the Uruguay Round (that did not materialize) and from more liberalization by developing countries. From 1995 to now, the poor countries had liberalized more while developed countries had expanded their trade restrictiveness.

With the poor liberalizing more than their economy can take, he said, import competition can decimate economies and communities, as the experience of Africa, the Caribbean and parts of Asia had shown. Rural producers cannot produce and families cannot repay their debts.

Calling for trade policy flexibility, Abugre said it was a fetish that trade policy goes only in one direction. Even when poor countries are devastated by low applied tariffs, they cannot increase these due to loan conditionalities and a one-sided presentation of trade theory that advocates a one-direction tariff policy.

This, he said, has to change. The poor countries would not receive special and differential treatment benefits unless the international financial institutions back away from trade policy. The Blair Commission on Africa had now agreed that forced liberalization is a major cause of African countries' inability to grow and to export. Thus, trade policy flexibility has to be available to poor countries.

Goh Chien Yen of Third World Network, citing examples of the application of proposed non-linear formulae to reduce industrial tariffs, showed how the reductions would be very drastic for developing countries, for example, a tariff of 60% now would be cut to 7.1% under the US proposal.

He said that there were already many countries where rapid liberalization, sometimes enforced, had led to devastating impacts, and cited several examples from African Development Bank reports.

He added that the non-linear formula in NAMA is inconsistent with the Doha mandate and would lead to "less than full reciprocity in reverse." The NAMA proposals would lock developing countries' tariffs at low levels, removing their policy space for long term industrial development, especially since the WTO had already removed other tools for industrial development through the TRIPS, TRIMs and subsidies agreements.

Jacques Berthelot of Mouvement de Solidarite (France) said the framework on agriculture in the July 2004 package would not be able to foster development. One major reason is that the US and EU would be able to retain a large part of their subsidies through falsely representing them as non-trade distorting or hiding them.

He said the EU and the US had been able to "cheat" in terms of their notifications to the WTO of their agricultural supports. This, he said, allowed them to hide large amounts of input subsidies (such as on animal feed, irrigation, agricultural fuel, agricultural insurance and interest rate rebates on agricultural loans).

He said that there were also "cheatings" on investment subsidies by the EU through improper notification in the Green Box, and the hiding of export subsidies (through subsidies on inputs that go into production of exports).

He added that the new EU agricultural policies (the CAP reform of 2003-04) and the US Farm Bill of 2002 are not abiding by the rules of the agriculture agreement. In particular, he said, the new single farm payment created by the CAP reform of June

2003 did not fulfil the criteria of the Green Box. He also argued that the counter-cyclical payments created by the US Farm Bill of 2002 could not be accommodated by the new Blue Box in agriculture created by the July 2004 package.

Berthelot said that the framework agreement on agriculture would not be able to foster development and that the "special products" category and special safeguard mechanism would be inadequate for protecting the developing countries. He suggested that developing countries should safeguard access to their own domestic market as their prime objective through effective import protection and remunerative prices, including through supply management.

Sangeeta Shashikant of Third World Network reviewed recent developments in TRIPS, pointing out that two deadlines had passed on finding a permanent solution to the para 6 problem identified by the Doha Declaration on TRIPS and Health (i. e. supplying medicines to countries with inadequate manufacturing capacity). She said the present impasse should be broken by supporting the African Group proposal on the subject.

She added that on the review of Article 27.3b of TRIPS, there had been several proposals on prohibiting the patenting of life (including certain life-forms and living processes that are now mandatory to patent in TRIPS) and on clarifying that countries can choose their own sui generis system for plant varieties protection. However, there had not been progress in these areas.

She said that there were also proposals by many countries to amend the TRIPS agreement to require that patents on genetic materials and traditional knowledge not be granted unless the application could disclose the source of origin, and show evidence of prior informed consent and a benefit sharing arrangement with the countries of origin.

 


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