TWN Info Service on WTO and Trade Issues (Oct06/09)

12 October 2006

Report 8 of UNCTAD meetings

Kenyan Minister warns against bilateral trade deals

By Martin Khor (TWN) Geneva, 5 Oct 2006

The Kenyan Trade Minister, Mukhisha Kituyi, today spoke up against the danger of countries running to negotiate bilateral and regional trade deals with the impasse of the Doha negotiations at the World Trade Organisation.

"If we face hard decisions in the WTO, we should not run from there by going after bilateral deals," he said in a presentation at the Mid-Term Review session at UNCTAD.

At the same panel, Brazilian Ambassador Clodoaldo Hugueney reiterated the need for resumption of the Doha negotiations but added that "you can't have a successful Round without dealing with development." He said that agriculture and development are at the centre of the Round, for the first time.

Kituyi, who also currently chairs the African Union Ministers of Trade, said that there is a rise of bilateralism as the Doha Round talks slowed down. Through bilateral and regional agreements, the developed countries were having the same aims as they had in other fora.

"Though the words change, the targets remain the same," he said. Referring to the latest European Commission paper on trade policy, he commented that the EU refused to be on the defensive and was going to go for "more market access."

The Kenyan Minister has on previous occasions spoken up on the imbalances and risks posed to developing countries in the Economic Partnership Agreements that the European Commission is negotiating with the ACP Group of countries. However, he did not mention the EPAs in his speech.

He added that many issues of concern to developing countries, such as the need to tackle agricultural domestic subsidies in developed countries and the use of special and differential treatment for developing countries, could only be dealt with in the multilateral system.

To go towards bilateral deals would be running away from the multilateral system, which is the only forum which can deal with these issues, said Kituyi.

Speaking at the session on "globalisation for development", Kituyi said globalisation created opportunities and challenges that were unequally distributed, and that managing globalisation must deal with this inequality.

UNCTAD has the opportunity to bridge the divide between global rule making and action. He said a major challenge was how to translate the UN commitments (such as on the MDGs) into a matrix of global systemic issues and actions, that can create rules to harmonise opportunities.

Julio Ortega Tous, Minister and Chief Trade Negotiator of the Dominican Republic, said the developing countries had made all efforts to integrate into the world economy. "We opened our economies, privatised state companies, cut budget spending and subsidies, and we even dared to sit as equals in some trade negotiations with developed countries."

However, the developing countries had instead felt the ill effects of globalisation on their economies. Giving an example, he said that the ACP countries had 3.5% of the total imports into the EU in 1970 but by 2005 the share had dropped significantly.

As the current Economic Partnership Agreements were being conducted on a reciprocal basis, there would have to be a free-competition system. He expected the share of exports to go down further.

With the Doha talks suspended or even aborted, it should be realised that common ground can be found only by listening to the developing countries' requests, such as aid for trade, elimination of agricultural subsidies, the recognition of asymmetries and food sovereignty.

Brazilian Ambassador Clodoaldo Hugueney said the results of globalisation are at least mixed because of many asymmetries, not only among countries, but also between sectors, for example, the practice of globalisation in services, industry and agriculture.

In agriculture, the developed countries insulate their domestic agriculture from globalisation, and at the same time they want a free ride in industry and services by opening up the developing countries and integrate them in the world market.

This, he said, is the reason for the failure of the Development Round, as agriculture is at the centre of the Round.

Hugueney added that there should be a resumption of the Round, as a world of bilateral deals is a worse world. Trade distorting domestic subsidies in agriculture cannot be dealt with through bilaterals.

For the Round to succeed, "we must see movement from the developed countries which have the major responsibility to resume the talks. For the first time the Round puts agriculture and development at the centre.

"If it doesn't succeed it's a lost opportunity for the multilateral trading system and the developing countries. The developed countries are also going to lose as the engine of growth today is with the developing countries."

Hugueney said groups of developing countries like the G20, G33, ACP and LDCs were all trying to promote a successful pro-development Round.

He added "you can't have a successful Round without dealing with development." It would be the first time that development is put at the centre of trade rules.

Hugueney also said UNCTAD is well placed as it has a broad view on coherence and global governance. "We need to develop a view of globalisation from the South within UNCTAD. Developing countries have a major role now in global growth and there is a greater need for South-South cooperation now."