Info Service on WTO and Trade Issues (Dec18/06)
12 December 2018
Third World Network
Current WTO reform proposals must be rejected, says Minister Davies
Published in SUNS #8814 dated 11 December 2018
Geneva, 10 Dec (D. Ravi Kanth) - The current set of reform proposals
for "modernizing" the World Trade Organization must be rejected
by developing countries, South Africa's trade minister Rob Davies
told SUNS on Friday. These proposals would "make an unbalanced
multilateral trading system even worse" by curtailing the "policy
space" for industrial and economic development, Davies said.
"This is the time for the developing countries to come together
and reaffirm what we want" at the World Trade Organization, he
said, expressing alarm over a set of reform proposals advanced by
major industrialized countries and their allies.
Developing countries face "a very one-sided debate" if they
do not articulate a common position, "as others [several industrialized
countries and their allies] have made their position very clear and
their positions are to the disadvantage of the developing countries,"
Davies said the so-called reform proposals which were advanced by
several industrialized countries as well as some developing countries
"would make an unbalanced multilateral trading system even worse."
"And that is the issue we [the developing countries] have to
confront," he said.
"The proposals on the table are not acceptable to the developing
countries, we are not willing to agree to steps that would bring about
differentiation between us developing countries and we are not going
to accept tightening of some rules that are of interest to some members,
while at the same time big issues like agriculture trade remain on
the back burner," he repeatedly emphasized.
"It is time for developing countries to speak out [against the
reform proposals]," the South African Trade Minister said.
"I think the proposals, simultaneously put out on the table,
are clear that developing countries should not have access to policy
tools which every country that is industrializing should have access
to, and their [policy] access should be severely curtailed."
Elaborating on the reform proposals, he said "what they [the
proponents] are talking about is not only same obligations [must apply]
but can have more time on a case by case you can ask for in the process
leading up to the Doha Round."
South Africa, he said, "made a strong case that historically
we are subjected to injustice as we were classified as a developed
country but we were asked to take a low Swiss coefficient that would
make things more disadvantageous."
Subsequently, "we were asked to justify our case as a developing
country, and we were told that we will have a carve out that is not
sufficient to correct the historical injustice," Davies explained.
"So this formula exposed us to power relations and it was not
acceptable," he said, suggesting that the WTO reform proposals
on the table will impose new power relations on developing countries
unless they reject them in full.
The United States, the European Union, and Japan have also targeted
against industrial subsidies, mandatory transfer-of-technology policies
and intellectual property rights as part of the reform proposals.
Commenting on industrial subsidies, Davies said for many countries,
"industrial subsidies are policy tools that are necessary to
support industrial development and countries have deployed them for
He said even smaller countries need industrial subsidies for further
Worse still, "the proponents want rules on industrial subsidies
but they are not prepared to address significantly the huge distorting
subsidies in agricultural products," he said.
"So what will happen is that the rules on industrial subsidies
will be made further disadvantageous for developing countries like
South Africa to move up the value chain," he maintained.
Davies said trade ministers of Africa will "discuss these issues
in the African Group trade ministers' meeting in Cairo next week [beginning
from 10 December] and our view is that, particularly South Africa,
strong message should go out that these reform proposals are not acceptable."
About reform proposals that intend to strengthen the role of the WTO
secretariat, and the monitoring and notification requirements, Davies
said "clearly, what is being attempted in monitoring and notification
requirements is to limit the policy space in the developing world
and prevent the lessons of few developing countries that have succeeded
(from being followed by others). The latest one is of course China
and that is what it is all about."
"That is the problem and that is what Ha-Joon Chang argued in
his book Kicking the Ladder and that is what exactly it is - kicking
the ladder," he said, emphasizing that attempts are being made
to ensure that developing countries should not have recourse to policies
that have enabled the developed countries to grow over the past 200
The US had built its industry starting with the Hamilton plan - "Report
on the Subject of Manufactures" in 1791.
"The core of his [Hamilton's] idea [is] that a backward country
like the US should protect its "industries in their infancy"
from foreign competition and nurture them to the point where they
could stand on their own feet," wrote the Cambridge economist
Ha-Joon Chang in his book "Bad Samaritans - The Guilty Secrets
of Rich Nations and the Threat to Global Prosperity."
Even Adam Smith, the Scottish father of free trade, "had solemnly
advised the Americans not to develop manufacturing," says Chang.
"He [Adam Smith] argued that any attempt to stop the importation
of European manufactures" would "obstruct instead of promoting
the process of their country [Britain] towards real wealth and greatness,"
Indeed, Britain and the US, the two most successful economies, had
been protectionist for long periods of time with high tariff walls,
according to Chang.
"While Britain and the US were protectionist, they were economically
more successful than other countries because they were less protectionist
than others," Chang has argued.
Asked to comment on the developing countries failing to come together
in the face of such disadvantageous and harmful proposals to their
interests, Davies said "if you are talking about groups and their
positions, we went into the [WTO's eleventh ministerial conference
in] Buenos Aires meeting with a set of proposals to improve special
and differential flexibilities and 120 countries had agreed on this."
But the developed countries said that the S&DT proposals "are
not acceptable as they would have serious consequences."
"But what about the reform proposals?" he asked. Surely,
"they will have much more serious implications," Davies
If the reform proposals make their way (into the WTO rules) then we
will have "power politics and even more unbalanced multilateralism
than now," he said. "And that is the choice between a rock
and a hard place," Davies emphasized.