Africa: Cancun, Overview (Reposted from sources cited below)
"The rhetoric of global trade is filled with promise. We are told that free trade brings opportunity for all people, not just a fortunate few. We are told that it can provide a ladder to a better life, and deliverance from poverty and despair. And we are led to hope that the current round of trade negotiations will deliver on this promise. Sadly, the reality of the international trading system today does not match the rhetoric."
- UN Secretary-General Kofi Annan, September 10, 2003. For full text see http://www.un.org/apps/sg/sgstats.asp?nid=491
As the World Trade Organization ministerial summit in Cancun moves into its closing days, African and other developing countries have had some success in calling attention to their concerns. It remains to be seen whether this will be reflected in the fine print of the official and highly technical negotiations. This posting contains two general background summaries of the issues under debate, while a separate posting focuses on agricultural issues.
The most useful sources for more detailed background and updates, from NGOs closely following the negotiations, are Third World Network [http://www.twnside.org.sg] and the International Centre for Trade and Sustainable Development [http://www.ictsd.org]. Several additional selected sources are given at the end of this posting.
A special Africa Action briefing on "Africa and the World Trade Organization" prepared two years ago at the time of the Doha Ministerial, is available at http://www.africaaction.org/docs01/wto0111.htm Given the lack of progress on most issues, the general points of that briefing are still largely applicable.
The most recent E-Journal postings on related topics can be found at: http://www.africaaction.org/docs03/tr0306a.htm, http://www.africaaction.org/docs03/tr0306a.htm, and http://www.africaaction.org/docs03/acc0309.htm
Africans Head for WTO With Low Expectations
September 8, 2003
By Charles Cobb Jr., Washington, DC
[reposted with permission]
African trade ministers and officials are approaching the fifth World Trade Organization (WTO) ministerial talks that begin in Cancun, Mexico, on Wednesday, with low expectations.
Since the collapse of the WTO's 1999 session in Seattle, Washington, the organisation has struggled to come up with a new world treaty on trade. It took about two years before trade ministers met in Doha, Qatar in November 2001 and gave themselves three years to complete work on a new treaty.
The 146-member organization has gotten virtually nowhere. Since launching the current round of world trade talks in Doha, WTO members have missed every deadline they set for themselves. "Up to now globalization has completely failed poor people and the WTO?s trade rules have made things worse," says Adriano Campolina Soares, head of the food rights campaign for the London-based advocacy group, ActionAid.
In Washington,last week, President George W. Bush urged WTO negotiators to recover enough lost ground in Cancun to reach a new world trade agreement by the 2005 deadline it set in Doha. But hardly anyone thinks that's likely to be achieved.
An end to the agricultural subsidies in Europe and the United States that make African agricultural products uncompetitive tops the agenda of concerns. The WTO would like to say it is making progress on the issue. But last week, in a statement on behalf of the Africa Group, Morocco criticized a draft WTO declaration on trade for failing to commit to ending subsidies, describing the draft as "a complex set of rules that appear to formalize... the continued use of domestic support. No mention is made of possible time-frames for the elimination of major portions of trade-distorting domestic support, a matter of great importance to the AG [Africa Group]."
But European Union (EU) Agriculture Commissioner Franz Fischler last week indicated that such demands went too far; in a sharply worded rebuff to poor nations pressing for the abolition of subsidies, he said: "If they want to do business, they should come back to mother earth. If they choose to continue their space odyssey, they will not get the stars, they will not get the moon, they will simply end up with empty hands."
Rich countries spend some US$300 billion a year on farm subsidies, about six times more than on development aid. Every EU cow gets about $2.50 a day in subsidies; a Japanese cow gets $7.50 a day. The World Bank estimates that getting rid of farm subsidies in rich countries would cause a 17 percent rise in global agriculture production, adding $60bn a year, or six percent, to the rural incomes of low and middle-income states. Annual cotton subsidies to U.S. farmers of more than $3bn (three times U.S. foreign aid to Africa) "depress world cotton prices and crowd out poor but efficient farmers in West Africa," said the Bank in a report on Global Economic Prospects released last week.
Tens of thousands of anti-globalization protestors are expected in Cancun this week.
Even the announcement by the WTO that it had cut a deal to permit developing nations to import cheap generic drugs to combat HIV/Aids, tuberculosis, malaria and other epidemics, was greeted with disappointment and skepticism by several aid agencies. It's largely cosmetic, said an Oxfam spokesperson, although African nations seem pleased. "It's good news for Africa and especially good news for the people of Africa who so desperately need access to affordable medicine," Kenya's ambassador, Amina Chawahir Mohamed, told reporters in Geneva.
The WTO deal requires the drugs to look different - not to be a copy of the originals. The deal may set up a patent conflict with countries like India, whose laws permit copying branded drugs as long as they use a different manufacturing process. But South Africa may benefit. Aspen Pharmacare, South Africa's largest producer of generic medicines,is planning to double production over the next year.
For some, however, the debate over subsidies is largely "peripheral." Economist Mark Weisbrot of the Center for Economic and Policy Research in Washington, citing World Bank figures, says gains from removing all the rich countries' remaining barriers to merchandise trade -- including manufacturing as well as agricultural products -- and removing agricultural subsides will have little real impact. "When the changes are phased in by 2015... an African country with an annual income of $500 per person would then have $503." In Weisbrot's view, the IMF "creditors cartel" and the "unpayable" debt burden, particularly in Africa - and a range of "inappropriate" macro-economic policies [are] "likely to have far more severe consequences."
Nonetheless certain crops subsidized in the West -- like cotton -- are of unquestionably of crucial importance to some African nations. But last month in Nairobi, the chairman of African trade ministers, Jayakrishna Cuttaree, urged the continent's governments not to be side-tracked from issues vital to Africa, as covered in the WTO's Doha Round. "We will not defuse pressure on Doha to new issues of discussion," he warned.
Beyond differences between rich nations and poor nations - and indeed between middle income nations, rich nations and poor nations - on specific issues like subsidies and generic drugs, the deep divide underlying every debate centers on what should the WTO be.
African nations are not only concerned with subsidies but also about the potential negative effects of proposed new rules on investment, competition, procurement policies, and trade facilitations. The lack of transparency in decision-making is another concern. In August, in a draft proposal for the Cancun meeting, eleven African nations called for clarification of the relationship between trade and investment, and expressed concern about "transparency" in trade and procurement.
And there has been bullying of developing nations. A new report released Monday by the Amsterdam-based Corporate Europe Observatory (CEO) documents EU arm twisting at the WTO. The report, based on interveiws with WTO neotiators, quotes one unamed negoatior's complaint: ""Both the United States and European Communities trade negotiators take us to the slaughter house at the end of the day. The latter might be more subtle and polite about it, however the end result is the same; we get slaughtered. I do prefer dealing with the US; at least you know exactly where you stand with them."
"There should be fair procedures especially in the final day and hours of the Ministerial Conference," the draft stated. Impromptu "green room" meetings -- a euphemism for private sessions where a few trading partners wheel and deal -- and privately circulated drafts of documents have been hallmarks of previous meetings. "There should not be last-night or last-day exclusive 'green room' meetings," the eleven ministers stated.
In the view of many in the South, the European Union, Japan, and the United States have shaped the WTO as a kind of global governance system reflecting their own interests, reaching far beyond trade. WTO rules - 800 pages of them - often override domestic policies in developing nations - as is the case with generic drug production. And not only developing nations are affected; in 1999, in order to force the Europeans to import U.S. beef raised using growth hormones, the U.S. placed sanctions worth about $117m on European goods.
Developing countries, on the other hand, and African nations in particular, see this as a value-laden policy that creates greater imbalance in world trade. Wealthy nations use their great wealth and power to ride roughshod over Africa's domestic priorities and policies. They would like a WTO with rules that are actually confined to setting the terms of international trade. "Trade rules should [just] cover trade," says Lori Wallach, director of Global Trade Watch.
No one is betting on whether progress will be made, or on how much will be achieved. Last week, suggesting that the Cancun session may fail poor nations, South African president Thabo Mbeki said that maybe poor nations should join anti-globalization protestors. "They may act in ways that you and I would not like - breaking windows in the street and this and that - but the message they are communicating relates to us," Mbeki told a seminar in Malaysia during a visit to strengthen ties between Africa and Southeast Asia.
If agreement can't be reached, "the U.S. will go it alone," warned U.S. Trade Representative Robert Zoellick, Friday. "We will find countries that want to open up markets with the United States. I hope they will be in the WTO. But if they are not, we are not stopping. We are moving with the countries that are willing to go."
TWN Info Service on WTO Issues 9 Sept 2003 Third World Network http://www.twnside.org.sg
TWN Briefings 1
SOME KEY ISSUES IN CANCUN By Martin Khor
The WTO's 5th Ministerial Conference in Cancun faces many key issues and problems. The outcome will be crucial for people and communities around the world. The developed countries, led by the US and EU, will push very hard to get their agenda accepted - opening up markets in the developing world for their goods, services and companies, whilst continuing to protect their own turf especially in agriculture. The developing countries have learnt that the rich countries will not give them access to their markets; that import liberalization is damaging their local farms and firms; and they should not be dragged into further commitments to open up. They are resisting expansion of WTO into new areas (the Singapore issues). They want the WTO to change its anti-development bias. But the rich nations are used to the GATT-WTO as their own club, and have mastered how to get their way, even with opposition from a majority of developing countries. Will the manipulations available in the rule-less operations of WTO Ministerials again be the decisive factor that decides the Cancun outcome? Or will developing countries stand firm this time?
THE DOHA PROGRAMME BECOMES AN ANTI-DEVELOPMENT AGENDA
The work programme from the 4th Ministerial has been advertised by the rich nations and WTO Secretariat as the Doha Development Agenda (DDA). It was never called that by most developing countries or the NGOs. That programme has now turnedf out to be a Doha Anti-Development Agenda (DADA).
Post-Doha, there was supposed to be a strong development dimension to the WTO's work. This has not been delivered. There has been no substantial progress on implementation issues (the programme intended to rectify the imbalances in the existing Uruguay Round rules) nor on strengthening special and differential treatment (S&D) for developing countries. Most of their proposals have met with hostility from the rich countries. Implementation issues have been downgraded and neglected, whilst the 24 S&D proposed decisions in the Cancun draft lack commercial value and do not expand policy space. The TRIPS and health "solution" for countries with no or inadequate manufacturing capacity is riddled with so many conditions and restrictions as to render it practically useless: it is a concession made by developing countries (and not by developed countries) to settle the issue before Cancun.
Worse, in the negotiations on agriculture and industrial tariffs (or non-agriculture market access), the Doha Declaration assurances that developing countries' needs will be fully taken account of have been cynically thrown to the winds. The rich countries are proposing to drastically press down developing counties' tariffs in agriculture and particularly in industrial goods, without regard to the disastrous effects on local farms, firms and livelihoods. The present Cancun draft text is biased towards the US-EU proposals. In services, the rich countries have a long list of "requests" for developing countries to give up their regulations and allow foreign firms to take over the local business. And worse will come if the rich nations succeed in pushing Singapore Issues as negotiating items for new WTO agreements.
In short, the deadlines on development issues have been missed and the assurances that development concerns will be "fully taken into account" have been discarded and what we face is a DADA instead of a DDA.
[for this section see separate posting today on agriculture]
NON-AGRICULTURE MARKET ACCESS (NAMA) ("INDUSTRIAL TARIFFS")
Developing countries could suffer immense damage to their industrial sectors if the Chairman's Cancun draft is accepted. There is already much evidence of de-industrialisation (closure of local firms and loss of jobs) in many developing countries due to past liberalization. The Cancun draft, if adopted, will make the situation even more critical. This draft basically reflects the US-EC-Canada position, put forward in August in Geneva, which is aimed at a steep and quick cut in developing countries' industrial tariffs. The pious rhetoric of the Doha Declaration that the "negotiations shall take fully into account the special needs and interests of developing countries and LDCs including through less than full reciprocity in reduction commitments" has been set aside by the rich nations (and the Chairman) by putting in place proposals giving the opposite effects.
The dangerous elements in the Cancun draft (Annex B) include: (a) Commitment to a "non-linear formula" approach, in which the higher the tariffs, the higher the reductions (since most developing countries have higher bound tariffs, they would be hit much harder than developed countries where most tariffs are low; (b) Mandating developing countries to increase the coverage of their tariff bindings to at least 95%, and then reducing the tariffs; (c) Bringing presently unbound tariff lines or products under reduction discipline by multiplying the present applied rates by two and then subjecting them to reduction by the formula approach; (d) Committing all members to a "sectoral initiative" of bringing tariffs to zero through fast track time frame for seven sectors. These proposals were objected to by developing countries generally during the Geneva negotiations, but they were included nevertheless in the Cancun draft. If they are accepted, then the policy space for industrial development will be very much reduced, and the viability of many firms and industries in the South -- and millions of industrial jobs -- would be threatened.
What Should Be Done: The Cancun draft on NAMA should not be accepted. In the past, developing countries have not been subjected to a "formula approach" and certainly not to a "non-linear formula". They have been able to choose the coverage of bindings (i.e. for which products to make binding commitments) and the rate of liberalization. This flexibility should be retained. In any case, Cancun should not adopt decisions to commit developing countries to a non-linear approach, sectoral tariff elimination, and near-100% coverage of tariff bindings, nor the binding of presently unbound tariffs at twice the applied rates.
THE SINGAPORE ISSUES
This is likely to be Cancun's politically most contentious question to resolve. Since the 1996 Singapore Ministerial, there has been a fierce North-South tussle, with developed countries pushing for WTO to take on new agreements on investment, competition, transparency in government procurement and trade facilitation, and most developing countries resisting. The issues have since been "discussed" with no commitment to "negotiate" new agreements. At Doha, the rich countries made headway (through manipulative tactics) with a Declaration that states that negotiations on the four issues will begin after the Fifth Ministerial (i.e.Cancun)-but this decision will have to be taken on the basis of an explicit consensus on modalities of negotiations.
Since Doha, the disagreements have continued (and indeed increased) in the discussions on each of the issues. This led most developing countries to take the position that there is no common understanding of the issues, and thus no basis for even discussing modalities (let alone having a consensus on them), that issues would have serious implications for their socio-economic development if they have to undertake new obligations, that there is no basis for starting negotiations and that Cancun should decide instead that the issues be further "clarified" instead. The rich nations (led by EU and Japan) argue the opposite: that an irreversible decision was made in Doha to start negotiations after Cancun, and this should be affirmed on the basis of "modalities" they have put forward.
These two options - to start negotiations, or to only continue discussions - are in the Cancun draft. But the "start negotiations" camp has an unfair advantage in that their version of modalities is included in Annexes, even though this is objected to by developing countries. Meanwhile, many hundreds of social organizations around the world have campaigned against negotiations on these issues, which they believe have no place in the WTO which after all is a trade organization (and at least three of the issues are non-trade issues). New agreements in these issues will lead to unprecedented new powers for multinational corporations andcalamity for developing countries as well as for many citizens in developed countries.
What Should Be Done: The best option is to decide to take these issues out of the WTO negotiating agenda once and for all. The second best option is to decide that the issues need further discussion and clarification, and thus negotiations should not begin. If the worst option is taken, i.e. to start negotiations, it would be a disaster for development, social rights and for the multilateral trade system itself.
THE UNDEMOCRATIC AND MANIPULATIVE DECISION-MAKING PROCESS
Although many developing countries have prepared themselves before Cancun, they will face an uphill (some say almost impossible) battle to have their views reflected in the texts that form the legal results of Cancun. They already had a bad experience in Geneva during the preparatory process: despite the many consultations, the texts on many areas ignored their views. At previous Ministerials -- except Seattle-the rich countries got their way.
The main reason is that Ministerials are run in ways that suit the major powers. There are no rules nor proper procedures on how Ministerials are run - very strange indeed for an organization that prides itself for "transparency" and being rules-based. There is no transparent or participatory procedures for drafting and revising texts-indeed it is not known to Members in general nor to the public how the drafts of the Declarations are made. Thus, even if Ministers and officials are called to attend consultations and "informal meetings" (for which there are no minutes), the views of many or most developing countries are ignored in the texts, which ultimately is what counts. Some of the most crucial meetings (known as Green Rooms) are very exclusive, with only a few Ministers called. Decisions on key issues such as which text to adopt as the basis for negotiations, who should be made Chairs of various negotiating groups, whether to extend the conference, have previously been made through non-participatory and untransparent methods.
Many developing countries have made proposals to have proper rules for WTO Ministerials, but these were rejected by the rich countries that claim that thee must be "flexibility" in the running of Ministerials (which is a code for wanting leeway to continue the manipulative processes). The terribly undemocratic and manipulative WTO processes is now the subject of an international NGO campaign. But that will not stop the attempts by the major powers to use the same kind of processes in Cancun. Unless the WTO changes the rule-less way it operates, it and its decisions --- including the Cancun outcome -- will not enjoy public legitimacy.
Selected additional Sources
WTO coverage and links from allafrica.com http://allafrica.com/business
The Cunning Bully - EU bribery and arm-twisting at the WTO By Fatoumata Jawara, http://www.corporateeurope.org/cunningbully
Alternative Informationa and Development Centre (South Africa) http://aidc.org.za/web/readon.php?ID=1
Date distributed (ymd): 030912 Region: Continent-Wide Issue Areas: +political/rights+ +economy/development+
Message-Id: <200309121539.h8CFdqH15624@marduk.africapolicy.org> From: "Africa Action" <firstname.lastname@example.org> Date: Fri, 12 Sep 2003 11:40:47 -0500 Subject: Africa: Cancun, Overview