Global Trends by Martin Khor

Monday 12 December 2005

Gearing up for this week’s WTO Ministerial

Thousands are streaming into Hong Kong for the start on Tuesday of the World Trade Organisation’s Ministerial conference.  The last such meeting collapsed in acrimony at Cancun.  Will the rifts between rich and poor countries erupt again, and how will the thousands of NGOs that are present respond as the events unfold?

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Hong Kong has prepared itself well, logistically, for the WTO’s Ministerial conference, which starts this Tuesday and continues to Sunday.

Thousands of government officials, non-governmental organisations and journalists have been streaming into this city.  They are greeted enthusiastically by teams of attendants, taking care of everything from fast track immigration and bag clearance to bus transport to hotels.

The famous Asian hospitality is in good display.  This contrasts with the lacklustre treatment which one gets when such conferences are held in Western capitals.

But Hong Kong is also bracing for a very tough week ahead.  Thousands of farmers, trade unionists and NGO representatives have come to Hong Kong to monitor what the governments are negotiating.  They will hold their own meetings, rallies, and protest demonstrations.

Most citizen groups are frustrated and angry at what they see as pressures put by rich countries on behalf of their big corporations on developing countries to open up their economies to imports and foreign banks and companies.

In so many countries, cheap imports have overwhelmed local products and caused closure of firms and loss of jobs.  Also, small farmers around the world have lost their markets and livelihoods due to the inflow of cheap, subsidised agricultural imports.

A Korean farmer committed suicide by slashing his body during a demonstration at the last WTO Ministerial conference in Cancun in 2001.  For months he had held a lonely one-person vigil outside the WTO’s headquarters in Geneva to bring attention to the plight of farmers threatened by imports.

More than a thousand Korean farmers are reported to be coming to Hong Kong, and they are in a dark mood.  Also in Hong Kong will be farmers and trade unionists from many other countries.  They have supporters among NGOs from both rich and poorer countries, many of which have been doing in-depth research on the effects of the proposals being pushed by the US, European Union and other rich economies. 

The research has shown that trade liberalisation can be positive when undertaken gradually in line with increasing efficiency of a country.  But when done too suddenly and with steep tariff cuts, most countries just cannot compete with imports, especially with subsidised products from rich countries.

In the halls of the official Conference, there will also be some angry delegates.  The African cotton-producing countries have given notice they cannot sign on to any declaration that does not give them concrete results.  They have campaigned since 2001 for an end to export and domestic subsidies in the US and Europe.

The more than US$3 billion of subsidies to a few thousand American cotton farmers allows the US to sell cotton to the world at artificially cheap prices, causing the African countries to lose many hundreds of millions of dollars annually. 

A recent Oxfam report also highlighted that cheap subsidised cotton from the US will lead to a loss of US$208 million and 720,000 jobs in China this year.

Though the cotton problem was successfully highlighted at the Cancun meeting in 2001, and promises were since made to provide a “fast track” solution, nothing has been done.  The US government says it cannot treat cotton as a special case and the elimination of subsidies for that crop must be part of the larger deal on agriculture.

That might take many more years to negotiate and implement, and the African governments are not in the mood to wait so long.  Their farmers are in even more dire straits today. 

They want all export subsidies to end by 31 December this year, and 80% of domestic subsidies to go by the end of 2006 and the rest by January 2009. It is doubtful there will be any such result in Hong Kong.

Many of the Caribbean and African countries are also frustrated that the phasing out of trade preferences will hit their commodity-dependent economies.  The phasing out of preferences has especially affected the Caribbean countries that export banana and sugar.

As trade is liberalised more as a result of the current trade talks, more countries will suffer more losses as preference margins are eroded.  The affected countries are determined to make this a big issue in Hong Kong.  But so far no solution is in sight.

Another hotly contested issue is services liberalisation.  The African and Caribbean countries, together with several Latin American countries, are demanding that the section on services in the draft Ministerial declaration be amended.

The draft makes it compulsory for developing countries, who are targeted for liberalisation by the rich countries, to take part in “plurilateral negotiations” aimed at opening their markets.  Under present rules, countries can choose whether or not to participate in such a process.

Malaysia, Indonesia, Thailand, the Philippines and Brunei had been in the forefront of the fight to change the text on services and even proposed their own alternative text to replace the now infamous Annex C (on services) of the draft Declaration.

This was a positive move because the Asean countries are among those most targeted by the rich countries to open their markets to foreign firms in sectors such as financial services, distribution and telecommunications.

However, in the key WTO meetings of the past fortnight, the Asean countries have strangely kept silent on the issue, even though their proposed amendment has been submitted to the WTO.

It remains to be seen whether the Asean countries will push for their own proposal at this week’s talks.  The African and Caribbean countries may not have the strength by themselves to have the draft amended.  And if the developing countries fail to change the text, they will have to live with very intense pressures in the next few months to open up their services sectors to foreigners.

The talks this week will of course focus also on the two priority topics of agriculture and industrial tariffs.  Other issues of priority to developing countries – strengthening special and differential treatment and resolving problems of implementing the WTO agreements – will hardly feature at all.

In its short ten-year history, the WTO has become a powerful organisation whose rules affect the lives and jobs of billions of people.  This is why it has attracted so much public attention.  This week’s meeting will determine whether its image improves or otherwise.