Eastern and Southern African countries are against having a new round of negotiations on new issues at the World Trade Organisation, as it would place an 'unsustainable burden' on developing countries.

By Martin Khor

March 1999

Kampala: A new round of negotiations at the World Trade Organisation would entail an 'unsustainable burden' on developing countries, and if there is such a round it should not include new issues.

This was one of the conclusions of a six-day workshop held here, with participation of over 40 senior trade policy officials from 21 Eastern and Southern African countries.

A statement approved by participants at the end of the workshop noted that there is an emerging consensus among the major trading powers on having a round of negotiations at the WTO.

'African countries will want to limit the focus to issues relating to implementation and the built-in agenda,' the statement said. 'A new comprehensive round would entail an unsustainable burden and should not include new issues. Whatever form these negotiations will take, our countries should be adequately prepared to negotiate and defend our interests.' The participants made specific proposals on the positions that African governments should take on several 'new issues' being advocated by developed countries.

They warned that it would be 'premature, burdensome and even a danger' to African countries should there be negotiations on an investment agreement, and proposed instead that the WTO working group on investment should continue its study process. They also said competition policy should remain an issue of domestic domain and the WTO working group on competition had not yet adequately clarified the issues involved and should therefore continue its study process.

On government procurement, the statement said there should be no attempt to expand the working group's scope beyond transparency and 'there should be no negotiations for multilateral disciplines in this area'.

The tariff-free status for electronic commerce, the participants said, should remain within a temporary time-frame. The proposal to negotiate industrial tariffs was 'premature' as there is a danger that further tariff reductions could result in 'further deindustrialisation in Africa'.

The participants in their statement enumerated many problems of implementation, which they said should be the focus of future negotiations (instead of any new issues).

The workshop was held on 4-9 March as part of the Southern and Eastern African Trade Information and Negotiation Initiative (SEATINI) project under the auspices of the International South Group Network. It was opened by Uganda's Minister of State for Trade, Manzi Tumubweine. Representatives of the United Nations Conference on Trade and Development, the WTO, the UN Development Programme and other resource persons also attended.

The participants were mainly officials from Trade, Industry and Commerce Ministries from African countries including Uganda, Zambia, Zimbabwe, Tanzania, Ethiopia, South Africa, Sudan, Mozambique, Namibia, Lesotho, Malawi, Mauritius, Egypt, Kenya, Angola and Burundi and Djibouti, as well as representatives of non-governmental organisations and civil society.

According to the statement, the participants recognised that their countries did not participate effectively in previous rounds of negotiations and at the last two Ministerial Conferences, resulting in marginalisation of issues of interest to African countries. 'Therefore, the agreements negotiated thus far largely reflect the interests of the developed countries.'

The statement said African countries face difficulties in the implementation of the Uruguay Round agreements, which were exacerbated by developed countries' failure to fulfil their commitments in a fair and balanced manner, especially those relating to special and differential treatment.

Furthermore, there has been no significant progress in the implementation of commitments made during the High Level Meeting on Least Developed Countries (LDCs) held in October 1997.

Participants said these implementation problems should be raised during the preparatory process at the General Council. Developed countries must actively promote LDC imports and LDCs should be given longer transitional periods in certain agreements. On subsidies, the participants said the agreement had benefited developed countries more than developing countries. To redress this, African countries should present proposals for making subsidies targeted at development and diversification programmes non-actionable.

They added that the WTO dispute settlement mechanism is recognised as a crucial pillar for the functioning of the trading system but the system contains an inherent asymmetry which disadvantages developing and African countries, which find it difficult and costly to seek recourse.

On services, the statement said there should be flexibility in the agreement and effective special and differential treatment provisions that will allow African countries to provide subsidies for certain services and take emergency safeguards.

Participants said that agriculture is of social, cultural, environmental and political concern as well as economic importance to developing countries. 'The developed countries are maintaining high levels of domestic support and export subsidies as well as very high levels of tariffs on several agricultural products. Further negotiations in agriculture should result in immediate withdrawal of domestic support and export subsidies by developed countries and significant reduction in their tariffs, thereby increasing market access for developing countries.'

The statement added that food security and the maintenance of agriculture-based livelihoods are major development goals for African countries. The participants were convinced that developing countries have to do their best in producing food for their domestic consumption, and any hindrance in their effort caused by the existing WTO rules should be removed.

Therefore African countries should propose that food imports in developing countries be exempted from minimum access provisions, and that food produced for domestic consumption as well as all agricultural products by small farmers in developing countries be exempted from the import control and domestic support disciplines of the Agriculture Agreement.

Also, the Marrakesh decision on net-food-importing developing countries should be made more effective and enforceable, for example by a Fund to which major agricultural exporting countries could contribute through an assessed compulsory system in the WTO. Improving market access for these countries should also be facilitated through concrete measures.

On textiles, the statement said developed countries had not liberalised the sector in the spirit of progressive liberalisation. Major importing developed countries had also taken recourse to transitional safeguard measures and anti-dumping measures repeatedly against developing countries' exports. Developed countries should accelerate the liberalisation process and refrain from safeguard and anti-dumping measures.

The participants criticised the TRIPs Agreement which they said contained fundamental imbalances inimical to developing countries' interests. 'Adverse effects include constraints on domestic technological development, barriers to technology transfer, monopolistic high prices (including of medicinal products, seeds and computer software).

'As far as Africa is concerned, the most serious problem in TRIPs is that it does not specifically recognise the rights of local communities to their traditional and indigenous knowledge, and this may lead to unjustified patenting of their knowledge and of biological resources by foreign corporations.

'African countries should make proposals to correct this situation and thus propose revisions to the Agreement that will support their development and access to appropriate technology.'

With regard to Article 27.3 (b) of TRIPs, the statement said developing countries have identified areas of priority to be considered in the review. 'African countries are very concerned that Article 27.3 (b) may facilitate the appropriation of local knowledge of the use of biological resources through patenting of this knowledge by corporations.

'We urge that the following priorities and proposals be considered in the review of this Article: the option for countries to exclude all biological materials or life forms from patentability; the development by African countries of suitable sui generis systems of protection for plant varieties, indigenous knowledge and technologies and community rights in line with their national developmental priorities, and to ensure that the TRIPs agreement conforms with the Convention on Biodiversity.'

On new issues in general, the statement said African countries need to clearly define their interests and objectives. Governments need to be prepared to prevent the emergence of new multilateral rules and obligations that may unduly restrict nationally determined policy objectives.

On trade and environment, the statement said that 'African countries are against the use of trade measures, especially unilateral measures, for narrow protectionist purposes. We are also against attempts to prevent multilaterally agreed environment measures that deal with genuine environmental problems such as the trade in hazardous wastes and products, and measures to promote biosafety, through the fallacious claim that such legitimate measures are against WTO rules.

'Further, developed countries must meet their commitments on financial aid and technology transfer to African countries to enable more environmentally sound development, including for export products.'

On the investment issue, the statement said the failure of the Organisation for Economic Cooperation and Development (OECD)'s Multilateral Agreement on Investment (MAI) negotiations has led to greater pressures from major developed countries to initiate negotiations for an investment agreement in the WTO.

'We view such initiatives with grave concern since an MAI-type agreement would severely restrict African countries' ability to regulate investment towards development objectives. The WTO working group on trade and investment should continue its study process, since the relations between trade and investment policies and processes are very complex.

'It would be premature, burdensome and even a danger to African countries should there be a decision in 1999 to start negotiations towards an agreement. We therefore believe that proposals to change the study process into a negotiating process should not be accepted.

'Meanwhile African governments should deeply study the most appropriate national policies for maximising the benefits and minimising the risks and costs of various categories of foreign investment and capital flows. Such studies should help clarify the issues in the relationship between trade, investment and development and thus our position in the Working Group.'

On competition policy, the participants said it should remain principally an issue of domestic domain so that governments can tailor and use it in a way that is in line with their national objective on development and fair trade practices. 'It should be recognised that a balanced policy would aim at curbing anti-competitive conditions whilst also dealing with the danger of large firms taking too much market share at the expense of the local sector. It is also recognised that there is a need to deal with anti-competitive practices in international trade, such as restrictive trade practices, transfer pricing and abuse of anti-dumping provisions. The working group on trade and competition policies has not yet produced an adequate clarification of the issues involved. Therefore the group should continue to study the issues.'

On government procurement, the statement said the working group's mandate is to study elements of transparency in procurement processes, and African countries should insist that the group continue its work on this limited topic.

'There should be no attempt to expand the scope of the group's mandate beyond transparency. African governments should continue to have the authority to decide on their procurement priorities and processes, and there should be no negotiations for multilateral disciplines in this area.'

On electronic commerce, the participants pointed to serious adverse consequences of duty-free status for products transmitted electronically, including loss of revenue for African governments and the setting of a dangerous precedent in which a mode of delivery becomes ground for tariff-free status.

'African governments should closely monitor the work programme on electronic commerce. The tariff-free status of products delivered electronically should remain within a temporary time-frame as the issues involved have not been fully understood and require further analysis.'

On industrial tariffs, the statement said African countries are concerned that many industrial products of their export interest are still subject to tariff peaks, tariff escalation and tariff dispersion in developed countries.

'However the proposal to include tariff reductions in future negotiations is premature; it may lead to requests for reductions in the industrial tariffs of developing countries. There is a real danger that if tariffs are reduced in sectors where local firms are not yet sufficiently competitive, these firms will be closed, resulting in further deindustrialisation in Africa.'

On labour, the statement said that Africa reaffirmed the Singapore Ministerial Conference decision that labour issues belong to the International Labour Organisation. 'Any new attempts to link social issues to the WTO and its dispute settlement system should be resisted.'

The statement also noted that Africa faces severe trade and economic problems, including external debt, drastic decline in commodity prices, currency and financial instability, all of which affect their export earnings and balance-of-payments position.

'These issues are not being considered in the WTO, and the WTO system should incorporate these key issues into its discussions with the view to eventually have them in its rules so as to aid the growth and development of African countries.'

In a section on 'strategies', the statement said that African countries should prepare national papers on the problems they face in implementing the Uruguay Round agreements and submit these to the WTO negotiation organs by July 1999.

It added that there is a need for African countries to coordinate their positions at national and regional levels, and all stakeholders must be involved, including African representatives in Geneva.

Noting that the capacity of African governments to participate in the WTO system is inadequate, the statement said this was due to the lack of resources of African countries as well as several aspects of decision-making systems and processes in the WTO. The participants therefore propose that:

* African governments give higher priority and allocate more resources to facilitate effective and informed African participation in multilateral trade negotiations;

* The international community take measures to assist African countries in this matter;

* The decision-making processes and systems in the WTO should be improved to enable more transparent, more balanced participation by the smaller and poor countries. - Third World Network Features

About the writer: Martin Khor is Director of the Third World Network.