DEVELOPING COUNTRIES ASKED TO RESIST NEW ISSUES

by Chakravarthi Raghavan

Harare, 2 Apr 2000 -- The failure of the Seattle Ministerial Conference demonstrates more starkly than before, that the World Trade Organization needs urgent and fundamental reforms, a workshop of trade officials of Southern and Eastern Africa have declared. A reformed WTO, they said, should become 'development oriented', and be based on "transparency, inclusiveness and representativeness."

The workshop (27-31 March 2000) of senior and middle-level trade policy officials and negotiators from 20 countries of the region, representatives of NGOs and private sector of Africa, reviewed the outcome of the 3rd Ministerial Conference at Seattle and developed common, critical negotiating positions for the future.

The workshop's final document asked developing countries not to accept any new issues - whether investment, competition policy, government procurement and trade facilitation (Singapore issues), new round of industrial tariff cuts, special treatment for biotechnology, and labour and environmental standards.

The third workshop of the Southern and Eastern African Trade Information and Negotiations Initiative (SEATINI-3) was under the auspices of the International South Group Network (ISGN) and co-sponsored by the UN Development Programme, and benefited from contributions of resource persons with varied experiences in trade and development issues - both from within the region and outside.

The workshop participants (some of whom had been at Seattle), in their final document said, that even in the preparatory process for Seattle, there were major differences between developing and developed countries, and among developed countries themselves. At Seattle, there was restricted participation and resort to "green room" negotiations to which only developed, and a select number of developing countries were invited. Strong objections of the developing countries, and their threat not to join any "consensus" on any final Ministerial text to which they were not a party in deliberations or decisions, had significantly contributed to the collapse of the Seattle Conference.

This was a victory for developing countries to the extent that no new round with new issues was launched, allowing them time to rethink their strategies and approaches visavis the WTO agenda and future negotiations.

Among other things, developing countries should use the interim period to institute proper and effective consultative mechanisms between governments, private sector and civil society and identify their economic and development priorities, and act collectively in matters of common interest to them.

The failure of the Seattle Ministerial had demonstrated, more starkly than before, that the WTO needs urgent and fundamental reform, a comprehensive rethink of the WTO mandate. The status quo of decision-making of non-transparency, 'green rom' and minority-dominated processes, is clearly undemocratic and unacceptable.

"A reformed WTO should first and foremost be development-oriented and based on transparency, inclusiveness and representativeness."

African countries, the workshop participants said, should therefore call for in-depth institutional reform, including:

* a re-examination of the single undertaking concept;

* addressing structural imbalances and deficiencies of WTO system and agreements;

* reviewing appropriateness of scope of WTO mandate in existing areas;

* rationalization of working procedures and calendar of meetings, and ensuring that proposals are taken up for consideration and/or negotiations only after sufficient advance notice, publication and wide dissemination to enable trade policy authorities, stake-holders and public in each country to consider them and weigh the pros and cons; and

* ensure full transparency and opportunity for full participation by all developing countries at all stages of negotiations and ensuring a Secretariat with equitable geographic representation.

On Trade-Related Intellectual Property Rights (TRIPS), SEATINI-3 asked African countries to reaffirm their position and concerns outlined in their proposals of 6 August 1999, and said:

* the review of Art.27.3(b) should clarify that plants and animals as well as micro-organisms and all other living organisms and their parts cannot be patented; natural processes that produce plants, animals and other living organisms should not also be patentable;

* WTO members should retain flexibility to develop sui generis regimes for plant variety protection, one that harmonises Art.27.3(b) of TRIPS with the UN Convention on Biological Diversity (CBD) and the FAO International Undertaking on Plant Genetic Resources so that conservation and sustainable use of biological diversity, protection of rights and knowledge of indigenous and local communities, and promotion of farmers' rights are fully taken into account;

* there should be a provision to the effect that patents must not be granted without prior consent of country of origin of biological resources and traditional and indigenous knowledge; nor must patents, inconsistent with Art 15 of the CBD, be granted;

* in the context of Art 31 of TRIPS, there should be a provision authorizing members to use automatic compulsory licensing for essential drugs;

* moratorium on application of non-violation disputes and remedy under TRIPS should be maintained indefinitely, until members agree otherwise by consensus, and any remedy adopted should not increase level of obligations of Members;

* developed countries should implement their obligations on technology transfer set out in Articles 7, 8, 40, 66 and 67 of TRIPS, and there should be a full review of the implementation of Art 66.2 by developed countries.

The TRIPS agreement itself should also be reviewed to operationalise objectives and principles for transfer and dissemination of technology to developing countries, particularly the LDCs.

* The OAU draft model legislation for protection of rights of local communities, farmers and breeders, and for regulation of access to biological resources, should be considered by countries in drafting legislation for protection of community and related rights.

On Services, and the launch of new round in February, the SEATINI-3 workshop said:

* a system for classification and collection of data on trade in services under GATS, in all four modes of delivery, should be agreed upon and put in place by the UN Statistical Commission and the UN General Assembly, "before any negotiations on market access under GATS are started and schedules are set down";

* the priority at the initial stage of negotiations should be to assess the impact of services liberalisation, and no pressures on developing to make new commitments until the assessment is made, and no negotiations should be concluded before this;;

* the Special and Differential Treatment (S&DT) provisions of GATS should be retained and fully operationalised, and effective S&DT measures should be instituted in development of any new rules, including in area of safeguards;

* developing countries should retain the right to lay down qualifications for service providers from outside and ensure that in the current process of recognition, the service providers of developing countries are not ignored.

The workshop was cautioned about the US practice, now being sought to be incorporated into the WTO, of banks and other financial service providers, incorporating provisions in their employment contracts to prevent employees joining some other enterprise for a period, purportedly to maintain business secrecy. This would negate the idea that bringing in foreign banks and financial enterprises would bring in new technical know-how and their spread into the country.

In other recommendations on services, SEATINI-3 called on developed countries to set aside a percentage of their government purchases for services from developing countries, and provide incentives to their private sector to use services imported from developing countries. Developing countries should not make any commitments in areas where they have no potential to gain. They should identify and negotiate elimination of restrictions in schedules of commitments of other WTO members, negotiate specific commitments in strategic sectors and subsectors, and coordinate market liberalisation in services with other macro-economic policies.

Agriculture, the workshop participants noted, had proved the most difficult and divisive issue before and at Seattle. The mandated negotiations had been launched, but with no agreement on either a date for conclusion or on even the chair for the negotiations.

In their proposals, developing countries should push strongly for redressal of the present imbalances, and show how imbalances have hamstrung their ability and potential to develop agriculture in their own countries, expose and argue against the inequities in the Agreement including the differing set of rules as a result of which the developed countries were able to maintain subsidies while developing countries were denied the same rights.

Developing countries were also asked to demand better market access for their products, and show that despite OECD claims of "reduced" subsidies, existing subsidies in countries had simply been reclassified and increased, thus failing to bring about better market access.

The developing countries should also ensure that the disciplines of the Agreement on Agriculture do not apply to developing countries "in relation to domestic food production for local consumption, as well as (to measures) for the protection of small and subsistence farmers.

The negotiations should also provide for measures to support agriculture in developing countries and ensure that issues of implementation are addressed effectively and faithfully, especially in commitments undertaken by developed countries. The latter should undergo far-reaching structural adjustments in their own economies, including on agriculture.

On the Dispute Settlement Review, the SEATINI-3 workshop said the dispute settlement system considered to be one of the key elements of the multilateral system providing for security and predictability, had in the five years of its operation, "proved to be imbalanced and unfavourable to developing countries." Specific means should be worked out to reduce costs for developing countries for effective participation, and where a finding is in favour of a developing country in a dispute, the developed country should be asked to pay adequate financial compensation towards costs incurred by the developing country.

The panels and the appellate body should be stopped from usurping the right and duty to provide authoritative interpretations vested in the Ministerial Conference and the General Council. Where there are conflicts between provisions of agreements, the matter should referred to the General Council. And in panel rulings favouring the developing countries, especially those requiring legislative changes, full corrective action should be taken expeditiously.

The participants came out strongly against any negotiations with new issues and said: "Before any resumption of discussion on new issues, the WTO must satisfactorily resolve overwhelming problems of implementation faxed by developing countries... And the WTO should not negotiate nor have any mandate over new issues that are not related to trade and trade-distortive, that restrict flexibility and range of development options and policies of developing countries, that are not mature for discussion or negotiations, and where the WTO is not an appropriate venue and lacks any comparative advantage especially from a development perspective."

On investment, the participants said there should be no negotiations for an agreement on investment policy and rules in the WTO. If the working group on trade and investment resumes, it should focus on effects, positive and negative, of FDI on development, the obligations of foreign investors to their host countries and the obligations of the home countries to ensure that their companies comply with their obligations.

African countries were also advised to conduct studies and formulate policies and institute measures to minimise the risks and maximise the benefits of FDI, and the objective of protecting and promoting national development and sovereign goals and interests.

Competition policy, the workshop said, should remain an issue of domestic law and policies, and there should be no agreement (in the working group on trade and competition policy) to negotiate in the WTO an agreement on competition policy. The working group should focus on implications of different models of competition policy and law for developing countries, on the need for developing country firms to remain competitive in the face of challenges from large TNCs seeking to monopolise domestic markets of developing countries. The Restrictive Business Practices and abuse of trade measures such as through anti-dumping measures should also be disciplined.

On government procurement, the workshop said African governments should always have the authority to decide on their procurement priorities and processes. The work of the WTO working group, if it resumes, should be restricted to an examination of elements for an appropriate agreement on transparency and not go beyond this scope. The need for and scope of any agreement on transparency in government procurement at the WTO should also be carefully examined and assessed by African countries, especially its implications for development and strategy.

On E-Commerce, the workshop said the moratorium on tariffs and duties that had come to an end should not be extended. E-commerce in developing countries would result in loss of valuable revenues to the government, and would remain an exclusive preserve of a few rich people who could afford access. And while in any agreement, developing countries would have given concessions to developed countries in the form of duty-free treatment, it was not all clear what compensation developing countries would get in return.

Negotiations on industrial tariffs, the participants said, would have serious implications for economies of developing countries, as low bound tariffs would reduce their flexibility for development and lead to further de-industrialization in developing countries.

Any negotiations in this area should aim at substantially eliminate tariff peaks and tariff escalation. Any decision to launch such negotiations should only be by a joint decision of all parties and be guided by needs and capacities of developing countries. The latter should themselves undertake a review of effects of previous liberalisation on their domestic industrial sector and overall economy and draw lessons for the future. Developing countries should reduce tariffs only after taking into account the capacity of local enterprises to withstand further competition, and their development needs.

The issue of genetically modified organisms should not be a subject for any WTO working group or for any special treatment at the WTO. The safety regulations in trade in GMOs should come under the purview of the CBD biosafety protocol, and exporting country members must provide importing countries with all relevant information on GMOs and get advanced informed consent before exports, as agreed in the biosafety protocol.

The workshop cautioned against the risks of including environmental standards in the WTO, and the possibility of its legitimizing inter alia protectionism of developed countries.

There were however other topics of interest to developing countries in the Committee on Trade and Environment - such as negative effects of TRIPS on developing country efforts to secure environmentally-sound technology, conserve bio-diversity or protection of traditional knowledge on sustainable use of biodiversity. African countries were advised to participate effectively in these discussions.

On labour issues, the participants said: "We reaffirm that the issue of workers' rights and labour standards do not belong to the WTO and can best be appropriately addressed in other relevant bodies. Therefore, developing countries, should continue to resist attempts to introduce these issues in the mandate of the WTO."

On special issues of concern to LDCs, the workshop recommended:

* appropriate interventions from development partners to improve productive capacities and overcome supply side constraints, to be complemented by "bound duty-free and quota-free market access conditions for all products from LDCs to developed countries, as well as favourable rules of origins as well as elimination of other non-tariff barriers";

* any new rules take account of special developmental needs and the limited capacity of LDCs to implement the rules; LDCs must be exempt from undertaking commitments which are inconsistent with their development needs, capacities and requirements;

* binding commitments from developed countries to provide technical assistance to LDCs in implementation of multilateral trading rules;

* establish clear, simplified and easy procedures for accession of LDCs to the WTO, and LDCs seeking accession should not be compelled to undertake obligations beyond those of existing WTO members. The workshop also called for an urgent review of the integrated framework programme. LDCs must resolve to carry through programmes, which would develop and sustain competitiveness, including diversification of the export sector, removing dualism and enhancing internal integration of domestic economies and ensuring equitable benefits.

The participants noted that the WTO process was now beyond Seattle, with a decision already taken to start mandated negotiations in agriculture, services and mandated reviews. But there had been no movement in priority areas of interest to developing countries, especially on implementation issues or questions of institutional reforms. As a result developing countries, and African countries in particular, were faced with enormous challenges.

The ability of African countries to maintain the positions discussed at Seatini-3 was dependent on overhaul of current exclusionary WTO decision-making process and it was imperative that African countries insist on institutional reform of the WTO to ensure full and effective participation of all countries.

"Such a reform should be the priority in the agenda of developing countries."

African countries were asked to make full use of potential and strengths of their civil society, academia, researchers and NGOs, in order to challenge the "much-touted development models advanced by the Bretton Woods and other Northern institutions.

Seatini, the participants said, should continue its important and commendable role in raising awareness and bringing governments, NGOs and other stake-holders together to advance trade and development interests. Seatini was also commended for its achievement in bringing together government officials, NGOs and other stake-holders to interface and network on these issues.

Seatini should continue this vital function, and other organizations should support Seatini financially and otherwise in this endeavour, the participants said. The Seatini initiative should be extended to other regions of Africa, and Seatini should consider the possibility of facilitating a training programme for African negotiators and media on trade issues. (SUNS4641)

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

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