Agriculture, GATS accords working against consumers, developing world

Geneva, 16 Oct (Chakravarthi Raghavan) - “The World Trade Organization will only regain its credibility if it acknowledges, and acts upon, the call by civil society and developing countries to rethink its past policies,” the Consumers International, a global federation of more than 250 consumer organizations in some 120 countries, declared Tuesday in releasing two special reports.

The reports, based on national impact studies in developing and transition economies, and focussing on the Agreement on Agriculture (AoA) and the General Agreement on Trade in Services (GATS), have brought out that the ‘trade liberalization’ of the World Trade Organization under the AoA and the GATS are not benefiting consumers, but working against their interests, particularly in the developing and transition economies.

The CI survey on impact of the AoA covered: Bolivia, Brazil, Chad, Fiji, Ghana, Kenya, Mali, Nicaragua, Pakistan, Poland, South Korea, Ukraine and Zambia. The survey on impact of GATS covered: Chad, Mali, Zambia, Kenya, Poland, Slovenia, Bolivia, Chile, Brazil, and Nicaragua.

The results of the survey showed that these two agreements are working against consumers, particularly in developing and transition economies, the CI said.

Services liberalization can bring about benefits for consumers, but the current GATS text affects government’s ability to put in place the appropriate regulations, which ensure consumers access to basic services such as water and telecommunication.

In agriculture, the CI reports said, with the limited access to developed country markets, poor farmers are being driven out by subsidised imports (from the developed countries). The impact of the AoA on livelihoods has left many consumers with reduced purchasing power, limiting their access to food.

“These findings of the research support the Consumer International’s call for a Consumer Round at the next WTO Ministerial Conference in Doha in November,” the CI said in a press release.

“The current draft Ministerial Declaration (the Harbinson text) does not take account of consumer concerns. By ignoring the needs of the poorest consumers the WTO is failing to promote sustainable development.”

“The WTO will only regain its credibility if it acknowledges - and acts upon - the call by civil society and developing countries to rethink its past policies,” said Mr. Julian Edwards, Director-General of the CI. “This means making consumer welfare a part of national, regional and global policy-making.  It also means that trade negotiations must be directed towards sustainable development and openly take into account, rather than seeking to exclude, the input from international non-governmental organizations.”

On the results of the impact of the AoA on the countries covered by the impact study, the CI pointed out that access to food is the most fundamental consumer right. Assuring a reliable supply of safe, nutritious and affordable food should be the starting point for any discussion on the AoA.

“The CI supports the international efforts to increase global supplies of nutritious, safe and affordable foods, especially in developing countries.  Solely removing or lowering barriers to free trade, however, cannot achieve that noble goal,” the report said.

The CI studies were carried out by the consumer organizations in the countries.  In some countries, the liberalised food imports have resulted in a flood of unnaturally cheap products that has driven small local farmers out of business.  “These products are often subsidised during their production in the EU and the US, and then further subsidised as exports. Export opportunities (to the developing world), often cited as a potential benefit to local farmers, have been limited as levels of protection in the markets of the EU and US remain high.”

The report said that the consumer groups in developing countries have found that the limited benefits from trade liberalization under the AoA have tended to accrue to larger and better capitalized farms rather than to farmers with small-holdings. These problems are exaggerated by the global slump in prices for coffee, cocoa, maize and most other commodities.

“As a result , many small farmers face financial ruin and potential loss of their land, an eventuality that locks them into poverty, while also denying them the means to feed themselves and their families,” the report added.

Such losses affect not only those farmers immediately concerned, since agriculture accounts for more than one-third of all economic activity and more than one-third of all exports. With their purchasing power seriously affected, many consumers, especially the most vulnerable ones, experience reduced access to food as a result of these changes.

At the same time, the imports have also exposed consumers to some products they may not want to eat - notably genetically modified (GM) maize and soy. Often consumers are not notified the grains have been altered. Some countries have temporarily banned import of GM foods, although the government has allowed some modified grains to enter the country, “when they are donated as part of international aid programmes.” There is also the danger that consumers face from foods spoiled in transit, or been banned as unfit elsewhere or otherwise unsafe because such countries often lack the monitoring and regulatory capacity to assure that imports are wholesome.

In recommendations, the CI said the AoA should be modified to expand and protect consumer interests by:

·        makings markets in the developed countries more accessible to food exports of developing countries, by reducing tariffs and eliminating tariff escalation;

·        encouraging fair competition in the global market by the developed countries eliminating export subsidies and credits and reducing domestic subsidies;

·        encouraging domestic production in developing countries;

·        offering technical assistance where required to improve production levels and quality;

·        improving the setting, monitoring and enforcement of safety standards; and,

·        clearly labelling genetically modified food.

On the issue of the services trade, the CI said that free trade in services - whether supply of water, provision of banking or delivery of medical care - could further the consumer right to basic services, particularly benefiting consumers in the poorest countries, by delivering better value at lower cost.

The General Agreement on Trade in Services is not doing so. GATS has not had a significant impact on consumers so far - but only because the treaty is new and international markets for services is still relatively small. This will change and the global trade in services is going rapidly, by 10% a year.

French water companies are slaking Briton’s thirst, German insurers are providing financial security in China and Spanish telecommunication companies are connecting mobile and fixed phone users in Latin America. And they are all eager to expand.

While in many cases this trend has improved service and lowered costs, in others the CI survey found that the costs of some basic services like water have soared beyond the means of many poor people. In Bolivia, this resulted in bloody confrontations between the people and the government. In other countries, consumer groups discovered that foreign-owned, under-regulated private monopolies - with little or no improvement in service - replaced inefficient government monopolies.

On the basis of the survey, CI has concluded that the impact of liberalised trade in services needs additional study before GATS is expanded. In particular GATS has to be amended to state explicitly that governments retain the right to regulate their domestic affairs and to continue to provide some services directly, on terms they decide without challenge under GATS rules.

As written, GATS could be interpreted as forcing governments to treat their own public services such as education and health care on the same basis as privately run services. This is because the definitions of government services and scope of regulations are ambiguous under the GATS. The GATS agreement must be made fail safe to ensure that consumers can always enjoy publicly provided health and education services.

“The right of governments to regulate companies,” the CI report points out, “is acknowledged only in the preamble to GATS, and so could be over-ridden by the other provisions. The overall tone of the document is biased towards free trade as an end in itself, rather than as a benefit to consumers or society.

“Liberalized international trade in services can help to improve the lives of consumers in both developed and developing world. But that does not mean that the GATS as it stands is the best way to achieve liberalised trade. GATS contains too many ambiguities - and now, when the GATS is relatively little used, is the time to improve it,” CI concluded.

In a separate release, CI called for a “Consumer Round” at the WTO. Such a round, says CI, must begin by correcting some of the many imbalances and inadequacies in the implementation of past agreements so that consumers can benefit from WTO negotiations and that consumer rights are protected and strengthened within a strong multilateral trading system.

CI stressed that if the WTO ministerial meeting scheduled for Doha is to succeed where Seattle failed, it must begin by taking the concerns of developing countries and civil society seriously.

There are many implementation issues left over from the Uruguay Round that need to be addressed before consideration is given to expanding the WTO agenda.

CI points out that areas that require urgent action include existing agreements such as the TRIPS agreement and the Agreement on Agriculture (AoA).

Another area that needs immediate action is the continuing problem of subsidies, quotas and tariffs. CI says that although developing countries have made clear their concerns, developed countries have been less eager to address these issues. In fact, notes CI, some developed countries are still pressing developing countries to liberalise their imports and investments as fast as possible.

CI stresses that if developed countries are serious about using the trading system as a pro-development tool, they need to take some serious steps, chief among these are to:

·        Reduce the protectionism and subsidisation of their agricultural sectors by eliminating all forms of agricultural export subsidies and credits and respecting the right of countries to protect the food security of consumers, particularly vulnerable consumers.

·        Agree to tariff and quota free imports of all industrial and agricultural goods from developing countries by a target date, such as 2005.

·        Remove all tariff escalation and peaks on exports from developing countries, especially agricultural and textile and clothing products by 2004.

·        Stop the inappropriate use of anti-dumping actions against developing countries’ exports, especially in those sectors that have been recently liberalised, such as textiles. Developed countries also must consider reparations for unfair anti-dumping actions.

·        Establish a well-funded system of technical cooperation to enable competition and consumer protection regimes to be supported in developing countries where requested.

CI expressed disappointment that whilst there has been much discussion, there has been little real progress in making the operations of the WTO an effective contributor to sustainable development.

CI suggests that this could be done by improving links with other global institutions and evaluating its impact on objectives other than trade liberalisation. International NGOs also need improved access to the WTO.

With regards to the upcoming Doha ministerial, CI points out that a credible WTO agenda must reflect progress in areas like the AoA, TRIPS, Competition Policy, Agreement on Sanitary and Phytosanitary Measures (SPS) and Technical Barriers to Trade (TBT).

On the Agreement on Agriculture (AoA), CI says that given the impact of import liberalisation in some developing countries without commensurate market access for developing country exports, provisions must be negotiated to ensure that the AoA enhances the food security of vulnerable consumers.

On TRIPS, CI stresses that it was opposed to the inclusion of TRIPS at the time of the Uruguay Round. It notes that ultimately, the best solution to many of the problems in the Agreement would be to remove it completely from the body of the WTO. However, CI recognises that cannot be a short term goal.

CI points out that given the lack of clarity over the relationship between implementation of TRIPS and measures to protect health, the Doha Ministerial Declaration must include an immediate and binding commitment to interpret the TRIPS Agreement in support of public health objectives. CI also supports the Africa Group position on TRIPS.

With regards to competition policy, CI says that since less than half of WTO members have a competition authority, moves to negotiate international rules are premature.

On SPS and TBT measures, CI stresses that consumer health and safety must be assured, and that the precautionary principle should be upheld by the WTO as long as it is not used as a protectionist measure.

On the issue of NGOs, CI says that the WTO must make operational Art.V of the Agreement Establishing the WTO that authorises the General Council to make arrangements for consultation and cooperation with NGOs.

The WTO should develop procedures, modelled on those that the UN has used to identify those NGOs that are democratic with an international structure to ensure that there is a balance between regions and interests in NGO representation at the WTO.

Such NGOs, says CI, should be given greater standing in the WTO process.

CI points out that the Doha Ministerial Conference provides an opportunity to take forward a pro-consumer and pro-development agenda, but only if key member countries are serious about their commitment to an equitable rules-based multilateral trading system.

A pro-consumer and pro-development round, in which all countries can and do participate and where the consumer interest is taken into account, is long overdue, says CI. – SUNS4989

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

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