ECOSOC High-level segment won’t endorse new trade round

by Chakravarthi Raghavan

Geneva, 16 July 2001 - - The UN Secretary-General Kofi Annan, and the heads of the World Trade Organization, the International Monetary Fund and the World Bank used the occasion of the High-Level Segment on Africa of the UN Economic and Social Council to promote the launch of a new round of multilateral trade negotiations at the WTO’s Doha meeting in November.

But their promotion of a new round is due to be rebuffed by the ECOSOC in the Ministerial Declaration to be issued at the end of the High-Level Summit: a formulation promoted by the EU, in effect commending/endorsing the launch of a new round of multilateral trade negotiations, has not achieved any consensus and had been eliminated in the negotiated draft.

The new formulation only has a reference to the African issues that should be on the agenda of any future trade negotiations.

The High-Level segment on Africa of the ECOSOC opened this morning, with an address by the UN Secretary- General, followed by an ‘interactive dialogue session’ where the IMF Managing Director Horst Kohler, the World Bank President James Wolfensohn, the WTO Director-General Mike Moore, and the UNCTAD Secretary- General Rubens Ricupero spoke.

Annan, Kohler, Wolfensohn and Moore all promoted the launch of a new round, arguing that the worsening global economic outlook (and slowdown in the major economies) required the launch of a new round.

In the inter-active dialogue period, the United States brought out that in the first draft of the declaration to be issued there was a paragraph about the launch of a new round at Doha, but in the latest revised version before the meeting (an informal draft of the text being negotiated), the support for a new round had been dropped. The US asked for the comments of those who had spoken for the round.

Other members of the ECOSOC said that in the first draft, the EU had put forward a paragraph in effect endorsing a new round being launched at Doha, and setting out the subjects of importance to Africa that would need to be included in such a round.

However, in the negotiations at New York (before the ECOSOC), and in Genera after the ECOSOC began, there were objections from members who said that there was no consensus on the round, and the formulation should be changed.

In his address at the opening of the high-level segment, Mr Annan said it was timely that the WTO would meet at Ministerial level and Qatar and that the greatest danger in times like these, a time of uncertainty in the world economy, is that people will listen to sirens of protectionism.

Annan said: “Nothing could be more disastrous for the world in general, or for developing countries in particular. Yet many of the developing countries themselves are now close to losing faith in the world trading system, because they feel that the advantages they were promised from the Uruguay Round have not materialised.”

“It is important therefore that we restore the momentum of open markets by launching a new round of trade negotiations, which this time must be a true Development Round, in the sense that it will give genuine priority to the concerns and interests of developing countries.”

The IMF Managing Director, Mr. Horst Kohler, said African needed better opportunities for trade, and African nations must be provided free access to markets of industrial countries, particularly in areas such as agricultural products, textiles and clothing.”These areas should be an important focus for a new round of multiliateral trade negotiations in the context of the WTO,” Mr Kohler said.

World Bank President, Mr. James Wolfensohn said they had to make sure that the next multilateral trade round would be ‘Development Round’ that would put the welfare and interests of developing countries firmly at its center. He called on the rich nations to open their markets and reduce their agricultural subsidies, and asked other rich nations to emulate the EC example of granting full duty-free and quota free market access for LDCs. Multilateral trade rules, Wolfensohn said should not also impose undue burdens on developing countries by requiring large scale investments in sophisticated administrative systems that were not priority areas for actions and which may divert funds from roads, clinics or schools. “Intellectual property rights is another area where rich countries should ensure that international rules do not unfairly discriminate against low and middle income countries.”

The rich nations could help poor countries by supporting ‘flexible implementation’ guidelines that recognize that countries had different needs and capabilities and “one size does not fit all”.

There should be no formulaic approach to Development, and aid should be provided to help the developing countries strengthen the public and private institutions such as transportation, telecommunications and financial services.

The WTO head, Mr. Mike Moore, said in terms of support to African development, the UN system and the Bretton Woods Institutions have an important role to play in mobilizing support for improved market access “which can now best be advanced within the framework of a new Round.”

Moore dwelt at length on Kofi Annan’s call for a new Round at the UN LDC Conference in May - and cited the points made by Annan at Brussels promoting a new round.

However, that conference after hearing the views of Annan, and that of Moore at an inter-active session, had failed to endorse a new round -with some of the LDCs challenging the call for a new round.

The US economy, Moore said, was stuttering and a recession in America could export trouble to the rest of the world, and an upsurge in protectionism could make things much worse. “The risk is that a global recession will jeopardise any chances of economic recovery and growth in Africa.”

The failure to launch a new round, Moore argued, could also jeopardise the multiliateral trading system.

In his address, largely outlining the need for massive increase in ODA to Africa, and for new initiatives on the debt relief for Highly Indebted Poor Countries (HIPC), UNCTAD Secretary-General Rubens Ricupero viewed as particularly important the trade proposals of the recently issued Zedillo report (the report of the High Level panel of experts named by UN Secretary-general Kofi Annan and chaired by former Mexican President Zedillo).

The panel had underscored that the main beneficiaries of trade liberalization in the GATT and the Uruguay Round had been the industrial countries, while the exports of developing countries faced significant impedimenta in the markets of rich countries. These questions need to be addressed, the panel said and identified several areas for reform of the WTO, and its trade rules - full implementation of the commitments made by the industrial countries in the Uruguay Round, strengthening the rules of the WTO system and reform of the anti-dumping rules to end their abuse, liberalising the trade in agricultural products, reducing tariff peaks and tariff escalations and reform of the TRIPS agreement.

A majority of that panel felt that these would best be addressed by a Development Round to be launched at the Doha Ministerial and focussing on these, while a minority said that no new round of negotiations should be launched at Doha until the developed countries had ‘fully delivered’ on their Uruguay Round promises.

Ricupero said that Moore and others trying to make the trading system work in favour of African countries should be helped and in this respect the Zedillo trade proposals were particularly important, and perhaps more urgent than the other recommendations (relating to next year International Conference on Financing for Development).

In their initial interventions, and in responses to comments and questions, Kohler and Wolfensohn agreed that the rich nations must open up their own markets to the exports of developing countries.

Kohler admitted that the IMF through its advice and conditionality was asking developing countries to do what is not practised by the developed countries - such as asking the developing countries not to subsidise agriculture and exports. He agreed that the rich nations must eliminate such practices, but  defended the advice to the developing countries with the argument that the government budget and revenues could not afford the kind of subsidies used by the rich nations. – SUNS4937

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

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