No accord yet on WTO work programmes on debt and technology

After meeting for the first time in mid-April, the two WTO working groups established by the Doha Ministerial Conference to study the issues of trade, debt and finance and trade and transfer of technology have yet to finalize their work programme, amid concerns that the industrialized countries envisage no substantive decisions emerging from this exercise.

by Chakravarthi Raghavan

GENEVA: The chairmen of the two new WTO study groups set up under the work programme adopted at the 4th Ministerial Conference in Doha, the Working Groups on Trade, Debt and Finance, and on Trade and Transfer of Technology, are to hold further consultations to settle the work plan of these groups.

The Working Group on Trade, Debt and Finance (WG-TDF) is chaired by Ambassador Hernando Jose Gomez of Colombia, while that on Trade and Transfer of Technology (WG-ToT) is chaired by Amb. Stefan Haukur Johansson of Iceland. Both groups held their first meeting in the week of 15 April. Though not part of the negotiations covered by the “single undertaking” under the Doha work programme, the Doha Ministerial Declaration (paragraph 52) has accorded the study groups a high priority, and the groups are asked to report on progress to the 5th Ministerial Conference (which is due to take place next year).

At Doha and afterwards, the WTO head and the industrial world, as well as several of the major developing countries that pushed for the comprehensive work programme of negotiations, pointed to these study groups as setting out a “Development Agenda” - a view that has also been accepted by the Secretary-General of the UN Conference on Trade and Development (UNCTAD), who has however added that the outcome would depend on how these agenda items are dealt with.

Judged by the initial responses, the industrialized countries do not seem to see the process in the working groups as an exercise that would lead to specific recommendations and decisions, viewing it only as a long-drawn ‘study’ process - while ensuring that through the mandated negotiations, including on services, and on the new subjects, rules and disciplines are written to subserve their neo-mercantilist trade agenda and expand the markets for their corporations.

The Doha Ministerial Declaration (para. 36) has called for an examination by the WG-TDF of the “relationship between trade, debt and finance, and any possible recommendations on steps that might be taken within the mandate and competence of the WTO to enhance the capacity of the multilateral trading system to contribute to a durable solution to the problem of external indebtedness of developing and least developed countries, and strengthen the coherence of international trade and finance policies, with a view to safeguarding the multilateral trading system from the effects of monetary and financial instability.”

At the meeting of the WG-TDF on 15 April, the industrialized world, more so the major trading entities, did not seem to favour any focussed work plan that would study these issues in a comprehensive way and work towards possible recommendations.

India and other developing countries, on the other hand, said that the work plan and the topics to be discussed should better reflect the fact that trade measures could provide a solution to debt problems, and could not be confined to only a study of the problems of highly indebted countries. In this view, trade must not only help resolve debt problems, but also enable avoidance of debt and ensure finance for development.

The industrialized countries, in effect, tried to suggest that the finance and debt problems are being dealt with elsewhere, and any “trade-related” solutions would be on the basis of special trade concessions to  highly indebted countries which carry out the IMF/World Bank-prescribed economic reforms.

The US insisted that the title of the topic should not imply that trade can cause indebtedness or that some trade measures could provide a solution to the problems. The EC, appearing to be more forthcoming, could only contemplate solutions in the form of preferential market access for the highly indebted countries, which in practice has meant discrimination against exporters of the same products from other developing countries.

However, a number of studies by think-tanks and UNCTAD have clearly brought out that the conditions of trade under which the developing world operates, including the problems of terms of trade not only of commodity exporters but even of manufactures under the present processes of economic globalization, are inevitably leading to the external payments problems and indebtedness of developing countries.

An issues note from the UNCTAD secretariat for the UNCTAD mid-term review discussions has brought out clearly that there is a “dichotomy” in the international economic systems, that at present the international trading and finance systems are working at cross-purposes rather than in support of each other, and that both are also working against development.

Suggesting, as the US seems to have done in the working group, that trade cannot be a source of debt, when, in the absence of official finance and aid, countries compelled to liberalize imports via the WTO rules are forced to borrow to finance the imports, will not stand up to scrutiny in any discussion in an unbiased forum.

Cross-cutting issue

In the WG-ToT, Pakistan, on behalf of a group of like-minded developing countries (Bangladesh, Cuba, Dominican Republic, Egypt, Honduras, India, Indonesia, Jamaica, Kenya, Mauritius, Pakistan, Sri Lanka, Tanzania and Zimbabwe), introduced a paper for the working group to address the issue of transfer of and access to technology as a cross-cutting issue relating to the efficient application of a number of multilateral trade agreements.

The Doha Ministerial Declaration, according to the stand of these countries, has laid emphasis on the two central issues of relationship between trade and transfer of technology, and of possible steps that could be taken within the WTO mandate to increase technology flows to developing countries.

The WG-ToT should thus examine and recommend measures to be taken to increase flows of technology to developing countries with a view to ensuring that developing countries participate and implement  more adequately international trade disciplines in the context of the WTO.

In this perspective, the terms of reference should:

   *  identify ways and means of taking full advantage of the flexibility existing in the TRIMs, TRIPS, GATS and other WTO agreements in order to increase transfer of technology (ToT);

   *  identify home-country measures including incentives that encourage ToT in various modes to developing countries, in particular to the least developed countries, including promotional measures for building up a sound and viable technology base (Articles 66.2 and 67 of the TRIPS Agreement);

   *  examine WTO agreements to identify restrictions that certain provisions might be creating against transfer and dissemination of technology, in order to make necessary amendments for facilitating and ensuring ToT on fair and advantageous terms and in line with provisions on special and differential treatment for developing countries, and

   *  assess the implementation by developed countries of WTO provisions related to ToT, with a view to identifying the need for appropriate changes or strengthening of, including possible amendments to, these provisions, in order to ensure technology flows to developing countries.

In terms of analytical work, the developing-country paper calls for analysis of how technologies are created, transferred and diffused, for what purposes and the extent to which developing countries benefit from the process; identifying the main beneficiaries of existing modes of generating and diffusing new technologies and how the needs of developing countries could be better taken into account, as also clarifying how countries at different levels of development can acquire commercial technologies and obtain access to scientific and technological knowledge needed.

The paper also calls for analytical work in identifying the main patterns of technology transfer, including through foreign direct investment, and among others identifying home- and host-country factors that hinder or facilitate ToT; and the examination of restrictive practices on ToT imposed by the transnational corporations on their affiliates and their bearing on TRIMs and competition policy. (SUNS5103)

From Third World Economics No. 278 (1-15 April 2002)