TWN Info Service on WTO Issues  (Oct03/8)

28 October 2003

Third World Network

Dear friends and colleagues,

DEVELOPING COUNTRIES SAY CIVIL SOCIETY CAN NO LONGER BE IGNORED

Debate on Cancun takes place at UNCTAD

With the impasse at the WTO, the UN Conference on Trade and Development (UNCTAD) recently became the forum for frank discussions on what happened at Cancun and what is the state of the multilateral trading system.

The Trade and Development Board of UNCTAD held its 50^th session in Geneva and its highlight was the debate on the post-Doha work programme and the outcome of the Cancun Ministerial.

Altogether 48 delegations made statements.  This is in contrast to the heads of delegation meeting of the WTO at about the same time, when only five countries spoke up.

Below is an article by Mr. Chakravarthi Raghavan, Chief Editor of the South-North Development Monitor (SUNS), on the debate that took place at the Trade and Development Board on 8 October. This article is reproduced with his kind permission from the SUNS of 10 October.

We will also send you separately more reports of the debate and the conclusions.

With best wishes

Martin Khor

TWN

South countries say civil society can no longer be ignored
By Chakravarthi Raghavan (Report in SUNS 5437, Geneva 10 October 2003)

A range of developing countries spoke frankly at the UNCTAD Trade and Development Board on 8 October to challenge the attempts of the majors to do finger-pointing for the failure of the Fifth WTO Ministerial Conference, and said that not only the substance and processes at Cancun, but also the procedures and processes in the two years at Geneva since the launch of the Doha Work Programme inevitably led to the failure of Cancun.

While the majors, and the WTO secretariat, in briefings and internal assessments, are trying to put the blame on civil society, a number of developing countries, big and small,  made clear that whether one liked it or not the involvement of civil society, both in the North and the South, in trade negotiations had come to stay. Also, a reality to be taken account of is that learning from their experiences in the past, developing countries were now getting better organized, and the business at the WTO can neither be done at the last moment at political levels, nor decided by a few.

The United States, one of the last speakers in the debate (the EC was among the first), referred to the G-21 agricultural alliance and said that if countries wanted to “insist on more, then they must also be willing to give more.” This view, on agriculture at least, appears to be at odds with the fact that in reaching the Marrakesh agreement, developing countries had made a ‘down payment’ in taking on new obligations and issues (services, TRIPS etc) on the basis that the industrialized countries would commit themselves to liberalisation of agriculture, textiles and clothing, and other market access issues - where they would act over a longer transition period.

The US position appeared to be “what we have taken (through the Marrakesh agreement)  is ours, and if you want us to deliver on marrakesh, make another payment to us.”

Brazilian ambassador, Luiz Felipe de Seixas Correa,  blamed the failure and lack of progress at Cancun  to the fact that in two years of negotiations after the launch of the Doha Work Programme (DWP), there had been no progress on any of the substantive issues - agriculture, implementation or Special and Differential Treatment, and the other items on the DWP. It is not Cancun that needs to be relaunched, but the Doha negotiations themselves, he said.

India’s Amb. Hardeep Puri  said the outcome at Cancun showed the need to revive and revitalize the Geneva process, where the bulk of negotiations had to take place at a technical level, and change the style of doing business at the WTO, “because it is clear that ramping up the political level and persuasion and hoping for compromises at the last minute is not likely to work.”

Jamaica’s Amb. Ransford Smith spoke of the “cottage industry” that had sprung up around the outcome of Cancun and said that not only the substance and processes in the negotiations had contributed to the outcome in Cancun, but also a range of procedural issues whose collective weight continued “to give a sense of an entity struggling, or reluctant, to make the transition in matters of process and procedure” from the GATT’s “contractual arrangement” to the WTO as a “multilateral institution.”

Jamaica, the Economic Commission for Africa (ECA), and several others also said that changes were needed in the WTO itself and its organizational agenda. Learning from their experience in the Uruguay Round, “developing countries are beginning to [be] better organized and prepared nationally and collectively,” Jamaica said.. If two out of three ministerial meetings of the WTO had broken down completely or otherwise failed, “there must be a genuine basis for asking whether this can merely be coincidental or in fact systemic.”

The representative of the ECA said that whatever reasons might be advanced for the failure at Cancun, an important development, which will forever alter future multilateral trade negotiations, emerged or was reinforced at Cancun. “This has been the ability of developing countries to establish ‘strategic alliances’ and to strongly advocate their interests in the MTS.”

South Africa said the ‘poor countries’ could not be blamed for the outcome at Cancun, and made references to the ‘unholy alliance’ on the eve of Cancun between the US and EU.

India said that it was “too simplistic” to “divide the WTO membership into ‘good guys’ - namely, those who agreed with whatever you say - and the ‘bad guys’, those who hold different views.” It was time to inject an element of realism, manageability and priority into the negotiating processes, to separate the grain from the chaff - issues that make for genuine trade liberalization and those that at best had a tenuous relationship with trade.

“If we do not learn the right lessons from the mistakes of the past, we will be condemned not only to repeat them but to compound them,” India warned, and said that one of the regrettable features of the Multilateral Trading System over the past quarter of a century had been the attempt at ‘forum shopping’, for which “the blame must rest with those who, at different points of time, have found certain organizations more amenable to the pursuit of their interests.” This attempt had led to the dilution of intergovernmental and negotiating role of UNCTAD, and it was time to underline the importance of policy dialogue under the auspices of UNCTAD.

Kenya punctured the self-congratulatory views about the progress made before Cancun on TRIPS and Public Health, and said, “we agreed to a temporary solution...  just before Cancun. But we need a permanent, simple and multilateral solution.” The Kenya representative said that attempting to allocate blame was a sure way of diverting attention from real issues confronting trade negotiations, in particular addressing the development concerns. The failure called for the need “to re-evaluate the mandate of the WTO, whose core business is market access.”

At Cancun, Kenya added, “we took note of the intention of some Members to completely drop some of the Singapore issues from WTO discussions.... and we hope these intentions will be locked in. However, our preference is to drop all the Singapore issues from the WTO.”

“Beyond these, there were other important issues needing some reflection, such as the WTO-decision making process and the need for greater internal transparency, including transmission of documents from Geneva to the conference, the organization of the Conference and the neutrality of the WTO secretariat among others.”

Though after Cancun, the WTO’s leadership in its internal assessments, and staff meetings, have been promoting the view of the MC-5 having had the best transparency process, in terms of Heads of Delegation meetings where everyone had an opportunity to present their views.

However, as many Third World negotiators who have returned from Cancun, including those who were at the ‘Green Room’ meetings on 14 September, said that for all this participation and views expressed, the overwhelming views, many strongly expressed, and even the summing up by the Chairs of working groups, like the one headed by the Minister from Kenya, had been brushed aside in the revised draft on the issues prepared by the Secretariat and the Mexican Chair.

One of the participants in the Green Room said that the Minister from Kenya, who was the facilitator chairing the discussions on development issues and had summed up the discussions, had not even been shown the paragraphs relating to his work that found their way into the Draft Ministerial text issued in the name of the Chairman of the Conference.

It was as if the whole meeting, and the views of delegations, had not taken place.  When this became known in the ‘Green Room’, and the issue was brought into the open, Derbez had tried to explain that the text had been prepared under his authority, though many said that the secretariat could not absolve itself of responsibility, and that there is an element of contempt from senior officials towards the developing world and its views.

India’s Hardeep Puri listed what he called “a few simple and self-evident propositions,” including the fact that an impasse scenario had not been strange to the MTS.

However, little purpose would be served by trying to apportion blame. The WTO membership could not simply be divided into ‘good guys’(those who agreed with the majors), and the ‘bad guys’ (those who had different views). Nor would any purpose be served by giving credence to ‘conspiracy theories’, India added.

[In various explanations since Cancun emanating from the European Commission, Trade Commissioner Pascal Lamy in a briefing session at Brussels (29 Sep) had listed several reasons as ‘conspiracy theories’.]

“Did Cancun breakdown because of Singapore issues or because others could not show forward movement on agriculture,” asked India. The need of the hour was to listen to one another, appreciate the concerns of all, and find multilaterally acceptable solutions.

There should be no mistake, India said. Every WTO member - small, medium or large, LDCs, developed or developing - had a shared interest in the UN Millennium Goals of an “open, equitable, rule-based, predictable and non-discriminatory multilateral trading system.”

The time had come to acknowledge “unambiguously that in the runup to Cancun, and at Cancun itself” there were several process-related flaws. “The manner in which an artificial consensus based on one-sided representation of positions was sought to be pushed through both in Geneva and again at Cancun, undermined the trust, particularly of developing countries in the fairness, integrity and democratic functioning of the process,” Puri said. “The majority of WTO members, the developing countries, felt alienated. This does not provide a recipe for true consensus.”

Cancun had clearly shown the need to revive and revitalize the Geneva process. The bulk of negotiations had to be undertaken, issues matured, and compromises reached at the technical level in Geneva. “The style of doing business has to be changed, because it is clear that ramping up the political level and persuasion and hoping for compromises at the last minute is not likely to work.”

Though negotiations were of an intergovernmental nature, within the contractual framework of rights and obligations, no longer is it possible, as was the case until the end of the Tokyo Round, to ignore the voice of those whom the decisions will affect.  People and stakeholders everywhere, especially in developing countries, have awakened to the stakes involved in the multilateral trade negotiations (MTNs).

“Rising to the challenge of negotiations among democracies in the full glare of civil society is the need of the hour and requires a new mindset and approach. Whether we like it or not, the involvement of civil society - both of the North and the South, has come to stay.”

The time has also come to inject an element of realism, manageability and priority into the negotiating process, to separate the grain from the chaff - the issues that make for genuine trade liberalisation and those that have at best, a tenuous relationship with trade.

“If we do not learn the right lessons from mistakes of the past, we will be condemned not only to repeat them but compound them.”

What was most important was not to make more mistakes. In the complex arena of MTNs, “overplaying one’s hand is as problematic as underplaying it.”

In what was seen as clear references to the US and EC’s private explanations as to why they could not move on agriculture, even as they blamed India for its stand, Puri said: “Unlike other negotiations, the outcome affects not only lives of millions of ordinary people economically and socially, but the fate of governments as well. Just as some countries cannot show movement and flexibility on agricultural subsidies on the eve of an election year, or prior to the enlargement of economic groupings, equally, others cannot countenance significant market liberalisation where the lives of millions, in vulnerable agricultural communities are affected.” The way forward depends on appreciating everyone’s concerns and come up with a road map that takes account of the interests of all in a balanced way.

Puri also underlined that the introduction, in the Uruguay Round, of the ‘single undertaking’ concept and a ‘one-size-fits-all’ approach had left a large and growing number of countries in the WTO with a ‘take-it-or-leave-it’ scenario, and this was aimed at international harmonization of regulatory practices and standards. While in the earlier rounds, non-reciprocal concessions were made available to developing countries, and the ‘enabling clause’ of the Tokyo Round were meant to be non-reciprocal, non-discriminatory and extended on a generalized basis, in the Uruguay Round, such concessions were effectively transformed to a reciprocal basis and made contingent on enhanced market access offered by developing countries.

It would be a travesty to suggest that the developing countries had been ‘free riders’ in the trading system. It is they who have assumed more onerous obligations and paid a heavy price without commensurate benefits in areas of interest to them. The South’s concessions in the new areas, as the World Bank’s Michael Finger has put it, “mercantilism, unrequited” and in the real economy, “they are costly.” Developing countries had barely begun to grapple with the onerous obligations of the Uruguay Round, when attempts were made even at Singapore to bring four new issues (the Singapore issues) on the WTO agenda. “These issues are of little interest to developing countries nor of relevance to the trading system.”

Given the differences in levels of development and ability of countries to assume obligations, “developing countries should not be coerced into assuming obligations they can ill afford. Any obligation assumed by developing countries should be based on their conviction, rather than coercion.”

Brazil’s Seixas Correa, like several other developing countries, said it was not very productive to think of Cancun as a failure, but rather see it as an “unfinished meeting... where due to the constraints of time and complexity of the issues, we could not explore the limits of the negotiating process.”

This gave rise to the question, why there was so little time and so many difficult issues had to be dealt with at the Ministerial level. It was not matter of pointing fingers, but to reflect on the substance and preparatory process in order to get the negotiations back on track.

On substance, said Brazil, it could not be overlooked that since the launch of the negotiations in Doha, almost two years ago, very little was achieved in terms of fulfilling the mandate. The reform of the CAP was late and insufficient, and had prevented the WTO from fulfilling the mandate to establish modalities for the agricultural negotiations by 31 March 2003. When the reform was announced, it did not lead to changes in negotiating positions, and this continued to stand in the way of fulfilling the mandate.

The US for its part, having played a bold and proactive part in the initial phase of the negotiations, adopted its positions in line with the considerable distortions introduced in the current farm bill. This allowed both the US and the EC to find a mutual compromise, a modus vivendi which did not take into consideration nor allow any room for interests of other participants, despite the best efforts of the chairman of the General Council.

In addition, there had been insufficient progress in S&DT, blockage on implementation issues, the cotton crisis in West Africa, and the manner in which the Singapore issues were handled.

All this contributed to alienate the developing countries. The problem did not arise in Cancun, they were present since the early days of the round. When looking for the next steps, “it is not Cancun that must be set right, it is the Doha round itself that must be relaunched.”

It was imperative to make a concerted effort to inject new dynamism into the Doha negotiations, and make up for the delays accumulated over the last two years, and look forward. “We must concentrate on the substance, on the issues that are really indispensable for the fulfilment of the Doha mandate. Procedure is important and deserves thoughtful consideration, but this should not divert from the important objective of completing the negotiations and achieving a result worth of being called a Development Round,” Brazil said.

Jamaica found curious the line of some analysts and commentators, after the failure at Cancun, that seemed to suggest that “developing countries have a responsibility to be flexible and keep the negotiations on track and on schedule, since.... the developing countries, and particularly the poorest among them are the major beneficiaries of the outcome of the Round.” The “somewhat puzzling suggestion” is that in fact developing country negotiators acted against their own interests at Cancun.

From Jamaica’s perspective, there was an array of factors at work - substantive differences on key issues, and in the case of the Singapore issues the entire subject areas, as well as institutional, procedural and organizational issues. There were also “attitudinal dispositions” towards aspect of the work at the WTO itself. Left untended and for the most part not discussed or otherwise not addressed in the intervening periods between ministerials, these have now risen to the surface, affecting the conduct of meetings and progress of work. “Now that two of the last three Ministerials have broken down completely, there must be a genuine basis for asking whether this can be merely coincidental or in fact systemic.”

Referring to the procedures in the preparation and transmission of texts to the Ministerial Conference, and the failure to reflect alternative views, the selection of officers, keeping and dissemination of records, and a long list of such matters, Jamaica said the collective weight of these continued to give the sense of an entity struggling to make a transition from the old GATT and its contractual arrangements into the WTO as a multilateral institution.

Ransford Smith cited his own Ministers report to the Jamaica Parliament where he expressed the sense of shock he felt on receiving the revised Ministerial text (Derbez text) on the penultimate day of the conference, since “it took little or no account of the views, concerns and proposals of developing countries, all of which had been aired in Cancun.”

The WTO negotiations were about commercial interests and policy space of members. This was difficult enough, but is compounded by the evident lack of consensus, and even profound differences among members on how the development dimension fit into the objective of pursuing liberalization at and increasingly behind the border. The lack of a common perspective has made it difficult to find agreement, mostly obviously on S&DT and Implementation Issues, but also on the core fundamental differences in areas such as Agriculture, Non-Agricultural Market Access and the Singapore issues.

Some of these underlying and procedural issues would need to be discussed honestly and openly and  addressed for the longer term effectiveness and vitality of the WTO.

The United States said it had left Cancun with a sense of pessimism. The MTS, it argued, could not meet the expectations of every member, and “the trick is to find the compromises.” The US agreed with India on the issue of brinkmanship and said this was not a useful tactic - clearly an effort to blame the EC for playing the Singapore issues close to the chest and making concessions at the last moment. The US repeated its arguments about differentiating developing countries.

Barbados, speaking for the Latin American and Caribbean countries, said in agriculture elimination of all subsidies will only contribute to growth and development. While the membership was aware of the difficulties faced by some of their developed partners, absence of strong reform would only contribute to the further complexities of bilateral and regional negotiations. In NAMA, there must be effective market access for developing countries, since the industrial sector is of great importance to their growth. Also, there must be inclusion in the WTO agreements of mandatory and effective S&DT, and linked to this “policy space” for developing countries.

An UNCTAD secretariat note for the meeting, reviewing the outcome of Cancun, noted that there had been much introspection about why the Fifth Ministerial Conference (MC-5) could not make the desired breakthroughs on a number of major issues of the DWP negotiations, and its  implications for the future of the MTS and the WTO.

Among the factors for the outcome at Cancun, the secretariat note, listed:

·        The complexity and diversity of the DWP on South-South, North-North, North-South, regional, sub-regional and individual country bases.

·        Difficulty in meeting the three criteria mentioned by the Chairman of the GC for determining the acceptability of any compromise package - namely (a) respecting the ambition of the Doha mandate, (b) respecting the development dimension and (c) seeking overall balance in the outcome of the negotiations.

·        Arrival of the moment for decisions with regard to detailed and specific policy commitments at Cancun, for which concerned members did not seem ready.

·        Difficulty in finding a balance between the package tabled and the expectations and demands of the 146 WTO Member states.

·        The fact that, against the background of expectations on development deliverables in areas of core interest to developing countries, especially agriculture, many developing countries were not prepared to accept commitments in other areas.

·        The emergence of a number of issue-based alliances and coalitions among developing countries (G-22 on agriculture, G-33 on SP and SSM and the “Grand Alliance” of the AU, the ACP and the LDCs). This was a factor in the negotiations, signalling that the concerns of these groupings had to be taken on board for a successful outcome.

·        The role and activism of civil society, parliamentarians and the media, both in the North and South, which added a new process-related and substantive dimension to the course of multilateral negotiations.

·        Problems in Cancun related to difficulty in establishing mutually agreeable linkages as well as balances within and among the key issues of negotiations involving considerations of pain and gain in the short and medium terms, sequencing, level of ambition, time line issues and payout and recompense.

·        Many process-related obstacles, including in relation to the timing of issues and their maturity for resolution.

NOTE:  This article is reproduced here with the permission of the SUNS.  Please contact Mr Raghavan at sunstwn@bluewin.ch  for permission for further circulation or reproduction.