South Summit: Redress imbalances in WTO agreements

At the conclusion of their meeting, the G77 leaders and representatives at the Havana Summit issued a Declaration which addressed many of the key issues concerning the developing countries. Among these was the need to rectify the asymmetries in the World Trade Organisation (WTO) agreements.

Martin Khor

POLITICAL leaders of the Group of 77 developing countries who met in Havana at the first ever South Summit have underlined the urgent need to redress the imbalances in the present World Trade Organisation (WTO) agreements, in a final Declaration adopted at the end of the meeting.

The leaders also adopted a Plan of Action outlining details of various measures to be taken (see 'Reform WTO and financial architecture, says action plan, p. 12').

In a 63-paragraph Declaration of the South Summit, the leaders also called for fundamental reform of the international financial architecture, reform and extension of the Heavily Indebted Poor Countries (HIPC) initiative on debt, rejection of the 'right' of humanitarian intervention and elimination of unilateral sanctions against developing countries.

The Declaration criticised the lack of benefits for the South from globalisation and the increased asymmetries and imbalances in international economic relations, and called for equal participation of the South in international economic governance institutions.

Restoring confidence

The Declaration has seven paragraphs on trade and WTO-related issues.

'We advocate the restoration of confidence in the multilateral trading system, which should contribute to the economic growth and development of the countries of the South,' it said. 'We insist on the need for the developed countries to fulfil their commitments fully and immediately to implement the provisions for special and differential treatment for the products and services exported by the developing countries, and for the strengthening of the system of trade preferences, which should also address the needs of LDCs (least developed countries) and the specificities of a number of small developing countries, while taking into consideration their problems of vulnerability and the risk of marginalisation in the global economy.

'We urge that priority should be given to the liberalisation of those service sectors where developing countries have the comparative advantage. In this respect, the key issue of the free movement of natural persons should be adequately addressed.'

The Declaration noted with concern that trade liberalisation has not provided benefits for all developing countries. 'There is a need to restore confidence in the multilateral trading system through full participation of developing countries, full and faithful implementation of the Uruguay Round Agreements in their true spirit, and effective attention to the implementation concerns of developing countries. We stress the principle of universal membership of the WTO and call for acceleration of the accession process without political conditionalities.

'We urge all WTO members to refrain from placing excessive demands on developing countries seeking accession to the WTO. We recognise that there is a need for consultations among developing countries to promote effective participation in the WTO.

'We underline the urgent need to redress the imbalances in the present WTO Agreements, and in particular, with regard to the right of developing countries to promote their exports, which have been curtailed by the abuse of such protectionist measures as anti-dumping actions and countervailing duties, as well as tariff peaks and escalation.

'Meaningful and expedited liberalisation of the textiles sector, which is of particular interest to developing countries, is another important market access issue which should be addressed by the multilateral trading system as a matter of priority.

'We also call for the mandated negotiations on agriculture in accordance with the provisions of article 20 of the Agreement on Agriculture. In agriculture the objectives should be to incorporate the sector within normal WTO rules. We also call for the full and prompt implementation of the WTO Marrakech decision on measures related to the possible negative effects of the reform programme on LDCs and net food-importing developing countries.

'The WTO Agreements should be implemented taking into consideration the need to extend the implementation period of particular Agreements that pose problems to developing countries. The review of the Trade-Related Aspects of Intellectual Property Rights Agreement (TRIPS) as mandated in articles 27 and 71 should make them more responsive to the needs of the South and to ensure access of developing countries to knowledge and technology on preferential terms. We will work towards harmonising the TRIPS Agreement with the provisions on the sustainable use and conservation of biodiversity in the Convention on Biological Diversity.'

The Declaration also called on developed countries fully to implement special and differential treatment for developing countries, to strengthen the system of preferences and to give the products and services of special export interest to developing countries free and fair access to their markets. In this connection, it urged all WTO members to grant the request of the European Union and the African, Caribbean and Pacific (ACP) Group for a waiver for the provisions of article 1, paragraph 1 of the General Agreement on Tariffs and Trade (GATT) (for the successor to the Lome-IV trade and aid agreement).

It said future multilateral trade negotiations should be based on a positive agenda and should take full consideration of the development dimension of trade and of the specific needs and concerns of developing countries. It called on all countries to support the mandate of the United Nations Conference on Trade and Development (UNCTAD) to assist developing countries in multilateral trade negotiations.

'While recognising the value of environmental protection, labour standards, intellectual property protection, indigenous innovation and local community, sound macroeconomic management and promotion and protection of all universally recognised human rights and fundamental freedoms, including the right to development, and the treatment of each issue in its competent international organisation, we reject all attempts to use these issues as conditionalities for restricting market access or aid and technology flows to developing countries.'

The Declaration welcomed Qatar's invitation to host the WTO's Fourth Ministerial Conference.

The Declaration noted the success of the tenth session of UNCTAD (UNCTAD X) and requested all countries to support UNCTADÕs efforts to promote the development dimensions of trade.

'We further believe that the member countries of the Group of 77 and China should coordinate their priorities and negotiating strategies effectively to promote their common interests by shaping and directing multilateral trade negotiations to take into account the needs of developing countries so that trade policies serve the objectives of development, and also provide enhanced market access to developing countries.'

The leaders said they remained 'fully committed' to the spirit of the G77 and China to pursue a common course of action to protect and promote their collective interests and genuine international cooperation for development, and to strengthening the unity and solidarity of the Group.

'We reaffirm that in our endeavours we are guided by all the principles and purposes of the United Nations Charter and by full respect for the principles of international law.

'We are committed to a global system based on the rule of law, democracy in decision-making and full respect for the principles of international law and the Charter of the United Nations. The new global system must reflect these principles.'

The Declaration said that solutions to global problems demand concrete mechanisms for full and effective participation by the South in international decision-making on an equal basis.

'In this regard, the international machinery through which global norms are developed and actions taken must therefore ensure that the countries of the South can participate on an equal footing in decisions which affect them most of all. In particular, the international economic governance institutions must promote broad-based decision-making which is essential if we are to have a more equitable global political economy.'

The leaders noted with concern that the South countries have not been able to share in the benefits of globalisation on an equal footing with the developed countries and have been excluded. 'Asymmetries and imbalances have intensified in international economic relations, particularly with regard to international cooperation, even further widening the gap between the developing countries and the industrialised countries.'

Reform of international financial architecture

The Declaration expressed concern on the serious financial problems faced by many South countries, with the systemic aspect of financial instability, the problems associated with excessive volatility in short-term capital flows, and the absence of an appropriate mechanism to regulate and monitor such flows, as well as hedge funds and highly leveraged financial institutions.

'This situation urgently requires a fundamental reform of the international financial architecture, making it more democratic, more transparent and better attuned to solving the problems of development. It also requires the establishment of a clear programme that goes beyond the mere prevention of crises and includes actions addressing the interrelated problems of finance, trade, technology and development at the international level. The return to apparent normalcy of capital markets after the last crises should not lull us into complacency.

'Even developing countries with limited or no financial markets suffer badly from financial volatility and contagion through lower commodity prices brought about by declining commodity demand, cross-instability in financial and commodity markets, and the postponement of investment, which seriously weaken their overall economic situation and growth potential. Although financial contagion in these countries does not have systemic consequences, their economies are severely affected, and we therefore call on the multilateral financial institutions to take appropriate and timely supportive action to assist them. ...

'We also urge the developed countries to take into account the possible negative impact of their domestic economic, monetary and fiscal policies on developing countries and to apply measures that are sensitive to the needs and interests of the South.'

The Declaration also noted with deep concern the continuing decline of official development assistance (ODA) and urged developed countries to honour their commitment of directing 0.7% of their gross national product (GNP) to ODA and, within that target, to earmark 0.15 to 0.20% for the LDCs. Official aid should respect the national development priorities of developing countries, and conditions attached to ODA should be brought to an end.

External debt problem

On debt, the Declaration expressed alarm that debt servicing has grown at a much greater rate than the debt itself, and that debt payment has become heavier in many countries. 'We therefore underline the need collectively to pursue a durable solution for the external debt problem of developing countries, including middle-income developing countries, which also addresses the structural causes of indebtedness. We further call for debt reduction arrangements for middle-income developing countries in order to expedite the release of resources for development.

'We welcome the expanded initiative in favour of heavily indebted poor countries (HIPC), but consider that it should be extended, expedited and made more flexible, and that new and supplementary resources should be contributed. Debt relief or cancellation should not be at the expense of official development assistance. We advocate seeking renegotiation formulas applicable to middle-income countries, and promote the design of a global strategy for external debt.'

The Declaration viewed with alarm the recent unilateral moves by some developed countries to question the use of fiscal policy as a development tool and to impose their own definition of so-called harmful tax competition.

'We reiterate the fundamental right of each State to determine its own fiscal policies and in this regard sovereignty of States must be respected. We subscribe to the view that the legitimate struggle against money laundering should not be used as a pretext to discredit genuine offshore financial centres because of their fiscal policies and incentives.'

The Declaration noted that the contribution of the transnational corporations (TNCs) is determined by their global strategies, characterised by the search for increased competitiveness and ever-higher profits. Such a situation is not necessarily consistent with job creation and the realisation of development objectives in many developing countries.

'Hence, we invite the relevant international institutions to address this dilemma with a view to attaining the proper balance between both objectives. In this context, we request UNCTAD and ILO (the International Labour Organisation) to study the merger trend among the TNCs and its impact on unemployment as well as its competitiveness impact on small and medium-sized enterprises (SMEs) in developing countries. We also call on the TNCs to integrate development objectives of the host developing countries into their business strategies.'

South-South cooperation

The leaders said they are convinced that South-South cooperation is an effective instrument and committed themselves to overcoming whatever factors that have limited this cooperation.

They also recognised that regional cooperation and integration is the most meaningful approach for the South to face the challenges of globalisation and take full advantage of its opportunities, and commended the work of the regional and subregional groupings established among developing countries.

On the environment, the Declaration stated: 'We believe that the prevailing modes of production and consumption in the industrialised countries are unsustainable and should be changed, for they threaten the very survival of the planet. We firmly believe that technological innovations should be systematically evaluated in terms of their economic, social and environmental impact, with the participation of all social sectors...We call on the developed countries to fulfil their commitment to provide developing countries with financial resources and environmentally sound technologies on a preferential basis...We advocate a solution for the serious global, regional and local environmental problems facing humanity, based on the recognition of the NorthÕs ecological debt and the principle of common but differentiated responsibilities of the developed and developing countries.'

Information technology

On information technology, the Declaration believed it is urgent to enhance the SouthÕs access to information networks but also 'emphasises the need to preserve our national and regional diversity of traditions, identities and cultures which may be affected by the globalisation process, and to achieve a connection to contemporary international information and knowledge that does not entail sacrificing our national and regional cultures and identities.'

'It is thus necessary to pay special attention to the homogenising tendencies that may threaten this diversity. In this context, we welcome the proclamation by the United Nations General Assembly of the year 2001 as the Year of Dialogue among Civilisations and stress the importance of this initiative as a means of enhancing understanding of diverse cultures and promoting North-South and South-South cooperation in a globalised world.'

The Declaration added: 'We firmly reject the imposition of laws and regulations with extraterritorial impact and all other forms of coercive economic measures, including unilateral sanctions against developing countries, and reiterate the urgent need to eliminate them immediately. We emphasise that such actions not only undermine the principles enshrined in the Charter of the United Nations and international law, but also severely threaten the freedom of trade and investment. We therefore call on the international community neither to recognise these measures nor apply them.

'We are committed to promoting democracy and strengthening the rule of law. We will promote respect for all universally recognised human rights and fundamental freedoms, including the right to development. We pledge ourselves to provide transparent, effective and accountable governance, responsive to the needs of our peoples, which is necessary for economic growth, peace and prosperity. We reaffirm that every State has the inalienable right to choose political, economic, social and cultural systems of its own, without interference in any form by other States.'

The Declaration added: 'We stress the need to maintain a clear distinction between humanitarian assistance and other activities of the United Nations. We reject the so-called ÒrightÓ of humanitarian intervention, which has no legal basis in the United Nations Charter or in the general principles of international law.'

The Declaration expressed deep concern over the insufficient level of resources for development at the disposal of the United Nations, thus hindering its capacity to fulfil its main economic and social objectives in a manner commensurate with the needs and aspirations of the developing countries.

'We note with concern the increasing erosion of the role and the contribution of the United Nations to the promotion of genuine international cooperation for development. In this regard, we reiterate that the United Nations has a central role to play in world economic matters by promoting a vital boost to the development of the South and by transforming international economic relations, making them more fair and equitable, and pledge our full support and determination to working towards its strengthening in this regard.

'We believe that in order to realise the goal of universal peace and prosperity, we will need to promote international cooperation that is just and equitable, giving high priority to integrated and comprehensive development, which can be achieved only by working together, both among ourselves and with the developed countries. We can make ourselves heard as a single voice, with the courage, perseverance, boldness and political will needed for the major and urgent transformations of the international economic system to which we all aspire.' - May 2000

About the writer: Martin Khor is Director of the Third World Network.