Why civil society opposes a new Round

by Dr Raoul Marc Jennar

Brussels, 22 May 2001 - More than 1,500 non-profit organisations from all over the world, working on the field in areas like development, health, education, environment, consumerism, agriculture, citizens’ and women’s rights, are against the new round of trade negotiations proposed by the European Union at the World Trade Organisation (WTO).

Why do a huge number of developing countries express the same opposition? The explanations lie in the existing agreements and in the new proposed issues for a new round as well.

The existing agreements signed at Marrakech at the end of the Uruguay Round are not fully and properly implemented. The critical issue of the implementation of the existing agreements requires firstly, a review of the way they are implemented and an evaluation of their social and environmental impact.

The second necessary step on this implementation issue is the revision of these agreements in accordance with this evaluation.

And the third step is the reform of the institutional procedures within the WTO and that means a full reform of this body.

We do believe that there is a need to proceed to such an evaluation and adaptation of the international trade system before moving forward. This is a pre-condition to any negotiations on new issues.

Five years of implementation of the existing agreements provide a clear indication that this implementation is far from being balanced. As was said by Ambassador of Egypt to the WTO, Mrs. Fayza Aboulnaga (at a seminar in Geneva organized by the Third World Network for developing countries, and reported in the South-North Development Monitor), “during the Uruguay Round, we were promised the moon, but what have we got today ?”

At the time of the signing of the Marrakech Agreements, it was agreed that an analysis of the results of the Uruguay Round would lead to an evaluation. But this never occurred. Why ? Because this analyses provides two critical indications: (a) the content of the different agreements exposes an imbalance of rights and obligations to the detriment of developing countries, (b) the implementation of WTO rules is leading to unequal competition.

Take the WTO agreement on Agriculture. It organises a competition between agricultural products subsidised (directly or indirectly) in the North and non-subsidised products from the South. On one side, Europe and the United States have the right to support both exportation and domestic production and are authorised to put restrictions on imports; and, on the other side, developing countries have been forbidden to introduce such measures. According to the data of the OECD, on one side, around $300 billion of agricultural subsidies are provided; on the other side, nothing.

The unfairness of this competition is increased by the obligation to import 5% of the agro-business consumption.

A second example of this imbalance is provided by the WTO agreement on Intellectual Property Rights (TRIPS), which is marked by an extreme imbalance between holders of intellectual property rights and the users of these rights and of society as a whole. Ninety-five percent of the patents are from the North. But the WTO rules are imposed on all. This agreement violates the International Covenant on Economic, Social and Cultural Rights, which protects the sovereignty of the people on their natural resources. As it has been stipulated by the UN Sub- Commission on Human Rights, “since the implementation of the TRIPS Agreement does not adequately reflect the fundamental nature and indivisibility of all human rights, including the right of everyone to enjoy the benefits of scientific progress and its applications, the right to health, the right to food and the right to self- determination, there are apparent conflicts between the intellectual property rights regime embodied in the TRIPS Agreement on the one hand, and international human rights law, on the other.(UN Economic and Social Council, E/CN.4/SUB.2/RES/2000/7). A third example is provided by the WTO Agreement on Textiles and Clothing. It is said to achieve a full liberalisation in this sector over a period of ten years. But the USA and the EU were and still are protected by the authorization to fix quotas and restrictions. No progress has been made by the developed countries on the opening of their markets. This agreement is one of the most unbalanced WTO agreements. It does not contain any explicit sanction against an importing country and it contains a mechanism for the benefit of the textile sector in developed countries. The USA and the EU refused competition in this sector and used safeguard mechanisms such as anti-dumping actions. The EU forced Bangladesh to withdraw hundreds of export licences and this kind of EU “partnership” led to the loss of hundred of thousands of jobs in Bangladesh.

Market access, reduction of tariff barriers, subsidies, anti-dumping actions, services, are many other issues which offer ground for a crystal clear demonstration of the very imbalanced nature of the WTO Agreements.

And then there is the WTO itself. This institution lacks transparency, accountability and democracy. The most important decisions are taken during informal meetings between a small number of countries led by the EU, the USA, Japan and Canada. This is the so-called “green room method”. Access to information and participation in the various committees create an imbalance for a large number of South countries that have not enough human resources to deal with daily negotiations on a wide range of issues with high technical profile.  Transnational corporations supply the delegations from industrialised countries with a lot of analysis and recommendations.

The WTO concentrates legislative, executive and judicial powers without any democratic control. The rulers are also the judges.

The Dispute Settlement Mechanism lacks independence and is failing to guarantee a genuine trade justice to weak and poor countries. This is why, Indian Ambassador to the WTO, Mr S. Narayanan said that “the greatest challenge is to ensure that the rules-based trading system that the WTO is supposed to be is really operating as a rules-based system instead of operating as a power-based system.”

The WTO secretariat is far from being neutral. Let me give you an example:

despite the fact that a large number - maybe the majority, we will check in the near future - of Member States is not in favour of a new round of trade negotiations, the WTO Director-General, Mr Mike Moore, is campaigning all over the world for a new round. All the WTO staff is mobilised for this campaign. But the WTO Director-General never received this mandate.

This is WTO-style democracy! Last March, in Geneva, the Ambassador of Zimbabwe to the WTO, Mr. Boniface Chidyausiku, said that the implementation of the existing agreements is “on the top of developing countries agenda and decisions.”

But if the implementation of the six years-old agreements is the first priority for most of the developing and the least developed countries to - at the very least - express reluctance to the EU option for a new round, the EU- proposed new issues are increasing this reluctance. There is a long list of so-called “new issues” proposed by developed countries which want to link trade - and that means trade measures and sanctions - with several economic and non-economic areas. In particular, the European countries want to bring under the trade rules issues which are not trade issues like investment, competition, government procurement and environment. The major push for this new round is coming from the EU because, as observed by Pakistan’s Ambassador to the WTO, Mr Munir Akram, “the European Union was arguing that to compensate for their loss in agriculture, they need gains in other areas like investment and competition policy.”

Indeed, the EU wants to introduce new rules that give new rights to foreign investors, “making it easier,” as underlined by Martin Khor, director of Third World Network, “to enter countries and to operate freely.” The EU is proposing a diluted version of the rejected OECD Multilateral Agreement on Investment. This new version, introducing options and steps, paves the way to the old one. At the end of the day, “developing countries will find it increasingly difficult to defend the viability or to give preferences to local investors, firms and farmers which are all much smaller than the transnational companies.”

On competition policy, as underlined by Mr Nathan Irumba, Uganda’s Ambassador to the WTO, “developing countries need domestic competition policies, not an international one which would not help them.”

The EU is pushing for a new agreement that will prohibit in developing countries domestic laws and regulations favouring local firms on the ground that these laws and regulations are against free competition. How is it possible to ignore the final consequence of a system of equal trade rights between giant international corporations and local enterprises ? No doubt that the competition policy the EU wants to impose will lead to foreign monopolisation of developing-country markets.

Government procurement, another new issue, is not directly a trade issue even if it may have relationship to trade. On government procurement, the aim of the EU is to bring spending policies, decisions and procedures of all countries under the umbrella of the WTO. The foreigners will enjoy equal rights to locals. This proposal will remove the rights of governments to reserve some of its business to local firms. It will destroy an important instrument for assisting local firms for national development and for socio-economic objectives. Even if, as a first step, only a provision on transparency is imposed, it will mean that countries will be obliged to submit draft laws and regulations to the WTO.

It is the end of national sovereignty not for peace or solidarity, but for profit purposes. Once again, the WTO is used as a tool to force developing countries to enter in a corporate-led system.

Western countries bear the highest responsibility for the ecological damage.  They want now to link trade measures to the environment. They want to impose concepts like internationalisation of environmental costs, eco- dumping and processes and production methods. These concepts are inter-related. The main question is whether all countries are expected to adopt the same standards or whether standards should correspond to the different levels of development. The implementation of a single standard would be inequitable as poorer countries would have their products made uncompetitive. Policies and measures to resolve environmental problems should be negotiated in international fora and agreements. Not within the WTO. Environment is not a trade issue.

There are also several EU and WTO assertions that belong to disinformation and manipulation.

1.      It is said that the EU is willing to meet the expectations expressed by developing and least developed countries in the frame of a new round.

But such a statement doesn’t reflect the exact will of the EU Commission. In a communication to the EU Council of Ministers, (EU Commission Note for the attention of the 133 Committee, ‘Improving the functioning of the WTO: suggestions for a way forward’, DG Trade I, 25 January 2000), on the issue of improving the functioning of the WTO, the Commission declared that “such institutional questions could be considered within the context of, or in parallel with the New Round of Trade Negotiations but should not hold up the launching of the Round. This is the number one priority for the trading system.”

2.      It is said that a new round is the only way to meet the expectations of developing countries.

This is not true. From a legal point of view, there is no need to decide on a new round (with new issues) when one has the will to change the existing agreements.

3.      It is said that without a new round, the whole trade system will collapse.

This is pure blackmail. Was there a collapse after Seattle? The lack of new round doesn’t make invalid the existing agreements and, according to these agreements, negotiations on agriculture, services and intellectual property rights will continue.

4.      It is said that without a new round poor countries will not be able to deal with the coming recession.

There was no recession before Seattle, but the EU asked for a new round. I don’t think that to have more issues under WTO rules, decreasing the sovereignty and the strength of the States, will increase the capacity of poor countries to face a recession

5.      It is said that without a new round poor countries will become poorer.

But there is no need to have a new round to reduce the imbalanced implementation of the existing WTO agreements and create opportunities for the poorest to become less poor. A new round is not a legal option. There is nothing in the existing agreements that obliges Member States to start a new round. A new round is not an economic option. There is no need, from an economic point of view, to increase the number of issues under WTO rules if the will is to achieve a fair implementation of the existing agreements. The new round is a political option.

As Pakistan’s Ambassador said, “the conditionality of a new round is a political condition”, a statement joined by the declaration of the Zimbabwean Ambassador, “the preparations and agenda for a new round and the preparation and agenda for the 4th ministerial conference (which will take place next November in Doha, Qatar) are separate issues and should not be mixed.” As a conclusion, I will give, once again, the word to an envoy from the South who underlined the hypocrisy of industrialised countries when they ask for a new round Ambassador Ransford Smith, from Jamaica said, last March, “when times are good for the global economy, we are told ‘we need a new round to prevent a relapse into protectionism’ ; when times are bad, we are told ‘we need a new round to counter protectionism and to lift the global economy out of the doldrums.’ The question might be when exactly will we not need a new round ?”

(Dr. Raoul Marc Jennar is from Oxfam, Belgium and URFIG, the Research, Training and Information Unit on Globlization. The above is based on a presentation by him at a ‘seminar’, on 21-23 May, organized by the EU Commission, in the aftermath of the Third UN Conference on the Least Developed Countries (LDC), for a group of journalists from LDCs to explain the EU position for a new round. One of the sessions was dedicated to a discussion with ‘civil society’, where Jennar was a panellist. Three other panellists represented the business sector views). – SUNS4902

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