TWN Info Service on WTO and Trade Issues (Dec05/27)

21 December 2005

NGOs criticize WTO's Hong Kong outcome

In contrast to statements by governments who hailed the WTO's Ministerial conference as a success, there was near unamity by non-governmental organizations who have been following the negotiations that the meeting was a failure, when measured against development goals.

The NGOs - whether those dealing with development, environment or labour rights -- were extremely critical.  Their judgments of the outcome ranged from it being "appalling" and a "development disaster" to "betrayal." 

Below is a report summaring the views of the NGOs which were voiced in their Statements on the last day of the Conference.

With best wishes
Martin Khor


NGOs criticize WTO's Hong Kong outcome

By Hira Jhamtani (TWN), Hong Kong 19 December 2005

In contrast to statements by several governments who hailed the WTO's Ministerial conference as a success, there was near unamity by non-governmental organizations who have been following the negotiations that the meeting was a failure, when measured against development goals.

The NGOs - whether those dealing with development, environment or labour rights -- were extremely critical.  Their judgments of the outcome ranged from it being "appalling" and a "development disaster" to "betrayal."

Also by contrast, the Coalition of Service Industries (which represents the interests of US and European services TNCs) hailed the meeting as a success, and immediately looked forward to new plurilateral negotiations in many sectors to get developing countries to open their markets to the services giants. 

The Africa Trade Network, which coordinates the activities of Africa NGOs, said that rather than being a milestone in the "development round",  Hong Kong ended as a platform for anti-development outcomes.  The Hong Kong declaration is "a loss for African countries. They have been forced to concede on most of the positions with which they came to Hong Kong. And whatever comfort exists in the other areas is ambiguous at best, illusory at worst."

The ATN said the clearest loss is in services, "where their right to choose which service sectors to open and to what extent, according to their own national needs, has been undermined.  Annex C on services opens up for plurilateral and sectoral negotiations as well as increased foreign ownership in investment in service sectors - putting enormous pressures on African countries to open up sensitive service sectors to powerful corporations from the North.

"Through the adoption of a Swiss formula on Non Agricultural Market Access (NAMA), African countries will be forced to undertake drastic cuts in their industrial tariffs. This will lead to further collapse of local industries, de-industrialisation and massive job losses. The text also opens up for sectoral elimination of industrial tariffs.

"In agriculture, African interests have been ignored, such as the need for specific flexibilities for developing countries with tariff ceilings and homogenous low bindings. The end date of 2013 for the elimination of export subsidies loses in significance when compared to the damages to African farmers caused by domestic support measures in the rich countries. The domestic support in the EU amounts to 55 billion euros, while export subsidies amount to 3 billion euros. The rich countries have also given themselves an escape route through a formulation that the end date will be
confirmed only upon the completion of the modalities.

"All this in return for a so-called development package which is essentially empty. The offer to LDCs is far below expectations. Instead of the initial demand of bound duty-free and quota-free access to developed country markets on all products for all LDCs, they have seen this offer being watered down to a product coverage of 97% with a best endeavour language of "on a lasting basis". This means that the rich countries can exempt exactly those products that are of export interest to African LDCs.

"Aid for trade is basically an empty proposal at best, because there is no commitment to providing the money promised; and at worst, an aid for trade liberalization to support African economies adjust to forced liberalization.

"On cotton, the main threat to African cotton producers - the domestic support in the industrialized countries which destroys the market for millions of African cotton farmers - has not been removed."

The African Cotton Producers Organization said that the Hong Kong outcome was so bad that "everything still needs to be done".  African cotton producers came to Hong Kong expecting to find a solution to the problems of the unjust and trade distorting subsidies given to the American and European producers. "Unfortunately, there has not been any concrete proposal on the most essential request, that of the elimination of domestic subsidies of the developed countries, even through they represent almost 90% of total American cotton subsidies and almost the total of European subsidies."

The African producers noted the governments have not given a concrete response to the problem.   The producers will not agree to the Hong Kong decision and "will not stop their fight to eliminate the rich countries' domestic cotton subsidies."

According to the Third World Network, there is little to celebrate from Hong Kong.  The agreement to eliminate export subsidies by 2013 is not enough, as these should have been eliminated long ago and at least an end date of latest 2010 should have been adopted.

On cotton, while export subsidies will be eliminated in 2006, this constitutes only a small portion of the trade distortion. There is no agreed concrete action for trade distorting domestic subsidies of about US$ 3.8 billion or 80-90% of total US support for cotton which is the main problem for cotton farmers in Africa and other developing countries, which did not get a good deal. 

The needs of LDCs, supposedly to have been championed by this Ministerial, are left with far less than was promised. The decision on quota and duty free market access to rich countries has an escape clause which says that "countries with having difficulties providing such market access shall provide access for 97% of products". This allows developed countries to continue to protect "sensitive products" that are of export advantage for LDCs such as textiles and clothing from Bangladesh and rice from Cambodia. Meanwhile there is no gain in the many other Special and Differential treatment proposals.

"The worst deal is in services and non-agricultural market access (NAMA). The services text, which did not receive consensus in Geneva and hotly contested in Hong Kong, has steered the modalities of GATS toward the direction demanded by the EU and other developed countries. The counter services proposal by more than 100 developing countries have not been reflected in the Ministerial Declaration and as a result they will be subject to pressure to liberalize in 19 broad-ranging service sectors.

"On NAMA, the Swiss formula adoption can be potentially devastating for the industrial development prospects of developing countries."

Yashpal Tandon, Executive Director of the South Centre said there is a long way to go if  this is to be called a "development round". Despite being called a 'development round', developing countries and LDCs, with a united front, had to fight hard and long to get anything, he added. And not much was achieved in terms of development with regard to domestic subsidies in agriculture, policy space and flexibilities in NAMA and Services as well as implementation issues and special and differential treatment across the board.

Tandon stressed that once again developing countries and LDCs have offered major concessions and accepted compromises to save the multilateral trading system. LDCs have to accept an uncertain and less than 100% duty free and quota free market access. Developing countries have to have to give up a lot of ground on flexibilities in NAMA and agreed to aggressive and prescriptive negotiating approaches in services on trade.

Rashid S. Kaukab, Trade Coordinator at the South Centre added: "Hong Kong should be remembered for the spirit of compromise and sacrifice shown by developing countries and LDCs to save the Doha Round from Total Collapse".

Focus on the Global South said the Ministerial ended with the adoption of a highly flawed text that doesn't reflect what several developing countries have been demanding over the last 5 days. The resistance of developing countries was thwarted by pressure from the developed world. In agreeing to slash tariffs in their agricultural, services and industrial markets, developing countries sanction of the text is a failure for development and a victory for corporate globalisation.

On export subsidies, the EC is extracting a high price, in return for doing nothing. A large proportion of EU supports go into subsidizing exports. However, only a small part is classified as export subsidies.
"The G20 has sold the developing countries out. They know well, that there are no real cuts in domestic supports and export subsidies by the EU or US with this text. India and Brazil have led the developing countries down the garden path in exchange for some market access in agriculture for Brazil, and services outsourcing for India.

"Despite a completely hollow package on agriculture, the developing world has been forced to swallow the bitter pill of aggressive services market access. The text sanctions the launch of sectoral negotiations, which will force developing countries to provide foreign investors with the same rights as local suppliers. This would lock up their ability to develop their own services sectors."

Oxfam International condemned the text as unacceptable and reflecting rich countries' interests.  It is a "betrayal of development promises.  Small progress on some aspects of agriculture is more than cancelled out by extremely damaging proposals on services and industry.  Developing countries were put in an impossible position: either accept a text which is seriously flawed or be blamed for the failure of the round."

Oxfam said that in services and NAMA the proposals went from bad to worse.  The right for poor countries to protect basic services and emerging industries has been comprehensively undermined, with grave prospects for development.  The "development package" for poorest countries dwindled to include near empty offers on aid for trade, with very little new money and a watered down duty free quota free package that will still allow rich countries to exclude key products."

ActionAid said the outcome was an affront to the world's poor.  The poorer countries were bullied into agreeing.  On elimination of export subsidy,  ActionAid said, "poor people can't wait another eight years for an end to EU export subsidies. The offer means that, yet again, minority interests are put before the needs of the majority of the world's population".  On export subsidies, Tim Rice of ActionAid UK said not only is the 2013 end-date is too late but the EU had already committed to reducing them anyway.  "By 2013 these cuts will only amount to one billion euros, which pales into insignificance  compared to the 55 billion euros the EU gives in domestic subsidies every year.  Millions of farmers in poor farmers will continue to lose their livelihoods because of these unfair handouts." 

Lori Wallach of Public Citizen (USA) said negotiators' attempts to characterize this summit as a success mainly reveals the vulnerability of the WTO process, as the most significant deliverable here was simply avoiding collapse of yet another WTO summit. Only one out of dozens of outstanding substantive negotiating issues was resolved.
and 95% of the deep divides that have deadlocked talks until now were simply papered over.

Much time here has been spent by rich nations trying to come up with a divide and conquer 'development' package aimed at seducing the poorest nations to split with the merely poor. The real goal of this cynical 'development' package proposal is to change the topic from the negotiating agenda which many developing nations view as damaging to their interests.

Yet, even the so-called 'development' package is empty since it is premised on the notion that providing grants and further-indebting loans for trade facilitation to increase rich country imports into the poorest countries will help poor countries.  The much-touted duty-free proposal allows rich nations to exempt from tariff cuts the very products in which the least developed nations have interests. In the United States, only 7.5% of all tariff lines are three times or greater than the U.S. average tariff. Most U.S. tariffs are so low that the 97% of products that would become duty free under the 'development' package in this text still would permit exclusion of almost half of high U.S. tariff peaks.

Friends of the Earth International said the Hong Kong outcome was only a "face saving deal" and the decisions in it would further threaten the global environment and livelihoods of the poor.  "The so-called gains for developing counties are just little crumbs that will not make up for the price millions of farmers, fisher folk, indigenous peoples and others in the developing world will have to pay for today's deal," said Meena Raman, FOEI chair.

Proposals to open markets in farming and natural-resource sectors (including forests, fisheries and minerals) will benefit large coportaions but have devastating impact on the poor who rely on natural resources for their livelihoods, food and medicines.

FOE also said governments have repackaged old aid, disguising it as new money for developing countries. It is also ironic that some of the poorest countries in the world are still being put under extreme pressure to open up their markets in the name of development, even when they have protested that it could lead to deindustrialization, increased poverty and unemployment.

According to Greenpeace International, "the ministerial declaration is a contemptible face-saving exercise by the WTO". The final compromise is highly imbalanced in favour of rich countries. Greenpeace is concerned that NAMA deal will push increasing liberalization in sectors such as electronic goods, fisheries and forests, which will inevitably result in negative social and environmental goods - more discarded electronic goods will be dumped on developing countries, more trees will be destroyed in the world's forests and even more fish will be pillaged from the oceans.

It added the WTO has failed to adequately address demands by developing countries to prevent legitimization of an assault on their biological resources for the benefit of developed country corporations. On elimination of agricultural subsidies, Greenpeace said the end date of 2003 is too little, too late. "It is scandalous that rich countries have gained concessions in return for merely promising, for the third time over, to end export subsidies which imperil livelihood of millions. These subsidies should have stopped long ago!" exclaimed Daniel Mittler of Greenpeace.

Two labour rights organizations criticised the outcome.  The International Confederation of Free Trade Unions (ICFTU) and Solidar said the deal is another blow to employment and sustainable development.  Guy Ryder, the General Secretary of the ICFTU said "They did it again. Despite the unity of developing countries, despite millions of people calling on them to deliver trade justice, the industrialized countries have manipulated their way to a deal that betrays development and yet again does not address the key issue of decent work".  The text will put developing countries under extreme pressure to open up their public services.

Gaiampeiro Alhadeff, the Secretary General of SOLIDAR said "any pretence that the Doha negotiations were about ending poverty have been laid to rest in Hong Kong" .  The end date for elimination of agricultural export subsidies of 2003 is poor consolation for developing countries whose workers will be the victims of the mass unemployment that will result from the NAMA deal. "There has been a fundamental failure here" he stressed.

Peter Hardstaff of World Development Movement (based in the UK) said:  "Setting  2013 to end export subsidies is a symbolic gesture of marginal benefit, made ten years late." The gains have been blown out of all proportion and developing countries should not give anything in return for the EU keeping a decade old promise, he added. However, in return for this, developing countries will now be under enormous pressure to negotiate radical cuts in industrial tariff and open up trade in services. "They have been backed into a corner".

Meanwhile, the Coalition of Service Industries, representing the transnational services companies, hailed the outcome on services for providing "a useful new impetus for serious negotiations early next year."   It said the Declaration supports plurilateral negotiations among like minded countries who want to make progress in sectors like express delivery and logistics services, telecommunications, computer and related services, financial services, energy services, audio visual services, and legal and accounting services. 
"We welcome the WTO membership's support of the work of "friends groups", said Robert Vastine, President of CSI.  "We believe that the work of groups like the Friends of Express Delivery could be the key to real progress in this and other sectors.  The text's provision that Members should present their requests to other members by February, 2006 is "helpful", he said. He pointed out that the US already exports $340 billion of services, with a $50 billion export surplus, and that "the potential for growth of US exports and investment in these sectors is enormous."  Vastine said that the agreement on plurilateral negotiations, and on dates for submitting additional requests and offers, fulfill US stated objectives at the outset of the Ministerial.