TWN Info Service on WTO and Trade Issues (Jun13/10)
20 June 2013
Third World Network  

Say ‘No' to binding TF deal, urge NGOs
Published in SUNS #7601 dated 10 June 2013
 
Geneva, 7 Jun (Kanaga Raja) -- Nearly 190 civil society organisations from both developed and developing countries have called on members of the World Trade Organisation (WTO) to abandon negotiations towards a binding agreement on Trade Facilitation (TF), one of the issues being pushed by the US and European Union, and being considered for possible delivery at the upcoming ninth Ministerial Conference in Bali this December.
 
In a letter dated 6 June sent to delegations in Geneva, the NGOs stressed that developing countries "should have the policy space to adopt, at their discretion, higher levels or standards and customs-related procedures as and when capacity exists to do so, taking into account their development context."
 
Commenting on the current state-of-play in the TF negotiations at the WTO, developing country trade diplomats have noted that while the US, EU and other developed countries are pushing strongly for a binding agreement in this area and for it to be sealed in Bali, they have not been willing to seriously engage in negotiations on the issues of great importance to the developing countries, such as on the G-33 proposal on food security.
 
Though pushing for a new WTO agreement on TF, with binding commitments that will involve developing countries taking on more obligations, developing country trade diplomats complain that the US, EU and other developed countries are refusing to engage on the food security proposal on the ground that it will require amending the Agreement on Agriculture, thus affecting the balance of rights and obligations that currently exist.
 
The letter from the civil society groups, organised by the Our World is Not for Sale (OWINFS) Network, states that binding rules on TF should not be promoted either inside the WTO through the proposed Trade Facilitation agreement, or through other avenues such as bilateral or regional Free Trade Agreements (FTAs) or Economic Partnership Agreements (EPAs).
 
The letter has been endorsed by some 23 international and regional NGO networks including the ACP Civil Society Forum, Africa Trade Network, Arab NGO Network for Development (ANND), Asian Peasants Coalition (APC), Development Alternatives with Women for a New Era (DAWN), IBON International, LDC Watch, Pax Romana - The International Catholic Movement for Intellectual and Cultural Affairs, and the Southern and Eastern African Trade Information and Negotiations Institute (SEATINI).
 
A number of national civil society organisations from both developed and developing countries also endorsed the letter.
 
In their letter, the groups underscore that there is no empirical evidence of benefits to developing countries from the proposed TF agreement.
 
Though the proponents of the TF negotiations have argued that developing countries would benefit even more than developed countries from an agreement on Trade Facilitation, the letter from the NGOs said that "there is little empirical basis for this claim. Quite the contrary, the proposed binding agreement on Trade Facilitation is a key demand of the developed countries towards the Ministerial, because it will serve the interests of their corporations."
 
It would be better to call it an "import-facilitating agreement", said the groups, stressing that a binding agreement on TF in the WTO would require developing countries to implement a set of rules reflective of the current trade facilitation practices of the developed countries.
 
"They would not address the urgent need to expand the productive and export capacities of the developing countries. Thus, while imports into developing countries would be facilitated by the new rules, it is difficult to imagine how exports from developing countries could be similarly facilitated."
 
In fact, the letter further said, Trade Facilitation rules in the WTO should be more accurately called "import-facilitating rules" for developing countries.
 
"Hence, a TF agreement would likely result in the further worsening of the trade balance in many developing countries, leading to balance of payment problems that often further increase indebtedness," it warned.
 
The letter further asserts that the proposed agreement on Trade Facilitation follows a model of corporate-driven globalisation focused on increasing the volume of trade, rather than achieving globally-shared development goals through rules that facilitate countries' use of trade policy for their own development needs, and in accordance with their levels of development.
 
"In fact, a Trade Facilitation agreement at the WTO would create new markets - in customs and shipment processing for multinational corporations. At the same time, it would likely lead to the further privatisation of ports, customs operations, and shipment processing, which leaves little or no space for local operators, and which has already led to a loss of jobs, downward pressure on wages, and erosion of labour rights for public workers in these sectors."
 
The groups drew attention to the fact that while developed countries promote the proposed agreement as a "win-win," most of the costs of a TF agreement to developing countries are rarely included in projected impact assessments. For example, there are significant implementation, regulatory, human resources, and infrastructure costs associated with the proposed Trade Facilitation agreement, many of which are recurring costs, and would be siphoned from national budgets, diverting available resources from development needs.
 
"A potential Trade Facilitation deal is also expected to lead to irreplaceable loss of tariff revenue. Compared to developed countries, the share of customs revenue in the total tax collection is much higher in developing countries and Least Developed Countries (LDCs)."
 
The letter cautioned that "foregone tariff revenue would have serious implications for national budgetary support for key development issues such as education, health, and poverty reduction. Reducing national budget support for addressing the Millennium Development Goals can in no way be referred to as a pro-development outcome."
 
In addition, the letter argues, the provisions of the proposed TF agreement, as they are being negotiated, would undermine the regulatory capacities of developing countries. The proposed rules would expand the opportunities of TNCs to lobby in national and local legislative processes. Furthermore, the rules that would be enforced through a TF agreement would provide ample grounds for challenging regulations, laws, and procedures in member states.
 
According to the civil society groups, further eroding any claim to benefits for developing countries is the fact that there remain significant imbalances and incoherence within the text being negotiated.
 
"The new Trade Facilitation rules, being pushed by developed countries, have advanced significantly, and are set in binding language. Negotiations on Technical Assistance and Capacity Building, which are central to the original agreed Trade Facilitation negotiations mandate (2004), have been stalled by developed countries, and are currently framed in non-binding language."
 
Furthermore, the groups said that the needs-assessment exercises of developing countries for compliance with TF are likewise being utilised as a ‘compliance assessment' tool in order to pressure developing countries into accepting the Trade Facilitation agreement rather than to encourage developed countries to increase their technical, and particularly financial assistance.
 
While developing countries can benefit from more efficient and transparent trade procedures, the letter notes that unilateral voluntary implementation of non-binding customs-related guidelines, and/or the Revised Kyoto Convention of the World Customs Organisation, in accordance with national priorities and needs, is of a different nature and brings different implications compared to a binding TF agreement that could be enforced through the Dispute Settlement procedures of the WTO.
 
"Worse, the latter could lead to sectoral cross-retaliation among countries, the effects of which are expected to be more pernicious to the much smaller economies of developing countries and least developed countries."
 
Instead, the letter recommends that any discussions at the WTO should focus on "rectifying historical imbalances and asymmetries in the WTO", in order to provide more policy space for countries to implement solutions to the global economic crises.
 
"A starting point would be agreeing to the important proposal of the ‘G33' group of 46 developing countries to allow developing countries to promote domestic Food Security, and delivering on the LDC package at the upcoming Ministerial."
 
In addition, the letter states, a real advancement on the Special and Differential Treatment (SDT) and Implementation Agenda issues, long advocated for by developing countries, is long overdue. +