TWN Info Service on WTO and Trade Issues (Oct13/14)
29 October 2013
Third World Network  

Trade unions, civil society deeply concerned over ITA-II talks
Published in SUNS #7682 dated 25 October 2013
 
Geneva, 24 Oct (Kanaga Raja) -- Over 160 civil society organisations (CSOs) and trade unions worldwide, including the International Trade Union Confederation (ITUC), have expressed deep concern over the current negotiations at the World Trade Organisation (WTO) to expand the plurilateral Information Technology Agreement (ITA).
 
In a joint letter this week to the ITA negotiating parties, the CSOs and trade unions, which they say represent hundreds of millions of members across the globe, are concerned that the expansion of the ITA (to ITA-II) "could further harm workers, particularly in developing countries, that have not yet benefited from the agreement, and possibly deteriorate the developmental prospects for those which participate."
 
"The information and communication technology (ICT) sector has enormous capacity to contribute to domestic industry creation, employment generation, and technological development. Unfortunately, claims of the ITA's potential benefits have failed to materialize for the majority of workers in participating countries," the letter noted.
 
[According to trade officials, following a suspension of more than three months, the negotiations on expanding the product coverage under the ITA resumed again this week among some 25 members including the EU.]
 
Apart from the ITUC, which it says represents some 175 million workers in 156 countries and territories, the letter to the WTO members was also endorsed by international CSOs and trade unions including Arab NGO Network for Development (ANND), ACP Civil Society Forum, Dignity International, IBON, International Union of Food Workers (IUF-UITA-IUL) and UNI Global Union (UNI).
 
Also signing on to the letter are a host of CSOs and trade unions from the African, Americas, Asia-Pacific, and European regions.
 
In their letter, the CSOs and trade unions said that the necessary diffusion of technology and the need to overcome the digital divide within and across countries requires policy space for governments in order to implement industrial policies that enable them to develop their own industries or to increase the ownership of production of ICTs in supply chains in which they operate.
 
"Instead of promoting industrial capacity, job creation, and technological diffusion, the ITA has eroded policy space for the majority of developing country participants. Experiences with the ITA indicate that from the point of view of developing and Least Developed Countries (LDCs), irreversible and binding commitments under the potential ITA-II could likely damage their present and future growth potential."
 
An expanded ITA might lead to an erosion of domestic manufacturing and loss of growth potential, the letter stressed, further noting that ICT is an important manufacturing sector with the potential to generate domestic industries and exports.
 
"Unfortunately, ITA tariff reductions have opened the flood gates to imports into the domestic markets of many developing countries, with many local manufacturers being pushed out of the market. In many countries, large numbers of domestic manufacturers have turned into assemblers and traders of ICT products, or have seen a reduction in the domestic content of ICT goods," it said.
 
Developing countries could give an advantage to their producers if they excluded their ICT markets until their domestic industries become competitive internationally, thus also providing avenues for higher domestic investment in production.
 
The CSOs and trade unions underlined that any negotiations on goods "should focus on expanding the potential for decent jobs", which the proposed ITA-II does not.
 
According to them, the claimed benefits of economic growth and potential job creation in ICT manufacturing have failed to materialize for the majority of ITA members.
 
"The creation of new industry is essential for the generation of sustainable decent jobs; yet domestic ICT manufacturing, and thus jobs, have been eroded rather than expanded. Where ICT jobs do exist in developing countries, workers have yet to be able to capture a fair share of the alleged gains."
 
The letter further noted that workers in developing countries are often trapped in performing only low value-added processes in the ICT sector, often in export processing zones (EPZs) and special economic zones (SEZs), where workers do not enjoy the right to unionise and collectively bargain or the right to sick leave and social insurance.
 
EPZs and SEZs are "isolated production enclaves with few forward and backward linkages", the letter said, adding that low taxation and high repatriation of profits further reduce domestic investment in job creation or other development priorities.
 
"Negotiations on goods must begin with a focus on decent job creation, to be based on the principles of fairness and equity in order to lift living standards by supporting employment growth, improving social protections and providing for fundamental workers' rights and environmental standards. Expanding the ITA goes in the wrong direction, and would hinder, rather than contribute to, a resolution of the global jobs crisis," the letter asserted.
 
The CSOs and trade unions were also of the view that an expanded ITA will likely benefit Transnational Corporations (TNCs) in countries with advanced technological development, particularly given patent monopolies and the lack of technology transfer.
 
"A small number of TNCs from developed countries reap the largest benefits from the intellect-intensive processes of technological design and marketing. The domination of the global ICT sector by a few corporations poses threats to the utilization of technology to address developmental concerns of developing countries and LDCs."
 
In many countries, the letter said, the effects of mass production have not benefited consumers and users of technology due to the oligopolistic market settings.
 
Patents on technologies account for the largest part of value added, and have increased disproportionately compared to other industry sectors in both developed and developing top-trading ITA participants.
 
Although several global ICT producers have invested in research and development in developing countries, these countries have enjoyed very limited technology transfer, and consequently have seen only marginal increases in their value added and in employment.
 
The letter called on developing countries not to accept de-linking tariffs and Non-Tariff Barriers (NTBs) in any negotiations.
 
"The ITA brought tariffs to zero in 76 countries; unfortunately, the significant amount of NTBs, especially in the form of national standards and regulation, remained unaddressed," said the letter, stressing that the issue of NTBs has exposed inherent weaknesses in the WTO system and the lopsided negotiation process dominated by a few developed countries, even in the plurilateral talks.
 
"While there has been much interest in tariff elimination in the ITA and in the proposed ITA-II, there has been no corresponding interest among the leading ITA members to address NTBs - even though three in four NTBs notified to the WTO are implemented in developed countries."
 
According to the letter, the current status of NTBs effectively restricts developing countries' exports to developed countries, except when developing countries are well-integrated in global production chains owned and operated by developed countries' corporations.
 
"Negotiating parties should strike the right balance in NTBs so as to ensure high-quality products on the one hand and facilitate access to developed markets on the other."
 
The CSOs and trade unions further said that governments considering engaging in ITA-II negotiations must conduct impact assessments so as to be able to make decisions based on research and assessment rather than unproven claims.
 
"It is rather appalling that after 15 years of the ITA, a comprehensive impact assessment has yet to be conducted. Prior to commencing in negotiations to expand the ITA, governments should conduct a comprehensive assessment of the existing agreement's impact on the environment and on economic and social development, particularly regarding employment in the ICT sector."
 
They should then examine the potential expansion of the agreement in light of financial market weaknesses and instability; a persisting jobs crisis; growing inequalities; and other major challenges.
 
"The decision of countries as to whether or not to participate in ITA-II negotiations should be based on actual and projected social, economic and developmental impacts rather than mere claims about the benefits of ITA or ITA-II," the letter underscored.
 
According to the letter, assessments must take into account the losses of government revenue from tariff reductions.
 
It noted that developing countries are more likely to use tariffs than subsidies in their protection of domestic industries.
 
"The reduction of tariffs to zero on ITA-included products by 2005 thus affected developing countries more than developed countries. In addition to impacting levels of employment, tariff elimination reduces revenues which the government could have used for spending on other important developmental activities, such as health care, education, and infrastructure."
 
For some LDCs, the letter emphasised, tariffs constitute a significant source of revenue for the national budget. Therefore, countries should take this into account in their consideration of whether to participate in ITA expansion negotiations.
 
Developing countries, and particularly LDCs, can enjoy market access benefits on a non-reciprocal basis if they do not join the ITA-II, said the letter.
 
"Signatories to the ITA are mandated to extend the benefits of tariff elimination to all WTO members on a Most Favoured Nation (MFN) basis. Therefore, countries that are not yet competitive in ICT manufacturing can already benefit from market access of other participating member, without having to join the agreement. LDCs already enjoy preferential access to most major markets, and would not gain more by joining the ITA-II."
 
National security issues should be taken into account, said the letter, noting that as some products included in the proposed ITA-II are used in armed forces and intelligence, some countries have raised concerns with regard to national security.
 
"The agreement should leave ample space for countries to deal with these issues as they deem appropriate."
 
Furthermore, the CSOs and trade unions called for any negotiations to be transparent and accessible.
 
"Negotiations with such major implications as the ITA-II should be transparent and accessible by civil society and interest groups so as to increase the probability of a fair, inclusive and relevant agreement for all. In addition, making trade inclusive has been stated as a global goal in several international fora, and should be built into the negotiations process of any international or plurilateral agreement," the letter concluded.
 
"Governments negotiating the ITA-II must guarantee a fair level of transparency and accessibility, and they must conduct impact assessments that take into account financial instability, the persisting jobs crisis and other major challenges so as to be able to engage in informed negotiations," said ITUC General Secretary Sharan Burrow in an ITUC news release.