TWN Info Service on WTO and Trade Issues (Dec17/09)
8 December 2017
Third World Network

Africa faces litmus test at MC11 on development issues
Published in SUNS #8591 dated 7 December 2017

Geneva, 6 Dec (D. Ravi Kanth) - The African Group of countries faces a litmus test at the World Trade Organization's eleventh ministerial conference (MC11), beginning in Buenos Aires on Sunday (10 December), on their collective proposals on development and domestic support for agriculture, and their opposition to domestic regulation in services and new issues, several trade envoys told SUNS.

On Tuesday (5 December), the African Group issued a proposal at the WTO on "Africa and Development," in which they provided a historical account of what happened to development in their countries following decolonization because of the multilateral trade rules.

"A number of studies have shown that the main reason why developing countries, especially LDCs have not been able to participate effectively in the Multilateral Trading System is mainly because they are lagging behind in terms of industrialisation, in particular the production of value added and competitive manufacturing products," the African Group said.

"It is therefore important to note that governments have a duty to make strategic and targeted interventions in key sectors of the economy without fear of infringing on their WTO commitments or being sued under the DSU [dispute settlement understanding]," the Group argued.

Therefore, the African Group said, its members need "some accommodation in the WTO to take measures necessary for industrialisation and development."

After all, it is historically established that "developed countries benefited from the absence of rules, and then created new rules that constrained developing countries, particularly in the early stages of development," the African Group argued.

The group maintained that development, which was the central pillar in the Doha Development Agenda (DDA), is being seriously undermined.

The Group said its members are frustrated that "the commitment by all Members to fulfilling the object, spirit and intent of the Doha Development Agenda is being seriously undermined."

Instead of finalizing the developmental dividends of the DDA negotiations, "the discourse on new issues such as Electronic Commerce, Investment Facilitation, and Micro, Small and Medium Enterprises (MSMEs)" is being pushed aggressively to "overshadow the development agenda since the Tenth Ministerial Conference in the current Doha Round negotiations."

More disturbingly, the developed countries joined forces to reject any negotiations on "development with respect to the paragraph 44 mandates in the Doha ministerial declaration," the African Group argued.

"Several developed Members have also adopted a stiff rejectionist approach to any negotiations on development with respect to the paragraph 44 mandate in the Doha Ministerial Declaration, with the view to foster structural transformation, diversification and industrialisation in line with the African Union's Agenda 2063: the Africa We Want."

The African Group said "some Members hold that these proposals cannot obtain multilateral consensus in time for concrete deliverables at MC11."

"At the same time, however, many of these Members are pursuing a number of deliverables, some without prior agreement or a (WTO) mandate, that we would qualify as anti-development, and which unacceptably narrow the space our Members use and need for policies and regulations that support our development objectives," the African Group insisted.

For example, the African Group said, in Domestic Regulation for services "these Members are pushing for rules that would erode our right to regulate, intrude into our domestic policy-making processes, and hinder the regulatory capacity and policy space for development-driven regulations by Africa; promote regulatory capture and control; and limit the sovereign function of our elected parliamentary representatives in discharging their sovereign function of legislating."

"The inherent contradiction by some of these Members are untenable, and point to the need for Members to have an honest appraisal that can deliver on the commitment to the DDA," the African Group argued.

It emphasized the centrality of "the concept of Special and Differential Treatment (S&DT), which was introduced in recognition of the development aspirations and socio-economic challenges faced by the broad constituency of developing and least developed countries (LDCs) of the WTO."

The African Group said that members should recall that "Ministers sought, through the establishment of the WTO, to ensure that developing countries - and especially the least developed among them - secure a share in the growth of international trade commensurate with the needs of their economic development."

It asked whether the developed countries want free trade for the sake of it or enable economic development by improving "inter alia market access conditions and the terms of trade in a manner that would steadily raise their living standards and eradicate poverty."

But major developed countries not only refused to engage but continued "to undermine the relevance and legitimacy of our issues despite having benefited from a system that supported their development and industrial rite of passage," the African Group pointed out.

Little wonder that "there is a total disconnect between the clear commitment to development by Ministers; and the stiff rejection by some Members on delivering on it," it pointed out.

As a consequence, "increasingly, the WTO is being looked at as an organisation that does not respond to the specific needs and concerns of its Members, in particular to effectively addressing the challenges to economic development in Africa, despite the most recent commitment by Ministers in Paragraph 5 of the Nairobi Ministerial Declaration."

There is no clarity on issues concerning Development and how the WTO intends to deliver "on its commitment to development."

"Who is the WTO intended to serve if it cannot address the specific development needs of the majority of its Members?", the African Group asked.

More important, "what does the WTO intend to promote, beyond simply rule-making?", the African Group sought to know.

Without answering these issues, the developed countries want to embark on new issues for "multilateral rules on E-commerce, Investment Facilitation and MSMEs," the African Group maintained.

Enough is enough, the African Group said, suggesting that "members had already undertaken enough rules so far."

As a consequence, "the multilateral rules as they are, are constraining our domestic policy space and ability to industrialise."

"Before the GATT came into being, industrialised Members benefited from the absence of rules, through the utilisation of policy space, and now they are closing this space through GATT Agreements notably by prohibiting the use of local content requirements; industrial subsidies; infant industry protection, among others. In other words, the policy instruments they used during their development process were denied to late-comers through the GATT Agreements."

Citing Cambridge economist Ha-Joon Chang's famous research work on "kicking away the development ladder", the African Group said it raised the issues in the Committee on Trade and Development in Special Session (CTD-SS) discussions.

The Doha Development Agenda was launched with development outcomes and aspirations at the centre for the purpose of redressing the systemic and historic imbalances inherited from GATT/WTO Agreements.

"Yet, the view that new e-commerce, investment facilitation and MSMEs rules will be good for developing countries has been highly contested [and] which is why, it is imperative to question the logic of these new rules," the African Group maintained.

"If developing countries cannot find relief in the current mandates and rules in a Multilateral Trading System that is intended to serve all its Members, then what would be the rationale for adopting new rules, especially if they are meant to further marginalise poor economies? Any new rules would simply entrench existing imbalances and further constrain the ability of our governments to implement industrial policy and catch-up," the African Group maintained.

Shockingly, the "developed countries are suggesting that the new approach to development is through the provision of time-limited transition periods," it argued.

"Africa's experience in the Uruguay Round shows that the transition periods do not work or at best are not an end in, and of themselves," the African Group pointed out.

"It is therefore unacceptable for some developed country Members to treat the development aspects of the work of this Organisation to conceptual and theoretical discussions at the Ministerial Conference, while on the other hand seeking to extract multilateral disciplines, including on new issues in areas of specific interest to them," it maintained.

Because of the recent developments in the WTO "on a so-called reform agenda and potential withering away of the centrality of development in the work of the WTO," the African Group proposed the following points:

* The WTO respond to the call by its founding fathers in the Marrakesh Agreement to continue to make positive efforts designed to ensure that developing countries, and especially LDCs among them, secure a share in the growth in international trade commensurate with the needs of their economic development.

* The G-90 S&DT proposal will be accorded the same treatment as all other potential deliverables at the MC11. A meeting of the CTD-SS will be convened to consider the draft Ministerial text.

* To reaffirm that the provisions for S&DT remain an integral part of existing and future WTO Agreements.

*  To instruct the CTD-SS to expeditiously complete the review of all the outstanding Agreement-specific proposals and report to the General Council, with clear recommendations for a decision, at the next Ministerial Conference.

Any "discussion or dedicated session," convened to deliberate on the topic of "Development" at the MC11 [Buenos Aires] meeting,  must address all the issues.

And they include how the African Group of countries "use trade policy instruments to promote structural transformation, industrialisation and sustainable economic growth for developing countries and LDCs."

Other related issues include: "how can we [members] ensure that S&DT in the WTO is applied in a manner that is effective in addressing the problems of those who need it? How have the current rules contributed to, or constrained development for developing countries and LDCs?  How would the rules being proposed in all areas where there are diametrical divergences contribute towards the development, and integration of developing countries and LDCs into the multilateral trading system? What is the nexus between domestic regulation and trade? What is the relationship between the right to regulate and the inter-linkages between regulations and broader domestic economic imperatives?"

Developed countries remained alarmed at the growing assertion and unity among the African Group of more than 50 countries, except Nigeria and in some cases Kenya, who are seeking to bring development to the centre stage in the multilateral trading system and the World Trade Organization, said a senior trade official from a major developed country who asked not to be identified.

"We don't know what these African countries led by the African Group are going to do at Buenos Aires on development because their unity is a cause for worry," the official told SUNS.

"Why are they bringing development to Buenos Aires; what do they want to achieve on these issues that call for various carve outs in all WTO agreements," the official said.

In conclusion, the Buenos Aires meeting will remain as a testing group for the African Group at a time when the industrialized countries seem determined to run away with new issues without resolving the outstanding Doha issues.