WTO Public Symposium 2003: Session XVII – Key Issues for Developing Countries

See Third World Network report on this session

Panelists and Viewpoints

Panel Moderator: Carlos Fortin, UNCTAD, Deputy Secretary General

WTO members committed in 2001 to making development the focus of the Doha agenda to be completed by 2005. The panelists and audience of this session organized by the WTO discussed the extent to which the interests of developing countries were being addressed and heeded in the current round of negotiations. Mr. Fortin observed near the opening of the session that, since the WTO has become the closest thing we have to a world government, the temptation is great to bring onto its agenda anything one thinks lofty and important, be it trade related or not. Many agreed that the negotiations should be redirected toward key issues in the interest of developing countries, but expressed differences of opinion regarding how this might be realized.

Dr. Jagdish Bhagwati, Professor, Columbia University

It is not so much the asymmetry in trade barriers that is the problem -- (in fact, we developing countries do tend to have higher tariffs on average). Nor is it the asymmetry in agricultural subsidies or defense spending, as we still tend to spend on these things even though we don’t have the money. So the asymmetry and unfairness arguments may not work at the moment for developing countries. Instead, NGOs should re-center their arguments to focus on identifying and opposing issues that in fact do not belong on the negotiations agenda since they are actually non-trade related. The American intrusion through TRIPS negotiations, for example, is an assault on the weak; and all the lobbying groups and lawyers behind it are from the West. Developing countries must beware as powerful countries’ interest groups push non-trade related agendas such as TRIPS through the WTO.

Martin Khor, Director, Third World Network, Malaysia

When done well, trade can be a very good instrument for development; but when not done well, it can be highly detrimental (i.e. by creating trade deficits or exposing countries to volatile prices). The World Bank and the IMF have historically insisted upon what the wrong kind and the wrong pace of trade liberalization in developing countries. For example, they have in many cases prohibited borrower countries from raising their tariffs even to the levels of internationally agreed upon bound rates (1). Meanwhile, subsidized goods from the developed world have flowed in to threaten already poor local producers, with critics instead misallocating the blame for such consequences on the WTO’s Agricultural Agreement. The Bank and the Fund should allow developing clients to move their applied tariff rates up to the bound rates – this is their legal right in the WTO. While developing countries have been unwisely forced to liberalize, rich countries have been allowed to protect themselves too much, especially in agriculture and textiles. The sought-after Trade Related Intellectual Property (TRIPS) agreement is in fact not trade related, but it is nonetheless en route to becoming another protectionist device. TRIPS has further hurt the WTO’s reputation and should be eliminated from the Doha agenda.

We must revise the rules of the WTO. The powerful countries are demanding concessions “in return for” editing the rules such that they will be more fair, arguing that the developing world “fairly” chose to sign onto these rules as they are. Insisting that Doha is a new round, rich countries maintain that if they are granted benefits on a set of new issues (2), then they follow through with concessions on agriculture. The truth is, however, that developing countries signed onto the Uruguay Round with the expectation that a set of benefits in their interest (including those related to agriculture) would be immediate. The developed countries have yet to own up to their side of the former agreements—Most of the Special and Differential Treatment (SDT) provisions have still not materialized. These must be made operational, and new SDT provisions must be worked into the coming agreements such as the new one on Agriculture. The modalities so far suggested for negotiations on agriculture are inadequate.

Furthermore, percentage reductions on bound rates are deceiving. The WTO attempt to rectify this with studies approximating what would be the reciprocal costs and losses incurred by each country so that we might know what it is we are actually negotiating. The TRIPS Agreement does not belong in the WTO and should be negotiated elsewhere; while investment, competition and government procurement are issues that should not be brought in until a later time. These new issues are too controversial and unbalancing, and they would give the WTO too much authority for it to manage.

Between now and Cancun, we should focus on entrenching SDT provisions for developing countries, concentrate on the implementation of the agreements already made, and drop the new issues—Otherwise we will never finish the Doha Development Agenda (DDA) before the end of 2004, and we will incur 100 times more controversy and problems with implementation and SDT’s than we already have. We also need to discuss how we can re-think the rules of the WTO and reform its decision-making processes, especially that of the ministerial meetings.

Mrs. Dianna Melrose, Head, International Trade Department, DFID, UK

Considering the Doha Development Agenda so far, there has been the least progress made on the issues that matter most to the developing world. Agricultural market access with special safeguard mechanisms for developing countries is the single biggest development issue on the DDA. The lack of progress on key concerns such as OECD agricultural subsidies is preventing negotiations on others (including SDT, TRIPS and health, market access for non-agricultural goods such as textiles, labor movement in services and the Singapore issues). The US presidential elections of 2004 could become yet another obstacle for the DDA deadline already threatened by a lack of political will in developed countries to challenge their most powerful domestic interest groups and a lack of negotiating capacity in developing countries to counterbalance these interests.

For success at Cancun, we need for more national leaders and shapers of public opinion to talk up the importance of the negotiations, as well as for the EU and US to converge on their interests. Additionally, the disconnect between the Geneva-based trade negotiations and the national economic development policies expressed in countries’ Poverty Reduction Strategy Papers (PRSPs) must be addressed, as has been done in conjunction with the World Bank with regard to the latest Cambodia PRSP.

Mr. Faizel Ismail, Head of South African Delegation to the WTO

The rules of the WTO mostly reflect the values of developed countries, who are also the major beneficiaries of globalization. Developed countries have claimed “special and differential treatment” since the very beginning of the rules, the most obvious example being the protections maintained within the EU and called legal by the WTO. Rules shaping anti-dumping safeguards are written and added in such a way that it is easy for powerful countries to discriminate. As Cancun approaches, it seems likely that the multiple missed deadlines and delayed negotiations might “threaten to block one another like logs in the river.”

Further Comments by Panelists and Delegates

Pro-Business Interests v. Development

A delegate from Actionaid referred to comments by the EU that, rather than being focused on the development agenda, its key issues are pro-business. Since the EU is seeking benefits in return for development-oriented concessions, its focus on the Singapore issues will constitute the predominant threat to the development outcome of the Round. Dianna Melrose responded that it is simply wrong to say that the EU is pursuing a merely pro-business agenda, while Faizel Ismail suggested that firms wanting multinational market access should be required to have development components to their agendas. Dr. Bhagwati asserted that there is no business lobby pushing for the investment issue in the WTO. The reason it is there, however, is because Pascal Lamy and others in Europe want to have it as a chip to trade for benefits on agriculture. The US wants to re-write WTO rules on this matter, but the EU seems intent on seeking advantages that are not development oriented.

Efficacy of Special and Differential Treatment (SDT)

Responding to a previous statement by Dr. Bhagwati that strong macroeconomics are a prerequisite to trade, a delegate from Niger noted that, while privatization and other changes motivated by the IMF and World Bank had been brought about in Africa, they have not seen dividends in terms of trade. Dr. Bhagwati expressed the concern that if developing countries proceeded to seek SDT provisions, the powerful WTO members might continue to try to collect benefits by further playing off one against the other in the developing world. SDT should therefore only be sought for the purposes of securing longer timeframes for adjustment for developing countries, and not for preferential market access. Martin Khor countered that longer implementation periods are not sufficient forms of SDT. Developing countries should instead be completely exempted from certain obligations, while developed countries should at the same time make binding commitments to them build their own capacity.

(1) Bound rates are the maximum levels to which a country may raise its tariffs without incurring potential penalties. The major beneficiaries of the earlier binding have a right under the GATT to receive compensation, usually in the form of reduced tariffs on the other products they export to the country. If the beneficiaries do not receive such compensation they may retaliate by raising their own tariffs against an equivalent value of the original country's exports.

(2) The "new issues" that developed countries are pushing onto the agenda are also called the "Singapore issues", which include investment, competition, government procurement, and trade facilitation.