Groups urge US Congress to refuse new Fast Track authority

24 April, 2007

More than 240 national and international groups representing religious, civil rights, environmental, farm, health, development and labour interests have come out in opposition to the grant of any new Fast Track trade authority for the WTO negotiations by the US Congress, and urged Congress to resist pressure by US corporate giants and other WTO proponents to renew this authority.

In a letter dated 19 April and delivered to Democratic members of the House of Representatives and the Senate (both of which are controlled by the Democrats), the groups argued for an entirely new vision and policy for multilateral trade that would benefit, rather than damage, the world's workers, farmers, environment, and future development potential.

The letter was signed by many international and regional networks (from both developed and developing countries) ranging from ActionAid International to the International Gender and Trade Network as well as numerous national and sub-regional organizations worldwide.

The letter by the groups comes just as US media reports this week quoted the House Ways and Means Committee Chairman Charles Rangel as saying that Congress was prepared to grant President George W Bush ''restricted'' fast track authority to conclude the Doha round of trade talks at the WTO, provided that the administration requests and justifies the extension.

The US administration's current fast track authority under the Trade Promotion legislation (which allows Congress a straight yes or no vote on trade bills, with no right to amend) expires on 30 June.

However, to avail of the current fast track, the administration would have had to notify Congress in detail by 1 April of the agreement on the WTO negotiations that it would sign before 30 June. This has not been done, and as such, a new Trade Promotion Authority would be needed from the US Congress.

The letter by the groups said that the results of the past twelve years of living with the results of WTO policies have resulted in worsening economic conditions for the majority of developing countries.

The number and percentage of people living on less than $1 a day in regions with some of the worst forms of poverty - Sub-Saharan Africa and the Middle East - have increased since the WTO began operating, while the number and percentage of people living on less than $2 a day has increased at the same time in these regions, as well as in Latin America and the Caribbean.

The letter also referred to projections by the World Bank, the Carnegie Endowment for International Peace (CEIP) and Tufts University that show that the Doha Round would result in net losses for the vast majority of developing countries.

The most likely Doha scenario that the World Bank reviewed would yield benefits of only $16 billion for developing countries by 2015 - that is a little less than one cent per person per day to the developing world. Worse, the research revealed under the "likely" Doha scenario, that the Middle East, Bangladesh, almost all of Africa and Mexico would actually face net losses.

Using more sophisticated modelling techniques, said the letter, the CEIP report further showed that the alleged gains that are projected to accrue to the biggest developing country "winners" - Brazil and India - would be largely concentrated in those countries' agribusiness and manufacturing industries respectively, while subsistence farmers - a much larger percentage of the populations in general and of the poor specifically - would see only tiny gains or in many cases net losses.

The groups also said that there are severe problems for developing countries with all three of the principle areas of negotiation in the Doha Round: agriculture, non-agricultural market access (NAMA) and services.

Many developing countries reluctantly agreed to launch the WTO Doha Round talks to redress imbalances created by the Uruguay Round agriculture agreement, said the group's letter. Those agriculture trade rules have undermined the livelihood needs of hundreds of millions of farmers worldwide while benefiting the handful of global grain and meat trading and agribusiness giants monopolizing this sector.

The letter pointed out that instead of addressing the growing rural crisis faced in many countries around the world, the Doha Round agriculture talks have focussed on expanding global markets for exporters from developed and to a lesser extent developing countries.

The over-production and the dumping of agricultural exports (promoted by current WTO agriculture rules) bought by the agribusiness giants - often for less than the cost of production in the United States and Europe - continues to drive down world prices for crops that the poor depend on, such as cotton, maize, rice, poultry, dairy, and sugar. This is having a devastating effect on local livelihoods, as small family farmers and agricultural workers have been pushed out of the market, and often become displaced and further impoverished as they lose their land.

The letter also noted that US negotiators have outright rejected the Group of 33 developing countries' proposal on Special Products and a Special Safeguard Mechanism. This proposal, supported by a broad alliance of over 100 WTO member countries, is based on established food and livelihood security and rural development criteria. It would define appropriate mechanisms for developing countries to safeguard the majority of their populations - who are farmers - from the distortions that would result from the Doha Round rules.

As to the negotiations on Non-Agricultural Market Access, which covers industrial goods and natural resource tariffs and non-tariff measures, the letter said that these negotiations are projected by the UN Conference on Trade and Development (UNCTAD) to cost developing countries over $63 billion in revenue, or more than four times the total possible gains to developing countries projected in the World Bank study.

In most developing countries, a quarter to over a third of the basic revenue that is used to provide essential health and educational services comes from tariff proceeds. Moreover, tariff cuts proposed by developed countries will have a significant and detrimental long-term effect on poor countries' ability to develop diverse industrial bases that can add value to their natural resources and provide employment and wealth in these countries.

The letter cited the Congress of South African Trade Unions (COSATU) warning that the proposals could leave countries "seriously de-industrialized," becoming producers of primary products with the loss of jobs and wealth that value-added activity entails.

While millions of jobs are at stake for many developing countries, for the poorest countries, the future policy space to deploy the strategic use of tariffs as a development tool - just as the US and all currently wealthy countries did during their industrialization - would be foreclosed forever if the NAMA negotiations were to conclude as designed under the Doha Round, the letter warned.

The third main focus of the Doha Round - service sector privatization and deregulation - is also anti-development, said the groups. These negotiations are aimed at requiring countries to transform their public services into new tradable for-profit commodities for foreign companies and to deregulate domestic service sectors to allow foreign corporations to operate without restriction in domestic markets.

Yet, said the letter, most experiences of services liberalization in developing countries to date - in water, energy, health, education, the financial sector - have been negative.

The letter said that the US Congress can take a key step towards restoring the standing of the US as a true multilateral leader in the international community.

In this respect, the letter urged Congress to resist the pressure to renew Fast Track for the WTO, and instead work together with the trading partners of the US and global civil society for a new multilateral trade system that is to the benefit of all.