Report 3 on WTO Symposium: Development absent in Doha talks, WTO symposium told

9 May, 2005

By Martin Khor, TWN, Geneva

The development dimension has not been adequately implemented, or may be absent altogether, in the current Doha negotiations, according to several panelists at a session on development during the WTO's public symposium held on 20-22 April.

Some of the panelists in fact found that the Doha work programme in some areas,especially industrial tariffs, was likely to produce outcomes that would be againstdevelopment interests.

The session, 'Development perspectives on the current WTO negotiations', wasorganized by the Third World Network as part of the WTO's public symposium,'WTO After 10 Years: Global problems and multilateral solutions.'

Dr Nagesh Kumar, director-general of the New Delhi-based Research and InformationSystem for Developing Countries, said the developing countries had taken on heaviercommitments than developed countries during the Uruguay Round with newobligations in the TRIMs, TRIPS and GATS agreements that involved the narrowingof their policy space and income transfers from the countries.

Their terms of trade had fallen, their share of world trade declined (if China and oilare not counted) and their growth experience was poorer in the 1990s than the 1980s. The fruits of globalization were not shared equitably.

The Doha Agenda starting in 2001 had raised expectations that it would be aDevelopment Round, with the focus on development concerns, and developingcountries expected that their concerns would be addressed and the balance of gainswould be in their favour. However, said Nagesh, it had not turned out that way at all.

In agriculture, despite the Doha mandate, there was reluctance by developed countriesto eliminate export subsidies (where an end date is not yet fixed) or reduce domesticsupport, said Nagesh. But in market access they are pushing developing countries tocommit to high tariff reduction so that the developed countries' farms can securemarket access. The developing countries cannot afford subsidies, so they can only usetariffs to support their large masses of farmers. By asking for deep tariff cuts, theirsensitivities are being ignored.

Nagesh said that in the NAMA talks, although there is the Doha mandate that themodalities are to be based on 'less than full reciprocity' for developing countries'commitments, in fact, the developed countries are seeking the opposite, i.e. more thanfull reciprocity from developing countries. The formulae put forward are based onthe non-linear concept where higher tariff rates are brought down more. Asdeveloping countries have higher tariffs, they would have to reduce their tariffs bymore, resulting in more than full reciprocity in their commitments.

He added that there was very little progress on special and differential treatmentissues, which is all the more surprising since this is supposed to be a DevelopmentAgenda. Thus, overall, he concluded, very little has been done in the Round so farfor development. If the Uruguay Round is a guide, this is not surprising. But hehoped that the Round will end differently.

John Hilary, policy director of War on Want and policy chair of the UK Trade JusticeMovement, said that an internal EC document of October 2004 revealed that itspriority was an aggressive offensive push for opening developing countries' marketsthrough NAMA and services talks, and that development was not mentioned.

He criticized the developed countries for insisting on pushing developing countriesto drastically cut their industrial tariffs. He recalled that the joint proposal on NAMAby the US, Canada and the EU on the eve of the Cancun Ministerial (aimed at gettingcommercially meaningful access to developing countries) was adopted, despiteopposition by developing countries, in the July 2004 package.

The developed countries are now speeding up the NAMA talks to get a tariff-cuttingformula agreed by the end of June, and they are also insisting that the flexibilities (inpara 8 of the NAMA text) will have to be forfeited unless the countries agree to aharder formula. The LDCs are also asked to raise their tariff bindings significantly.

On services, Hilary said the developed countries were now turning on the pressure,even on LDCs, to make offers. Moreover, there is a threat that the current GATSframework based on a positive list approach (there are commitments only if placedon a list) could be overturned through a 'benchmarking' process which groups sectorstogether for joint liberalization across whole clusters of sectors, a proposal that hadcome from the US services companies.

Hilary concluded that the rhetoric of development contradicts the reality thatdeveloping countries' markets are being forced open for the North's corporations. Heinterpreted the EC President Jose-Manuel Barroso's message at the symposium as 'webelieve in development but the poor countries also have to pay.' This, he said, wasunjust.

The developing countries had paid far more than developed countries in the UruguayRound. In NAMA, they are asked to pay far more again. Yet the Northerncorporations are piling on pressure for even more market access. 'We need tochallenge the rhetoric of the Doha Development Agenda and prove there is a realdevelopment outcome,' he concluded.

Charles Abugre, Christian Aid policy director, challenged the basis of projections bythe World Bank and other agencies of the massive gains from the Uruguay Round(that did not materialize) and from more liberalization by developing countries. From1995 to now, the poor countries had liberalized more while developed countries hadexpanded their trade restrictiveness.

With the poor liberalizing more than their economy can take, he said, importcompetition can decimate economies and communities, as the experience of Africa,the Caribbean and parts of Asia had shown. Rural producers cannot produce andfamilies cannot repay their debts.

Calling for trade policy flexibility, Abugre said it was a fetish that trade policy goesonly in one direction. Even when poor countries are devastated by low applied tariffs,they cannot increase these due to loan conditionalities and a one-sided presentationof trade theory that advocates a one-direction tariff policy.

This, he said, has to change. The poor countries would not receive special anddifferential treatment benefits unless the international financial institutions back awayfrom trade policy. The Blair Commission on Africa had now agreed that forcedliberalization is a major cause of African countries' inability to grow and to export. Thus, trade policy flexibility has to be available to poor countries.

Goh Chien Yen of Third World Network, citing examples of the application ofproposed non-linear formulae to reduce industrial tariffs, showed how the reductionswould be very drastic for developing countries, for example, a tariff of 60% nowwould be cut to 7.1% under the US proposal.

He said that there were already many countries where rapid liberalization, sometimesenforced, had led to devastating impacts, and cited several examples from AfricanDevelopment Bank reports.

He added that the non-linear formula in NAMA is inconsistent with the Dohamandate and would lead to 'less than full reciprocity in reverse.' The NAMAproposals would lock developing countries' tariffs at low levels, removing their policyspace for long term industrial development, especially since the WTO had alreadyremoved other tools for industrial development through the TRIPS, TRIMs andsubsidies agreements.

Jacques Berthelot of Mouvement de Solidarite (France) said the framework onagriculture in the July 2004 package would not be able to foster development. Onemajor reason is that the US and EU would be able to retain a large part of theirsubsidies through falsely representing them as non-trade distorting or hiding them.

He said the EU and the US had been able to 'cheat' in terms of their notifications tothe WTO of their agricultural supports. This, he said, allowed them to hide largeamounts of input subsidies (such as on animal feed, irrigation, agricultural fuel,agricultural insurance and interest rate rebates on agricultural loans).

He said that there were also 'cheatings' on investment subsidies by the EU throughimproper notification in the Green Box, and the hiding of export subsidies (throughsubsidies on inputs that go into production of exports).

He added that the new EU agricultural policies (the CAP reform of 2003-04) and theUS Farm Bill of 2002 are not abiding by the rules of the agriculture agreement. Inparticular, he said, the new single farm payment created by the CAP reform of June2003 did not fulfil the criteria of the Green Box. He also argued that thecounter-cyclical payments created by the US Farm Bill of 2002 could not beaccommodated by the new Blue Box in agriculture created by the July 2004 package.

Berthelot said that the framework agreement on agriculture would not be able tofoster development and that the 'special products' category and special safeguardmechanism would be inadequate for protecting the developing countries. Hesuggested that developing countries should safeguard access to their own domesticmarket as their prime objective through effective import protection and remunerativeprices, including through supply management.

Sangeeta Shashikant of Third World Network reviewed recent developments inTRIPS, pointing out that two deadlines had passed on finding a permanent solutionto the para 6 problem identified by the Doha Declaration on TRIPS and Health (i.e.supplying medicines to countries with inadequate manufacturing capacity). She saidthe present impasse should be broken by supporting the African Group proposal onthe subject.

She added that on the review of Article 27.3b of TRIPS, there had been severalproposals on prohibiting the patenting of life (including certain life-forms and livingprocesses that are now mandatory to patent in TRIPS) and on clarifying that countriescan choose their own sui generis system for plant varieties protection. However, therehad not been progress in these areas.

She said that there were also proposals by many countries to amend the TRIPSagreement to require that patents on genetic materials and traditional knowledge notbe granted unless the application could disclose the source of origin, and showevidence of prior informed consent and a benefit sharing arrangement with thecountries of origin.