Global Issue Paper No. 23
Edited by Marita Wiggerthale, December 2005
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Preface: World trade policy prior to the Ministerial Conference in Hong Kong
By Barbara Unmüßig, Member of the Executive Board of the Heinrich Böll Foundation
The breakdown at Cancún was not taken as a signal or a chance to review WTO principles, objectives and procedures and to engage in a fundamental discussion on the design of international trade policy. In Doha in 2001 a promise was made that a development round would be negotiated and concluded.
However, the Hong Kong meeting is almost upon us and there is still no sign of a development round. The diplomatic pressure gauge is rising and draft agreements are being watered down so as to avoid having to openly admit another failed conference in Hong Kong.
The diverging interests between and within the various negotiating groups appear almost irreconcilable. New coalitions are constantly being formed alongside the central issues of agricultural trade liberalization, tariff reductions for non-agricultural products, services, and TRIPS. The power to define what is beneficial to development and what is not is no longer the domain of the developed countries. More advanced developing countries such as Brazil and India make their demands heard loud and clear. They all have to deal with the questions as to how much liberalization, how much market access and how many safeguards for individual sectors are in the interest of which of the country groups backed up by which economic (sectoral) interests.
Something else we can establish pre-Hong Kong: A cooperative, equitable negotiation of compromises between developing countries, more advanced developing countries, and developed countries is not in sight. The developed countries are far from finally stating a clear and close target date for the abolition of export subsidies, trade-distorting subsidies and export credits for agricultural commodities. The more advanced developing countries and developed countries with an agricultural export focus push for market access, which may be appropriate for the developed countries but is more harmful than anything else for poor developing countries. The latter insist that their protective interests, such as for example the tariff preferences between the EU and the ACP countries, should be maintained, recognized and possibly extended.
In return for minimal concessions in the agricultural arena the developed countries expect improved market access for non-agricultural products (NAMA) in the developing countries by way of tariff reductions. This issue has a similar degree of explosive potential as the Singapore issues (inclusion of investments, competition and trade facilitation into WTO rules) did prior to Cancún. The developed countries thus keep trying to make the rules and to predominantly enforce their own liberalization and protection agenda (see agriculture) just as they see fit.
With its multitude of general rules the WTO intrudes deeply into national economic and social policies. Therefore questions keep arising as to its democratic control, transparency and accountability. Little if any progress has been made on procedures and decision-making – a fact that gave rise to yet another recent complaint from a group of 33 developing countries. Despite the developing countries formally having equal rights – as in the UN the one country-one vote principle applies – there can be no doubt that the most important preparations for decisions are made in informal power circles in the WTO which are dominated by a handful of developing countries. The increased claims to participation, especially by the more advanced developing countries, are only “met” through the group of "Five Interested Parties" (FIPS - EU, US, Brazil, India, Australia). But this does not make up for the lack of opportunities for participation or for the lack of transparency in decision-making which affect the majority of the developing countries. Apart from the diverging views in the agricultural and investment arenas, it was these very problems of legitimization which brought down Cancún. So far the developed countries have not yet sacrificed trade privileges to any considerable extent or have otherwise shown any substantial commitment when it comes to the democratic legitimization of decision-making processes.
It is obvious now that Hong Kong will not in any way deliver a breakthrough. There is even a fear of backsliding in some quarters, a fear that policy space for self-determined development and for the necessary socio-ecological regulation of imports and exports will be narrowed. As long as the WTO agenda is not a true reform agenda in the sense of promoting socially and ecologically benign development and democratic decision-making, a non-agreement does not necessarily have to equate to a "failure".
The debate on the usefulness or otherwise of the abolition of barriers to trade through tariffs and other trade-distorting measures can and should go on within the WTO. If the will is there to conclude a development round, the focus must shift to what the individual societies consider the necessary trade-political limitations. The relationship between international trade law and international human rights and social standards as well as environmental agreements should have long been legally defined in favour of the latter. However, the WTO negotiators are not making any progress on these issues.
The basic principles of a reform of the WTO must include the recognition and protection of national development policies and their respective instruments and institutions. Political scope for the co-existence of a variety of development strategies and different rules for developed countries and developing countries must be accepted and recognized by WTO rules. At present the world trade regime yields inequitable results which is not all that surprising in a world of unequal players. The times of the classic North-South constellation have long passed. A multilateral trade regime must address these imbalances and make a positive contribution to social, ecological, and humane development.
In this Global Issue Paper we aim to throw some light on the conflicts and contentious issues in the current negotiations. We are focussing on those issues which are likely to be at the centre of attention: Agriculture, non-agricultural goods (NAMA), and services (GATS). But we also provide an overview of the issues that are neglected in the negotiations. Following an introduction on the historic development of the Doha Round, Marita Wiggerthale analyses the state of the agricultural negotiations. Arguing from the point of view of food security, sustainable rural development and livelihood protection for small farmers, she harbours more worries than hopes regarding a possible agreement at Hong Kong.
Liane Schalatek describes the diverging interests of the various coalitions in the negotiations on the liberalization of trade in services (GATS). The pressure to give up as yet rather substantial policy space provided by an approach involving bilateral requests and offers and a move towards aggressive liberalization across the board appears to be the principal danger, putting many areas of human welfare at risk.
Damian Sullivan and Alexandra Wandel take a look at market access negotiations for non-agricultural products. They highlight industrial policies and the establishment of domestic industries in developing countries as well as environmental policy concerns regarding the exploitation of natural resources as the principal problem areas. In these fields the developing countries have more to loose than to win.
Marita Wiggerthale concludes the paper with an overview of the neglected aspects of the WTO negotiations, making it abundantly clear how politically weak ecological and development issues are systematically sidelined in the negotiating process, stuck in a position from which they fail to move on.