Examination of witnesses (Questions 180
- 196)
TUESDAY 21 MARCH 2000
MS SABRINA
VARMA, MS
RONNIE HALL
and MR BARRY
COATES
180. Both the Government and the WTO, Mike Moore
when he gave evidence here, have argued that developing countries
would have the most to gain from a new Round. You would say, "They
would argue that, wouldn't they?", but given that the average
tariffs faced by developing countries' manufactured goods into
developed countries are some three per cent, which is four times
higher than the tariffs faced by developed countries at 0.8 per
cent, could there not be some truth in that argument? The second
question I would like to tack on to that is do you recognise that
in theory what the WTO is trying to achieve is a rules-based approach
to international trade and, were it to work, in theory, that rules
based approach would by far be the best thing for developing countries?
(Ms Varma) On your second question, I think it is
worth saying that ActionAid certainly would support a World Trade
Organisation that was rules based and based along fair and equitable
principles, but that is not what the situation is right now. We
see the WTO playing potentially a very constructive role in the
world economy and governing the actions of government and transnational
corporations. This is why I think it is important to clear that
particular issue. We are not saying that we are against the WTO
as such; what we are saying is that we think there is a particularly
useful role that it can play but we need to recognise what all
the problems are, which is what the collapse of the talks in Seattle
has presented us with: time to rethink what it is all about and
take it from there.
(Mr Coates) I agree that developing countries, by
definition, have most to gain from further trade negotiations
because, as you rightly point out, they face most of the tariffs.
The question comes as to what do they have to give up in order
to have those tariffs reduced. Our view is that these tariffs
are sufficiently unfair that they should not require reciprocal
liberalisation from developing countries in ways that are not
in their interests. Therefore, if there is to be a new set of
trade negotiations that will make the current trade agreements
fairer to developing countries, that is exactly, I believe, what
NGOs and most developing countries are calling for. It is part
of the review, repair and reform formulation that I talked about
initially. Should there be a repair of unfair agreements? Absolutely.
There should be. Should there be new trade negotiations which
will force developing countries to agree to rules that are not
in their long term development interest? I think that would be
blatantly unfair and should not be allowed. Finally, on the rules
based approach, I think there is a myth that NGOs are arguing
against rules. The reality is that NGOs are the strongest proponents
of rules. However, what we have seen in the WTO is that (a) the
rules are unfair and (b) most rules are orientated towards basically
removing powers of governments to regulate international trade
and, if the EU's proposals went through, removing powers of governments
to regulate international investment. In fact, they are to an
extent deregulatory mechanisms rather than regulatory mechanisms.
The most intelligent media article I saw after Seattle was a New
York Times article by the author, Naomi Klein, which said
that there was a misconception that the people on the streets
were anarchists. She listened to what they were saying and these
thousands of protesters on the streets were saying, "We want
rules" which really does turn the argument on its head.[30]
I believe that NGOs are very much united in wanting strong rules
to operate internationally. The question is whether the WTO is
agreeing fair rules and whether the WTO is the right institution
to regulate the global economy. This brings us back to the issue
of institutional reform and where the WTO sits in amongst other
international institutions.
Mr Robathan
181. You say you are not against rules. In fact,
you want strong rules. In your memorandum you said, "The
weight of evidence is that unregulated trade and investment is
implicated in the increasing disparities between rich and poor
. . . environmental damage and downward pressure on social and
environmental standards." First, it seemed to me this was
an argument for WTO rules in the regulation of trade, if you want
rules, and that is a good organisation to set the rules; but the
second point is, if you are not arguing for that, you actually
seem to me to be arguing for protectionism. The idea that environmental
damage is not often connected with protectionism and indeed poverty
is not connected with protectionism I think is quite wrong. If
you look at eastern Europe for instance, the environmental damage
in the former Soviet Union was largely caused by the centralised
economy and the protectionist economy.
(Mr Coates) Another myth that is often perpetrated
is that if NGOs argue against liberalisation in any form then
we must be arguing for either communism or complete autarchy.
I believe that there are other options available in the international
system.[31]
When we are talking about the WTO's role in setting international
rules, we believe, for example, there needs to be international
regulation to enforce core labour standards that have been agreed
by the International Labour Organisation. This was a key issue
in Seattle. Implementation was proposed by the United States as
being through the World Trade Organisation. Developing countries
were concerned that that would lead to protectionism. Many NGOs
agreed, although much of the trade union movement was in favour
of including labour standards in the WTO. The issue for us is
that there needs to be an international mechanism for enforcement
of international norms on the environment, on labour standards,
on human rights, on pesticide use, on dangerous chemicals, on
genetically modified organisms etc; but those mechanisms should
be fair and should not result in trade sanctions, which can then
be abused for protectionism. We are calling for international
regulation to protect the social and environmental values in the
global economy that are currently the subject of voluntary international
agreements but are unable to be consistently enforced. The WTO
has been seen to be the only game in town with regard to enforcement.
We are proposing a fair international regulatory system which
would allow for enforcement of international standards, not using
the WTO as a mechanism.
Ann Clwyd
182. What core labour standards would have been
eroded under the Seattle proposals and which core labour standards
do you think ought to be strengthened?
(Mr Coates) At the governing council of the ILO in
1999, it was agreed that all of the seven core conventions of
the ILO would be observed by all ILO member countries, which includes
most countries in the world, and these would be implemented. Unfortunately,
again, there is no mechanism for ensuring these standards are
implemented. Most of the developing countries have ratified most
of the core conventions. The United States, which proposed core
labour standards in the WTO, has in fact ratified only one of
those seven core conventions. From our perspective, yes, we need
core labour standards to be implemented in their entirety, all
of them, but the correct mechanism is not through the WTO. The
way forward is not to pick some labour standards or others; I
think all the core labour standards need to be implemented. It
is encouraging that leading British businesses are now starting
to implement those core labour standards through their supply
chains internationally through, for example, the Ethical Trading
Initiative. Unfortunately those more ethical businesses are being
undercut by their less scrupulous competitors because there is
no international regulation. If we want a level playing field
on ethical issues, we need international regulation of labour
standards and other issues.
(Ms Hall) It is interesting to quote John Gummer who
I heard say once that there is more to life than trade. It is
perfectly obvious to many people around the world that there is
a severe imbalance between trade rules and institutions and other
rules and institutions. What people are looking for is for the
two different sets to be brought into line with each other, to
have some balance. The issue that you brought up on labour is
a perfect example of that. I have just come back from an international
strategy meeting of various different groups around the world.
It was conducted in Boston and there was complete unanimity on
the need to strengthen the International Labour Organisation core
conventions.
Chairman
183. Should it be done through the ILO or through
the WTO?
(Ms Hall) Through the ILO, absolutely. The concern
of the groups that I work with is to roll back the power and authority
of the WTO and bring it into line with the rest of the international
institutions, and ideally to bring it into the United Nations,
as it is the only international institution that is currently
outside the United Nations. I just wanted to make the additional
remark that, from our perspective, trade liberalisation is most
definitely a tool and not a goal. It is not the end goal. It can
be useful in certain circumstances, but the goals of the current
trading system are what need to be revised. When that happens,
institutions and rules will fall into line and follow.
Mr Robathan
184. If I can broaden the discussion to the
role of the NGOs and, to be more specific, in Seattle, it seems
to me that Ms Hall and Mr Coates have both been saying in terms
that there was a lack of capacity of developing countries to negotiate.
That is obviously true given the small number of representatives.
In fact, there are not permanent representatives in Geneva. Ms
Hall said something very similar about difficulty in understanding
the general nature of what the EU was saying. The NGOs have been
very vociferous in their opposition in Seattle. You have had the
headlines, most certainly. Do you not think this is slightly patronising
towards developing countries, the suggestion that they cannot
state their own case? Do you not think opposition or support should
be left to the Member States and, as I have said before, we have
met many representatives of Member States—we met some in
December in Geneva—who, whilst they were not entirely enthusiastic
about what had been happening in Seattle and they very much said
they had a lack of capacity, nevertheless, they were not opposed
to the thrust of the WTO negotiations. I leave it up to you. What
do you think of that?
(Ms Varma) From our dealings with the governments
of developing countries whilst we were in Seattle, we got no indication
that there was wholehearted support for a new Round. You are quite
right in stating that developing countries were not necessarily
saying that they were against the WTO system. Nor are we, as I
highlighted before. What we are saying is that we think the setup
is currently unfair, grossly unbalanced and needs to be reformed.
That is exactly what various civil society groups and governments
are saying.
185. Do you think they should say it as they
represent people or that NGOs should say it? There is no reason
why you should not have an opinion.
(Ms Varma) Sure, and it is up to each of the WTO member
governments to consult with civil society and be able to reflect
the views of those consultations when they go into trade negotiations.
What is happening at the moment is that commercial interests tend
to dominate whatever position is taken forward and other aspects
of civil society concerned, such as the environment, such as poverty
and a whole heap of other things, are being sidelined and marginalised.
That is what we are objecting to.
Mr Khabra
186. Your organisation has argued that agriculture
should be removed from the ambit of the WTO, to be negotiated
in an alternative forum in which trade is considered but as a
factor which cannot override issues such as food security and
safety, rural employment and ecological impacts. Is it really
likely that developed countries would agree to reduce agricultural
tariffs and subsidies outside the WTO?
(Ms Hall) In terms of what is likely in the near future,
in terms of positions of various industrialised and developing
countries, it may well not be likely, but we think that in the
long term agriculture is such an important issue and it has so
many impacts on people and the quality of their lives that the
WTO is simply not the right place. We are basing our position—this
relates to the last question in a way—on the views of civil
society groups that we work with and other Friends of the Earth
member groups that we work with, rather than simply the views
of governments. Sometimes we coincide with the views of governments
and sometimes we disagree with them.
187. A number of the NGOs have mentioned the
Marrakesh decision on least developed and net food importing developed
countries in their memoranda, calling for WTO Member States to
consider how it should be put into practice. The Government in
evidence stated that they do not see this as a well conceived
decision because food aid would undermine domestic agricultural
production as prices fell still further. The Government preferred
to address any potential rises in food prices at the broader level
of balance of payments, especially given that, as Mike Moore stated,
food prices have not increased for developing countries, partly
because agricultural subsidies had actually risen. Would you agree
with the Government's assessment of the Marrakesh decision?
(Ms Varma) This is an issue that ActionAid have been
working on for some time. I am very glad that you raise this very
important issue. In view of what the United Kingdom Government
has said about the Marrakesh decision, we would agree with their
assessment that the decision is flawed. That is why it has not
been implemented. The decision is vague on its timing, criteria
and mechanisms for implementation, which is exactly why it needs
to be revised and subsequently implemented. As you are probably
very much aware, based on the evidence that Mike Moore gave you
as well as DFID, the debate has been bogged down on whether the
Uruguay Round has been responsible for affecting world food prices.
We think this is the wrong way to approach it. The fundamental
issue is that this decision was agreed to towards the end of the
Uruguay Round as a form of compensation to net food importing
developing countries and least developed countries. It was recognised
that these countries would be potential losers from further liberalisation.
I would contest the evidence that Mike Moore and Mr Low from the
WTO gave to you about world food prices. There is evidence out
there based on analysis done by UNCTAD, the United Nations Conference
on Trade and Development, as well as the FAO, the Food and Agricultural
Organisation, which shows that, since 1995—that is after
the Uruguay Round came into effect—the NFIDCs and LDCs are
seeing 22 per cent higher food import bills compared to the mid-1990s.
This is based on the import price per unit having increased significantly.
It is not just about more imports coming in; it is about the price
of individual units. Again, this definitely contests the evidence
that was given by Mike Moore to you. You should also recognise
that this trend in the price increase of food imports is taking
place despite the declining price index for basic foodstuffs.
This is a particularly worrisome situation if one considers the
diminishing ability of the NFIDCs and LDCs to pay for their imports,
for a number of reasons, such as debt repayments, balance of payments
problems, decline in terms of trade. Mr Batt from DFID had also
said that the analysis, when it came to the Marrakesh decision,
should be a bit more dynamic by NGOs, saying that with further
liberalisation there will be high prices which could act as an
incentive for stimulating agricultural production in these countries.
This can only take place if there is a strong agricultural base
within these countries to begin with. It is also worth pointing
out that the decision is not just about food aid. The Marrakesh
decision also includes provisions for financial and technical
assistance, for improving the agricultural productivity and infrastructure
within the NFIDCs and LDCs. This is an important component of
the decision which often gets ignored. It is not just about food
aid. There are many ideas but one particular idea that was developed
by the FAO and very much supported by the NFIDCs and the LDCs
and many NGOs at Seattle for implementing the Marrakesh decision
was the idea of a fund which would basically release money in
times of high prices to assist in food purchases by the NFIDCs
and LDCs and in times of low prices it would release funds to
enhance agricultural productivity. A lot of these proposals still
need a lot of work but there is work out there, looking at ways
in which the decision can be implemented.
Chairman
188. One of the food importing countries is
Bangladesh with rice imports from India. I have not heard that
Indian prices are going up on rice or am I mistaken?
(Ms Varma) I am unable to comment on that particular
aspect of it.
189. The other question that arises is why are
these countries net food importing countries? That is the real
problem.
(Ms Varma) Absolutely. If you look at the Kenyan case,
they were once an exporter of maize and now they have become a
net importer of maize since the early 1990s. You are quite right.
I think we should be asking the question when and why have these
countries become net food importing developing countries.
Mr Robathan
190. What is your analysis of the Kenyan situation?
(Ms Varma) The trade liberalisation process has certainly
played a key role in all of this. Countries are now—
191. No; specific to Kenya.
(Ms Varma) Well, we have undertaken a joint case study
of Kenya with the FAO which I am happy to submit as supplementary
evidence to you which looks at the situation in Kenya and maize
and the trends in terms of their imports and exports of maize.[32]
What we have seen is that within the general context of trade
liberalisation, also taking into account the effect of structural
adjustment programmes and the policies that are being pursued
under that, the situation is one where now Kenya is importing
a whole lot of maize whereas once it was quite a strong exporter
of it.
192. But you would not lay any blame at the
foot of the Governments of the Kenyan people over the last 30
years?
(Ms Varma) I am not sure what you are implying.
193. I am talking about well-known cases of
corruption of governments in Kenya.
(Ms Varma) Yes.
Mr Robathan: Which most Kenyans not in
the Government will tell you about.
Chairman
194. What about the whole question which arises
about the world price of maize and how that price rises? There
is a considerable amount of grain dumped on world markets, is
there not, and hence the price of maize internationally is lower
than the cost of production in some developing countries?
(Ms Varma) Yes, that is right and this is a particular
issue of concern to us, this incidence of dumping on world markets
and the effect that that has on prices and how that works to undermine
a lot of agricultural productivity in many developing countries.
(Mr Coates) Can I just make a comment on what I think
is a central issue in the EU's position. The implication of the
EU's position on a new Round is that some concessions will have
to be given to the EU in order to agree to reform the Common Agricultural
Policy, and thereby to make it fairer to developing countries.
The Committee should look particularly critically before accepting
that assumption. For example, at the moment the annual subsidies
for farmers, the total is around US$20,000 per farmer per year
across the EU, Japan and the United States.
195. Just let me understand that figure. It
is $20,000 per farmer per year in the US, the EU and Japan?
(Mr Coates) That is an average across those three
countries. Those are OECD figures, so they are probably quite
accurate. If we look at the comparison to farmers' income in developing
countries, it is generally in the order of a few hundred US dollars
per year. This is such a major issue that I believe that it calls
into question the whole basis of the EU's position in saying,
"We can only move ahead with agriculture if we get things
that are in our interest from developing countries". This
issue should be not taken at its face value by this Committee,
but in fact examined on the basis of its fairness or otherwise.
From our perspective, the current situation is that the powerful
countries have trade rules that are grossly to their advantage.
The particular exports of developing countries that are important
for their development process are blocked off by either subsidised
industries or protectionism from the north. The first priority,
rather than twisting the arms of developing countries to accept
agreements that are in the EU's interest, should be to make the
trade system fairer. I think this is an absolutely fundamental
point that argues against a new Round as proposed by the EU and
argues in favour of unilateral concessions by the EU and other
powerful nations in order to redress the unfairness in the system.
Such concessions would help build trust, so that many of the other
issues that concern the British Government can be agreed by developing
countries in a spirit of co-operation. At the moment the developing
countries do not believe the EU and the US when they call for
them to liberalise their trade because they say, "If liberalisation
is such a good thing, why aren't you doing it?"
196. Can I just ask you a final question on
agriculture and your proposal for this separate negotiation. The
prize here for developing countries is actually to break down
the protectionism of agriculture in the US, in Europe and in Japan.
Japan has the highest cost of rice in the world, I gather, or,
if not the highest, it is close to it. What would persuade a group
meeting on agricultural issues actually to give away their protectionism
which, as you know, preserves the countryside of Europe, or Western
Europe at least, and of course large parts of the US and there
are a lot of votes and voters in that group who have to be pacified?
(Ms Hall) It is obviously an extremely difficult question
to answer and whenever you get a group of NGOs together, it is
the one thing that they seem to spend an awful lot of time talking
about. I think if you are going to talk about prizes, then when
we look at what is happening in the World Trade Organisation at
the moment, I think that might be a prize, but the cost may be
too high, what developing countries are being asked to give up
in return and whether that is going to create an equal problem
for them. Given the current state of play and the deadlock even
on choosing a chair for the agricultural negotiations, there is
very little optimism about what is going to happen in these negotiations
at the moment. The reason that we have taken this rather principled
stance, if you like, of recommending that agriculture is dealt
with in a completely separate forum, preferably within the United
Nations, is that we feel that these issues of export subsidies
and dumping should be addressed, but they should be addressed
in the overall context of agriculture, what it is for and who
it benefits and we do not see any possibility of that happening
within the World Trade Organisation at the moment. We are also
concerned that the current rules and regulations within the World
Trade Organisation on subsidies and support would not permit positive
measures to support sustainable agriculture and to support small
farmers, so we would like to see that entire debate shifted. One
of the very interesting things I have found when talking to my
colleagues from Friends of the Earth groups in the south is that
they have actually been very supportive of the European Union
and Japanese mention of multi-functionality which surprised me
because in the political game where they are particularly concerned
about what the European Union is doing, you would expect them
to avoid any congruence of agendas, but they really are in favour
of multi-functionality being addressed.
Chairman: Well, unfortunately we have
come to the end of our time. We could spend a lot more time discussing
these fascinating and difficult issues with you, but I think you
have given us a very good flavour this morning and added considerably
to our understanding of your written submission, so I would like
to thank you. In doing so, I would like also to apologise to you
for postponing today's session because we felt we needed to examine
the issues of the flooding in Mozambique with the Secretaries
of State for International Development and Defence last week when
we had been scheduled to see you, so thank you very much for accommodating
that and thank you again for coming and giving us evidence this
morning. Thank you very much.
30 Note by witness: They were calling for rules
on corporations to serve the public interest. Back
31
Note by witness: We are in favour of a fair market system
and against abusive protectionism. Back
32
Not printed. Back
|
