MEMORANDUM SUBMITTED BY THE CATHOLIC AGENCY
FOR OVERSEAS DEVELOPMENT (CAFOD)
INTRODUCTION
CAFOD welcomes the timeliness of the Development
Committee's inquiry, and the inclusion of issues related to the
implementation of the Uruguay Round agreements which, while of
urgent interest to many developing countries, were largely ignored
in Seattle. Three CAFOD delegates attended the Seattle Ministerial.
This submission is based on their visit, discussions with other
delegates, and background research.
The breakdown of the talks was not a disaster
for the developing world. In the aftermath, Sir Shridath Ramphal,
who represented the Caribbean countries in Seattle, commented
that "The Caribbean and other nations of the Third World
have good reason to be happy with the failure to arrive at a consensus".
Seattle's true impact on the developing world will depend on what
happens next, both within the WTO and in bilateral trade relations
between industrial and developing countries. The WTO itself stands
at a crossroads. The path it now takes will profoundly influence
the economic prospects for the developing world.
The EU and US Governments should now acknowledge
that the atmosphere of recrimination and distrust so evident in
Seattle shows the need for a thorough overhaul of the WTO, not
least to ensure that developing countries are no longer sidelined
within the organisation. In Seattle their trade ministers were
kept in the dark, their demands ignored, and their arms twisted
when the powerful nations wanted their support. Several southern
delegates, including Ramphal, described the process as "neocolonial",
and by the end of the meeting, US Trade Representative Charlene
Barshefsky, was being greeted with boos and catcalls by delegates.
WTO reform is needed to create a new, fairer, more development-oriented
framework of rules for multilateral trade.
The danger, however, is that the powerful nations
will give up on the WTO and retreat further into protectionism.
This is especially true of the US as it enters an election year.
That could be enormously detrimental to developing countries,
which have spent the last decade liberalising their economies
on the promise of improved access to northern markets.
THE BRITISH
GOVERNMENT'S
ROLE IN
SEATTLE
CAFOD applauds several aspects of the British
Government's policies in the run up to and during Seattle. Clare
Short first coined the term "development Round", drawing
attention to the need to give priority to development issues in
the planned Round of trade negotiations. She was also one of the
few development ministers to attend the talks, along with environment
minister Michael Meacher, making the British delegation particularly
representative of non-trade concerns.
In Seattle, the official British delegation,
led by Stephen Byers, also established a welcome precedent by
including representatives from NGOs, the TUC and the CBI in the
official UK delegation and briefing British NGOs and business
representatives for an hour every evening, listening carefully
to their feedback.
CAFOD, however, believes that events in Seattle
demonstrated the difficulties in the Government's stated position
that any "development Round" should include a range
of new issues such as competition policy and investment (known
as a "comprehensive Round"). It was clear, both in Seattle
and beforehand, that many developing country governments did not
share this view, arguing instead that their interests and limited
capacity would be best served by addressing a limited number of
issues, beginning with the negative impacts of the Uruguay Round
agreements. The EU, and particularly the British Government, was
therefore placed in the uncomfortable position of claiming to
know what the South needed better than developing countries themselves.
There was widespread scepticism over the EU's
position among developing countries, who interpreted its insistence
on a broad agenda as a way to maximise the trade-offs it could
demand in return for any action on the Common Agricultural Policy.
In the aftermath of Seattle, EU negotiators confirmed this interpretation
of its position. Many developing countries, along with the US,
see the CAP as one of the greatest obstacles to ensuring developing
nations benefit fully from globalised trade, since it both limits
access to European markets, and dumps artificially cheap food
on other countries.
The EU's insistence on a broad agenda was one
of the reasons why the South, especially the smaller nations,
came to feel so alienated by the Seattle process. What is now
needed is a change of approach. If the EU does indeed support
a development-based round of talks, it should begin by listening
to and acting on the many concerns of developing countries (see
sections on implementation and agriculture).
Seattle also demonstrated several problems with
the nature of Britain's representation at the WTO. Britain negotiated
via the EU delegation, led by the EC directorate for trade and
its Trade Commissioner Pascal Lamy. That meant that issues like
development and environment, which belong with other directorates,
got short shrift in the heat of negotiations. The most notorious
example of this was when Commissioner Lamy accepted a US proposal
for a biotechnology working group, leading to a debilitating row
within the EU delegation, as Michael Meacher and other environment
ministers from EU Member States publicly expressed their opposition
to the concession. There is a clear case for looking at how non-trade
interests and individual member states are represented in the
EU negotiating team.
Outside Britain's formal role at the WTO, its
leadership role within the Commonwealth could enable it to lead
the way in rebuilding some of the trust lost due to the Seattle
experience. It could provide an important channel through which
developing country concerns can be taken forward at the WTO.
INSTITUTIONAL REFORM
All sides agree that the WTO is in serious need
of institutional reform, and CAFOD supports the British Government's
proposal for an extraordinary meeting of members at ministerial
level to discuss this issue. However, the WTO's problems go much
deeper than questions of organisational mechanics. They also include
the organisation's assumptions, aims and governance.
The WTO has hitherto been seen a staking precedence
among international bodies on trade-related issues. This has led
to decisions which clearly affect other areas, such as environment
or development (notoriously the ruling on the EU banana regime),
being taken by the WTO on the basis of trade concerns alone. Other
organisations and regimes (for example the new Lome agreement)
are then expected to become "WTO compatible".
Instead, the WTO should be made "development
compatible" by subordinating it to the UN system to which
it theoretically belongs. When disputes arise which involve the
environment, development, or other non-trade concerns, the WTO
should defer to the relevant specialist agencies of the UN. Mechanisms
should be put in place to enable these bodies to arbitrate fairly
and quickly in disputes.
The WTO should also follow the lead offered
by the World Bank and IMF in recent years, and publicly commit
itself to the International Development Targets, making the reduction
and elimination of poverty its overriding goal. Too often, trade
liberalisation is seen as an end in itself, rather than as a means
to the end of sustainable development. This means that, in cases
where trade liberalisation can actually damage development, trade
liberalisation comes first. One useful reform would be to overhaul
the WTO's Trade Policy Review Mechanism, which reports on individual
members' trade policies. This currently only reports on steps
to liberalise trade, and ignores issues such as the social and
environmental impact of such policies.
At the national and EU level, parliamentary
oversight of the WTO should be stepped up, in particular to ensure
that non-trade concerns are adequately taken into account. CAFOD
believes the introduction of an annual reporting procedure to
both European and British Parliaments would contribute towards
this aim.
Within the UK, the Secretary of State for Trade
and Industry's decision to include environmental criteria in the
mandate of the ECGD is a welcome integration of trade and non-trade
concerns. The Development Committee has recommended that the Government's
developmental objectives also be included in the ECGD's revised
Mission Statement and drawn particular attention to the use of
the ECGD to underwrite arms sales. These steps constitute welcome
recognition of the need to integrate trade and wider non-trade
concerns. The same logic should apply to the WTO.
There is clearly a need for reform to the WTO's
decision-making structures. Its insistence on taking all decisions
by consensus appears superficially democratic since it gives the
smallest countries the same weight as the largest. In practice,
however, it has created a byzantine and opaque process of decision-making
which favours bilateral horse-trading between powerful nations
and blocs. The real decisions are taken behind closed doors and
the less powerful nations are cajoled or coerced into agreement.
In Seattle these practices alienated southern members to such
a degree that African, Caribbean and Latin American nations issued
separate statements (attached)[69]
condemning the way in which the talks had been conducted.
This process inevitably squeezes out global
concerns such a poverty reduction and environmental protection.
There is a need for discussion about alternatives
to this way of working, such as a constituency system modelled
on the IMF. Or one which provides for much more detailed scrutiny
of texts, as in the UN system. It may be that the era of big trade
rounds, with their emphasis on striking deals and gaining unilateral
advantage, should come to an end and be replaced by a more truly
multilateral system. CAFOD's principal concern, however, is that
any new structure should enhance rather than reduce the level
of involvement of developing country governments in the running
of the WTO.
One of the key problems of the WTO as an institution
is that, while democratic on paper, developing countries are in
practice unable adequately to argue their case in Geneva or during
negotiations. Thirty members were unable even to afford to send
delegates to Seattle. This is clearly unacceptable. CAFOD welcomes
the UK government's support for a legal aid centre for developing
countries, based in Geneva, to enable them to cope with the WTO's
dispute procedures, but far more needs to be done. For example,
a funding mechanism should be set up to allow poorer countries
to maintain a permanent presence in Geneva.
Developing countries are also disadvantaged
within the disputes settlement system since, even if they win
a case, their only means of redress is by imposing trade sanctions
on the wrongdoer. While the US is able to impose a range of fairly
effective sanctions on smaller economies (and even on the EU),
it is hard to envisage a country like Ghana or Mali imposing sanctions
on the US or EU!
The general call for increased transparency
at the WTO should include the role of transnational corporations,
which maintain an effective lobby in Geneva and drafted many of
the agreements in the Uruguay Round process. CAFOD does not oppose
the involvement of business in the WTO, but believes that their
participation should be properly regulated, with disclosure of
their finances, staff and activities in Geneva and within the
WTO in general, and rules to avoid conflicts of interest arising.
IMPLEMENTATION
"Implementation" in Seattle became
one of the main faultlines that divided North from South. It was
effectively shorthand for a number of areas in which developing
countries felt let down by the Uruguay Round agreements. The US
and EU's refusal to revisit these agreements was a major contributor
to the rising tide of anger from many Third World delegates as
the week wore on.
Underlying this argument there is a key methodological
issue at stake. To what extent should the WTO proceed on the basis
of empirical evidence, carried out by independent bodies such
as UNCTAD or the FAO, and to what extent on the basis of simulation
and theory? So far there has been almost no attempt to establish
what the impact of the Uruguay Round has been in practice—an
exercise which might help bridge the gap between the WTO and Northern
governments who maintain that the round has brought enormous benefits
to all except sub-Saharan Africa, and the Third World governments
who claim that their actual experience has been the opposite.
CAFOD believes that any credible pro-development
trade policy must be based on empirical evidence and impact assessment.
The British Government does not seem to share this view—senior
officials at the Department for International Development have
told CAFOD that the search for empirical evidence is a "wild-goose
chase" and that "simulation models are the only valid
approach".
CAFOD believes that a new consensus can only
be forged if the WTO stands back and adopts the "review,
repair, revise" approach advocated by many NGOs prior to
Seattle. The first step has to be an attempt (allowedly fraught
with technical difficulties) to analyse the impact of the Uruguay
Round and, where results have not lived up to predictions, to
consider amending the implementation of the round to further development
goals.
Whatever the outcome of this wider debate, there
are a number of areas where developing countries are already up
in arms over the implementation of the Uruguay Round. These include:
— The 1994 Marrakech decision to compensate
net food importing developing countries for the higher food import
bills expected from the Uruguay Round. This has never been implemented,
even during periods of sharp food price rises.
— The widespread abuse of anti-dumping
legislation by northern governments, as a means to impose protectionist
barriers against southern imports.
— WTO trust funds for technical assistance
urgently need to be replenished. Only two countries (Uganda and
Tanzania) have so far benefited from the WTO and World Bank's
"Integrated Framework" for trade-related assistance
to the least developed countries, a programme which has been running
for three years.
— The North should consider providing
financial support to enable countries to meet the costs of implementing
the Uruguay Round, which often impose a heavy burden on poorer
governments. For example, the costs of introducing the agreed
customs procedures has been estimated at $10 million per country.
Rich countries often respond to claimants from
the South by offering to delay the deadlines for implementing
various agreements signed in the Uruguay Round. However what is
needed is a much greater level of recognition for the use of special
and differential treatment of developing countries, enabling them
to pursue development goals without fear of being prosecuted for
breaking WTO rules.
In Seattle, the US and other northern governments
offered to put these issues on the table in a new round of negotiations,
but this is both illogical and unfair. The WTO should right the
wrongs and mistakes of the Uruguay Round before proceeding with
any new negotiations. Making progress on righting imbalances in
the last agreement conditional on further concessions in a new
round will only compound the problems.
IMPACT OF
TRIPS
The TRIPs agreement signed under the Uruguay
Round has raised serious concerns among developing country governments
and NGOs. CAFOD has been involved in two particular areas of special
relevance to developing countries: the patenting of plant varieties
(Article 27) and compulsory licensing (Article 31).
Article 27, setting out the exceptions to patentable
subject matter and obliging member states "to provide for
protection of plant varieties either by patents or by an effective
sui generis system", is regarded by many developing
countries as threatening because the industrialised countries,
where most commercial plant breeding takes place, favour a rigorous
system based on the International Union for the Protection of
New Varieties of Plants (UPOV). Developing countries argue that
many of the plant varieties now in use have been developed and
conserved by small farmers and that this development has depended
on the free exchange of seeds and genetic material. A uniform
system of plant breeders rights—as proposed by UPOV—would
not recognise the historic contribution of farmers and would inhibit
the conservation of seed and exchanges by farmers and lead to
further genetic erosion.
Article 31 of the TRIPs agreement deals with
the use of a patented process or product without the authorisation
of the owner of the patent. The requirement to obtain authorisation
from the right holder on "reasonable commercial terms"
may be waived in cases of "national emergency or other circumstances
for extreme urgency or in cases of public non-commercial use".
CAFOD believes that this article thus allows developing countries
to manufacture drugs to combat life-threatening diseases. We know,
however, the United States has exerted bilateral pressure on South
Africa to prevent it going down the compulsory licensing route
for the manufacture of anti-AIDS drugs. South Africa can make
the drugs available for a sixth of the cost of importing the drugs
from the US patent holder. There needs to be explicit recognition
and political support for this legitimate use of compulsory licensing
in any revised TRIPs Agreement.
CAFOD believes that countries should also be
free to decide their own intellectual property regime, including
the option not to patent life forms and to secure farmers' rights
to save seeds from one harvest for the next. This could be agreed
as part of the TRIPs review within the built-in agenda.
The Review of Article 27.3(b) on biopatenting,
however, is likely to be limited in scope owing to pressure from
the United States to limit the review only to implementation and
to exclude the provisions themselves. Most developing countries
want a review of the provisions because this could open the way
for revision of the text.
There is concern that, in the absence of any
agreement in Seattle, the 1 January 2000 deadline for the implementation
of the Uruguay Round TRIPs agreement still stands, opening the
way for a potential avalanche of dispute settlement cases by northern
governments against southern governments which have not had the
time or resources to comply by the deadline.
IN -BUILT
AGENDA ON
AGRICULTURE AND
SERVICES
In Seattle, developing countries showed almost
unanimous suspicion of the EU's position on agriculture, claiming
that its emphasis on the "multifunctional" (non-trade)
aspects of agriculture was merely a smokescreen to enable the
EU to maintain high levels of agricultural subsidies. These encourage
food dumping on world markets, undermining domestic agriculture
in numerous developing countries.
The EU could go a long way toward putting these
doubts to rest, and rebuilding trust within the WTO, if it were
seriously to address developing country criticisms of the Common
Agricultural Policy. This would mean analysing its impact on development,
rather than merely treating the talks as an exercise in trade
negotiations whereby any "concession" requires a reciprocal
concession from the developing nations, from the Cairns group
of agroexporters or from the US.
The potential outline of a future agriculture
agreement can be seen in the successive drafts circulated in Seattle.
These were largely aimed at bridging the gap between the US and
Cairns Group of agroexporters, who wanted the elimination of agricultural
subsidies, and the EU which wanted a form of words which encouraged
reduction but not elimination. However, many developing country
concerns were not addressed in the drafts, notably anti-dumping
practices, the US' use of export credits and the absence of any
reference to tariff peaks which discriminate against southern
agricultural exports.
The greatest disappointment was perhaps the
failure of the text to make the objective of meeting food security
central to global agricultural trade. This could happen through
the creation of a "food security box", enabling developing
countries to introduce measures to defend food security, for example
of peasant farmers, without fear of breaking WTO rules.
ZERO-TARIFF
ACCESS TO
NORTHERN MARKETS
This issue was widely discussed in Seattle.
CAFOD supports the British government's call for zero tariff access
on all (not "essentially all" as suggested by the EC,
which could exclude bananas, beef, sugar and rice) imports from
the 48 least developed countries. In the absence of a generalised
round of trade talks, following the collapse in Seattle, such
a step, preferably taken by all the major industrialised nations,
would be an important symbol of a change of approach form Seattle,
and a good way to begin rebuilding the mutual trust and respect
that was lost there.
Duncan Green,
Catholic Agency for Overseas Development (CAFOD)
January 2000
69 Not printed. Back
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