Examination of witnesses (Questions 325
- 357)
THURSDAY 18 MAY 2000
THE RT
HON ALEC
ERWIN MP and MR
TSHEDISO MATONA
Chairman
325. Order, order. May I first of all say, Mr
Erwin, how very delighted the Committee is that you have found
time to come and give us evidence this morning. It is very important
for us in our inquiry in trying to understand and make recommendations
on the future of the World Trade Organisation's conferences on
the next Round for the WTO following Seattle and what it means
to developing countries such as your own, and of course your neighbours
in southern Africa and therefore you give us a very much needed
insight into the difficulties which the Round faces. We know that
you were particularly effective in Seattle and we are very anxious
to hear your point of view so that we can understand it and include
it in our recommendations to our own Parliament and to our Government.
So thank you very much for making the time in what is a very busy
schedule I know during the Presidential Visit to this country.
I think all the Committee would like to say how much we thank
you for coming and look forward to your evidence. I understand
that you do have an opening statement and then could I ask you
in your opening statement perhaps if you could answer the first
question which we had in mind? What do South Africa and southern
African countries want out of the new Round? What does SADC, southern
Africa and South Africa want to see the outcome to be from the
Seattle Round?
(Rt Hon Alec Erwin) Thank you very much and thank
you for this opportunity to speak to you because I think it is
very important that we start to get a more common understanding
between the developed and the developing countries. Very briefly,
if I may, I think as we built up to Seattle there were slightly
differing approaches amongst the developing countries. There were
those countries that are themselves more active in trade and are
industrialising, and South Africa would be one of them, that had
increasingly come to the view that a balanced Round was important.
By that we meant that the Round should cover a range of issues;
industrial products, agriculture, the so-called implementation
matters, the actual workings of the Uruguay agreement. We were
prepared also to address in practical ways investment, competition
and, in South Africa's case, were also prepared to address matters
such as labour standards, although we could speak on that at some
length. We argued that such a Round was the only way we could
address some of the real imbalances that exist in the world trading
rules and system and that any attempt to deal with these matters
issue by issue would not be successful. We had to find a balance
of matters where there could be a trade-off and redress that.
We began talking to many of our colleagues in the developing world
and I think what was important and interesting was that by the
Seattle meeting this view of a balanced Round, as we call it,
or an extensive Round, a comprehensive Round, was shared by most
of the leading developing countries. There were still, I think,
on the part of many others some reluctance, some reticence, some
nervousness about whether this, in fact, would be a useful approach
to take, but in the actual proceedings of the Conference I think
very considerable progress was actually made. For the developing
countries, particularly the grouping I am speaking about that
advocated this Round approach, we would have accepted the outcome
of Seattle if all of the working group texts had been finally
processed and pulled together. In fact I can say with some confidence,
certainly for ourselves, Brazil, India, Nigeria, Egypt—we
had been interacting very intensely—all of us would have
been quite pleased with that and felt that there would have been
real achievement that would have taken place. So what we have
been looking for, very briefly, is the following. We are prepared
to deal with industrial products: not quite in the format that
the EU put it forward, we would want some fairly focused attention
to be applied to specific sectors that are of importance for the
developing world, to deal with particular problems of tariff escalation,
tariff peaks in the industrial product area. In agriculture, clearly
we want to implement the Uruguay agreement and a text that emerged
in Seattle which we felt was real progress on all sides. With
regard to implementation, we need to address a range of issues
such as TRIMs and TRIPs outstanding matters, but we also have
to address the actual workings and implementation of anti-dumping
and countervailing duties, not to change these fundamentally but
to address very specific issues which we can discuss if you wish.
With regard to the outstanding issues on services we all agree
we should continue to negotiate that and we should continue to
look at issues like electronic commerce, IT, and new forms of
trade. On investment, South Africa—and I think we have some
support for this—would be prepared to enter a real dialogue
on that, with a view to moving towards some form of negotiation.
The approach would have to be from the perspective of the developing
countries and we can elaborate on that if you wish. South Africa
and some of the other developing countries would be prepared to
look at competition policy; it is increasingly important, but
our assessment is that this is not going to be on the agenda right
at the moment. With regard to labour standards, a text was worked
out in Seattle in a working group. We think that was a fair and
reasonable text. The balance that has to be struck is you cannot
use labour standards as an actionable item—it would cause
considerable problem in the world trade system—but there
has to be some harmonisation between the ILO Conventions and the
WTO systems. This is a position South Africa has advocated quite
strongly for a long time now and I think that text in Seattle
attempted to get that. So in short, Chairman, I think the developing
countries were well organised, generally speaking, for Seattle.
We were very clear in what it was we were wanting and we put forward
those views and I have briefly summarised what they are. It is
quite an extensive range of issues.
326. Yes, in other words you are talking about
a fairly comprehensive Round, not a narrow Round?
(Rt Hon Alec Erwin) It is essential in our view that
we do this. We have to be realistic and understand that there
are new political pressures in Europe, the United States. Our
view is that those pressures will grow and in regard to agriculture,
given the European structure of agriculture and the particular
interests of agriculture, trade negotiators will need to trade
off agricultural concessions for others.
327. Yes.
(Rt Hon Alec Erwin) So unless you have this Round,
you cannot get the balance of tradeable issues or negotiable issues
that can unlock the process. Whilst some important progress is
being made in Geneva—the WTO is certainly functioning and
moving—I think most of us feel that we are now discussing
matters in agriculture which are far back from where we had got
to in Seattle, so we are starting from square one. And we will
not make major progress in agricultural negotiations unless you
can trade this off against other factors in the world trading
system. But the obstacles in agriculture are probably, in our
view, along with the tariff escalation, two of the most severe
obstacles to development of the world economy today.
328. Yes, right. May I invite you to introduce
your colleague, Mr Matona—have I got the pronunciation correct?
(Mr Matona) Fine.
(Rt Hon Alec Erwin) Yes, sorry, Mr Matona is the Director
in charge of multilateral negotiations in my Ministry and he is
the leading negotiator for multilateral issues.
329. And I join my welcome to Mr Erwin to you,
Mr Matona. Thank you very much for coming.
(Mr Matona) Thank you.
Chairman: I am going to invite Mr Rowe
to lead us on the first of the questions, but we will all be joining
in, I think.
Mr Rowe
330. Well, I must say, you gave us a rather
more positive view of Seattle than we have had up until this point,
but I wonder if you would just like to tell us a little bit about
your experience of the negotiations at Seattle and of the preparatory
process for it? We would be very interested to hear from a leading
protagonist country what your experience was.
(Rt Hon Alec Erwin) The preparatory process was log-jammed.
Not a great deal was achieved in the pre-Seattle process in Geneva.
Of course there was a massive amount of work and things were done,
but it was log-jammed and the coming together of the Ministers
gave us an opportunity to go beyond the preparatory process. The
problem with Seattle was that at the end of the day the conference
was not well-managed, so accordingly the processes which are inevitable
in our view, such as so-called Green Room processes, unlike the
previous meetings at Singapore and elsewhere, we never had a chance
to report back to all countries. So in Africa's case, the fact
that you had in the Green Room South Africa, Nigeria, Ghana, Morocco,
Tunisia, Egypt, Lesotho, we along with other developing countries
made considerable progress in that and in the working groups,
but we were never able to get back to our African colleagues,
all of us, and say: "Look, this is what is happening".
As a result there was a complete breakdown of the information
flows, quite legitimate frustration by the island states and by
many African countries and the considerable achievements in the
process were just lost. So it was frustrating. As I said, all
of us agreed that what was actually achieved in working groups
and in the Green Room, from the developing country point of view,
was considerable. This got lost because we were never able to
report it back. The Conference closed in a very peremptory and
abrupt way and in the final Plenary it was impossible to report
back what had actually been done. So it was only the 30 or 40
countries that are the real active players in trading negotiations
that knew what was happening.
331. Given that collapse, what do you think
should happen now?
(Rt Hon Alec Erwin) We are convinced that we should
be moving as rapidly as possible back to a Round and we do not
share a view which is often put forward that we must wait for
the United States elections. If we do that, we are going to wait
for the French elections and everyone's elections. We cannot be
held hostage by elections. It is very, very important that the
European Union and the United States and the so-called QUAD do
not sit and watch each other. We should move. South Africa, Brazil,
Egypt, Nigeria and India have been working very closely on this
and discussing with Malaysia and many other countries. We are
of the view that we as developing countries did not have sufficient
weight to get the thing re-started and we have been hoping that
the European Union and the United States would make more progress.
They do not seem to be and we intend, as a group of countries
and others, to meet again and see whether we cannot start putting
more pressure on this process. We must move back to a ministerial
meeting and a Round. The developing countries do not have the
resources to keep up with the complexity of hundreds of little
negotiations spread over months and months in Geneva. All that
does is reassert the primacy of the QUAD and developing countries
get very frustrated by that and feel excluded.
Chairman
332. The QUAD being?
(Rt Hon Alec Erwin) The QUAD is the EU, the United
States, Japan and Canada; their nickname is the QUAD.
333. Thank you.
(Rt Hon Alec Erwin) Inside the invisible.
Chairman: We have to get used to these
terms as we go along. Mr Worthington, would you like to ask a
question?
Mr Worthington
334. We have covered the question I was going
to ask, but what strikes me about what you say is that there is
a huge chasm between what you, on behalf of many developing countries,
are saying about what you need and what many lobbying organisations
in the world are saying that you need, who are campaigning for
the collapse of the WTO, seeing globalisation as an alien force
and so on and so forth. How are you going to square that, because
the pressure we come under in terms of lobbying is from those
NGOs? How has that chasm come about?
(Rt Hon Alec Erwin) Let me make two points. Firstly
that the amount of resources that developing countries have to
apply to keep track of this is considerable. In South Africa—and
we must thank the European Union and the negotiations we have
had with the European Union—we have had to build a capacity
we never had. So the new democracy over the last five years has
built young people like Mr Matona and the negotiators and we had
to put 40 people in our delegation to Seattle. Very few developing
countries can do that, but there are a number who can and it is
those more active ones that I have just been mentioning that have
considerable capacity and play an active role. I want to make
that point, because the greatest concern we had about Seattle
was that this was not a protest about developing countries. This
was essentially sociological protest problems of the developed
world and most of us that were there, the South African delegation,
six or seven years ago had also been protesters, so we were used
to tear gas and other things and we were out talking to the protestors
and they were of the view that they were helping us. We said:
"No, not at all. If the WTO collapses, we collapse with it".
And I think this is something that is not well appreciated, the
speed with which the developing countries are entering the WTO.
It is precisely because they know that unless we get fair, transparent
and equitable multilateral rules, then the imbalance in the world
economy will get worse, not better. The commitment to the WTO
by the developing countries is massive. The protest groups here
that say that it is working against us, of course there are aspects
that are working against us, but we will negotiate that. We do
not need anyone else to negotiate that for us; we will negotiate
that.
Ms King
335. In terms of the way forward, obviously
one of the key issues is going to be how the decision making process
is reformed and I just wondered which of the options you were
in favour of if we are going to see the combination of accountability
with transparency. There are various options that have been put
forward, but are you going to continue with the consensus approach—which
obviously has not worked—or constituency-based, or regional
approach. I just wondered more specifically which do you favour?
(Rt Hon Alec Erwin) In the WTO, it will have to be
a consensus approach. It is not going to be possible to move to
anything other than that. That would be very destructive of the
basic architecture of the WTO. We would tend to share a view which
I think India has articulated very well and that is to not try
and structure this too much, to essentially allow natural constituencies
to form. This is what you have got and these constituencies sometimes
cross over. We often want to and need to talk to the United Kingdom
or Sweden or other countries who play an important role within
the European Union or elsewhere, so our view is that when you
have a negotiation, make sure there is enough time for consultation
and that there is clear documentation and time to consider it
and prepare it. If we do that, then we as developing countries
will form natural constituencies and will talk to other groupings.
So we would not favour any attempt to over-elaborate the structure.
What has to happen is just plain process matters; documents, time,
time to consult, time to consider and then the consensus hot house.
Our view is that it is impossible to avoid the so-called Green
Room structure. At the end of the day those 30 or 40 countries
account for 80 or 90 per cent of the world's trade. They will
talk to each other; there is no way you can prevent them talking
to each other. They have to talk to each other, but as long as
they can then consult with broader constituencies that would be
very important. In the southern African development community,
South Africa is very conscious of the fact that with certain aspects
of trade what we want is not exactly what would be useful for
our fellow members of SADC so we have to have a dialogue about
that before we move into the multilateral arena.
Chairman
336. Would you say that the lack of preparation
and clarity in the papers prepared before Seattle was a major
contributory factor in the lack of success of Seattle?
(Rt Hon Alec Erwin) More time could have been given
but you may or may not be familiar with the fact that we of South
Africa, with UNCTAD—at the time we were President of UNCTAD—with
WIPO and with the WTO we had a number of meetings for African
negotiators, Ministers. We met as African Ministers in Algiers.
The developing countries were better prepared than we have ever
been. We can do better next time. The problem arose not so much
in our ability to prepare, but in the ability to consult during
the conference.
337. Right.
(Rt Hon Alec Erwin) And that was merely the political
mis-management of the conference.
338. No, I was really rather thinking of not
your preparation, but the preparation by WTO itself which was
distracted by an elongated process of selecting a new secretary-general
or director as we call him, and they had themselves not given
sufficient thought, and therefore preparation time, to enabling
them to make the conference in Seattle a success. Did you feel
that they had not thought through the process themselves?
(Rt Hon Alec Erwin) I think that it would have been
easier if the Director-General of WTO had been there from an earlier
time and been able to work through it. You have to have some central
process.
339. Yes.
(Rt Hon Alec Erwin) The problem is that the actual
conference is largely directed by the host country and the circumstances
with the protestors and the way in which the political process
was conducted in the United States made the conference structure
really very difficult. To knock out two days of a conference through
what happened makes it almost impossible to catch up. So we have
been saying do not over-exaggerate all the structural faults of
what was happening because most of it was a failure of the actual
five or six days conference. One of the difficulties you find
is that it is very difficult for Ambassadors or negotiators in
Geneva to do deals because you do not see everything at once.
So if you do a deal here, you are very worried that that is going
to jeopardise something there, whereas the negotiating context
of all the ministers together you are doing that balance at one
place, saying: "Okay, we give here and you give there".
It makes sense.
Chairman: That is very useful because
it has been put to us that the WTO itself was very distracted
before the meeting and therefore that was partly responsible for
its failure. Andrew Robathan wanted to come in.
Mr Robathan
340. Could I pursue that slightly more as well?
What you are really saying is that the host country's organisation
largely contributed to the failure of Seattle, not just the policing
which I understand was often inappropriate we would say, but we
have also heard for instance that the most basic things like there
was no water available for delegates and actually if you are doing
a lot of talking, as we politicians know, water is quite necessary.
Is that fair and were the physical arrangements available within
the conference centre? Is that fair, that it was a badly organised
conference centre?
(Rt Hon Alec Erwin) Yes, there were many logistical
and technical problems which made things a lot worse. I mean,
the African group found they had no translators at crucial times.
When you are trying to get something through in a matter of an
hour, hour and a half not to have translators is extremely problematic.
It is very hard to tell whether the surrounding circumstances
impacted on the internal logistics or whether there just had been
insufficient account taken of the complexity of these negotiations.
If you compared it to, what was it, three years or so in Singapore
where it was very easy to get access to other people where you
had a common place and everything, you can see the importance
of just physically being able to talk to other delegations in
the first two or three days of the meeting which are critical,
because that is when you are coming together. We could not get
to the hotel where the Egyptians were and when we did we got tear-gassed.
Good fun, but it meant it was very difficult to start talking
about practical problems, because in Africa, Egypt and South Africa
we play a very important role. And Nigeria, we could not get to
the Nigerians they were outside the cordon sanitaire so
we never saw the Nigerian Minister for three days. Whereas to
get Africa together those countries had to be talking and saying:
"What do you think? What is happening?". We could not
talk.
341. That is very interesting. If I could take
you back to your view on the protestors because actually whatever
anyone thinks, in the media's mind and the public mind Seattle
was about protest and the protestors have not gone away and indeed
the view of many people about globalisation, etcetera remains
the same, which I think is very unfortunate. Incidentally, I have
also been tear-gassed once or twice so I know how it feels. You
said that you were saying to them: "You are not helping us.
You are not helping developing countries". Do you think it
is possible for developing countries like yourself to get this
message across to many NGOs who still believe that the whole process
of WTO is to the detriment of developing countries? And actually,
it is in your hands and the hands of other developing countries
to do that, I am sure.
(Rt Hon Alec Erwin) It is not easy. We in South Africa
have worked particularly with Sweden and addressed a number of
meetings with NGOs present prior to Seattle. It was a very healthy
and constructive process, but I think these are circumstances
which cannot be lightly dismissed. Some of the protestors exhibit
what, from our perspective, will end up as being a straight protectionist
position, so whatever they may dress that up as, it does not take
away from the fact that this is an attempt to protect their lifestyle
or their economy; perfectly legitimate. The real challenge facing
the world economy at the moment is that it will only bring about
development and growth if major structural changes are made in
the economies of the developed world and that is going to be a
very difficult political process for you. We believe and I think
you cannot solve these matters through protest as I said in Seattle.
You cannot have a dialogue with hundreds of different organisations;
it is not a dialogue, it is a shouting match. So I think a great
deal of attention has to be paid to how you deal with the legitimate
concerns of your own civil society. In South Africa, being more
alert to these problems because of our very recent history, we
put massive effort into talking to our civil society before Seattle.
Talk, talk, talk; we had workshops, conferences with every shade
and opinion of NGO. We worked with the union movement and our
delegation consisted of leaders from the union movement and from
business and from civil society and we were quite relaxed. The
union leaders went and marched in the protest. When they finished
the march they came into the delegation. The rules were clear
though; when you are in this delegation you speak as a South African
government position which we have adopted through a fairly transparent
process. Out there you can shout at us, but inside, you know.
But it helped. It allowed our union people to talk because South
African Unions are alive to the fact that in the United States
unionism and European unionism, some of the anti-WTO is protectionist
and that will be inimical to the interests of the developing world
if it is allowed to carry on. But we should encourage the dialogue
between the unions of the south and the unions of the north so
that we come back to concepts of solidarity. We are going to solve
these problems by increased solidarity. We are going to solve
these problems by increased solidarity, not by less solidarity
Chairman: We want to turn to European
Union matters and I am going to ask Mrs Barbara Follett to lead
us on those, but of course you have had a considerable experience.
We have been following the European Union/South African trade
negotiations with great disquiet and I know that you eventually
came to a compromise agreement which, from my judgment anyway,
was not one which I would be proud of in terms of the European
Union, because it did not give South Africa—I think—a
fair chance to trade properly with Europe. But Mrs Follett will
lead us on these matters.
Barbara Follett
342. I would just like to say, welcome. It is
nice to see you here. I would like to refer back first to something
you said in your statement in Seattle. You say: "It is not
clear to any of us whether this whole badly managed exercise was
designed to give us some insight into the pressures that the US
and, to a lesser extent, the EU experience." Could you just
amplify that very slightly for me; I am not quite sure what you
mean?
(Rt Hon Alec Erwin) I think that is what I mean.
343. Just that?
(Rt Hon Alec Erwin) Yes. I do not think it was a wise
political choice that was made.
344. Quite. All right, we will leave it at that.
How do you think the EU's negotiating position could be changed
to a more politically realistic one which could lead to an agreement
which could benefit developing countries?
(Rt Hon Alec Erwin) In regard to the WTO context?
345. Yes.
(Rt Hon Alec Erwin) The European Union has to change
its agricultural policy. I think it has no option anyway, but
this matter is of massive concern to developing countries. It
is an obstacle to growth for the developing world. The developing
world inevitably has to, in many cases, first move from an agricultural
base in its developmental process and the current distortions
in agriculture, as a result of this protectionism. The United
States is not totally free of this either and of course Japan
and Korea are also major players in this. We have to open up the
agricultural trade because what it will do is precisely what it
did within the European Union. Anyone who has just the briefest
of brief looks at the trade in agricultural products will see
that the most rapid growth by far was within the European Union
in the last three or four decades. We need to have the same thing
happening between south and north and it is not happening at the
moment. So you have to change on agriculture.
346. What hope do you have that there will be
any change on agriculture, as an outsider?
(Rt Hon Alec Erwin) Well, the balance of negotiations
in the world is changing. When India, China, Brazil, South East
Asia, South Africa, Nigeria, Egypt come together we are a significant
market for Europe so we are going to do some deals and I do not
think that Europe will be able to hold out on this matter forever,
but the quicker it changes the greater contribution it will make
to development in the world if we could get a realistic approach
on agriculture from Europe.
Barbara Follett: It is refreshing to
have such an optimistic view.
Chairman
347. What agricultural products would you pick
out as the most those that have to change? Would it be sugar,
rice? Would it be alcohol, would it be products like peaches or
fruits? Which ones would you suggest?
(Rt Hon Alec Erwin) The major areas will be basically
citrus products and sugar.
348. Right.
(Rt Hon Alec Erwin) Sugar, speaking for southern Africa,
if we could get the world sugar market better organised it could
have major and immediate beneficial effects for Mozambique and
for Zimbabwe. Currently it is almost suicidal to expand the tremendous
potential of the Mozambican economy for sugar because we would
just alter the world prices. So the sugar production in Europe
is too expensive, too inefficient and should be taken out of the
market. That would open space for really important developments
for our neighbours. In South Africa itself we are taking sugar
out of the sugar market, but we are fortunate in being able to
do that by processing it into complex chemicals. That is not what
most developing countries can do; they still need to sell sugar.
Sugar is important. Citrus is another very important product,
bananas, tropical fruits. Deciduous fruits, it is a limited number
of developing countries that would be into that. South Africa
would be one, Argentina, Chile, but not as fundamental I think
as some of those basics.
349. And rice?
(Rt Hon Alec Erwin) Rice; I have to be honest with
you, we are less familiar with the trading patterns of rice in
South Africa. We just do not know much about it, but it is obvious
that rice will have to be liberalised as well.
Chairman: The highest priced rice is
produced, I think, in Japan. I think we need to move on now. Would
Mr Piara Khabra like to lead us?
Mr Khabra
350. The questions I was going to ask you, you
have partly answered actually. After what happened at the WTO
Summit in Seattle, the developing countries were not happy with
the situation. Since then there are two arguments which have been
put to the Committee in favour of countries outside the EU grouping
together to form common negotiating positions. First it would
enable poor countries to pool resources together and secondly
it would provide solutions to the problems of co-ordinating and
managing the discussions between the Member States of the WTO.
The question is, is there any realistic possibility of countries
outside EU grouping together to form common negotiating positions
for WTO negotiations? How important will such groupings be to
the success or otherwise of the next Round?
(Rt Hon Alec Erwin) You do have groups that are formed
in the WTO. They are not as strong, but in agriculture the so-called
Cairns Group plays a very important role. Most of those countries
are developing, although it includes Canada. The Cairns Group
certainly plays an important role and I think the Cairns Group,
because it includes countries like Thailand, Argentina, South
Africa recently joined, Brazil. You have a number of developing
countries in it as well so it played a slightly bigger role than
just agriculture in recent times. There is a loose grouping that
I have been mentioning from time to time. We do not try and form
ourselves into a tight group because we each have slightly different
aspects, but we have been consulting more than we ever did before,
and that would be Brazil which also then interacts with MERCOSUR,
South Africa which interacts with SADC—we keep our SADC
partners briefed about these discussions—Nigeria which now
interacts with ECOWAS, which is the West African group and Egypt
which then speaks to a big group called COMESA in Africa. And
then we have been speaking to India and we keep close contact
with Malaysia and other countries, so these regional groupings
have tended then to have the main economies in that group start
to talk to each other and I think this offers very considerable
hope for a more balanced negotiation. We keep our lines of contact
open to the EU and to the United States, continuously open, but
we talk to each other. We never used to before; we now talk to
each other a lot.
351. Are there any conflicting interests within
the developing countries as well?
(Rt Hon Alec Erwin) Yes, the developing countries
are not a homogeneous group of economies and the simplest way
of seeing the divide would be, in my view, the giant economies,
the Indias, Chinas and others can afford to be much more resistant
because their trade is not such an important part of their economy.
Then you have the economies that are making changes and are effectively
entering the global markets—South East Asia, South Africa,
Brazil—who have put a lot of effort into the World Trade
Organisation, and then you would have countries that have been
unable to get into this process and are being marginalised more
and more who are the least developed countries, many countries
in Africa, and these economies are in different positions. The
South African economy wants to trade more and is prepared to open
its markets to the European Union to do so, but for many of our
neighbours to do the same thing would be suicidal for their economy
unless they make other structural changes.
352. Do you think that these conflicting interests
within these developing countries are of disadvantage to the developing
countries and the under-developed countries and the poor countries
to negotiate better trade terms with the highly industrialised
countries?
(Rt Hon Alec Erwin) The overall commonality of the
developing country position is more powerful than the division,
so generally speaking I do not think it is a major problem. There
is a practical problem; to be an active negotiator you have to
have the resources and this is not necessarily a shortage of funds
it is just the political decision-making that is necessary to
apply resources. You have to restructure your government and you
have to restructure either your commerce ministry or your trade
ministry to have more negotiators in it.
Chairman: Thank you. Mr Rowe?
Mr Rowe
353. I must say, I am sure I speak for us all
to say that we were right to think that this would be a useful
session. It has been wonderfully informative. Going to this business
of resources, I mean it has been put to us that, for example,
one of the most useful things that the developed countries could
do would be to put more resources into a common resource base,
whether it is an information base or whether it is for training
negotiators or whatever. I think we would be very interested to
hear what you think about that as a proposition and, if so, what
sort of resource you would want?
(Rt Hon Alec Erwin) We would be very supportive of
that. The support budget of the WTO is ridiculously small. The
benefits of support are massive. As I outlined to you earlier,
the work that we did in Africa prior to Seattle was funded partly
by South Africa and partly by UNCTAD, some Scandinavian countries
helped us out. The value of it was massive. I think also that
the training facilities in WTO have to be expanded. Mr Matona
is a graduate of that. I do not know how many we have sent; we
have sent about 12 people to the WTO training courses. Most of
our top negotiators from 1994—but it is a political choice
you must make, so in 1990 we made a political choice to send people
out for training. The results now are very, very experienced negotiators.
But we were lucky; people funded us so if Zimbabwe or Tanzania
or Nigeria want to do the same they are going to have to have
someone to help them. So we would be very supportive of a pool
of support.
354. May I ask Mr Matona to tell us just a little
bit about the nature of that training he underwent?
(Mr Matona) Thank you very much. The Minister tried
to give a sense of the increasing complexity of the WTO system
and therefore representing your interests often requires a very
good understanding of the details and the intricacies of the various
agreements and this thing is just growing and growing all the
time and therefore that training at least allows you to have a
good base of understanding, the ability to interpret the agreements
and in that way negotiate. So it has been very, very useful. Many
governments in Africa, I know, find it very useful as well. The
WTO can only take a limited number of candidates for its course—no
more than 25 at any given time—whereas the demand is much
greater, particularly as more countries accede to the World Trade
Organisation.
355. And is the value of the training partly
and mainly because what you are actually dealing with is the main
issues? If you took it out of the WTO and put it into an academic
institution for example, would it then lose its effectiveness?
(Mr Matona) Not really. For example, if one looks
at a subject like investment, the value of having multilateral
rules of investment, this is something that could be taught at
an academic institution, but as opposed, for example, in Europe
and the United States, most academic institutions in the developing
world do not teach trade law. So you do still require specialised
training. Of course some of it is very peculiar, very specific
to WTO and can only be done by the WTO.
Mr Rowe: Thank you very much.
Chairman: Ms King?
Ms King
356. Do you agree with the concerns of some
developing countries who feel that they have not benefited sufficiently,
say, from the Uruguay Round—some of those concerns do appear
to be legitimate—and do you agree with the basic premise
of the WTO that free trade does benefit your GDP—presumably
you would not be doing it otherwise—but beyond that, how
do you make it trickle down to the poorest in society who are
disproportionately women, for instance? I would just make the
comment that your wonderful delegation here today does appear
almost exclusively male which shows how far women are cut out
of the loop. How do you make that transition to ensure that it
does reach the poorest?
(Rt Hon Alec Erwin) There is no doubt whatsoever that
virtually all developing countries—one would even say all;
even in countries like South Africa who have made massive changes
in the last few years we have major problems with the Uruguay
Round. So there is a fundamental imbalance in the outcome of the
Uruguay Round that has to be corrected urgently and that is the
thrust of what we are driving at in developing countries. We would
not interpret, and I do not think many developing countries interpret
the WTO as meaning that you must have free trade. We interpret
the WTO as meaning that you must have transparent, fair and equitable
rules around trade. The general view of most countries is that
liberalisation is important, but you must remember that in many
areas—services, investment—we are actually talking
about more regulation, not less, in order to make it fairer. So
I think we should not see the WTO, as is often projected, as some
simplistic Washington consensus, free trade loonies. It is a very
sophisticated institution and the most important I mention of
it is the transparency and equity of the rules that get applied.
That is crucial. As for trade's impact on the poor and on women,
this is really a matter for national economies to address. You
have to have programmes that counter the effects of globalisation
which have a tendency to exacerbate wealth differences if they
exist. So you have to have conscious policies to correct that.
We, in South Africa, I think on gender have done well; this delegation
looks a bit weak, but I think we have very active programmes to
ensure that women participate in the economy, in technology, in
agriculture and we have in our Department, in the trade negotiation,
we make absolutely sure that we train everybody—men, women
and in South Africa's case, also black and white which is crucial.
But those are responsibilities of the nation state. They are not
going to be solved automatically by a multilateral institution.
Ms King: Thank you. That is very useful.
Chairman
357. I am very conscious that we do not want
to make you late for your appointment in the Department of Trade,
but could I ask a last question about what we call TRIPs which
are trade related aspects of intellectual property rights? To
what extent does the United States decision to drop the threat
of trade sanctions against countries such as South Africa planning
to produce cheap, generic properties of existing western medicines
alleviated the concerns of the part of South Africa in relation
to the implementation of the TRIPs agreement?
(Rt Hon Alec Erwin) Well the question shows just how
powerful the American machine is to influence the nature of the
problem because that has never been the dispute between us. It
is a very important dispute we have had and the Americans have
misread it continually, deliberately or unintentionally. But the
point that South Africa made was that we wanted to prevent the
segmentation of the drug market, so what we said was that if we
can show that we can get the same patented drug—not generic;
very separate—cheaper in another market we reserve our right
to import that, because the major problem in the drug market is
that prices are very high in South Africa, lower elsewhere. They
segment the market which is a maximising strategy for profit and
we say: "No". In all other products, what we call parallel
imports for drugs would not even raise an eyebrow. So once you
sell your drug into the world market we should be able to trade
it in the world market. Now because of the power of the pharmaceutical
and other lobbies in the TRIPs agreement, this thing called exhaustion
is just left there, it is not resolved. So we said to the United
States: "Look, this matter is not resolved. We say that you
have exhausted your patent right and we are going to buy in the
cheapest market"—the patented product, not the generic—"and
if you want to take us to WTO, take us to WTO." Well, they
have not because they would lose. You know, this is the matter
that has been at issue between us and we all know that we will
have to solve this in the TRIPs agreement. At what point is your
patented right exhausted? Now that it is in the free market, provided
you do not violate the intellectual property then you should be
allowed to trade it. That is the issue we have been arguing with
them. Generics is another matter, and they have conflated the
two because it has been an attempt to show that South Africa is
trying to lower the standard of drugs. It is just nonsense; we
have never tried to do that. Where generics exist they must come
onto the market. We were grappling with another problem which
is market segmentation which is adverse to the developing world.
We need to be able to trade where the price is lowest.
Chairman: Yes, absolutely right. We must
release you, but thank you, both of you very much indeed for coming
to talk to us. You have given us an aspect to the World Trade
Organisation negotiations which we could not have got from anybody
else. Thank you very much.
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