APPENDIX 2
Memorandum submitted by The Circle of
Friends (UK) for the promotion of a New Global Human Order
INTRODUCTION
(i) We are pleased to submit a Memorandum
on "After Seattle: The WTO and developing countries"
to the International Development Committee of the House of Commons.
We are glad to contribute to the process.
(ii) This Memorandum is based on research
and interviews to ascertain the main areas of concern for developing
countries. The Memorandum is therefore a presentation of our research
findings from and our recommendations based on those findings.
(iii) The Circle of Friends (UK) was not
surprised that the Seattle Ministerial Meeting collapsed. The
preparatory process was difficult and contentious. Two weeks before
the meeting, there were still substantial differences on very
many subjects proposed for inclusion in the agenda of a new Round.
Since September 1999, many developing countries were saying they
felt excluded and did not want a new Round. The scale and manner
of the collapse were surprising.
(iv) The UK Government is uniquely placed
to contribute to discussions on reasons why Seattle collapsed
and on the way forward. This belief is because:
(a) The UK Government's initiatives on debt
write-off and on debt-relief demonstrate its bona fides and
leadership on issues that are very important to the developing
countries.
(b) The UK Government has a unique place
in the international system. It is an important member of the
Commonwealth and has good relationships with developing countries
in the Commonwealth. It is also a key member of the European Union
and it influences EU trade policy. Also, in the EU, the UK has
very good relations with ACP (African Caribbean and Pacific) countries.
(c) Last but not least, the UK has bundles
of unique relationships with the USA in military, political and
cultural affairs.
(v) We believe that the WTO can make very
significant contributions to poverty reduction in developing countries.
The developing countries at Seattle questioned that potential
when they aired their grievances with the WTO. The challenge is
to find a way to get the WTO and developing countries moving in
the same direction.
(vi) We wear two hats in this Memorandum.
One is our concern with the development process in the countries
of the South. Our members originated from that part of the world.
Our other hat is as British taxpayers. We are convinced that the
UK could play a major role in clearing the problems currently
facing the WTO. We are therefore interested in the Committee's
contribution to UK government policy on the WTO.
SPECIFIC PROPOSALS
There were many causes of the collapse at Seattle.
We believe there are five main issues, from the developing countries'
perspective, that contributed to the collapse of the Ministerial
Meeting in Seattle in November 1999. These are:
A. Non-transparent and undemocratic nature
of the WTO.
B. Sovereignty issues.
C. Imbalances in the multilateral trading
system.
D. Power and influence in the WTO.
E. Implementation issues.
A. NON-TRANSPARENT
AND UNDEMOCRATIC
NATURE OF
THE WTO
1. A major and widespread complaint of developing
countries since September 1999 was that they were excluded from
meetings and discussions affecting their interests. They believed
they were serving the WTO system rather than the WTO to serving
their interests. They complained that they were excluded from
informal meetings that took place in the "Green Room".
Canada, a developed country, made a similar observation.
2. At the informal Heads of Delegations
meeting in Geneva on 13 November 1999, the Canadian representative
observed that "discussions were taking place in vertical
silos and there was a need for linkages."
3. Mr Clement Rohee, Chairman of the Group
of 77, released a press statement from the World Trade Organisation
(reference WT/MIN(99)/ST/111 2 December 1999). He said on page
2, "As I said at the beginning of this presentation, Guyana
comes to Seattle with a clear objective in mind, that is to bring
about a positive and balanced outcome at this Third Ministerial
Meeting of the WTO. This can only be accomplished in an atmosphere
of transparency and inclusivity. No `Green Room', `Blue Room'
or whatever room can accomplish this."
4. GRULAC (the Spanish acronym for the Latin
American and Caribbean group of Ministers at the WTO meeting)
press statement said, "As long as due respect for the procedures
and conditions for transparency, openness and participation that
allow for adequately balanced results in respect of the interests
of all members do not exist, we will not join the consensus required
to meet the objectives of this ministerial Conference."
5. The African Ministers issued a strong
statement complaining that African countries were excluded from
the discussion of issues affecting their future. They wanted transparency.
B. SOVEREIGNTY
ISSUES
6. National sovereignty provides the political
and legal basis for participation in the WTO. National sovereignty,
democracy and good governance are fundamental to improving the
lives of people in developing countries. Democracy provides the
political "glue" that holds together the political,
economic and social processes necessary for development. Good
governance provides political stability, complements democracy
and is a requirement for assistance from many institutions.
7. Therefore, it is in the WTO's interest
to support democratic, responsive governments in developing countries.
Constituencies must believe democratic governments can protect
their interests. Democratic processes and a democratic culture
are still fragile in many countries. That was shown in Guyana
by events after the last elections. We therefore submit that the
Committee supports respect for national sovereignty and good governance
in developing countries.
8. WTO rules should complement the ability
of national governments to ensure effective protection of workers,
of the nation's health, the environment, consumers and other national
interests. Many developing countries believe the WTO impinges
on their sovereignty because it threatens their right to take
appropriate measures to protect food security in their countries.
9. They believe the DSB (Dispute Settlement
Body) restricts them from fending off threats from TNCs (Trans
National Corporations) eg on public health issues.
10. They also believe it necessary to discourage
a litigation culture in the DSB thereby preventing some developed
countries from imposing their laws on developing countries.
11. Many individual members of the G77 Group
believe not only that they cannot protect their sovereign rights.
But neither can they find refuge within the G77 Group. They do
not have their own secretariat. They cannot adequately protect
their Group rights. They cannot adequately advocate their agenda
of economic growth, social development and south-south co-operation.
They lack the necessary organisational framework to protect and
to implement issues affecting their sovereignty.
12. Many developing countries undertook
comprehensive structural adjustment programmes in collaboration
with the International Monetary Fund (IMF) and the World Bank.
In many cases, the structural adjustments came before access to
the WTO and before the Uruguay Round. Many governments, for example
Guyana, found it difficult to mobilise national political support
for the adjustment and for the liberalisation programmes. The
population had to be convinced that their government was taking
the right path because the adjustment process brought bad effects
for many people in Guyana's productive sectors.
13. There are important linkages between
governance and poverty. Democracy alone is not sufficient but
it can channel the aspirations of populations. It can influence
the way the society shares the benefits of success. We envisage
the Committee supporting good governance and democracy. Good governance
is central to establishing the legitimacy and sustainability of
the development process. The Department for International Development
(DFID) does good work in Guyana, the Caribbean and in many other
regions. The International Development Committee has an interest
to see that DFID's contributions to good governance, democracy
and protecting national sovereignty are not squandered by the
effects of WTO policies. National sovereignty underpins the whole
development process.
14. Many developing countries felt their
sovereignty threatened by the WTO, TNCs and the developed countries.
Specific issues were (a) the implications of TRIPs (Trade-Related
aspects of Intellectual Property rights), TRIMs (Trade-Related
Investment Measures), (b) the "coherence" proposals
to give the IMF, the WTO and the World Bank together more influence
on government policies in developing countries, (c) and the displacement
of developing countries' agenda for international trade policy
being displaced by those of developed countries and TNC's. (d)
The Bank's 1997 report "The State in a Changing World"
proffered the view that governments' proper role was to be an
effective facilitator of private sector-led growth. Many developing
countries felt threatened by that report. They thought the Bank's
view of the state as chiefly promoting macroeconomic stability,
labour market "flexibility" and the rule of law threatened
their sovereignty.
C. IMBALANCES
IN THE
MULTILATERAL TRADING
SYSTEM
15. Mr Supachai Panitchpakdi, Thailand's
deputy Premier and scheduled WTO Director-General in 2002, put
the views of developing countries at Marrakesh in September 1999.
He said they justifiably believed that the Multilateral Trading
System (MTS) had important systemic imbalances that worked against
the interests of developing countries. Mr Ricupero, Secretary
General of UNCTAD, at the same meeting strongly supported the
view that the Multilateral Trading System (MTS) had serious imbalances
working against developing countries.
16. Many developing countries perceived
themselves as working for the MTS. They wanted the MTS to work
for them. Examples of the imbalances include the case where the
United States of America (USA) had a waiver in agriculture in
the 1950s that should expire in 2003. That is a transition period
of 50 years. The transitional period for developing countries
in the WTO is generally five years. The USA also got a waiver
on cotton in the 1950s that later developed into the MFA (Multi
Fibre Agreement). The cotton waiver is still in effect more than
40 years later.
17. There seems to be an undue reliance
on market forces and technological fixes in the MTS. They will
not yield a more equitable economic order. The current trading
system is unjust and unstable. There is need for a system that
affirms equity and justice for all nations. At the practical level,
measures must be taken in trade to ensure a level playing field;
in finance, the need for a strengthened and more stable financial
order; and in competitiveness the developing countries' enterprises
need to be able to compete in world markets.
18. In the past, one measure of the usefulness
of trade Rounds was the overall growth in trade. Developing countries
believe that in real economic terms they have gone backwards because
of the imbalances in the trading system.
19. The Special and Differential (S&D)
Treatment rights of developing countries was endorsed in GATT.
These rights should be assessed to ascertain how they could be
enforced to enable developing countries to phase themselves into
the MTS. The S&D rights are principles established as an attempt
to alleviate some of the effects of the imbalances in the MTS.
Many developing countries felt increased pressures on them since
the Uruguay Round to limit the scope and significance of these
S&D rights. Developing countries see these rights as necessary
to promote the interests of their constituencies within the MTS.
20. Knowledge and technology are essential
to competitiveness. Access to knowledge and technology is more
difficult. S&D rights include the learning of the process
of development. Competition depended on development. Competition
required preparation, education and training. S&D helped developing
countries to learn how to compete.
21. Clear rules and an impartial arbiter
while important in implementing competition do not by themselves
make a great contribution to becoming competitive. There is need
for a collective agenda for developing countries in science and
technology. They call for a revisiting and amending of the TRIPs
(Trade-Related aspects of Intellectual Property rights) regime
of the WTO in order to make the global IPRs (Intellectual Property
Rights) regime more responsive to and supportive of development.
22. Developing countries were not allowed
to subsidise their industrial production but developed countries
like the USA and the EU could use large volumes of money to subsidise
their agriculture production.
23. There should be a Development Round.
Previous Rounds dealt with various issues. A Development Round
would deal with the development concerns of the majority of the
WTO members including the present MTS imbalances of the WTO. Some
imbalances are the result of previous Rounds of trade negotiations.
Some poor countries felt pressured in the Uruguay Round to give
up on "transitional" periods. A Development Round would
have the support of most of the members of the Group of 77. It
would be a harvest for the developing countries that have been
waiting for more than 50 years for trading imbalances to be rectified.
D. POWER AND
INFLUENCE IN
THE WTO
24. Power is a fact of life in all international
organisations. Relative power is used to achieve national interests.
In trade negotiations, it is market power that counts. The WTO
should be a rules-based system to develop trade. The WTO has defects,
some of which are set out below. Because of the power relations,
many developing countries felt that issues important to them were
not on the Seattle agenda eg market access, textiles and agriculture.
25. Developing countries felt that their
efforts to change or to get consistent interpretations through
the WTO General Council were blocked by the developed countries
withholding consensus.
26. Developing countries also felt that
the developed countries successfully insisted in the DSB on the
inflexible observance of time limits set in the rules when it
suited their cases. But in other agreements where time limits
have been set the time limitations have been ignored. That happened
in the workings of the Textile Agreement and the Textiles Monitoring
Body. In the financial and telecom services negotiations the deadlines
were reported as repeatedly extended until the demands of the
USA and the EU were met.
27. It is crucial for the progress of the
WTO that it functions more often on rules and less often on market
power. The WTO must be designed to achieve equitable objectives.
There is a danger that the WTO's influence would decline should
it continue to be run by power under a thin disguise of rules.
It would degenerate into an ineffective, inward looking institution.
It would abort its great mission. It is better that the power
problem is addressed and solutions sought than for the pretence
to continue and the majority of WTO members feeling frustrated
at the way the WTO worked.
E. IMPLEMENTATION
ISSUES
28. "Implementation Issues" is
a catch all category. It cuts across many of the topics raised
above. It is the general name for issues of great concern to members
of the Group of 77. It covers problems flowing from the Uruguay
Round, problems of market access to developing countries, the
lack of progress on issues of textiles and agriculture, the lack
of action to correct the imbalances and deficiencies responsible
for developing countries not getting the anticipated benefits
from the WTO, the increasing marginalisation of developing countries
in the international trading system. They also include the legal
problems many countries had in implementing the WTO agreements.
They include problems on anti-dumping and trade harassment, the
S&D issue and its application to the Subsidies Agreement.
Many of these issues were not intended by the Uruguay Round agreements
but arose from the way the Uruguay Round was implemented. Hence
the name "implementation issues."
29. Some of these "implementation issues"
may be one-off issues and may not be amenable to the WTO's general
procedures for solution. The developing countries have to prioritise
these issues. The developed countries should recognise that these
"implementation issues" were of such concern that the
developing countries did not want to move to a new Round until
these issues were settled. What was needed was a political acknowledgement
of these issues and a commitment by members to sit down and find
solutions to them.
RECOMMENDATIONS
30. We would like to see the International
Development Committee consider these matters:
A. Non-Transparent and Undemocratic Nature
of the WTO.
B. Sovereignty Issues.
C. Imbalances in the Multilateral Trading
System
D. Power and Influence in the WTO.
E. Implementation Issues.
31. First, if the Committee wants to take
an overall approach, we urge the Committee to press for the implementation
of a Development Round in the WTO. A Development Round would address
all the issues raised in this Memorandum including reform of the
WTO's decision-making system and processes; abolishing the "Green
Room" meetings. The WTO should be a member-driven, rules-based
system. Therefore, transparency and recognition of members' interests
are essential for the functioning of the WTO. A Development Round
would tackle all the "implementation issues" and injustices
to developing countries. A Development Round would have the support
of the members of the Group of 77, Commonwealth members, ACP and
Latin American countries. It could provide the rewards the developing
countries have been awaiting for more than 50 years. At last,
the imbalances of the trading system could be rectified. The WTO
could then move confidently on to a new Round of negotiations.
32. Should the Committee prefer a piece-meal
approach, we recommend two alternatives. Both alternatives could
be used. The first alternative is that the developing countries'
primary cause for concern is addressed. Therefore, the Committee
should ask that the WTO reviews the claims of exclusion from discussions
and decisions of the developing countries and that the WTO from
it becomes more responsive to their needs.
33. Our second alternative is that the widespread
disillusionment with the Uruguay Round be addressed. Therefore,
the Committee should recommend that the UK make strong representations
to get a review of the Uruguay Round. The review should be a stock-taking
before moving on to a new Round. The review is to learn lessons,
repair breakdowns and to inform negotiations in future Rounds.
The review should include (a) an analysis of the growth in trade
over the past 10 years to ascertain the level gains made by the
developing countries; (b) to make recommendations to correct injustices,
(c) an assessment of the level of protection of S&D rights
and where S&D could encourage development; (d) an evaluation
of the developing countries' call for revisiting and amending
of the TRIPs (Trade-Related aspects of Intellectual Property rights)
regime of the WTO in order to make the global IPRs (Intellectual
Property Rights) regime more responsive to and support of development:
and (e) identification of the hurdles that impeded implementation
of agreements reached in the Uruguay Round.
Richard Nunes de Souza, Co-ordinator,
The Circle of Friends (UK) for the Promotion of a New Global Human
Order
January 2000
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