APPENDIX 3
Memorandum submitted by Save the Children
Fund
CONTEXT
Save the Children Fund was one of many non-governmental
organisations represented at the third WTO Ministerial meeting
in Seattle. Save the Children's interest in this event was both
positive and negative in the impacts that trade policies have
on children and communities in developing countries. International
trade policies can impact children and their communities in a
number of complex direct and indirect ways through changes in
such factors as government revenue and the provision of basic
welfare services, changes in prices and employment and, more directly,
through effects on the extent of child work. What is clear is
that as WTO rules are expanded into more and more areas of domestic
policy, children will be affected. For Save the Children the issue
is not whether to have global trade rules but rather what kind
of rules, and how they should be balanced to ensure they do not
have adverse impacts on social, health and education provision
within poor countries and other negative distributional consequences.
We welcome this inquiry following the suspension
of negotiations to launch a new trade Round. The Seattle meeting
demonstrated without doubt that the WTO does not present a level
playing field for all countries. The failure of the conference
to pay due attention to the concerns of developing and least developed
countries demonstrates the need for fundamental and substantive
reform of the WTO processes.
This submission will focus on developing country
concerns at Seattle; the linkages between trade and child labour;
and the public health implications of the Agreement on Trade-Related
aspects of Intellectual Property rights (TRIPs).
1. DEVELOPING
COUNTRY CONCERNS
AT SEATTLE
The Seattle talks failed because differences
on almost every subject hindered efforts by member governments
to draft an acceptable declaration. The failure was primarily
attributed to acrimony over procedural issues, specifically the
difficulty of managing the negotiating process in a transparent
and inclusive manner, together with specific disagreements over
traditionally difficult issues (agriculture, textiles and anti-dumping).
The US and EU pursued their own agendas and were unwilling to
make meaningful concessions, while developing countries were clearly
unhappy with the way in which the meeting was conducted. In the
words of Ambassador Barshefsky (US), Chair of the Conference,
"the WTO has outgrown the processes appropriate to an earlier
time".
(A)
IMPLEMENTATION
VS. NEW
ISSUES
In Seattle, WTO Member States were divided over
EU proposals for a comprehensive Round comprising negotiations
on "new issues" (investment, competition policy, transparency
in government procurement, competition policy, industrial tariffs,
trade facilitation, and electronic commerce) versus a narrower
"built-in agenda" (agriculture, services and built-in
reviews). The most contentious areas were the long-standing issues
over further liberalisation in agriculture, labour standards and
implementation of existing Uruguay Round agreements.
On this last item, the Seattle trade meeting
failed to address developing country concerns to "review,
repair and reform" existing Uruguay Round agreements. Developing
countries and least developed countries were concerned about the
implementation of developed country commitments in areas such
as the phasing out of the multi-fibre agreement; reducing agricultural
export subsidies; restraint in the use of anti-dumping measures;
and implementation of the provisions on special and differential
treatment for developing countries. They argued that the Uruguay
Round had not improved market access for their exports of goods
and services. Furthermore, insufficient human and financial resources
and weak institutional capacities have restricted their ability
to comply with their contractual obligations and exploit the opportunities
open to them under the WTO, particularly in the dispute settlements
mechanism.
It was felt that a proper review of implementation
problems and the process of initiating necessary changes in the
agreements could not be properly carried out if there was a proliferation
of new issues in a new Round. For example, at the opening of the
conference Mike Lamin, the Minister of Trade and Industry for
Sierra Leone was not alone in pointing out that:
"The introduction of new issues at a time
when we have not come to terms with the existing Agreements, including
those under the built in agenda, will pose serious difficulties
to the legal and regulatory authorities and slow down our integration
into the system" (Speech to the conference).
(b) Least-Developed Countries
During the negotiations, the US and Canada objected
to the EU proposal to provide tariff- and quota-free access for
essentially all exports from the world's poorest 48 countries.
This was a lost opportunity to make a goodwill gesture because
the initiative also included the establishment of a programme
for focused and effective trade-related technical assistance in
support of capacity building. Tariff barriers are far from the
only constraint facing poor countries. The least developed countries,
with 10 per cent of the world's population, have only 0.3 per
cent of world trade, half the share they had a decade ago. The
EU is however committed to implementing this package by 2005,
and Member States must take steps to do this unilaterally for
all exports from least developed countries. It is important that
momentum for this proposal is not lost within any current discussions
within the Quad group (EU, Japan, US and Canada).
(c) Capacity-building
Developing country after developing country
reiterated the need for capacity building to be a priority to
enable them to negotiate and implement agreements. Seattle demonstrated
the danger of new negotiations taking place prior to first ensuring
an acceptable level of negotiating capacity on the part of the
poorest countries. The stark reality was that 30 WTO members could
not afford to send any delegates to Seattle at all, and others
had delegations of no more than one or two. Whereas the US had
a team of 85, Belize, Burkina Faso and the Congo had five delegates.
Thirty-three of the WTO's least developed country members have
no diplomatic representation in Geneva and do not have the capacity
to formulate negotiating positions and trade legislation. In this
respect, the newly established WTO legal advisory centre in Geneva
will be an important first step towards providing subsidised legal
advice to member governments and must be adequately financed.
Many least-developed countries in particular
pointed out that any capacity-building programme had to address
the inextricable link between increased market access and improved
supply capacity. This compares with the usual focus of the WTO
and donors on demand side issues such as improving market access.
Widely divergent capabilities, skills and resources mean that
many developing countries cannot compete on an equal footing.
So, for example, limited trade finance and commercial skills,
limited transport and telecommunication systems, poor information
about foreign markets all combine to create a major disadvantage.
The elimination of trade barriers must be complemented by appropriate
measures to help the poorest countries to overcome their infrastructual
and institutional weaknesses. Without this, they cannot benefit
from improved market access. The Minister of Tourism, Trade and
Industry in Zimbabwe pointed out some of the constraints:
"On, the one hand, institutional, financial
and skilled human resource deficiencies that lead to weak capacities
to utilise potential opportunities offered by global trade liberalisation.
On the other hand, limited market access in products of export
interest to developing countries, which hampers our efforts towards
diversification and industrialisation" (Speech to the Conference).
Other least developed countries, like Nepal,
called for the speedy operationalisation of the WTO's Integrated
Framework for Least Developed Country's Trade and Development
and full implementation of the Special and Differential provisions
as a first step towards helping the smaller economies. Capacity
building has to be given a priority to prepare developing countries
for resumed negotiations and be generously financed.
2. THE NEED
FOR GENUINE
REFORM OF
THE WTO
Seattle highlighted the undemocratic nature
of the WTO negotiating process, explaining why many developing
countries were unenthusiastic about embarking on a new Round.
Decision-making within the WTO relies on consensus and developing
countries account for three-quarters of the membership. However,
in practice smaller countries come under pressure not to use their
right of veto.
The Seattle preparatory meetings and the negotiations
themselves witnessed the resumption of the "Green Room"
method, originating from the old GATT practice of convening small
groups of invited members to progress on the drafting process.
Developing countries felt excluded and humiliated by the process.
The Latin American, Caribbean and African delegations all issued
statements saying that their concerns with the process were such
that they could not agree to any final declaration. This was despite
the rhetoric of developed countries and the WTO Director-General
promising to make the WTO work better especially for least developed
countries. Sonny Ramphal, Chief Negotiator for the Caribbean explained
the dilemma: "If I am a member of an organisation that takes
decision by consensus and I am not consulted, I am not even invited
to participate in the process by which a decision is reached,
how can I be asked to concur? And if I cannot concur, how can
there be consensus?" (Statement to the Press, 2 December
1999).
The way in which trade negotiations are conducted
in the future will have to better reflect the consensus-making
structure of the WTO. The suspension of talks offers an opportunity
for genuine reform. The UK has proposed a special "Ministerial
meeting on Ministerials" for improving the way trade negotiations
are conducted and asked EU Commissioner Lamy to have the EU come
up with a paper on ideas for reform of the WTO.
This is an encouraging way forward, as is the
recent statement by UK Secretary of State for Trade and Industry
Stephen Byers to Commonwealth Trade Ministers in New Delhi that
the "WTO will not be able to continue in its present form.
There has to be fundamental and radical change in order for it
to meet the needs and aspirations of all 134 of its members."
The next formal WTO General Council meeting
is scheduled for 7 and 9 February. Japan is also expected to propose
the establishment of a special advisory council idea as an alternative
to the so-called Green Room process. This advisory group would
comprise between 20 and 30 WTO Members from both developed and
developing countries to foster greater transparency in the WTO
decision-making process.[1]
In the short-term, the UNCTAD X meeting in Bangkok
next month will provide a critical test of developed country commitment
to address developing country concerns about further trade liberalisation.
The meeting will focus on the development impacts of globalisation
and will determine UNCTAD's work programme over the next five
years. UNCTAD has long pointed out that the world economic system
is failing the poorest countries and developed countries should
support the idea of UNCTAD carrying out impact assessments of
current WTO trade agreements. Earlier this month, UNCTAD Secretary
General Rupens Ricupero urged the forum to be used as "world
parliament on globalisation" to break the deadlock in WTO
trade talks.[2]
3. LINKAGES BETWEEN
TRADE AND
CHILD LABOUR
The issue of labour standards generated much
of the tension and division among WTO members in Seattle. In a
controversial move, the US proposed that the WTO establish a working
group on trade and labour standards. The issues to be discussed
by this working group would go beyond the "core labour standards"
proposal that was rejected at the WTO 1996 Ministerial in Singapore.
New items included employment, forced or exploitative child labour,
social protection and safety nets. Developing countries, fearing
this to be disguised protectionism, had their worst fears confirmed
in Seattle when President Bill Clinton decided to depart from
his original demand for a working group. Following the mass demonstrations,
he proposed that core labour standards should be part of every
WTO trade agreement enforced through trade sanctions.
As a compromise the EU proposed a joint ILO/WTO
forum on trade, globalisation and labour issues. The forum idea
explicitly ruled out the use of trade sanctions, favouring positive
incentives (such as linking labour standards to the Generalised
System of Preferences). The forum would exist outside of the WTO
structure aiming to promote dialogue between all interested parties,
including governments, trade unions and others such as UNCTAD
and the World Bank. Given the suspension of the talks, and hostility
from developing countries, it is not clear where this proposal
now stands. Save the Children suggests that any future proposal
for a forum outside of the WTO must include NGOs as a formal partner
alongside international agencies and trade unions.
Child labour is now higher on the international
policy agenda than ever before. In June 1999, the International
Labour Organisation adopted a new convention on the worst forms
of child labour. Save the Children supports core labour standards
and in particular, believes that eliminating harmful child work
which jeopardises a child's health, education or development should
be a priority for action. Children work in a variety of reasons
and "solutions" will only work if they take this diversity
and complexity into account. However, our evidence suggests that
trade sanctions and boycotts have limited immediate impact and
may shift child workers into worse paid and more hazardous jobs,
making the problem more difficult to resolve. Less than 5 per
cent of children work in the production of goods for export, which
would be affected by trade sanctions. Most children work in domestic
family-based agriculture, service industries (street trading and
food), and small-scale manufacturing.
We also believe that the WTO is not the institution
to take forward the issue of core labour standards. It has no
representation aside from governments and, unlike the ILO, no
experience of the range of different methods that can be employed
to improve labour standards. Developing country experiences in
Seattle give very strong grounds to their fears that the linkage
of trade and labour standards within the WTO may be abused. Instead,
we would call for a speedy universal ratification for the new
ILO Convention on worst forms of child labour (I82), strengthening
of the ILO particularly its monitoring of, and action on, labour
violations, and international co-operation in support of action
to eliminate the worst forms of child labour. These measures must
be underpinned by more equitable trading conditions for developing
countries.
4. THE HEALTH
IMPLICATIONS OF
THE WTO TRIPS
AGREEMENT
The WTO TRIPs agreement was one of the first
multilateral agreements negotiated as part of the Uruguay Round
in 1994. The TRIPs agreement sets out minimum standards in the
field of intellectual property. All WTO Member States have to
comply with these standards by modifying their national regulations
in accordance with the agreement.
With respect to pharmaceuticals, the main change
is the obligation to grant patents for pharmaceutical products
and process inventions for a minimum of 20 years. Developing countries
have a period of 10 years (up to 2005) to amend their patent legislation,
while least developed countries are given 11 years (up to 2006).
The agreement permits Member States to provide
limited exemptions to the patent holder's monopoly through their
national legislation. Firstly, public health authorities may be
allowed to issue compulsory licenses against the owner's will
if justified by "the public health interests of its people".
Secondly, the agreement does not prohibit parallel imports, which
gives a government the legal right to import a patented product
manufactured or sold more cheaply from a third country. However,
this can only take place following strictly enforced procedures
and the patent holder has to be compensated.
Intellectual property rights that protect drug
patents enforced by TRIPs will have negative consequences for
developing countries leading to higher consumer prices for drugs,
while undermining domestic drug production. Concerns about the
negative consequences of TRIPs was expressed in the WHO resolution
on essential drugs. This resolution faced substantial opposition
in the WHO Assembly in 1998 before it was adopted in 1999. The
World Health Assembly Resolution WHA52, 1999 calls upon Member
States to explore and review their options under relevant international
agreements including trade agreements, and to safeguard access
to essential drugs.
The gains made world wide in health status in
the last few decades are being lost in the poorest countries as
they are excluded from global economic development. These and
other factors have caused many state health systems to collapse.
The poorest countries are only spending a fraction of the very
basic minimum for health care, which the World Bank estimates
at $14 per head year. For example, Malawi and Rwanda spend $3
dollars and 1\4 dollars per head.
Save the Children believes that the TRIPs agreement
will have implications for the affordability of essential drugs
for the poorest people. The collapse of health systems in the
poorest countries and the absolute lack of resources mean that
essential drugs cannot be delivered to those most in need. By
raising the cost of essential drugs, the TRIPs agreement will
further deny poor people access to basic health care.
Defenders of the TRIPs agreement argue that
it will not affect essential drugs as only 15 per cent of the
World Health Organisation's model list is patented. However, the
reality of the public health situation today means that affordable
drugs will be required for diseases such as HIV infection, and
drug resistant infections such as TB and malaria, if health strategies
are to be effective.
During the Seattle talks, several developing
countries including the Africa Group of countries, submitted proposals
on reviewing and amending various aspects of the TRIPs agreement.
These proposals include the need to review article 27.3(b) of
TRIPs to clarify artificial distinctions between life forms and
to clarify that all living organisms and their parts cannot be
patented; and the need to extend exemption from patenting for
essential drugs under the WHO list. However, the US and EU rejected
developing country proposals on the grounds that existing WTO
agreements cannot be re-opened.
RECOMMENDATIONS
1. Save the Children believes that the credibility
of the WTO as the focus of a rules-based multilateral system is
at stake unless developing country concerns to "review, repair
and reform" existing agreements is genuinely addressed. Any
future resumption of negotiations on a new round will not succeed
unless these concerns have been addressed.
2. The UK Government should work with its
EU partners and take steps towards providing tariff and quota
free access for all the exports from the least developed countries.
It should also push this proposal within any discussions within
the Quad group (EU, Japan, US and Canada).
3. The collapse of the Seattle talks offers
an opportunity to make the WTO a genuinely consensus-driven organisation.
The proposal for a "Ministerial meeting on Ministerials"
offers an opportunity to take the reform agenda forward, based
on the lessons from Seattle. Developing and least developed countries
must be equal participants in this process. The UK Government
must also support NGO participation in future discussion on WTO
reform.
4. Seattle demonstrated the danger of embarking
on new negotiations prior to ensuring an acceptable level of negotiating
capacity on the part of poorest countries. Negotiations on the
built-in agenda begin this year and must proceed hand in hand
with a sustained and well-resourced programme to enhance the negotiating
and legal capacity of the poorest countries.
5. There is a growing lobby of Southern
governments, international and national NGOs calling for a comprehensive
reform of the WTO Trade-Related aspects of Intellectual Property
rights (TRIPs) agreement. The life patent provision of TRIPs under
Article 27.3(b) will be reviewed this year. During the Seattle
talks, President Clinton announced a change in US policy in support
of greater access to life-saving medicines. In view of President
Clinton's announcement and the recent UK Government moves to formulate
a policy position on access to drug treatment, Save the Children
believes that the TRIPs review should also address the issue of
access to essential drugs. The UK Government should also work
with the EU to support President Clinton's statement calling for
a flexible interpretation of TRIPs to enable access to affordable
drugs.
6. Core labour standards are essential to
a modern international trading system. However, the WTO is not
the institution to take forward the issue of core labour standards.
Developing country experiences in Seattle suggest that any discussion
on the linkages between trade and child labour cannot be dealt
with fairly and by consensus. Save the Children would favour the
strengthening of the ILO, particularly its monitoring of and action
on labour violations, as well as the speedy universal ratification
of the new ILO Convention on the worst forms of child labour.
These measures must be underpinned by greater market access for
developing country goods and services.
Save the Children Fund
January 2000
1 Reported by ICTSD Bridges Weekly News Digest,
Vol 4, Number 1, 10 January 2000. Back
2
Reported by ICTSD Bridges Weekly News Digest, Vol 4, Number
2, 18 January 2000. Back
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