Examination of Witnesses (Questions 60-79)
TUESDAY 11 FEBRUARY 2003
MR DUNCAN
GREEN, CLAIRE
MELAMED AND
MR MICHAEL
BAILEY
Tony Worthington
60. To go back to two points about campaigns,
WTO and the prospect of the weekend of 27 and 28 June being taken
up with trade matters, we are going to get lots of letters which
will be inspired by NGOs, the World Development Movement, by the
Trade Justice Movement, in which WTO will come across as the anti-Christ
and yet there is a huge danger in this. One feels that the NGOs
would be campaigning for the creation of the WTO if it did not
exist because it is democratic, it has all the nations of the
world in it, and yet the WTO does not really exist in terms of
its members. If it did not exist, the bullies would win all the
time. Do you not feel there is a danger in the style of campaigning
that you are going to undermine something that could be a considerable
force for good in the world?
(Ms Melamed) That is a difficult question. Obviously,
when you are campaigning and attempting to reduce what are very
complex policy arguments to issues which can be campaigned on,
there are always issues. I think that NGOs have been very careful
to try and emphasise to supporters in the course of building up
the trade campaign that the WTO is not like the World Bank and
the IMF, which are significant actors in their own right, and
that the issue of the WTO is, as you say, very much more about
the way in which countries act within it, that the WTO as an institution
actually is driving trade policy forward. That said, I think there
is a big distinction between the way the WTO could and should
work and the way it does work. It is absolutely legitimate to
draw attention to the problem of democracy within the WTO. As
you say, in theory it has 145 members, no voting, decisions by
consensus, et cetera. In theory it is a very much more democratic
institution than most other international institutions. In practice,
as we have already alluded to and as I am sure you will find out
if you to go to Geneva in the course of this inquiry, it does
not work like that. The experience of the developing country delegates
at the WTO is not that they are participating in a democratic
process as equals with the EU, the US and the other developed
countries; their experience is that they are under-resourced,
they cannot attend key meetings but if they do not happen to be
in the room at the moment of decision, their approval is assumed.
It is passive consensus; you have actively to say "no"
rather than actively say "yes". There all kinds of ways
in which the day-to-day experience of developing country delegates
in Geneva is that the WTO is simply not as democratic as it could
be and as it should be. There are very few commentators on these
issues who would say at this point that things would be better
if there was no WTO but one absolutely should not make the leap
from there to say, "And therefore the WTO is fine".
In a sense, it is that ground that we are trying to cover.
Chairman: I have some sympathy with Tony's
point. My point is that maybe a month before the WTO lobby, the
Trade Justice Movement lobby, we might see if the Committee could
have an informal session with your policy advisers rather than
campaigners and an exchange of views on what works so far as we
as parliamentarians are concerned and what they are trying to
achieve as campaigners. I agree with Tony: I think there is a
danger sometimes in campaigns becoming very simplistic in single
lines, and then people say that is unreal.
Mr Battle
61. I am not sure that 27 June is going to be
a mutual cuddle. Just as we think there is a quick and easy answer
and that the World Trade Organisation is undemocratic, not very
efficient and still playing the capitalist game, we tend to say
this of the American and European farmers. I think underneath
those words such as "trade openness", "trade liberalisation"
and "market access" are massive unspoken hidden assumptions
of different economic models and we do not really open up that
debate and try and understand the complexity of it. I put it to
you this way in an attempt to stir it up. I do not think it is
an easy consensus about what we want or what the NGOs think they
want, what poor farmers think they want or what northern Europeans
and the rich world wants. An official from DEFRA last week said
that as far as relations with developing countries goes, the primary
purpose of CAP reform is to provide better market access, to use
a phrase. In the CAFOD memo, market access is "very far from
being a poverty panacea or even the most important issue for poor
farmers in developing countries". I would like to ask: why
is market access not a poverty panacea and what do you think poor
farmers really want?
(Mr Green) All two and a half billion of them! I start
with my own experience. I went to Kenya this year and last year.
Among other things, I went to see the people who grow flowers
and vegetables for Marks and Spencer. If you are growing mangetout
in Kenya and you want to sell to Marks and Spencer, you have to
get the product from the fields to the Marks and Spencer shelf,
or to the Tesco shelf, or any of the other shelves in Britain,
within 48 hours in chilled conditions for as much of that time
as you can. The mangetout have to be all of the same kind and
the same length. There must be no kind of a blotch. Now you must
use no pesticides because of the requirements of the EU. The level
of technical skills, marketing skills and capital investment required
is beyond most small farmers and so the small farmer is being
squeezed out of that production chain. That is one reason why
the kind of simplistic market access equals trade equals poverty
reduction should be questioned. Actually, those markets are quite
job-creating and so they do reduce poverty, but in other cases,
such as soya bean exports from Brazil or Argentina, the impact
on jobs is quite limited through the tax system. You have a situation
where people are making a claim which they cannot back up with
anything like a serious case study or research. One of the things
DFID could be doing is trying to look at the cases in which export
promotion has led to poverty reduction and the cases where it
has not. This can lead to the expulsion of small farmers from
the land if big guys come and buy it all up to grow flowers. There
is far too much dogma and not enough evidence on the whole issue.
I want to plug somebody else's book for a change. There is a Korean
economist who is my number one guru at the moment, a chap called
Ha Joon Chang. He has written a book called Kicking Away the
Ladder. He goes back to the 14th century and shows how countries
managed trade, intellectual property rights, investments, all
the issues which are now being debated in WTO. He shows that in
every case, except possibly Holland, they have always discriminated
between national and international producers; they have always
used high levels of state regulation. This idea that these things
should now be made illegal under the WTO is, in his words, kicking
away the ladder, which comes back to the point right at the beginning
about the importance of looking at history when discussing this
subject and not approaching it in a Chicago boys' vacuum.
(Mr Bailey) I would add this on the market access
issue. Our Trade Report emphasised that developing countries
could earn about $100 billion more a year if the northern countries
were less protectionist. This is looking at agriculture, footware
and textiles. All the things that developing countries are good
at exporting, we are good at stopping at the border. There is
a clear development benefit with improved market access. However,
that does not come automatically. We would argue that that market
access is a necessary but not a sufficient condition for there
to be benefits in the developing countries. There are a lot of
other things that developing countries have to do to make sure
that the benefits from exporting, as Duncan has suggested, are
actually shared more widely and do not accrue simply to local
elites or at the expense of the environment. Though one of the
demands in Oxfam's trade campaign is to reduce these northern
barriers. We have to be very careful that we do not then subscribe
to the view that export-led growth is the way to go. In that sense,
we do have to qualify our call for market access very quickly
and very carefully.
62. What resonance does that receive in the
Agreement on Agriculture negotiations where they are still pushing
very hard for export-led growth and market access, which is the
final category?
(Mr Bailey) Certainly developing country governments
in Geneva are pushing hard to improve market access, along with
other things.
(Ms Melamed) The important issue with market access
is the terms on which you get it. Quite often market access is
offered under conditions which actually make it less useful in
that countries are less able to improve their supply response
in order to have more for exports. For example, the current negotiations
in which the European Union is involved with the ACP countries,
the Cotonou and negotiations. The idea is that the ACP countries
are being pushed to move from non-reciprocal market access to
reciprocal market access. The danger there is that that is going
to undermine the whole way in which market access might potentially
be useful. The countries that have benefited under the previous
non-reciprocal regime are those that have actually used various
kinds of interventionist and protectionist trade policies within
their own economies in order to boost their production, in order
to benefit from market access, such as Mauritius. If those options
are not being made available to the ACP countries under the proposed
new arrangements, market access will be a lot less useful in future
than it has been in the past.
(Mr Green) We should be careful about saying what
developing countries say. The positions of developing countries
usually reflect their own economic situation. The big agri-exporters,
like South Africa, Egypt, Argentina and Chile, want market access.
The importers are much more worried about the impact of dumping.
There is one other factor. DFID has funded something called the
Globalisation and Poverty Programme over the last three years,
which spends £3 million on a number of research areas, such
as the impact of investment, impact of trade liberalisation and
what good government in the WTO looks like. The Committee might
like to think about asking the researchers, who are led by Professor
John Humphrey from IDS, to present their findings which should
be ready by June or July.
Chairman: We move on to special and differential
treatment and development box proposals.
Mr Walter
63. We move into the area of jargon. The Doha
Declaration agreed that: "all special and differential treatment
provisions shall be reviewed with a view to strengthening them
and making them more precise, effective and operational".
That is SDT. The development box was not actually mentioned in
the declaration itself. We had, as you probably know, the DTI
officials, and officials from several government departments,
here last week. The DTI officials stated that the Government believes
in principle that there should be appropriate special differential
treatment to allow developing countries to be smoothed into the
liberalised system. Is this the right objective and what, in your
view, should the development box include and how would it help
developing countries?
(Ms Melamed) The development box is, in a sense, a
specific instance of special and differential treatment. If you
do not mind, I will start with a general discourse on special
and differential treatment and then perhaps others will come in
on the development box. We seem to keep coming back to your first
question here about what is good trade policy from the point of
view of development. The debate on special and differential treatment
is perhaps, of all the debates in the WTO, the one that most closely
touches on that issue. The Government's approach to special and
differential treatment, outlined in what you have just said, is
that the purpose of special and differential treatment is to deal
with the difference between WTO members in terms of their capacity
to implement WTO rules, so that, for example, with particular
complex rules, it may take longer for a developing country to
implement the agreement on intellectual property rights because
it has to develop certain institutions and so on. It is an expensive
and complicated business. Therefore, it makes sense to give developing
countries longer to implement what are virtually the same rules.
That was the approach taken for special and differential treatment
in the Uruguay Round, and that is the approach which the UK Government,
and most other industrialised country governments, are still taking.
The difficulty is that it is precisely that approach which the
developing countries objected to, which is why special and differential
treatment is such a big issue at the moment. What the developing
countries in the WTO tend to argue, and again obviously there
will be differences between developing countries, put crudely
is that what they require is in fact special and differential
treatment which will reflect their different trade policy needs,
rather than making a difference in implementation. What they need
is special and differential treatment, which will actually allow
them to have a different kind of trade policy for a period of
time, which will allow them, as Duncan said, to do exactly what
the European, American and other countries have done in terms
of building up their domestic industries, protecting their vulnerable
populations, and so on. That is the crux of the argument. Within
the WTO, as is wont to happen with the WTO, this has taken all
kinds of political and bizarre twists and turns. The outcome,
after nearly a year, has been absolutely nothing. Despite the
very heavy engagement of developing countries in this process,
very little has happened. Actually, apart from the importance
of issues of special and differential treatment, there has been
an interesting test case on the capacity arguments in the WTO.
We are used to hearing that the problem with developing countries
in the WTO is that they lack capacity and therefore if you put
money into capacity-building, everything will be OK. In the special
and differential treatment discussions, in fact there has probably
been an equal level of participation from developed countries.
They have put in an enormous amount of resources; they have taken
all the advice they can take; and yet, even when they put in equal
amounts of resources and even when capacity is less of an issue,
they still do not get what they want. That is something of an
aside but it gives you quite an important indication into the
realities of power politics in the WTO.
Chairman: Hugh Bayley has two specific
questions on SDT and then we will come back to the other questions
on the development box.
Hugh Bayley
64. First of all, Claire, can you tell me a
little bit more about the framework agreement your paper talks
about? How would that work? Can I link to that: is there not a
danger that too much SDT will undermine the principle of reciprocity
upon which the whole WTO edifice is based?
(Ms Melamed) I will start with the framework agreement.
The idea of the framework agreement was first mooted by a group
of developing countries before Doha as something they wanted to
put on the table as a possible way of dealing with this.
65. Can you remember who they were?
(Ms Melamed) I think Pakistan, Kenya and India were
involved. I can send you the original proposal that they tabled
in the WTO[13]The
idea was essentially to deal in advance with the kinds of problems
that had come up in discussion. At the moment, the way the special
and differential treatment is dealt with tends to be on an agreement-by-agreement
basis, so that developing countries have to negotiate the special
differential in agriculture, industry, TRIPS and so on. Basically
what they have to do in WTO, in the mercantilist way in which
the WTO operates, is to give something away every time. In a sense,
they are negotiating the same point over and over again in each
agreement, that they need to have more flexibility, they need
to have longer implementation times. They are achieving the same
thing every time and yet having to give something away separately
every time. The political purpose of the framework agreement is
to prevent that happening. If we think collectively as WTO members
that this is an appropriate way of dealing with the differences
between countries in the WTO, then let us set that out at the
outset rather than having to negotiate it separately every time.
That was the political purpose of the framework agreement. The
economic purpose was as I have just said. It came from this understanding
of the history of trade policy, that developing countries have
specific requirements in terms of trade policy, in terms of being
able perhaps to use a wider range of trade policy instruments
than a more industrialised county needs, and that therefore that
should also be reflected in WTO agreements. I think the whole
experience of what has happened to special and differential treatment
since Doha has borne out that political calculation, that developing
countries are going to be required to pay an extremely high price
come Cancun for whatever they get in special and differential
treatment. In a sense, everyone agrees that they should get special
and differential treatment but yet everyone is returning to extract
the maximum possible price for that.
66. I have one little supplementary on that
point before we move on. If you have within a framework agreement
an acceptance that the least developed countries, or some developing
countries, should simply notify, shall we say, the WTO what their
SDT requirements would be in relation to TRIPS or whatever it
might be, there will come a point of course when least developed
countries graduate out of the need for special assistance. That,
of course, is the critical issue. It is about when Malaysia, for
instance, needs the ladder and when it is reasonable for the ladder
to be kicked away. How do you deal with that issue if you have
institutionalised special terms of trade? How do you deal with
the graduation?
(Ms Melamed) The graduation issue is one of the matters
that is holding everything up. The WTO at the moment has this
rather bizarre system where the category of developing countries
is self-selective, so that any country can simply announce that
it is a developing country and receive the benefits due to it.
The United Nations category is used for least developed countries.
There has been an enormous amount of debate on this subject. It
is one of the things that is really holding up the whole discussion.
This is an illustration of the problems with the way WTO works,
that in a sense the politics of the situation get in the way of
what are perfectly sensible economic discussions. At the moment,
there is huge resistance by developing countries even to discuss
the issue of graduation because they fear that basically it will
be used as a device to give away less things to less countries,
whereas in private some of them do agree that obviously it is
something that will have to be discussed. Even some of the developing
countries' proposals do have the germs of ideas about differentiation.
Perhaps the most sensible way to look at it would be to have a
framework agreement which set out a requirement that within each
agreement there should be special and differential treatment;
that it should be designed in such a way as to give developing
countries more flexibility for development purposes; and that
within each specific agreement there has to be some kind of consensus
on the criteria that could be used to define which countries could
be eligible for special and differential treatment under that
agreement. The special and differential treatment has to be appropriate
to the problems which it is designed to solve. Clearly, there
may be some countries that would require much greater flexibility
in their agricultural policy which perhaps would not require it
in their industrial policy, and vice versa. It is important to
make sure that the instruments countries are allowed to use are
appropriate to the particular problems that they have.
67. May I make one comment in leaving that?
I do not think the problem is just in terms of defining the countries
which are least developed or developing and therefore need special
and differential treatment, but it is in designing the process
of removing that assistance in a way that does not simply knock
them back to square one. There is the graduation process but there
is an economic problem as well as one of definition. That is a
comment. Duncan, you said in your paper that you wished that trade
rules could be redesigned to distinguish between social groups
and not just between countries. I wondered how that could possibly
be achieved? What does it mean? Does it not undermine the role
of the government in a developed country which has the responsibility
to pursue economic policies for poverty alleviation and a more
equal society?
(Mr Green) That is all about squaring various circles
and this is an attempt to square the development circle, if you
like. If you are presented with a large country, and let us take
Brazil where you have millions of small farmers and a few tens
of thousands of very big farmers, somehow it is very arbitrary
to apply the same trade rules to both those groups. In the past,
trade rules have always been done country by country. The development
box is an attempt to see whether trade rules could be designed
in such a way to be a filter and only apply to certain social
groups. This actually already exists in the Agreement on Agriculture.
There is talk of special rules for low income and resource-poor
farmers. There is talk of special rules for staple foods in the
existing rules on agriculture; it is just that no one has really
picked it up. We took that existing stuff and said that staple
foods are mainly grown by the poor, not by the rich, in developing
countries—that is a very generalised view—and if the
low income, resource-poor farmers exist, then surely we can have
trade rules which do things like allowing governments to exempt
staple foods from liberalisation commitments or allowing them
to subsidise low income, resource-poor farmers in ways that they
cannot subsidise big farmers? This is about trying to drill down
a little bit below these national categories, which I think is
an alternative to this endless attempt to differentiate between
developing countries. There are poor people in Brazil and in Ghana:
why do we have to classify Brazil as one thing and Ghana as another
if we can find a rule which picks up poor people in both countries?
Chairman
68. That is helpful and brings us back to Robert
Walter's question: what in your view should the development box
include and how would it help developing countries?
(Mr Green) I laughed when I read the transcript and
the awful idea of spending a Sunday afternoon in Oxford debating
what a development box is. That rings true. The development box
is a way of talking about development in WTO jargon, and in particular
in the case of agriculture. It is asking how we can talk about
development in such a way that people in Geneva understand what
we are on about. That is the big picture. Specifically it means
that you have a set of exemptions and allowances within the Agreement
on Agriculture which deal with precisely this problem: small farmers
and staple food producers. The experience is that one of the worst
impacts of over-hasty trade liberalisation has been the impact
on those small farmers. There is a group called Friends of the
Development Box; there is Friends of Fish, Friends of Geographical
Indicators and there are all sorts of bizarre groups in Geneva.
The key proposal of Friends of the Development Box is to exempt
staple foods from reduction commitments. There is a number of
other bits and pieces within the development box. I would say
that is at the heart of it. Can you take staple foods and treat
them differently within the trade rules? That received a lot of
interest in Doha. There was a head of steam. It did not make it
into the ministerial declaration, and that is a great shame. There
has been a number of submissions since. DFID has taken the issue
seriously. The EU has taken the issue seriously in its own way,
which is to co-opt language and remove almost all content. The
EU has now said it supports what it calls a food security box,
and actually it has much less in the box than developing countries
would like to see, but it has successfully confounded the campaign
for the development box by doing that.
Mr Walter
69. I want to pursue the development box idea
because there is a danger, is there not, and I think the DEFRA
officials we had here last week did not say any different, that
agricultures become isolated and that actually what you should
be doing is trying to encourage them to diversify, to get into
different areas where they would be competitive, rather than just
protecting and effectively ossifying their own domestic agriculture.
Do you think there is that danger?
(Mr Green) I come back to Michael's point, that that
requires good government policy over a long period of time and
a transition, not a vast swathe being cut through small producers.
Something like 97% of the world's small farmers are in developing
countries. The enormous majority produce for the domestic market.
The idea that all of them are going to start growing mangetout
is not clearly thought through. UNCTAD in the last Trade and Development
Report said, especially for the larger countries, that those countries
like China and India are going to have to develop on the basis
of their domestic markets and there have to be domestic linkages,
and not on the basis of export loan credit. There is just not
enough demand for that level of export. The term "ossify"is
very emotive language and we would not want to condemn those two
and a half billion people for being poor; they have had terrible
lives as under-resourced farmers. But trade liberalisation right
now is not going to make things better. The experience of the
FAO, UNCTAD and NGOs has been that it makes it worse. The question
is: how much will a more holistic view of an agricultural policy
help those farmers improve their productivity? It may help some
of them move into international trade, but the market access that
matters, and will continue to matter to those small farmers, is
access to their domestic markets.
Tony Worthington: Take the case of Caribbean
bananas. What about trade patterns that are historical and those
Caribbean banana producers have been producing not for their domestic
market but for the export market but they have been protected?
Should we not be looking at things that they could produce more
efficiently to replace the bananas that could be produced much
more cheaply elsewhere in central America?
Chairman
70. Anybody else want to talk about bananas?
(Mr Green) I am not a bananas person.
71. Michael, do you want to talk about bananas?
(Mr Bailey) No.
(Mr Green) The answer is yes.
Tony Worthington
72. One of the areas where there is agreement
by everybody is that the developing countries, not all of them
but many, are ill-equipped for the negotiations within the WTO
and that if the WTO is, in the future, going back to what I said
earlier, to be seen as a positive force for developing countries,
we have to do something about that negotiating capacity. How should
that be done?
(Ms Melamed) The first and most obvious thing that
should be done is, if not to reduce it, to limit it to the number
of issues that are on the WTO table, and within those constraints
of the number of issues that we are dealing with there are then
various other measures about boosting capacity that could be done
over the long term, but I think the most immediate short term
response to that is to say that if we all accept that there is
a problem of capacity we have to stop where we are now and not
have any new issues.
(Mr Bailey) We would agree with that. Also, the way
that the WTO does its business and reaches its agreements is problematic
for developing countries. As you know, since the Uruguay Round
what they employ is the method of a single undertaking, so-called,
which means that they negotiate a whole series of agreements (in
the case of the Uruguay Round a vast number of agreements) and
then agree them, all or none, so you are either completely in
or you are completely out. This means that developing countries
have to sign up to a whole bundle of things at the same time.
In the case of the Uruguay Round they really did not understand
half of what they were signing up to or the implications of it.
We would like to see a reversion to the old way of doing business
at the GATT, which is to negotiate agreement by agreement. Then
developing countries can know what they are getting into and be
conscious of what the implications are for them rather than have
this huge package to which at the end of the day they have no
choice but to say, "Yes, we agree". This links the point
about the volume and pace of the agenda in Geneva.
73. Neither of those points is about negotiating
capacity or about building the capacity of the developing countries.
They are about slowing down what is coming at them.
(Mr Green) Yes. There was an interesting study by
Sheila Page of the ODI, funded by the Globalisation and Poverty
Programme—I do not know if she is going to be a witness—who
has compared developing country participation in a number of different
negotiating fora, including the climate change negotiations under
WTO, and has come up with some ideas on how that can be improved.
One interesting one is that the best way to learn about negotiating
is to negotiate and that the countries that have been involved
long term in WTO or other negotiations are much more skilled at
it and much more aware of it. The logical conclusion from that
is that the whole round structure is questionable, and that permanent
negotiations actually lead to capacity building in a way that
endless seminars from consultants flying into the capital city
and giving a talk do not. She sees ideas that can be picked from
other UN processes which could be useful to the WTO. As far as
I know none of that kind of thinking is going on except in the
ODI. I have got her paper here which I can leave[14]It
is fairly short by ODI standards.
(Ms Melamed) Can I sum up that what we
are all saying is that the problems to capacity lie in the structure
of the WTO rather than in bunging in a few more million quid to
run a few more seminars, because I think that approach has been
tried and developing countries in Geneva are rather cynical about
that approach and NGOs are becoming so.
74. I am a bit surprised that none of you has
suggested building up capacity on a regional basis. We are recently
back from Malawi and are therefore familiar with SADC. I think
it is difficult to believe that Malawi, given the size of the
country and the under-development, could realistically cope with
all of Geneva on its own in the foreseeable future.
(Mr Green) Sheila is one of Malawi's negotiators.
75. In one of them?
(Mr Green) In one of the summits, yes.
76. But the regional point. That is how we do
it, is it not, in the European Union?
(Ms Melamed) Yes. I think in Geneva to some extent
developing countries do do that informally. There is a strong
Africa Group which organises among itself and there is an informal
division of labour within that group as to which countries will
be focusing on which negotiations. I think it is an important
approach where it comes from the countries themselves and where
it is based on definitions of mutual self-interest. The danger
comes if it is imposed—"You are all in southern Africa
so you must have the same interests", whereas in fact, for
example, in southern Africa there are a number of occasions on
which South Africa has taken a very different negotiating stance
from other southern African countries, so I think there is a danger
of assuming that because they are all developing countries they
must all have the same negotiating interests. That often is not
the case but I think there is a lot of mileage in self-selecting
groups, sometimes regionally-based, sometimes issue-based, and
that is actually happening in Geneva.
(Mr Green) But there are also a lot of stories—this
is all on the level of gossip in Geneva—that where regional
groupings do emerge countries who are negotiating against them
do their best to undermine the unity of those groups. There is
a lot of talk, for example, about (and these are all allegations)
the US using AGOA (the African Growth and Opportunity Act) to
pick off certain countries who are key within the Africa Group
and thereby weaken its voice. It is not as if everybody is saying,
"Oh, great. Our negotiating partners are better at negotiating
now". That is not how it works.
(Mr Bailey) Just on the capacity building, clearly
there is a need. It is important that the capacity building that
is provided, the resources that are provided, do go to genuinely
assist developing countries work out what is in their interests
and how to negotiate. Our anxiety is that some of the resources
that have gone for capacity building are actually about helping
developing countries implement WTO agreements, in other words,
to conform, if you like, to what is expected of them by the system
rather than understanding more clearly what their interests are
and how to battle for them.
77. You have said that we should drop the new
issues in the forthcoming negotiations. What do the developing
countries themselves feel about that?
(Mr Bailey) It is quite difficult to know exactly
what they feel. When we talk to most of them in private, and certainly
when they were making public declarations before the Doha Ministerial,
the majority of them are against the expansion of the WTO agenda.
But through a variety of means which we can go into if you like,
they were persuaded to accept at the Doha Ministerial that negotiations
could start after the Fifth Ministerial, the Cancun Ministerial,
which is coming up. However, a number of them were still unhappy
with that and, as you may recall, India mounted a last-ditch effort
to keep the door open at Cancun to not starting negotiations on
these new issues. So we have this rather strange situation where
formally negotiations can start after Cancun but any country can
say, "We do not agree with the scope of the discussions",
or the scope of the negotiations or the details, and therefore
indefinitely postpone starting negotiations. Before Doha the least
developed countries and the African-Caribbean-Pacific countries
came out clearly against negotiating the 'new issues'. But by
a variety of devices, including particularly skilful manipulation,
I would say, Pascal Lamy managed to persuade them to go along
with it at Doha. Currently, there are one or two countries that
clearly are in support of the new issues—Korea at the top
end, almost the OECD end, of the developing countries scale, and
Costa Rica, but I would say the majority are against and if they
had a free choice they would not expand the agenda.
78. What would happen if you had your way, if
new issues were put on the backburner? That does not mean those
issues would have no activity associated with them. I assume that
bilateral activity would go on and that it would be taken out
of the framework of the WTO. Would there be a down side to that?
(Mr Bailey) There have been discussions at the WTO
since 1996 when a working group on trade and investment started,
for example, so discussion would continue within the WTO on negotiation
of new rules and possibly market access as well. Investment, procurement,
and competition can be subjects of regional trade agreements and
clearly we would be concerned if the Americans were successful,
for example, in pushing these through in their bilateral treaties.
The sad fact is, though, that although we have the multilateral
process on a whole range of economic governance issues it does
not stop the bilaterals. It would be nice if they did but I think
that is the reality. What we do say is that there are important
issues to do with investment, competition and procurement that
need addressing by the international community. We know that there
are problems of cartels, for example, in some international commodity
markets. We know that there are problems of market domination
in coffee or in grains. Restrictive business practices abound
and they operate internationally—tax evasion, tax avoidance
by companies, transfer pricing, use of tax havens. There is a
whole series of issues concerning management of the international
economy that we do want to see addressed in order to assist developing
countries. What we are saying though is that that is not what
the rich countries are proposing when they propose expanding the
WTO agenda. What they are about much more is increasing market
access and actually deregulating international investment.
(Mr Green) WTO is the wrong place. Everything gets
sucked into the WTO because it has a court and it has teeth vis-a-vis
the settlement procedure, but actually one of the WTO's two core
principles is national treatment. You have to treat foreign entities
at least as well as domestic entities and for all the historical
reasons I laid out earlier that does not work for investment.
You actually have to distinguish between foreign and national.
Our argument is that it is just the wrong place and also you have
got to find a forum that can balance the rights and responsibilities
of large companies and that will not happen in the WTO.
Mr Khabra
79. The WTO is holding Mini-Ministerials to
ensure that sufficient progress is made prior to Cancun. What
is your view of Mini-Ministerials and should we welcome them as
a way to break the deadlock in trade negotiations or condemn them
as limiting the effective participation of developing countries
in trade negotiations?
(Ms Melamed) It is a difficult one. I think to some
extent in the WTO with the very large membership there is a kind
of efficiency/equity trade-off and that if you have meetings with
smaller numbers of people then you will be looking to get faster
progress. The question is really what you want in the WTO. Do
you want progress or do you want good rules? We would argue that
the Mini-Ministerial process is perhaps erring on the side of
efficiency at the cost of equity within the WTO process and that
there is a real danger with having a small group of countries
where it tends to be the same countries invited over and over
again, that they are being given in a sense a privileged position
in decision-making, other countries by definition being squeezed
out of that process, and there is a danger that what you come
out with may be decisions but they may not be the right decisions.
(Mr Green) It is an extraordinary situation. I asked
DFID once if they would fund the WTO on the basis of its governance.
There is a de facto executive committee, which is what Mini-Ministerial
is becoming, where it is down to the host country to decide who
to invite, presumably in consultation with the WTO Secretariat,
but the whole thing is completely unaccountable, completely un-transparent,
and they may or may not help break deadlocks but where is the
governance in all this? It is rather worrying. For example, the
next Mini-Mi, as they are now called, is taking place in Tokyo
this weekend. They are discussing agriculture as the main issue
and as far as I can see from the list of countries there is not
a single one of the countries that proposed the Development Box
invited. That is probably an accident but that means where is
the accountability in that? No-one has been involved in making
that decision. It is very worrying.
(Mr Bailey) It is a hand-picked group of developing
countries, certainly the larger ones, because you cannot not invite
Nigeria or Brazil. But in the case of the Tokyo Mini-Ministerial,
Bangladesh, the current Chair of the least developed countries
group, which is obviously really important from the development
perspective, was not invited. Of the Africa Group you have Senegal
and Lesotho, who are fairly tame; they are not the outspoken ones
who are going to raise tricky issues. Particularly for the smaller
countries there is definitely a problem of inability to participate
in key moments in moving things forward.
13 Proposal for a Framework Agreement on Special and
Differential Treatment, WT/GC/W/442, 19 September 2001, World
Trade Organization. Available at: http://www.wto.org/english/thewto-e/minist-e/min01-e/proposals-e/wt-gc-w442.pdf Back
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Developing Countries: Victims or Participants. Their Changing
Role in International Negotiations' Sheila Page, Globalisation
and Poverty Programme, Overseas Development Institute: http://www.odi.org.uk/iedg/Publications/dev-countries-web.pdf Back
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