20. Memorandum submitted by the Bangladesh
Parliament Secretariat
WTO ISSUES: CONCERNS
OF BANGLADESH
1. Since the establishment of the World
Trade Organization in 1995 following the successful conclusion
of the Uruguay Round of trade negotiations, eight years have passed.
Unlike the WTO's predecessor, the General Agreement on Tariffs
and Trade (GATT) which covered only the trade in goods, the coverage
of the WTO is wider. In addition to trade in goods, the coverage
of the WTO is extended to trade in services and intellectual property
rights during the Uruguay Round. The most crucial outcome of the
Uruguay Round is that the WTO has emerged as a legal body which
provides the principal contractual obligations determining how
governments frame and implement domestic trade legislation and
regulations. As a consequence, the scholars, civil society and
the business community all over the world expressed their expectations
and concerns on the outcome of the Uruguay Round.
2. It is widely cited that most of the developing
country members of the WTO did sign the Agreement without having
any clear understanding of the agreements contained in the text
and their consequences in the national economy. However, many
of the developing countries, who realized that trade can act as
a development vehicle, came to the negotiation table in the Uruguay
Round with full-fledged commitment in exchange for developed country
commitments on agriculture, textiles and also on special and differential
treatment for LDCs as well as developing countries. Moreover,
they strongly felt that the ways of implementation of the provisions
of the WTO agreement by the developed countries were far from
their expectations. While implementing the WTO agreements they
also observed that there are imbalances in the existing WTO agreements.
So there are growing concerns on the implementation issues among
the LDCs and developing country members and since 1998 they became
very active in addressing the issues relating to implementation
of the existing Agreements. Against this backdrop the development
agenda has become an issue of the WTO.
3. The WTO's Doha Ministerial Declaration
has launched a new round (Doha Agenda) of international trade
negotiation, which began in January 2002 and is scheduled to be
concluded by 1 January 2005. The Doha Declaration has recognized
the need for addressing the concerns of developing and Least Developed
Countries. It recognizes the role of enhanced market access, technical
assistance and capacity building programmes for ensuring the growth
of LDCs and developing countries. However, no up-front commitments
were made in this direction. So, the responsibilities lie on the
negotiators in Geneva to include the development agenda in the
negotiation and make it meaningful and development oriented.
4. At present, one of the major concerns
of all developing countries is how to define the development agenda.
After analyzing the Doha Ministerial Declaration, one may say
that unlike other Ministerial declarations, it emphasizes the
need for enhanced technical co-operation; addresses the issues
like implementation related issues, special and differential provisions
for LDCs and developing countries; trade, debt and finance; trade
and transfer of technology, etc. These are very important from
the perspective of developing countries. All these issues are
the elements of development agenda. However, many of the developing
countries argue that the development agenda means the negotiations
that provide sufficient safety nets for developing countries and
mechanisms that will help in strengthening production capability,
efficiency and product competitiveness. The development agenda
should include negotiations that open up markets in developed
countries for the products of developing countries particularly
the LDCs. It should also ensure full exercise of the rights to
compete with developed countries as well as other countries' products
on fair terms.
5. Although some of the development issues
are addressed in the Doha Ministerial Declaration, there is a
necessity for undertaking further measures in specific areas of
negotiations to be conducted under the auspices of the WTO if
the Doha Round is to have any claim to being a genuine development
agenda.
6. IMPLEMENTATION
6.1 Implementation related issues should
be solved on a priority basis: Since 1998 developing countries
have been raising their concerns about implementation related
issues. They, time and again, argued that these issues should
be resolved before entering into any negotiations on other issues.
A number of implementation related issues have already been addressed
by the Doha Ministerial Conference. Rests are included in the
negotiating agenda within the single undertaking. This is against
what the developing countries wanted. For obvious reasons, they
wanted that their problems in implementing the existing WTO agreements
should and must be addressed, if the members really want the Doha
Round to be a development round. Inclusion of the implementation
related issues within a single undertaking means that the problems
will be resolved only if the developing countries are ready to
accept new obligations, which seemingly fails to recognize the
importance of the outstanding issues from a development perspective.
Hence, outstanding issues must be resolved on a priority basis
and implemented at an early stage (as provided for in the Ministerial
Declaration, para 47).
7. AGRICULTURE
7.1 It is our understanding that the agriculture
issue is likely to get precedence over other issues in the Fifth
WTO Ministerial Conference to be held in September 2003 in the
city of Cancun of Mexico. A good number of philanthropists and
scholars are of the opinion that agriculture was not within the
purview of GATT.
This is not correct; in fact, agriculture has
been the most difficult part of international trade and it was
discussed in most of the previous rounds.
7.2 The Uruguay Round was finally successful
in bringing agriculture under the umbrella of trading rule system.
Indeed, agriculture was the central negotiating issue for the
Uruguay Round and, to a large extent, the Uruguay Round proceeded
at a pace only to the extent it was permitted by the developed
country negotiators.
7.3 Nevertheless, the Agreement on Agriculture
does have some considerable promises for the future. At this point,
it seems that this agreement will, in fact, be the beginning of
the application of rules and liberal trade principles pursuant
to GATT policies. The following are considered as its major characteristics.
The agreement addresses the agricultural problems in basically
four subject areas. The first of these is the obligation to phase
out non-tariff bafflers and "convert" the effect of
such measures to tariffs.
7.4 Bangladesh and most LDCs employ far
more people than all other industries and sectors put together—60
to 70%—and even more of the total workforce is in agriculture
in many of the poorer LDCs and developing countries including
China and India. By contrast, agriculture in developed economies
typically employs less than 10% of the workforce (about 3% in
the United States). Secondly, agricultural activities have existed
for thousands of years, ever since humankind gave up hunting as
its main source of food. Because of this long history, the rural
economy is often referred to as tradition bound. A third characteristic
of agriculture that separates it from other sectors is the crucial
importance of land as a factor of production. Other sectors use
and require land, but in no other sector does land play such a
paramount role. Closely related to the central role of land is
the influence of weather. No other sector is as subject to the
vagaries of weather as is agriculture. In agriculture, differences
in soil quality, climate, and the availability of water lead to
the production of different crops and different ways of raising
a particular crop, not only within countries, but also even within
provinces or counties of a single country. Finally, agriculture
is the only sector that produces food. Humankind can survive without
steel or coal or electric power, but not without food, air or
water. For most manufactured products, in fact, there are substitutes,
but there is no substitute for food. Either food must be produced
within the country or it must be imported from abroad. Agriculture's
role in economic development is crucial because most people in
poor nations like Bangladesh make their living from the land.
7.5 This sector in Bangladesh produces about
one third of the GDP and generates employment and livelihood for
about three quarters of the population.
7.6 It is, therefore, suggested to:
— continue the provisions contained
in Article 6.2 of the Agreement on Agriculture (AoA) relating
to investment and input subsidies for LDCs;
— revise provisions under para 13 so
that the governments in the LDCs can provide greater assistance
to low income/resource poor producers as a strategy for poverty
alleviation;
— exclude product specific support,
given to low income and resource poor farmers, from Aggregate
Measurement of Support (AMS) calculations;
— take cognizance of currency depreciation
and inflation in LDCs and developing countries while calculating
the AMS;
— include domestic support measures,
which are used by developing countries and small developing economies
in the Green Box within the context of economic adjustment programmes;
— implement duty and quota free treatment
for all export products from the LDCs; and
— obtain substantial technical and
financial assistance from developed countries for expansion and
development of the agriculture sector.
8. MARKET ACCESS
8.1 Market access for the products of LDCs
deserves top priority in the agenda of any global trade talks.
Indeed, developed countries have made commitments at Marrakech,
First WTO Ministerial Conference in Singapore, the High Level
Meeting on LDCs in Geneva, the Third UN Conference on LDCs in
Brussels in May 2001, and the Fourth WTO Ministerial Conference
in Doha in November 2001, to ensure effective participation of
LDCs in the multilateral trading system with a view to reversing
the trend of their marginalization. However, these commitments
have by and large remained as pious intentions and with some exceptions
like the Everything But Arms (EBA) Initiative of the European
Union. Moreover, the Doha Declaration and the Uruguay Round Decisions
on LDCs morally obligate the Developed Countries to grant trade
preferences to LDCs.
9. TEXTILE AND
CLOTHING
9.1 As per provision of the WTO Agreement
on Textile and Clothing, phasing out of quota has started since
1995. The 3rd phase of withdrawal of quota restrictions on textile
products has started from 1 January 2002. Earlier, some quotas
were withdrawn in two phases, but Bangladesh was not affected
by it since it does not export much under those categories. But
at the 3rd phase, Bangladesh is severely affected since quota
restrictions were withdrawn on two categories of vital importance
namely; category No. 847 (trouser) and 331 (gloves). Now Bangladesh
is facing open competition in the international market for export
of items under these two categories. Our export under these two
categories has recently recorded a sharp decline. It is a fact
that performance of our overall export depends largely on the
performance of the textile and clothing sector. It has been ascertained
that until 2000, Bangladesh was able to increase its export of
textiles and apparels in the US market in terms of both value
and volume. It is to be noted that from 1996-2000, the Bangladeshi
exporters received a higher price per unit for both quota and
non-quota category items. Since 2000, the unit price of both quota
and non-quota items exported from Bangladesh has recorded a sharp
decline and it has reached the lowest level during January-August
2002. For example, the unit price for quota items in 2000 was
US$ 2.39; but during January-August 2002 it has come down to US$
2.07. In the case of non-quota items, the unit price was US$ 1.40
in 2000 which has reduced to US$ 1.22 during January-August 2002
(source: website of the textile and apparel office—OTEXA,
USA).
9.2 In view of above, it is almost certain
that the major textile producing countries will increase their
export substantially in the post-MFA period because of their highly
superior supply capacity of raw materials, stronger infrastructure,
better transportation and utility services. On the other hand,
phasing out of the MFA will pose a serious threat to the export
of textile products by Bangladesh. As such, some sort of capping
mechanism in financial terms, on export from the Advanced Developing
Countries (ADCs) who have reached a higher stage of development,
may be in place by the year 2004 to protect the market share of
apparel exporting LDCs including Bangladesh and those new entrants
who are expecting a good growth. Without such a mechanism countries
like ours will face a serious situation. Apart from a huge loss
of export earnings, it will also lead to closure of a large number
of factories and thereby a huge loss of employment which may disrupt
the economy of the country. It would not be wrong to say that
the world is now divided into four groups, viz. developed countries,
advanced developing countries, developing countries and the least
developed countries. If trade is to be treated as a vehicle for
poverty alleviation, the matter should also be looked into from
this point of view.
10. SERVICES
10.1 Meanwhile we have identified the following
problems in Trade in Services:
— Restriction to the movement of natural
persons originates in immigration. These restrictions include
processing of visas, work permits, limitation on the length of
stay. It erodes the cost advantage of Foreign Service suppliers;
— Wage parity is another restrictive
condition which also negates cost advantage;
— Requirement for Economic Needs Tests
(ENT) is an artificial barrier preventing free movement of natural
persons;
— Lack of recognition of professional
qualifications also prevents market access for the foreign service
providers;
— Foreign professionals are normally
being subjected to payment of social security contributions in
the host country. But they are not eligible to get the benefits
from such contributions.
10.2 With a view to overcoming the barriers
noted above, the following measures may be considered:
— Member countries should establish
a system allowing business persons and professionals to get visas
and work permits on actual requirement;
— Member countries should simplify
and relax the current immigration legislation to allow movement
of natural persons;
— To facilitate future negotiations
a monitoring device should be evolved for tracking implementation
status.
11. SPECIAL AND
DIFFERENTIAL TREATMENT
11.1 Special and Differential (S & D)
treatment for the LDCs in various trade-related matters is provided
under the WTO Agreements. The S & D status which forms a crucial
part of the WTO mechanism was designed to facilitate the process
of the global integration of the LDCs. The S & D status to
LDCs is envisaged to be implemented through exemption, delay in
implementation, preferential measures, flexible scheduling, technical
assistance, and safeguards. However, in most cases, the S &
D related promises have not been matched by concrete actions of
developed countries. We may call upon members to take concrete
steps for:
— full operationalization of special
and differential treatment provisions for LDCs as soon as possible;
— full implementation of the commitments
made in the Marrakech Declaration, Ministerial Decisions and Declarations
in favour of the LDCs and the Ministerial Decisions on Measures
concerning the possible negative effects of the Agreements on
LDCs and Net Importing Developing Countries.
12. TECHNICAL
CO -OPERATION
FOR CAPACITY BUILDING
12.1 First Ministerial Meeting in Singapore.
Although capacity building forms part of WTO Plan of Action, it
is not confined within WTO because it involves major international
development agencies like the UNCTAD, JTC, IMF, World Bank and
the UNDP. This capacity building initiative has been titled as
the Integrated Framework for Trade-related Technical Assistance
for LDCs. This Integrated Framework covers an extensive range
of trade-related human and institutional capacity. Under this
Integrated Framework (IF), we have submitted capacity building
projects to WTO and concerned international agencies as well as
the EU for support.
12.2 Meanwhile, Bangladesh has taken initiative
to establish a Foreign Trade Institute (FTI) and a WTO Cell in
the Ministry of Commerce for which we need both technical and
financial assistance from our development partners.
13. INDUSTRIAL
TARIFF
13.1 We ought to be very careful in negotiations
in respect of tariff escalation as well as NTBs (non-tariff barriers)
and S & D. At this stage, for obvious reasons, we should not
place stress upon industrial tariff liberalization. Tariff cuts
may lead to de-industrialization or the closure of domestic industrial
firms.
14. TRADE-RELATED
ASPECT OF
INTELLECTUAL PROPERTY
RIGHTS
14.1 The negotiations will start after the
Fifth Session. The Ministerial Declaration merely instructs to
examine the relationship between the TRIPs Agreement and the Convention
of Biological Diversity. The Declaration does not clarify that
all living organisms and living processes cannot be patented;
and that sui generis national plant-varieties policies
that protect rights of local communities to their traditional
practice of exchanging and saving seeds are recognized. Since
the full implementation of the TRIPs Agreement involves a massive
change in legislative and enforcement institutions, with huge
costs beyond their capabilities, LDCs should seek technical assistance
from development partners.
15. TRADE AND
INVESTMENT
15.1 Negotiations will take place after
the Fifth Session on the basis of consensus. The LDCs and developing
countries may consider agreeing to a possible multilateral investment
agreement if, and only if,
— The movement of natural persons and
capital is treated identically in the negotiations;
— The agreement strictly limited to
FDI and not other capital flows.
16. TRADE AND
COMPETITION POLICY
16.1 As in Investment, a decision on modalities
of negotiation will be taken in the Fifth Ministerial. Bangladesh
wants to actively participate in the negotiation, we should keep
in mind the following:
— The competition agreement will give
advantage to the larger foreign firms to enjoy national treatment
and compete freely with the weak local firms;
— Competition policy has many perspectives:
— (i) It curbs mergers and
acquisitions;
— (ii) It prevents abuse of
anti-dumping;
These issues are unlikely to find favour with
the developed countries.
17. TRANSPARENCY
IN GOVERNMENT
PROCUREMENT
17.1 Negotiations will start after the Fifth
Session and be limited to only the transparency aspects. The Ministerial
Declaration on this issue is unfair for LDCs, the scope and space
for a government to use procurement as an instrument for development
would be seriously curtailed.
18. TRADE FACILITATION
18.1 Negotiations will begin after the Fifth
Session. The primary aim of negotiations on Trade Facilitation
is to harmonize and simplify customs procedures around the world
in a cost-effective way. LDCs should therefore seek inclusion
of appropriate provisions for technical assistance and financial
support.
19. WTO RULES
19.1 The Declaration refers only to the
Agreement on Anti-dumping (Article VI of GATT 1994) and the agreement
on Subsidies and Countervailing Measures. Our suggestions in this
respect are the following:
— Since LDCs are not able to defend
their industries against dumped or subsidized imports or to protect
the legitimate interests of the exporters, simplified procedures
for taking anti-dumping and anti-subsidy action need to be devised
for use by LDCs;
— The best endeavour provisions of
Article 15 of the Anti-dumping Agreement needs to be operationalised
so as to impart stability to the initiative undertaken to improve
market access for the LDCs;
— For purpose of application of Article
5:8 of the Anti-dumping Agreement, the threshold for the volume
of imports from LDCs may be raised from 3% to 7%, and exempting
them from cumulation.
20. TRADE AND
ENVIRONMENT
20.1 The Committee on Trade and Environment
will report to the Fifth Session and recommend future actions
and negotiations. Bangladesh delegation may note the following:
Negotiations will be conducted on:
— the relationship between the existing
WTO rules and specific trade;
— obligations set out in a possible
multilateral environment agreement (MEA);
— the reduction or elimination of tariff
and non-tariff barriers on environmental goods and services.
21. ELECTRONIC
COMMERCE
21.1 The General Council will report to
the Fifth Session. The work programme on E-Commerce may continue.
22. SMALL ECONOMIES
22.1 General Council will report to the
Fifth Session on the work programme under the Council. The work
programme may continue.
23. TRADE, DEBT
AND FINANCE
23.1 The General Council will report to
the Fifth Session. We have no comment at the moment.
24. TRADE AND
TRANSFER OF
TECHNOLOGY
The General Council shall report on the work
of the Study Group to the Fifth Session. Bangladesh should seek
technical assistance from the development partners.
Bangladesh Parliament Secretariat
January 2003
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