Memorandum submitted by Oxfam
INTRODUCTION
1. Oxfam welcomes the opportunity to feed
into the Committee's inquiry post Cancún. The launch of
the Doha development agenda was based on the promise that this
round would finally deliver the reforms needed to provide developing
countries with trade opportunities "commensurate with
their development needs", something they were promised
almost half a century ago in the GATT agreement of 1947. Developing
countries came in good faith to the Cancún ministerial
conference, expecting a fair deal. However, the conference ended
in failure because developed countries were unable to match with
deeds the commitments made in Doha.
2. A number of critical factors contributed
to this unfortunate outcome: The European Union and the United
States failed to build domestic constituencies in support of deep
agricultural reform, the cornerstone of this round. Moreover,
the international environment, marked by economic recession and
weaker international cooperation, was more favourable to protectionism
and unilateralism than a renewed commitment towards reform and
multilateral trade rules. To make things worse, the agenda was
completely overloaded due to missed negotiation deadlines on all
key areas and the push by the European Union, Canada and Japan
for the launch of negotiations on the very controversial Singapore
issues.
3. In a way, everybody hoped for a miracle
in Cancún, as if a four-day conference could compensate
for two years of frustrating deadlock. The fact that it did not
is no excuse for a complete freeze of the negotiations, which
would be disastrous for everybody. This is a luxury that neither
developed nor developing countries can afford. The development
challenges are too pressing and the need for multilateral economic
cooperation too great.
4. For these reasons, Oxfam joins many developed
and developing countries in urging every WTO member to go back
to the negotiating table to restart talks on a more constructive
basis and with renewed energy.
RESPONDING TO
PRESSING DEVELOPMENT
CHALLENGES
5. The world trade system has so far failed
to deliver on such a promise. In fact, the benefits of international
trade remain unequally distributed:
— With 14% of the world's population,
high-income countries account for 75% of world exports.
— Low-income countries with 40% of
the world's population account for 3% of world trade.
— The UK accounts for a larger share
of world exports than South Asia and Sub-Saharan Africa combined.
— Unfortunately, this poor economic
result is, at least in some part, due to continuing imbalances
in global trade rules which urgently need to be addressed. For
instance:
— Developing countries exporting to
rich ones face trade barriers four times higher than those faced
by industrialised countries—and goods produced by the poorest
people face the highest import barriers of all.
— Northern governments are allowed
to spend billions on agricultural subsidies, mainly for their
richest farmers and agribusiness. Amounting to six times their
spending on aid, many of these subsidies generate large surpluses
that are dumped on world markets at prices bearing no relation
to production costs.
6. Unless these imbalances are corrected,
there is little hope that Millennium Development Goals will ever
be achieved.
DEFENDING MULTILATERAL
ECONOMIC CO
-OPERATION
7. Almost ten years after the creation of
the WTO the belief that multilateral trade rules are the best
option is under fierce attack. The WTO is accused of being slow,
cumbersome and inflexible. Big powers, confronted with greater
preparedness and resolve of poorer nations, are threatening to
short-circuit the WTO system and pursue their objectives through
bilateral or regional deals.
8. While the WTO has certainly failed to
live up to expectations, this fever for bilateralism and regionalism
makes little economic and political sense:
— Bilateral and regional trade agreements
can create severe distortions in trade flows, with greater costs
than benefits for parties involved and the world economy as a
whole. This is why the Most Favoured Nation was established as
one of the cornerstone principles of the WTO and why there are
disciplines on the establishment of free trade agreements and
customs unions in Article XXVI of the GATT.
— The plethora of existing bilateral
and regional agreements has had very mixed economic results. For
instance, the 2003 World Trade Report shows that many Regional
Trade Agreements have not led to trade creation, for instance
because they failed to liberalise the sectors where the greatest
protectionism was present (p59, WTO, 2003).
— Bilateral and regional trade agreements
contribute to greater legal complexity and uncertainty, not only
for customs authorities but also for economic actors faced with
a web of contradictory rules and lack of clarity about their hierarchy
and applicability.
— Bilateral or regional agreements
involving developed and developing countries reinforce the natural
imbalance existing between rich and poor nations, leading to very
inequitable results with adverse consequences on the ability of
developing countries to move up the development ladder.
— Bilateral and regional agreements
do not have a dispute settlement mechanism equivalent to that
of the WTO and therefore do not guarantee that rules will be enforced.
— Bilateral and regional agreements
are unlikely to provide developed countries with access to the
larger markets of developing countries. The Financial Times described
the US strategy as "Trawling for Tiddlers", since the
largest developing economies are showing no eagerness to negotiate
with the United States outside the WTO.
— Agriculture, the thorniest issue
under negotiation, cannot be resolved through regional or bilateral
agreements since the European Union and the United States will
never accept negotiating subsidy reductions outside of WTO. Similarly,
agricultural markets of the South will never be liberalised without
a deal on a substantial reduction in subsidies.
9. Furthermore, putting multilateral economic
cooperation aside is inconsistent with the growing recognition
that greater cooperation, albeit difficult, is needed to respond
to the world's current challenges in terms of security, stability,
development and environmental protection. Major powers cannot
have it both ways, rejecting multilateral cooperation today and
demanding international solidarity tomorrow, without completely
losing their credibility and creating even more distrust in the
international community.
A WAY FORWARD
10. The collapse of the Cancún Summit
has undermined and possibly imperilled the multilateral trading
system. There is an obligation on everyone to get the negotiations
for a genuine Development Round back on track. The alternative
is to abandon hope that nations can create together global trade
rules to help remedy the growing inequality and dangerous instability
of our divided planet. Confidence-building measures by major players
are urgently needed to re-build trust and commitment to the round's
success.
11. The Cancún declaration provides
some useful clues on how to restart discussions in Geneva. It
proposes to build on the "valuable work" done during
the conference with two key principles:
— maintain points of convergence:
"In those areas where we have reached a high level of convergence
on texts, we undertake to maintain this convergence while working
for an acceptable overall outcome."
— reconvene soon: "convene
a meeting of the General Council at Senior Officials level no
later than 15 December 2003 to take the action necessary at that
stage to enable us to move towards a successful and timely conclusion
of the negotiations".
12. One of the positive developments that
also needs to be built upon is the improved coordination and coherence
among developing countries, through the group of the G-20+, and
the consolidated ACP/LDC/Africa Union. Rather than a threat, this
new political landscape should be seen as an opportunity to move
forward in a more focused and effective manner, overcoming some
of the difficulties linked with negotiations among 146 members.
13. In the light of the above, Oxfam makes
the following recommendations on four areas of negotiations which
are crucial if the WTO is to overcome the current deadlock, and
restart negotiations. Once negotiations are back on track, other
important issues such as TRIPs, implementation or special and
differential treatment will also have to be taken up by the membership.
14. The spirit of these recommendations
is to provide suggestions on minimum steps to restart the negotiation
process.
AGRICULTURE
15. Agriculture is the single most important
issue on the agenda of the WTO and will define its capacity to
deliver on a pro-development reform agenda. More than three-quarters
of the world's poor—some 900 million people—live in
rural areas, most of them working as small-scale farmers.
16. It is therefore quite clear that without
constructive steps forward on agriculture negotiations cannot
really restart.
17. The various proposals made by key developed
and developing country in the run up to, and at, Cancún
should provide useful inputs for restarting negotiations on modalities
which should be completed without further delay. According to
feedback from several developed and developing country members,
discussions at Cancún seemed to be moving in the right
direction. These advances must be capitalised upon. The EU and
the US need to make meaningful concessions on subsidies, if they
want additional market access in major developing country markets.
Contrary to what happened at Cancún, more attention needs
to be given by the Quad and the G20+ to the demands of the poorest
members for effective special and differential treatment.
18. We suggest the General Council set,
as soon as possible, a new date for the completion of modalities
and for the chairman of negotiations to start consultations based
on the various framework proposals presented by WTO members.
COTTON
19. Cotton became a litmus test at the Cancún
conference because it provides a stark illustration of the flaws
of current WTO rules on agriculture. Despite disciplines agreed
during the Uruguay Round, cotton subsidies are threatening the
survival of tens of millions of producers in developing countries.
West African countries came to negotiate in good faith and presented
constructive proposals in Cancún, gathering solid political
support from the vast majority of both developed and developing
countries.
20. The failure to reach a result at Cancún
is a serious set back. West African countries have showed some
flexibility at Cancún in terms of the end date of trade-distorting
cotton subsidies. But their producers cannot wait until the end
of the round for action, especially if it is delayed beyond 2005
and implemented over the course of five to ten years. By then,
one of the very few competitive sectors in these desperately poor
countries would be dead, which is why cotton was put on a separate
track in the first place.
21. The text presented on 13 September,
which was rejected by the vast majority of WTO members, should
be discarded as a basis for discussion. To move towards a solution
as soon as possible, the negotiation group on cotton issues, created
at Cancún, needs to be reconvened as soon as possible to
look at alternative options.
22. Of course, the phase out of all trade-distorting
cotton subsidies would require important efforts on the part of
the United States, the main subsidizer of cotton, and also the
European Union. Potential difficulties for cotton producers in
wealthy countries, especially small producers, must be taken in
account. But these concerns should not be used as an excuse for
inaction. While clearly insufficient, the proposed reform of the
EU cotton sector is a useful first step. The US should also rise
to the challenge and come up with constructive proposals regarding
its own cotton subsidies. Any meaningful initiative would be helpful
to resolve the current deadlock.
SINGAPORE ISSUES
23. Singapore issues played a significant
role in the failure of the Cancún ministerial.
24. In pre-Cancún ministerial declarations,
90 developing countries had clearly indicated that they were not
ready to launch the negotiations at this time. They were backed
by the majority of NGOs and trade unions, several international
business groups, and the World Bank as well as parliaments of
several EU member states.
25. Clearly misreading the political climate,
proponents such as the European Union, Canada and Japan continued
to hope that opponents would accept their approach, while the
vast majority of members clearly indicated their unwillingness
to launch negotiations at this time. The insistence on launching
negotiations in such a context contributed to a polarised political
climate.
26. Irrespective of their individual merits,
it is clear that, for the time being, Singapore issues cannot
be negotiated at the WTO. It is time for demandeurs to accept
this political reality if they want negotiations to restart on
a more constructive basis. The European Union should take a positive
step forward by clearly indicating their readiness to drop Singapore
issues from the negotiation agenda so the atmosphere can be cleared
and membership can focus on the core agenda of the WTO. Such a
step would demonstrate concretely that the message sent by developing
countries has been heard and that the European Union is ready
to make concessions to salvage the multilateralism and the WTO
at this decisive moment.
TRIPS
27. Included as an appendix is the joint
NGO statement issued on 30 August in response to the WTO decision
on patents and medicines which was aimed at allowing countries
without adequate drug production capacity (including all developing
countries) equal rights to affordable generic medicines as rich
ones.
28. NGOs are critical of the WTO decision
that we believe is unnecessarily restrictive due to pressures
from rich countries. We had supported a simpler, fairer and broader
solution which had been backed by developing countries, the WHO
and intellectual property experts, but which was rejected by the
US and EU.
29. Nevertheless, given that the decision
has been taken, Oxfam now believes that it should be tested and
hopefully made to work. To that end, countries with drug production
capacity, including the UK, should amend their national legislation
to allow compulsory licensing for export. The lessons from implementing
the WTO decision should be used to simplify and improve the final
amendment at the WTO discussions on which will begin in December.
30. In addition, Oxfam and other NGOs also
strongly urge WTO members to fully implement the Doha Declaration
on TRIPS and Public Health. This requires:
— Countries to begin using all the
TRIPS public health safeguards to provide affordable medicines
to the poor, (including complusory licensing, Article 30 exceptions,
the 30 August, 2003 decision, and the extended deadlines for LDCs
granted by the Doha Declaration).
— An end to rich country and corporate
pressure on developing countries to implement TRIPS plus obligations
in regional or bilateral trade agreements.
— Technical assistance bodies including
the WTO secretariat, WIPO, government to ensure that the Doha
Declaration is fully integrated into their technical assistance
programmes.
— Companies to agree to a systematic
and global system of tiered pricing, and to endorse the use of
the TRIPS public health safeguards by developing countries.
31. However, while the recent WTO decision
on TRIPs and health was supposed to remove restrictions on the
export of affordable generic medicines—it does nothing
to address the 20-year patent period imposed by TRIPS which restricts
the production of affordable medicines. Increasingly, in
the future the supply of generic versions of newly patented medicines
will rely on countries issuing compulsory licenses. Unless this
can and is done in a routine and flexible way, or unless patent
periods are shortened in developing countries, it will become
increasingly hard for generic companies to achieve the necessary
markets and economies of scale to produce affordable, quality
generic medicines. And if this happens it will mean new improved
medicines will remain priced out of reach for many of the world's
poor.
32. For this reason the international community
must continue to monitor the health impacts of the Agreement,
and consider further future reforms to the TRIPS Agreement in
order to give developing countries greater freedom to decide the
appropriate length and scope of patent protection for medicines
based on public health needs. More broadly, evidence from authorative
sources such as the recent Commission on Intellectual Property
Rights (CIPR) and the Royal Society indicates the need for a substantive
review of the entire TRIPS Agreement in the light of its detrimental
impact on global intellectual property rules on innovation, access
to knowledge-based goods and development.
INSTITUTIONAL REFORM
33. Given the failure of the Cancún
ministerial, the issue of institutional reform has been raised
by several members, including the European Union.
34. There is little doubt that procedural
issues contributed to the Cancún failure, including the
drafting of text under the responsibility of chairmen, the role
of facilitators, decisions regarding the sequencing and prioritisation
of issues on the conference agenda, and the lack of clear procedures
and responsibilities for extending the conference.
35. For instance the revised declaration,
which arrived late in the process on the afternoon of the penultimate
day (13th), failed to reflect reactions and counterproposals of
developing countries. The enormous gap between the proposed text
and the positions of the vast majority of the membership led a
number of countries to question the value of their participation
at the conference.
36. Previous attempts at institutional reform,
initiated by the breakdown at Seattle, have failed. While business
as usual is not an option, Big-Bang proposals and sweeping reforms
are unlikely to be accepted by all parties, at least in the near
future.
37. However some concrete, common-sense,
reforms could be adopted before the end of the year, which could
significantly improve the atmosphere and help restart negotiations
in a more transparent and efficient manner. These include:
— a decision by the General Council
on which text should be the basis of further discussions;
— clearer terms of reference for chairs/friends
of the chair;
— clearer procedures for preparing
new drafts, which should reflect different views or present options
on controversial issues;
— a more realistic timetable for the
completion of the talks.
CONCLUSION
38. The way forward is simpler than it seems.
WTO members need to stay true to the spirit of the Doha ministerial
declaration, where ministers recognized that the world trading
system was deeply imbalanced and needed to respond better to the
needs and aspirations of developing countries, which constitute
the vast majority of its membership. This decision was made not
out of naïve generosity, but based on the growing realisation
that sustainable development for all would guarantee greater prosperity
and stability, and is in every country's interest. It is now time
for WTO members, with the support of civil society, to transform
this vision into concrete actions.
RESPONSE TO
UK GOVERNMENT'S
REPORT TO
THE COMMITTEE,
PARAGRAPH 108
39. We agree with, and welcome, the Government's
commitment to reach agreement on a new framework for special and
differential treatment for poor countries, but firmly believe
that an important aspect of that framework should be longer transition
periods for poor countries for relevant WTO agreements. TRIPs
is a prime example, and indeed WTO members recently accepted the
need for longer transition periods for poor countries by extending
the compliance period for medicine patenting for LDCs until 2016.
This was a welcome step in the right direction, but the extension
is a fixed and short period, and based on political calculations
rather than health or development criteria. The need for longer
compliance periods for poor countries is also supported by the
findings from the independent Commission on Intellectual Property
(the CIPR) established by the UK Government. It said "We
are not persuaded by the arguments that developing countries at
very different stages of development should be required to adopt
a specific date (January 2000 for developing countries and January
2006 for least developed countries) when they should implement
TRIPS regardless of their progress in developing a viable technological
base. On the contrary we believe there are strong arguments for
greater flexibility in setting an optimum time to strengthen IP
protection, taking into account the nation's level of economic,
social and technological development". (Also see further
quotes below.) It makes logical sense for compliance periods for
both least developed and developed countries to be extended on
bloc based on their achievement of development milestones".
40. Moreover, in a DTI response to a parliamentary
question on this topic from Tony Worthington MP, the UK Government
accepted the case in principle for longer transition periods.
It said it "the UK Government supports the development of
objective criteria to form the basis upon which extensions on
TRIPS transition periods should be agreed. The Government therefore
supports the introduction into TRIPS of a mechanism for extending
transition periods for individual developing countries".
We believe that the Government should also support mechanisms
for extending transition periods for developing and least developed
countries en bloc.
41. Finally, we do not understand why the
Government thinks that "longer transition periods could mean
that many countries would be unable to take advantage of new trading
opportunities, leaving them excluded and marginalised in the world
trading system". Developing countries are not likely to push
for longer compliance periods in agreements which bring them clear
and immediate benefits. Moreover, unlike in plurilateral agreements
they would still be signatories to the agreement and thereby party
to ongoing negotiations.
42. Quotes from CIPR about the impact
of global IP rules on developing countries: "Because
developing countries are large net importers of technology from
the developed world, the globalisation of IP protection will result
in very substantial net transfers from developing to developed
countries."
43. "There is much less evidence from
developing countries indicating that IPR systems are a key stimulus
for innovation. Indeed, for most developing countries with weak
technological capacity, the evidence on trade, foreign investment
and growth suggests IP protection will have little impact. Nor
is it likely that the benefits of IP protection will outweigh
the costs in the foreseeable future. For most developing countries."
44. "The evidence suggests that the
IP system hardly plays any role in stimulating research on diseases
particularly prevalent in developing countries, except for those
diseases where there is also a substantial market in the developed
world. Nor it is likely that the globalisation of IP protection
will lead to greater investment by the private sector for the
development of treatments for diseases that primarily affect developing
countries. The evidence also suggests that patent protection has
an effect on the prices charged for medicines. In the absence
of patents more people would be able to afford the treatments
they need."
October 2003
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