Memorandum submitted by Consumers International
1. OVERVIEW OF
CONSUMERS INTERNATIONAL
Founded in 1960, Consumers International (CI)
is the only global federation of consumers organisations, representing
over 234 groups in 113 countries. Its members in the UK include
Which? and the National Consumer Council. CI is a not-for-profit
company limited by guarantee registered in England and Wales,
and has regional programmes currently managed from offices in
Ghana, Chile and Malaysia as well as London.
Through its membership, CI represents the interest
of over six billion consumers worldwide. CI is committed to promoting
the interests of all consumers, especially those living in poverty
and unable to enter markets as well as consumers who have unequal
bargaining power in the marketplace.
CI is dedicated to the protection and promotion
of consumers' interests worldwide through institution-building,
education, research and lobbying of international decision-making
bodies.
We campaign to promote consumer concerns on
a wide range of issues, such as trade and investment, public utilities,
e-commerce and internet regulation, environment, health, food
and technical standards.
1.1 Consumers International and Trade
Consumers are the people that make markets work;
we buy goods and services. CI is committed to ensuring that the
consumer voice is heard at the international level. In the developed
world, consumers have the ability to support development by choosing
fair trade products, though ranges are limited. In the developing
world consumer choice is limited. As we will demonstrate, dumping
of agricultural goods means that foodstuffs from the developed
world are cheaper than local products and therefore consumers
cannot support their own producers.
Consumers International and its member organisations
recognise the need to balance the value and benefits of market
openness with the obligation to provide universal access to basic
goods and services and the importance of defining and meeting
safety and other standards. Currently trade rules benefit big
business and consumers suffer as a consequence. Better and fairer
trade rules are vital if the Millennium Development Goals are
to be met and we are going to make poverty history.
The international consumer movement demands
a multilateral trading system which supports and encourages the
protection and development of consumer rights. Consumer policy
is integrated into trade policy at both the national and international
level and this requires that consumers must be represented in
policy making. We believe that the UK Government should focus
its attentions during the Sixth Ministerial meeting of the World
Trade Organization (WTO) on opening up markets to enable all consumers
to get a fairer deal.
We believe that trade matters to all consumers
including:
— One billion people who go without
a supply of safe drinking water let alone electricity.
— More than two billion people who
do not have access to essential medicines.
— The 1.5 billion consumers in the
developed world who pay £1,000 over the odds for food due
to unfair agricultural subsidies.
Member governments of the WTO have procrastinated
for far too long over key issues of subsidies, market access and
service provision, the WTO must strive to complete the Doha Round
to deliver fair trade rules.
Consumers International supports the UK Government's
trade agenda and believes that the focus on Africa can do much
to alleviate poverty in that region, however it should also be
noted that Least Developed Countries (LDCs) in other regions need
similar support mechanisms.
1.2 Trade and Millennium Development Goals
The Doha round of multilateral trade talks must
achieve its pledge of ensuring development issues are at the heart
of the talks. Consumers International believes that the UN Millennium
Development Goals (MDGs) provide a framework for development that
the WTO should consider adopting during the Hong Kong negotiations.
Trade negotiations should be about the benefits conferred to all
stakeholders, not just business, therefore we believe that progress
towards reaching the the MDGs provide benchmarks for success.
If the WTO adopts the goals as its performance indicators, it
will show that member governments have the political commitment
necessary to make trade work for all consumers.
2. KEY RECOMMENDATIONS
Consumers International believes that trade
liberalisation has the potential to bring many benefits to consumers.
However, these benefits will not be achieved if the world trading
system neither recognises nor addresses the imbalances between
developed and developing countries, and if appropriate regulation
of commercial activity is not in place to ensure the advancement
of consumer rights.
Multilateral, regional, bilateral and even national
trade rules can help achieve development and poverty reduction
goals if the following principles and procedures guide negotiations:
— All relevant countries should benefit
from trade agreements—improvements in market access must
outweigh the costs of implementing trade agreement obligations.
— Trade is seen as a means to an end
rather than an end in its own right— trade must be geared
to achieving international sustainable development and reductions
in poverty.
— All parties to a trade agreement
are able to participate effectively in decision-making.
3. THE IMPLICATIONS
OF DIFFERENTIATION
BETWEEN DEVELOPING
COUNTRIES FOR
THE OUTCOMES
OF THE
MINISTERIAL. TO
WHOM SHOULD
SPECIAL AND
DIFFERENTIAL TREATMENT
BE APPLIED?
3.1 Consumers International believes that
the demarcation between developing countries is unhelpful from
both a development and consumer point of view. It is the developed
world which is trying to classify countries as more developed
etc, this can be seen in the recent textiles debacle whereby the
EU and US governments have re-introduced tariffs on textiles coming
from China to protect their own producers claiming that the burgeoning
Chinese economy can cope with cutbacks. This does not take into
account the cost impact on consumers, nor the severe poverty faced
by many rural and urban Chinese.
3.2 There have been many debates about to
whom S&D should be applied, but this has been in the context
of which markets developed countries want access to and inevitably
politics underpins this. For example, the EU's "Everything
but Arms" initiative, which provides market access to the
Least Developed Countries (LDCs), was diminished by the continued
discrimination against developing country producers in "sensitive"
sectors such as sugar, where the EU continued to protect its own
producers. This indicates the limitations that can be applied
to S&D in practice.
3.3 We believe that S&D should be used
as a development tool and while the developed world should give
absolute priority to LDCs, we also feel that developing countries
in a position to do so ought to open up their markets to LDCs.
This however isn't where the biggest problem lies. The developed
world continues to push for free trade agreements with certain
countries yet they still refuse to scrap their own unfair agricultural
subsidies and domestic support.
3.4 Recommendations
— Effective special and differential
treatment for developing countries through recognition of special
products and the need for a special safeguard to deal with crises
without a reciprocal arrangement.
— Binding commitment to duty- and quota-free
market access for Least Developed Countries.
— The WTO must give priority to providing
technical support to developing countries to help them improve
food and product safety and participate in international standard-setting
institutions.
4. THE EXTENT
TO WHICH
TARIFF ESCALATION
AND OUTDATED
RULES OF
ORIGIN HARM
PROSPECTS FOR
INDUSTRIAL DEVELOPMENT.
4.1 Consumers International welcomed the
2001 Doha Ministerial Declaration call for "substantial improvements
in market access". Given the role of a wide range of intermediaries
(including exporting interests and an increasingly powerful retail
sector) and supply-side constraints, it is by no means automatically
the case that socially equitable benefits for developing countries
will accrue from export promotion and greater market access opportunities
to developed countries. However, if effective policies are put
in place to remedy supply-side constraints and address such problems
as agribusiness and food retail market powers, greater market
access could bring significant benefits to developing country
consumers, particularly rural consumers.
4.2 Tariff escalation
4.2.2 Consumers International believes the
averaging of tariff cuts leading to "dirty tariffication"
should be stopped. In theory, trade liberalisation should allow
Southern producers and Northern consumers to benefit from trade
to each other's markets. However, in practice, developing countries
do not get reciprocal access to rich country markets because of
such practices as "dirty tariffication" in which, for
example, the highest percentage reductions in tariffs are made
in those sectors with the lowest tariffs. For example a 99% cut
can be made to a 1% tariff and a 1% cut to a 99% tariff, with
the two cuts notified to the WTO as having produced a 50% average.
4.2.3 Additionally, Consumers International
urges the elimination of tariff escalation (increased tariffs
on products as value is added). Tariff escalation penalises the
industrialisation of LDCs and is a tax on development. It encourages
countries to export primary products and discourages them from
exporting processed products, reserving the more lucrative industrial
goods for developed countries. Tariff escalation in the EU and
US severely limits the export of value-added agricultural products
by developing countries, to the detriment of their consumers as
well as both consumers and farmers in the developing countries.
LDCs desperately need to diversify the type of commodities they
produce and move away from producing primary commodities that
are particularly vulnerable to external shocks.
4.2.4 While Brazil exports coffee beans
to the EU, exports of value-added ground roasted coffee are hindered
by EU tariff escalation, thus limiting the economic benefit of
trade for Brazilian consumers and farmers. At the same time, the
EU practice of re-exporting the now processed Brazilian coffee
means that the European consumer does not benefit from lower coffee
prices.
4.2.5 Cocoa is another example of a commodity
in which the negative impact of tariff escalation is clearly felt.
Exporters of cocoa to the EU and USA are generally subject to
tariffs of 0% on cocoa beans but this rises to over 15% if it
is processed into chocolate.
5. STANDARDS
AND RULES
OF ORIGIN:
BARRIERS TO
TRADE OR
CONSUMER INFORMATION?
5.1 Standards
5.1.2 Big business has argued that rules
standards can be detrimental to trade and therefore making money.
From the consumer perspective standards foster trust in the trading
of goods, including agricultural products and food, and services.
5.1.3 There is no doubt that a balance needs
to be found between setting standards for consumer protection
and avoiding unfair barriers to trade. Cases are reported where
standards have been set to levels that make it extremely difficult
for developing countries to access northern markets. This is due
in part to a lack of the required technical assistance to meet
technical and health and safety standards applied in accordance
with WTO rules. At the same time, Consumers International research
reports widespread evidence of dumped surpluses imported into
developing countries being of sub-standard quality.
5.1.4 Clearly, food standards and food safety
matter very much to consumers, particularly vulnerable consumers
who have less disposable income. However, a consistent approach
is needed to avoid spurious barriers being erected in the name
of consumer protection. Debate on developing such an approach
should be consumer-led.
5.2 Rules of origin
5.2.1 Rules of origin are used by countries
to discriminate between imports from different countries. Such
rules are central to any preferential trade arrangement, such
as a free trade area, customs union or preferential access arrangement.
Rules of origin allow a country to deny the benefits of an agreement
to countries that have not signed up to a treaty or agreement
(eg EU, GSP, the North American Free Trade Agreement—NAFTA).
This discrimination can operate in both a positive and negative
sense:
— positive discrimination: rules of
origin can be used to help developing countries gain preferential
access to developed country markets, eg the Generalised System
of Preferences, the Caribbean Basin Initiative etc; and
— negative discrimination: rules of
origin can be used to block imports from countries not party to
an agreement, eg aspects of the European Union and NAFTA).
5.2.2 The regulation of rules of origin
agreements thus needs to be treated very carefully. On the one
hand, preferential access for developing countries needs to be
maintained, if not enhanced. On the other hand, rules of origin
should not be used by developed countries to unjustly block imports
from other, particularly developing, countries. Any regulation
of such measures thus needs to promote the former while limiting
the latter.
5.2.3 However the idea of discriminating
between countries in the granting of import status hits at the
heart of the principle of non-discrimination in the GATT system.
The charge is often that rules of origin can be used to undermine
the multilateral thrust of agreements like the Uruguay Round by
setting up networks of preferential access arrangements. Simply
having such rules can lead to trade diversion— where trade
flows are redirected to take advantage of an artificial benefit.
While this may seem petty, consider an agreement that allows preferential
access for all of the least developed countries. The definition
of a least developed country will have an artificial cut off point
and we may well find that one country will benefit while another
does not, despite the fact that they are almost identically disadvantaged.
This de facto discrimination is one of the central problem with
rules of origin being used in conjunction with preferential trade
agreements.
5.2.4 Another problem with rules of origin
requirements is that, in combination with different access privileges,
it creates an incentive for firms to manipulate national origin
information to gain an advantage. This creates a false basis for
some manufacturing operations (setting up of two plants either
side of a border to take benefit of a rule of origin requirement
for preferential access). This wastes much needed investment resources
and distorts trade unnecessarily.
5.2.5 Again, a balance needs to be struck
between the needs of developing countries for preferential market
access and the principles of the multilateral trade system. But
as an overall rule, it is infinitely better for all developing
countries to be given equally good market access to developed
countries, rather than allowing picking and choosing.
Rules of origin are based on one of two calculations:
5.2.6 The result for consumers.
A good can be deemed to have come from a country
if a significant change has been made to that product within the
borders of that country. For instance, if a company imports cocoa
beans, which are then transformed into a powdered chocolate drink
or a chocolate bar, a significant change can be said to have taken
place.
A second approach involves the calculation of
added value in a product. This calculation is of particular importance
for the establishment of assembly and screwdriver' plants. Most
countries set a minimum level of value added for a product to
qualify as having been manufactured in that country (eg 35% of
the value of the product). Such a rule would be aimed at stopping
manufacturers from country X importing all of the constituent
parts of a product and merely putting them together on the dockside
of country Y, claiming them to be sourced in country Y.
The results of the rules of origin talks were
few to see. As such the effect on consumers is minimal. It is
important to monitor the potential effect of the review process
contained in the agreement is more important to watch. Consumers
need to ensure that the process is not used to undermine the preferential
access that developing countries currently have, nor is used to
limit their future prospects.
5.3 Conclusions
Preferential trade agreements are unfortunately
an important tool for Developing Countries: if they are to be
replaced it must be with totally duty free access for their products.
The review process looks closely at the preferential
trading arrangements of developed countries to ensure that they
neither discriminate against developed world consumers nor against
Developing Countries.
While the current agreement does little to control
the use of rules of origin, the debate about their use has, if
anything, become more intense. One of the main reasons for this
has been the problem of how to deal with China. For many years
the US, in particular, played constant "cat and mouse"
games with Chinese manufacturers seeking to get around strict
rules of origin. The so-called "anti-circumvention"
measures cost time and money to apply and this is multiplied when
significant distance is involved. With China's entry into the
WTO in 2001, consumers' organisations will have to keep an eye
on the way in which rules of origin are applied to ensure that
they are not used to restrict Chinese goods unnecessarily.
6. THE DEGREE
TO WHICH
LIBERALISATION OF
INDUSTRIAL AND
MANUFACTURING SECTORS
THREATENS TO
UNDERMINE DEVELOPMENT.
WHAT ASPECTS
OF THE
NON-AGRICULTURAL
MARKET ACCESS
NEGOTIATIONS WOULD
BENEFIT DEVELOPING
COUNTRIES?
6.1 The elimination or reduction of all tariffs
6.1.2 Non-Agricultural Market Access (NAMA)
negotiations within the Doha Development Agenda (DDA) focus primarily
on the reduction or elimination of tariffs. This includes the
reduction or elimination of tariff peaks, high tariffs, and tariff
escalation, and non-tariff barriers (NTBs), such as labelling,
for both industrial and environmental goods (energy efficient
products such as refrigerators, water and waste water management,
air pollution control goods, etc) Thus, the outcome of the Doha
negotiations on NAMA will have a significant impact on consumer
rights to the satisfaction of basic needs, safety, information,
choice and a healthy environment as well as on the industrial
and development policies of WTO Member Governments.
6.1.3 Consumers International calls for
direct reduction or elimination of tariff escalation, especially
developed countries' tariff peaks, given their harmful impacts
on both consumer welfare and economic growth of developing countries.
The Doha Round negotiations should focus on products of export
interest to developing countries and fully take into account the
special needs and interests of developing and least-developed
countries, including the principle of less-than-full-reciprocity.
However, in the negotiations leading up to the
Hong Kong Ministerial, we are concerned that negotiations on NAMA
are undermining special and differential treatment provisions
for developing countries, reversing the principle of less-than-full
reciprocity for developing countries, restraining the policy flexibility
of developing countries' industrial policies, and threatening
eco-labelling schemes for consumer goods.
6.2 The key areas of concern for Consumers
International are:
6.2.1 Least developed Countries (LDCs).
6.2.2 Consumers International believes this
access must be offered immediately. However, although LDCs are
excluded from requirements to apply any formula of reduction,
they are still expected to "substantially increase their
level of binding commitments".
6.2.3 The 2004 WTO July Package reaffirmed
the 2001 Doha Ministerial Declaration statement that there should
be less-than-full reciprocity and provisions for special and differential
treatment (S&D) for developing countries. However, several
developing countries are claiming that there is not sufficient
focus on these elements in the negotiations.
6.2.4 This claim is in reaction to the advancement
of the simple Swiss, or linear, type of formula favoured by several
developed countries that would involve steeper cuts in higher
levels of industrial tariffs and tariff peaks (defined differently
by developed and developing countries) and lead to a harmonisation
of tariffs. However, since in general, tariffs in developing countries
are higher than in developed countries, this formula would result
in greater reductions in industrial tariffs in developing countries.
6.2.5 Consumers International is concerned
that this type of formula will mean that market access for industrial
goods will be more and more reciprocal, as has occurred under
the Economic Partnership Agreements (EPAs) between the EU and
Africa, Caribbean and Pacific (ACP) countries. Since the average
bound tariff in developing countries is l4% while that of developed
countries is 3%, harmonisation would involve greater reductions
by developing countries. In contrast, some developing countries
have argued for the need for a more flexible formula that uses
the average bound tariff of each country.
6.2.6 Consumers International believes that
developing countries should have the right to flexibility in levying
tariffs, especially regarding imports. However, care should be
taken in drafting averaging proposals to avoid giving scope for
the kind of "dirty tariffication" that was seen under
the Uruguay Round agreements whereby developed countries have
reduced tariffs on products of little importance and maintained
them on products of great importance.
6.3 Labelling of environmental goods and product
safety
6.3.1 Negotiations toward the reduction
or elimination of tariffs and non-tariff barriers, including labelling
requirements, to environmental goods were mandated within the
Doha Ministerial text. These negotiations are being conducted
within the negotiating group on market access and thus are part
of the NAMA negotiations.
6.3.2 Consumers International is highly
concerned that several countries have identified certification
schemes as a general issue to be discussed. For example, South
Korea has challenged US labelling of energy efficient refrigerators
and "unduly strict" safety measures on cars and "stricter
than necessary" standards on certain chemicals. Several Member
Governments raise objections to "excessively high" safety
and quality control standards and certification requirements for
electronic products. Thailand, for example, challenges restrictions
on the use of certain heavy metals in the production of electronic
products.
6.3.3 Negotiations about the reduction or
elimination of non-trade barriers must ensure that relevant consumer
interests in safety will not be undermined. Consumers International
is concerned that several key issues that represent a serious
challenge to health and safety seem to be at stake in the current
negotiations.
Such challenges must not be allowed to reduce
the labelling requirements consumer organisations have fought
so hard to acquire. For example, our research in Lebanon found
that inadequate labelling of pesticides has led to widespread
overuse or misuse of dangerous pesticides— many of which
are currently banned by international agreements. As a result,
although Lebanon has a trade agreement with the EU, in
July 2005, the Ministry of Trade stated that Lebanese exporters
are facing serious barriers to entry. Approximately 35% of their
agricultural products are being rejected because of the use of
illegal and unsafe additives and chemical products.
6.3.4 Consumers International believes that
consumers must know under which conditions products have been
produced and if environmental effects from the use (or misuse)
could result. This right of information about product safety and
possible environmental problems—for example in the case
of genetically modified organisms (CMOs) as part of the Cartagena
Protocol—must be guaranteed for food and products that are
used in food production.
6.3.5 Consumers International is strongly
opposed to any undermining of existing measures enabling informed
consumer choice regarding quality and safety of products.
Negotiations on labelling must take into account
the fundamental relevance of certain useful trade-related requirements
in order to promote safe, healthy and sustainable consumption
by well-informed consumers. The negotiations should therefore
clarify that the precautionary principle will not be at stake.
No measures should be taken without an independent impact assessment
about the implications for consumers and the environment.
6.4 Conclusions and recommendations
— Developed countries should immediately
offer duty free and quota free market access on industrial goods
to least developed countries.
— Reduce tariff and non-tariff barriers
that can have a negative impact on consumers, especially tariff
escalation that can have harmful impacts on both consumer welfare
and the economic growth of developing countries.
— Members of the WTO should identify
an appropriate tariff reduction formula that will allow developing
countries the flexibility of implementing pro-consumer industrial
policies while keeping their pledge to take fully into account
the special needs and interests of developing and least-developed
countries, including the principle of less-than-full reciprocity.
— The WTO negotiations on environmental
goods must not undermine existing measures enabling informed consumer
choice regarding quality of and safety of products. Labelling,
including eco-labelling schemes, must not be threatened by WTO
rules.
7. THE BENEFIT
OF INCLUDING
GATS MODE IV, THE
TEMPORARY MOVEMENT
OF LABOUR,
IN THE
SERVICES NEGOTIATIONS
FOR DEVELOPING
COUNTRIES. WHETHER
OR NOT
DEVELOPING COUNTRIES
SHOULD BE
MAKING MORE
"AMBITIOUS" OFFERS
IN THE
SERVICES SECTOR
7.1 One of the many failures of GATS is
that it has tried to adopt a "one size fits all" policy
for service provision. From the consumer perspective provision
of telecommunications is, and should be, very different from healthcare
or education. While for consumers the former is about competition
and consumer protection, the latter is about access.
7.1.1 There is a danger that, under pressure
to make commitments under GATS, countries will liberalise before
the proper consumer protection, competition and regulatory structures
are developed and introduced. This would lead to a repetition
of false liberalisations, characterised by ownership being transferred
to private (often foreign-owned) under-regulated monopolies. There
are still instances of such "liberalisation" programmes
reported by our members. In Brazil for example, high tariff
increases in the fixed line telecommunications sector are attributed
to the virtual absence of competition. In practice, competition
has been seen for corporate customers only.
7.1.2 There have been highly contentious
privatisation schemes in recent years involving transnational
companies in developing countries. Some concession agreements
such as those in Bolivia and Tanzania have collapsed,
often in acrimony, and even civil disturbance.
7.1.3 These episodes cannot be attributed
to GATS, and indeed, since 1997, the trend has been for foreign
investment in this sector to decline. What the episodes do indicate
is that there is a need for the development of a set of international
rules and conventions that are about much more than market access.
Yet market access is promoted by GATS and regulation is constrained.
7.2 Request-offer process
7.2.1 Many developed countries have bemoaned
the lack of "ambitious" offers tabled by developing
countries; we believe that the biggest barrier to ambitious offers
is the confidentiality surrounding GATS' "request-offer"
process, these should be abandoned. It is not a treaty requirement
and it needlessly increases public confusion and suspicion about
what is already a complex process. However, there was no commitment
on this, either in Cancún or in Geneva for the July framework.
Indeed the both texts exhort WTO "participants who have
not yet submitted their initial offers to do so as soon as possible".
7.2.2 Consumers International deplores this
continued failure to address the unjustified confidentiality of
the request-offer procedure. We see little reason why the members
should speed up their commitments until the Treaty is clarified.
Mechanisms for transparency and consumer consultation and access
to information should be introduced. Furthermore, changing the
request/offer process into a "common baseline approach"
would not help the confidentiality problem.
7.3 Mode 4
7.3.1 On Mode 4 of GATS, "the movement
of natural persons", in our 2001 GATS impact assessment for
the Doha summit we indicated the scope for improvements that would
help many developing country economies and developed country consumers.
It is regrettable that so little discussion
has taken place, not only of the benefits but also of the problems
that outward movement of skilled workers can cause for developing
countries. This aspect of GATS is being largely ignored by the
developed country WTO members, who place greater emphasis on the
other Modes (such as `cross border supply' and `commercial presence')
most favourable to their producers.
While the consumer interest in Mode 4 is ambiguous
it is notable that the reluctance of developed country WTO members
to discuss it is contributing to "freezing" all negotiations
on services under GATS.
7.4 Conclusions and recommendations
Effective and equitable regulatory structures
in the delivery of services such as electricity, telecommunications
and water are critical to development and poverty reduction.
— While we welcomed the affirmation
of the "right to regulate" in the Doha Declaration,
we want to this greater legal force by seeing the right to regulate
stated within the body of the General Agreement on Services (GATS)
treaty rather than in the preamble.
— There is a need for the need for
the consumer right of access to basic services to be promoted
through explicit recognition of universal service provisions and
the role that can be played by subsidy.
8. THE EXTENT
TO WHICH
DEVELOPING COUNTRIES
WILL GAIN
FROM AGRICULTURAL
TRADE LIBERALISATION
8.1 Agricultural trade liberalisation—
the current picture
8.1.1 As a general rule, Consumers International
supports trade liberalisation as it promotes competition that
in turn leads to consumer benefits. If the WTO can establish and
adhere to a liberalisation framework that supports developing
countries, all consumers will accrue benefits.
Agriculture and the related issues of food
sovereignty and food safety are of key importance to
consumers, especially in developing countries because of the prevalence
of small-scale rural farmers and the urban poor.
8.1.2 In some developing countries, the
requirements of structural adjustment policies have caused government
support to farming households to be reduced. This has caused an
increase in their production costs. At the same time, high levels
of domestic support and export subsidies in some developed countries
has led to a surge in cheaper imports into developing country
markets. For farming households who depend on farming as both
a source of food and income, these policies have affected them
twofold.
— Rising input costs have constrained
their ability to produce for home consumption.
— Due to increased competition from
cheaper imported produce income to purchase basic goods and services
has also declined.
In the continuing process of agricultural liberalisation
within the Doha round, Consumers International has called for
the elimination of subsidised exports and export credits, the
phasing out of trade-distorting agricultural domestic support
in developed countries, and greater market access for developing
country exports, particularly those benefiting small producers.
8.1.3 Consumers International has examined
trade liberalisation under the WTO agreements and other economic
reform programmes and its impact on consumers and development.
The research primarily focused on the issues of, agriculture and
competition, the research outlines some of the key consumer concerns
about specific WTO agreements, or their potential implementation.
The biggest barrier to effective trade liberalisation
is that the Agreement on Agriculture permits dumping to continue.
It has continued with serious effects in such countries as Malawi
and Kenya. Furthermore, there is evidence that subsidies thought
to be non-distorting may in fact be trade distorting, and may
thus contribute to overproduction and dumping.
8.1.4 Research from our members has indicated
that liberalisation has been to the detriment of consumers:
Malawi—Imported agricultural products
are often less expensive than locally produced agriculture, yet,
during food shortages when domestic supplies decrease, consumers
in urban areas are severely affected. Even though locally produced
agricultural products were often of better quality, there has
been an increase in the import of less expensive, but substandard
produce. The result was that markets in Malawi are flooded with
substandard agricultural products.
Kenya—The introduction of cheap
sugar imports (an increase of 40% between 2002 and 2003), with
which local sugar producers cannot compete, as well as the mismanagement
of the domestic sugar industry, resulted in the closing of factories
and the abandonment of sugar cane farming by small-scale farmers.
The impact on consumers included increased prices, as well as
retail outlets restricting consumers to two kilos of sugar a visit.
Indonesia—With no prior notice or
public consultation, the Ministry of Trade and Industry appointed
the US agri-industry giant Cargill as the primary agent in the
importing of sugar. While sugar imports continue to rise, the
Indonesian sugar industry has collapsed, sugar farmers have lost
their incomes, and the price of sugar is not yet stable.
Chad—Subsidies in the US cotton
sector destroyed the livelihoods of more than two million farmers
in Chad with the price of cotton losing around 50% of its value
over the last decade—reaching its lowest level in 30 years.
8.2 How to make liberalisation work
8.2.1 Jordan—During Ramadan
the demand for lamb and other meat increases sharply. In the past,
lamb producers had colluded to raise prices during this month,
aided by the fact that the surplus demand could not be accommodated
by foreign producers since they faced tight import restrictions
imposed by the Ministry of Agriculture. An investigation by the
Competition Directorate uncovered the anti-competitive practices
of the Jordanian producers. With the help of the Ministry of Agriculture,
mechanisms were put into place to facilitate market access for
foreign producers of lamb and other meats. This increased competition
has led to a decrease in the price of lamb during Ramadan, which
has been of great benefit to consumers.
8.3 Conclusions and Recommendations
— The immediate introduction of, and
adherence to, binding timetables for the elimination by 2010 of
subsidised agricultural exports used by industrialised countries
to compete with agricultural exports of developing countries and
with domestic production in those countries.
— Abolition of the practice of dumping
expensive agricultural surpluses on world markets.
— Effective disciplines should be applied
to export credit and food aid programmes.
— The introduction of, and adherence
to, binding timetables for the phasing out of trade-distorting
domestic support in developed countries, thus honouring the pledge
made in the 2001 Doha Declaration. Support may be continued for
non-trade-distorting agriculture, environment and rural development
policies.
— An agreement on greater market access
for developing country agricultural exports, particularly those
benefiting small producers, accompanied by appropriate technical
assistance to meet technical and health and safety standards applied
in accordance with WTO rules.
— The Agreement on Agriculture must
support food security and not undermine it.
— A shift in orientation in the WTO
negotiations on the Agreement on Agriculture towards a sustainable
agricultural policy that provides consumers with their basic food
needs (ie food security, fair practices, and safe and healthy
food).
November 2005
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