AFRICA: DOHA ROUND CANNOT BE ABOUT ANYTHING OTHER THAN DEVELOPMENT SOURCE: Produced by SEATINI Director and Editor: Y. Tandon; Advisor on SEATINI: B. L. Das, Assistant Editor: Percy F. Makombe Editorial Board: Chandrakant Patel, Jane Nalunga, Riaz Tayob, Percy Makombe and Yash Tandon For more information and subscriptions, contact SEATINI, 20 Victoria Drive, Newlands, Harare, Zimbabwe, Tel: +263 4 792681, Ext. 255 & 341, Tel/Fax: +263 4 251648, Fax: +263 4 788078, email: seatini.zw@undp.org, Website: www.seatini.org Material from this bulletin may be freely cited, subject to proper attribution. Editorial: Doha round cannot be about anything other than development Percy Makombe Reviving trade talks In the last two months we have seen concerted attempts at reviving global trade talks which collapsed in Cancun, Mexico last year. The 147 World Trade Organisation (WTO) members Programme. They were willing to consider the fourth issue – trade facilitation if their concerns in this area were addressed and “there is satisfactory balance in the overall framework of the negotiations.” July package The G90 was of the opinion that if the “July package is to be taken seriously, it should also include amongst others: · policy space and flexibility. · address three pillars of agriculture reform – domestic support, export competivity, market access in a balanced manner. · S & D provisions be binding. · Deal effectively with non-tariff barriers notified by G90 countries in the NAMA group · Exempt all members of the G90 from reduction commitment. The Doha round cannot be about anything other than development. At any rate, the Marrakesh Agreement which established the WTO speaks of a “ need for positive efforts designed to ensure that developing countries and especially the least developed countries among them secure a share in growth in international trade commensurate with the needs of their economic development.” The outcome of any negotiations cannot be considered legitimate if they trash the concerns of the poor countries. The Doha mandated negotiations are remarkably slow in areas of interest to the developing countries. The slow progress for instance in implementation issues, Special and Differential treatment and agriculture call to question the commitment of the major developed countries to the development of vulnerable nations in the global village. Interestingly, issues of concern to the developed countries like NAMA and Singapore issues continue to be on top of the WTO agenda. Agriculture As the G90 reiterated in Mauritius, agriculture is of crucial importance in Africa. Other than providing food security and sovereignty, it is the mainstay of most African economies. The sector is however performing below its capacity as it is being affected by factors in external markets like subsidies and tariff peaks and escalation. The Agreement on Agriculture is skewed as it allows developed countries to maintain their domestic support while denying developing countries the same rights to counterbalance with tariffs. To accept any agricultural market access formula that aims at further reducing tariffs in developing countries is to condemn the already vulnerable countries to perpetual poverty. Developed countries must eliminate all forms of export subsidies, credits, tariff peaks and escalation. In the infamous Derbez text, “sensitive products” of developed countries like sugar and beef for EC, rice for Japan, sugar, cotton for US were covered by a blended formula. The developed countries were allowed to have a list of products where tariff cuts would be little or virtually non-existent. There is a case for the elimination of amber, blue and de minimus boxes of subsidies by developed countries and the limiting of their green subsidies as these have a direct effect on production for export and therefore become trade distorting. Growing fears that the US is pushing for the creation of a special blue are not to be taken lightly. The US is believed to be pushing for the expansion of the blue box so that it can put counter-cyclical payments in this box. This arrangement would cover losses to US farmers during price falls and more importantly it would enable them to continue to sell below production prices thus continue with its trade distorting practices. Even worse it means Brazil would have to abandon its hard won panel ruling to accommodate the US. What is very clear is that the system of domestic support and subsidies in the US and EU is still very far from undergoing any meaningful reform. Non-Agricultural Market Access Misleading assumptions continue to be made by prophets of trade liberalization. They come up with models projecting welfare gains of billions of dollars to be obtained from further trade liberalization. Interestingly these conclusions are usually based on assumptions of full employment with complete disregard of the negative effects on the national production structure of the developing countries. Competition from cheaper imports, we are told, will induce local firms to be more competitive. Nothing could be further from the truth. Economic theory and history reflects that all the developed industrial states of today could not have reached their level of development without high tariffs and other protectionist measures. Having reached this stage, they now want to “kick away the ladder” by peddling the falsehood that it was the total opening up of their economies which led to their rapid development. The fact of the matter is that developed countries industrialized under high tariff and import protection. They developed because they had a pro-active state that supported infant industries. Countries that liberalized too fast suffered closure of local industries and massive job losses. That indeed is the story of Africa today. Hence the need to be cautious about proposals that impose further and rapid liberalization. It is against this background that LDC countries with a weak industrial base should be exempted from tariff reductions in any negotiations. All developing countries with a weak industrial base should have the policy freedom and flexibility to chose their own commitments regarding which sector and at what rate of reduction their commitments are to be. Countries that have already suffered deindustrialization from previous tariff cuts should have the flexibility to increase their tariff rates above the bound rates for certain periods for those products and sectors that have been adversely affected. We cannot have a one-size-fits-all approach in trade negotiations. Trade arrangements should take into account the different structural and social conditions of each country. Trade facilitation The G90 must be careful that they are not left holding the baby on trade facilitation. Negotiations should not lead to an agreement that will impose new obligations that are expensive and difficult to implement for developing countries. An agreement in this area may require our countries to purchase and maintain expensive equipment for customs clearance and safety testing. Moreover the structure and functions of customs are different in developing countries, as governments there are much more reliant on customs duties for revenue. Conclusion Lest we forget, Cancun collapsed because of the intransigence of the EU and US. The EU insisted on the adoption of the Singapore Issues even in the absence of an explicit consensus. Though at Cancun EU agreed to drop three of the four Singapore Issues. Since then it has come back to pushing for their inclusion in the WTO agenda. The US on the other hand was not interested in tackling the problem of its cotton subsidies. Added to this was the undemocratic and exclusive way of producing a new draft text. There is little to suggest that there have been major changes in the way in which the developed countries operate. Sir Oscar Wilde was known for his sharp tongue. Handcuffed, standing in pouring rain on his way to prison, he is said to have remarked: “If this is the way Queen Victoria treats her convicts, she doesn’t deserve to have any.” If this is the way the developed nations treat the developing countries, then they do not deserve to have any. * Percy Makombe is the Assistant Editor of the Bulletin.