HK talks demote development*

Rene E. Ofreneo, Ph.D., Executive Director

HONG KONG — Delegates and observers at the Hong Kong Ministerial Conference of the World Trade Organization (WTO) are virtually unanimous on what could possibly come out of the six-day meeting—no firm agreement among the member countries on any new trade liberalization targets in agriculture, industry and services.

What is likely to happen is an agreement to continue the trade talks in Geneva, where Director-General Pascal Lamy hopes to wrap up the most contentious round of global trade talks since the formation of WTO in l995.

The Group of 20 or so developing countries led by Brazil and India are adamant in their refusal to accept any tariff reduction formula without any movement on the part of the developed countries to reduce their actual, not paper (or ‘water’) ceiling, subsidies amounting to $1 billion a day, which distorts global trade in agriculture to the detriment of small producers from poor countries.  On the other hand, the Group of 33 (latest count: 44) countries shepherded by Indonesia and, yes, the Philippines is pushing for full recognition of the right of developing countries to declare sensitive crops ‘special products’ and for the WTO to set up ‘special safeguard mechanisms’ in order to protect these SPs.

And yet, the developed countries, mindful of their own farm constituencies at home, are like an immovable mountain, offering meaningless paper or ‘water’ cuts or pledges of real cuts but only after so many years, or long after the collapse of agriculture in many developing countries as what has happened in the case of the cotton-growing countries of Africa.  The acrimonious debates on agricultural trade reforms between the haves and the haves have spread even among the developed countries themselves, with the EU questioning the international ‘food aid’ of the US as a disguised subsidy program.

Industry, services are also battlegrounds

In industry, covered by the so-called Non-Agriculture Market Access (NAMA), the developed countries are asking all countries for a radical tariff convergence through a tariff-busting ‘Swiss’ formula or a variation of this. Many developing countries with double-digit tariff averages, some as high as 50 percent or more, are naturally howling in protest, for this effectively reduces their capacity to protect their economies from goods produced by the more efficient and technologically advanced countries.  For the Philippines, which has reduced its tariffs way ahead of other countries under a blind liberalization program supervised by the IMF-World Bank group, the proposal appears to make sense—except that the overall NAMA scheme eliminates the flexibility of the Philippines to nurture strategic industries such as those in the chemical and electric sectors or protect sensitive industries involving small producers such as those in the footwear and fishery sectors. Instead of getting involved in the technical debates on the tariff-reducing coefficients, the Philippines has correctly notified conference chair John Tsang and other WTO officials that it wants an exemption from any tariff-reduction coverage (for as much as 10-15 years) because the RP’s unilateral liberalization program has already put RP tariffs at par with the developed countries.

In services, the issue is again flexibility.  What the EU and other developed countries want is a wholesale liberalization of services through ‘benchmarking’ (or doing ‘complementary’ liberalization) with the aggressive liberalizers.  This is a major departure from the original provision of the General Agreement on Trade in Services (GATS), which says that service negotiations should be on a ‘request-offer’ basis, which allows member countries to identify which ones to open up in accordance with a country’s development priorities.    In this regard, the Philippines has taken a progressive stance by insisting on the ‘request-offer’ negotiating modality and ‘more flexibility’ in the overall service sector liberalization.

Hardly any development issue on the table

But overall, something is seriously amiss in the conference in Hong Kong.
The ongoing trade round is billed as a ‘Doha Development Round’ (DDR).  And yet, outside of the flexibilities the Philippines and other developing countries are asking in relation to the proposed new liberalization formulas in agriculture, industry and services, there are hardly any ‘development’ issues put on the negotiation tables.
This is what many civil societies outside the official deliberations are clamoring in their parallel conferences as well as in their daily marches against the  WTO. Trade unions and farmers are complaining how jobs and farms are sacrificed on the altar of free-trade globalization.

In a seminar at HK’s Indian Club on the WTO clause on ‘special-and-differential treatment’ or SDT, participants from Bangladesh, China, the Philippines, Indonesia, Taiwan, Malaysia and other countries took turns in denouncing  the inequality and insecurity affecting the working peoples virtually everywhere and the limited and unequal progress achieved by developing countries under a WTO-led globalization.  They said the lives of the working peoples, in both developed and developing countries, are simply being sidelined, if not ignored in the ongoing DDR talks.

Accordingly, trade liberalization as an economic panacea is still being bandied about as the cure-all for the economic ills of the world, when it is clear that the one-size-fits-all liberalization model of globalization is at the roots of global, regional and national inequalities and the stark poverty hounding many in developing countries.

Farmers in South Asia reported on the numerous suicides occurring in the region (as high as 25,000 in India in the last ten years or so) because of their inability to survive in a globalized trading system dominated by the big subsidizers.   In China, the media have glossed over the stories of massive dislocations affecting  scores of millions of workers in the state-owned enterprises (SOEs) and scores of millions of farmers in the countryside, who now constitute the ‘xia-gang’ or  ‘floating population’ of migrants working for a sub-human wage of less than $2  a day for jobs which can disappear tomorrow.   Other participants from the Philippines, Indonesia and other countries have similar laments.

Special differential treatment hardly given attention

What is strange is that the SDT clause of the WTO, contained in more than 150 provisions of the WTO umbrella of agreements and enshrined in the WTO Preamble itself, is hardly given attention in the MC6.   Briefly, SDT means not all countries are of the same level of development because of historical and other reasons.  Hence, it is only logical that countries should be given leeway to determine their development priorities and to calibrate their trade policies in accordance with such priorities.  In the trade policy area, SDT means  giving developing countries some flexibility  –  more liberal market access,   higher tariff commitments,  longer transitions to comply with certain commitments and safeguards against unwanted imports.

Such flexibilities are ignored in the DDR.  Worse, in the draft Ministerial text prepared by Lamy, SDT is reduced to a number of tokens for the ‘least developed countries’ (not all developing countries) such as duty-free and quota-free entry for  certain agricultural products and extension of the local-content privilege under the old Trade-Related Investment Measures (TRIMS).  In short, the WTO leadership has reduced SDT into a meaningless rhetorical clause for many developing countries like the Philippines. This is supplemented by the US and EU with pledges of roughly $5 billion for ‘aid for trade’ program, or a program on how to enhance the capacity of developing countries to meet their liberalization commitments, which is ironic, because the problem precisely of many developing nations is how to have flexibility and exemption in meeting those commitments.

Liberalization for its sake

This is why there is so much polarization — and tension – in the MC6, inside and outside the HK’s Convention Center. Trade as an instrument for development is being reduced by some neo-liberalizers into a simplistic question of liberalization for liberalization’s sake.  Their trade agenda is reduced to more liberalization in agriculture through bands of tariff reduction, more liberalization in industry through tariff-reducing coefficients and more liberalization in services through ‘benchmarking’ or ‘complementary approaches’.

In contrast, the Philippines and other developing countries are asking for safeguards in agriculture, tariff flexibility in industry and ‘policy space’ in services.   This is a good stand but this is clearly not enough.  Real development requires growth in industry, agriculture and employment.  Such development is only possible if countries are given maximum flexibility to determine their priorities and calibrate their trade polices in accordance with such priorities, consistent with the SDT principle of the WTO itself.

Fleshing out such development priorities and doing serious trade-development calibration are the real challenges facing the Philippines and other countries under globalization.

—————————

*Article published in Manila Times WTO Watch section on December 17, 2005.

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  1. Food Aids are badly needed by third world countries like in Africa in Asia.~.;

  2. food aids are badly needed by third world countries and we really need to give something to the poor.`;:

  3. we can always give food aid to the african countries if we just save some pennies and donate it to them `’-




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