A tumultuous closing to a divided WTO meet*

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

Hong Kong, billed as the ‘world’s freest’, is now a fortress – and wounded — city.

Thousands of HK police and para-military are on patrol in the labyrinthian streets of Wanchai and other fashionable districts of the city, on the look-out for global anti-WTO protestors, whose militance and resolve seem to be growing day by day.  Evening of December 17, the protestors, led by the defiant Korean and Filipino farmers, fisherfolk and trade unionists, breached the three-layered iron barricades of  the sprawling  HK Convention Center, where DG Pascal Lamy and ranking trade ministers from the developed countries are gathered and have been pushing for a one-sided and onerous draft Ministerial agreement. Tear gas, pepper spray, glass shields and numerical police advantage are being used to disperse the protestors who are trying to hold their ground to stop the Ministerial and express their collective anger against the WTO, which has become the most concrete expression of   inequity under globalization.

There is reason to be angry, if the latest draft Ministerial text masterminded by Pascal Lamy squeezes through the 6th WTO Ministerial Conference.

The draft text has managed to ignore the proposals made by the developing countries and civil society groups to make the present round of trade talks, billed as the Doha Development Round (DDR), truly development-oriented and the global trading system equitable.   Launched in 2001, DDR is supposed to address the special-and-differential (SND) needs of developing countries and correct the distortions in global trade in agriculture caused by the $1-billion-a-day subsidies provided by the developed countries.

And yet, what is being offered for the developing countries in HK are the usual rhetorical provisions on development and tokens for the least-developed (LDCs) from Africa, Caribbean and other regions such as duty-free entry for some agricultural goods (which has always been in place in Europe) and a $5-billion ‘aid for trade’ program (which has no budgetary allocations yet in the US and EU). Close to 200 SND proposals have been made by the developing countries since 2001, and yet only 5 SND ‘tokens’ for LDCs made it to HK.
The main items on the HK negotiation table are the demands of the developed countries for the developing nations to open up — in the name of ‘market access’ — their agriculture, industry and services sectors through a whole new set of liberalization formulas.

In agriculture, the developed countries are giving the impression that there are reforms when the text acknowledges the need to reduce their overall ‘aggregate measures of support’ (AMS) and eliminate export subsidies.  And yet, there are no concrete end dates or timetables being offered, which means the experience of the last 11 years of the WTO might even be repeated (when the total US and EU agricultural subsidies increased instead of declining as promised in l995)!  The draft Ministerial text positively recognizes the importance of special products (SPs) and special safeguard mechanisms (SSMs), two issues which the Philippines, Indonesia and 43 (from 31) other countries are passionately advocating.  And yet, there are no concrete actionable measures outlined for SPs and SSMs; meaning, they are subject to further future negotiations.

The only concrete reform measure in the new Agreement on Agriculture (AoA) is the pledge of developed countries to phase out the cotton subsidy, which has been killing the economies of the poorest countries in Africa such as Chad and Burkina Faso.  The other concrete measure is a non-reform one, the adoption of three ‘bands of tariff reduction’, with the developing countries given the band with the highest rates of tariff reduction and the developed ones, the lowest.   In short, the developing countries are mandated to open up their agricultural markets, while the Northern countries are given the flexibility to protect their domestic and export markets by keeping their subsidy system intact.

In industry and services, the anti-development agenda of DG Pascal Lamy and other WTO influential leaders become even clearer.

In industry, the proposals of the Philippines and other developing countries under the non-agriculture market access (NAMA) are to let ‘unbound’ items such as fishery and footwear to remain ‘unbound’ and give member countries flexibility to keep its sensitive industries uncovered by the WTO binding mechanism.  These have been ignored.  And so is the proposal to have two tariff-reducing coefficients, one for the developed and another for the developing nations.

Also, the text is silent on the tariff peaks, some as high as 300-800 per cent, extended by the developed countries on their sensitive industries.  Thus, even if the tariff averages of these countries are low, a uniform tariff-reducing coefficient will keep these favored industries protected.  This is a flexibility that the Philippines does not enjoy, having unilaterally and foolhardily reduced its tariffs wholesale in the l980s and l990s, way ahead of other developing countries. The text is also silent on the ‘crediting’ of this unilateral liberalization.

Overall, therefore, under  the proposed NAMA, the  Philippines loses all flexibilities such as the right to protect the fishery and other vulnerable sectors and support the development of strategic sectors such as an integrated petrochemical sector. The country will simply become an open market for all imports produced by other countries, at the expense of local industry, workers and fisherfolk, as what is already happening.

In services, there are loud protests by African and other developing country delegates that their proposals were deliberately omitted in the text.   The Philippines and a number of Asian countries took a progressive position by upholding the provision of the General Agreement on Trade in Services (GATS) on request-offer negotiation modality, which is flexible and recognizes the different levels of development of member countries.   And yet, what appear in the text instead are references only to  the plurilateral (among a group of  countries) and sectoral (industry by industry) negotiation approaches, which shall be subject to the MFN principle (what applies to one applies to all)!   This is virtually a reiteration of the original EU’s ‘benchmarking’ or ‘complementary’ approaches, which is aimed at forcing the ‘slow’ liberalizers to keep up with the ‘fast’ liberalizers such as Singapore.  The irony is that ‘Social Europe’ has very strict rules and allows government intervention in  services because of its strong social democratic tradition, and yet it wants the service sector of the developing world to open up its banking, telecommunication, water, energy, education, public utility and other services without any restrictions!

So what is the position of the Philippine trade negotiation team in the face of this US-EU-Australia-Canada-Japan trade offensive?

It is not clear.

In one of the plenary sessions, DTI Secretary Peter Favila took a fairly progressive position, one that closely adheres to the stand of the Philippine civil society movement favoring safeguards and subsidy phase-outs in agriculture, tariff and binding flexibilities in industry and policy space in services.   But in a briefing for the NGOs December 17, the government negotiators seem to be hesitant and equivocating.

The developed countries, of course, have hidden weapons to soften the resistance of the developing nations – offers of loans, declaration of market access for certain products, investment pledges and ‘policy coherence’ with the IMF-World Bank tandem.   The developing nations are further divided by threats of isolation from bilateral and regional ‘free trade agreements’ that are being forged with the ‘willing’. To top it all, the US and EU are now making a big noise about their ‘aid for trade’, to help developing countries adjust to liberalization and the new WTO liberalization formulas.

But protestors in the streets of Hong Kong, civil society advocates within HK’s Convention Center and trade negotiators from the developing world who remain steadfast in their principles know better.  They refuse to be drowned out by the threats and blusters by the trade negotiators from the developed countries. The unbalanced outcomes of 11 years of WTO are enough to educate the most jaded neo-liberal economists.

The bigger noise, therefore, is coming from those demanding for just and fair rules to govern a just and fair global trading order.  They happen to be on the right side of history. — Written with inputs from the Philippine trade advocacy civil society groups represented in HK.


* Commentary published in BusinessWorld on December 20, 2005.


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