WTO symposium debates virtues or otherwise of liberalisation

Original Publication Date: 
9 May, 2005

By Martin Khor, TWN

A three-day Public Symposium organised by the WTO started on 20 April with opening speeches by the European Commission President Jose-Manuel Barroso and the President of Rwanda Paul Kagame and a panel discussion on the WTO's institutional challenges.

The theme of the symposium is 'WTO After 10 Years: Global problems andmultilateral solutions.' Many of the speakers spoke in a spirit rather celebratory ofthe 10th anniversary of the WTO's founding, but this could also be due to the choiceof persons chosen to be speakers.

Barraso as well as former GATT director-general Peter Sutherland advocated makinga distinction between developing countries in relation to the level of WTOobligations. Several developed country speakers extolled the success of the WTO, andasked developing countries to realise that if they further liberalised it would only beto their own good.

However, other speakers (including the Rwandan President, the Archbishop ofCapetown and some NGOs) pointed out that the trade share and living conditions ofpoorer countries had worsened and that further liberalisation commitments wouldcause developing countries more damage.

Barroso said he saw the WTO as a gifted 10-year-old rather than old man GATTdressed in new clothes trying to look youthful. The WTO is the most advancedmultilateral institution, he said, pointing to the dispute settlement mechanism as aunique tool giving teeth to a rules-based system allowing disputes to be settledconstructively.

He praised the WTO for now linking trade to development, and gave credit to the EUfor being 'at the forefront' to fight for a Doha development agenda where trade is notan end in itself. 'As far as I'm concerned this Round will not have succeeded if itdoes not integrate developing countries better into the world economy,' he declared.

He also said the EU welcomes the establishment of developing country alliances suchas the G20 and G90, as the operation of coalitions is essential to the futurerationalisation of decision-making processes in the WTO.

However, he expressed the EU's concern about the pace of negotiations especially inservices and industrial tariffs, and said, 'we cannot afford to be complacent.' Thenegotiations must move forward 'in parallel' on agriculture, NAMA, services, tradefacilitation and rules.

He gave credit to the EU for taking the lead on agriculture with an undertaking toeliminate export subsidies and challenged others, in particular the G20 developingcountries to 'match our ambition by putting forward equally ambitious offers forindustrial and services market access. We all have to give in order also to take.'

Rwandan President, Paul Kagame, by contrast, tried to show how poorer countrieshave taken very little if anything at all from the trade system. He said that despiteglobal trade growth, 'many member countries of the WTO are not benefiting from theglobal trading system,' with living conditions having deteriorated in parts of Africa.

Although the multilateral trade system is recognised as the best model, however,African countries are yet to benefit from this system. After ten years of the WTO, weneed to ask critical questions: Is development really at the heart of the Dohadevelopment agenda? Is the WTO delivering for the poor and least developedcountries? Are negotiations driven only by the need to increase market access for afew members, or market access and development for all?'

Answers should be measured against capacity building as well as enhanced marketaccess, he said. 'Today the trading system is skewed in favour of some countries atthe expense of others. This is morally wrong and has far reaching consequences forthe countries' development and security.'

'Due to the inequitable trading system, our countries are increasingly dependent onaid, creating an aid dependency cycle.' The countries' concerns with the multilateraltrade system include 'unfavourable trade conditions, unfair trade rules, barriers tomarket access including tariff peaks and escalation, and distortions in agriculturetrade due to subsidies in developed countries.' These distortions increase povertylevels.

He agreed that trade should also open among countries of the South, and called forremoval of barriers among African countries. He also called on 'rapidly growingdeveloping countries' to show leadership and the ability to engage for 'mutuallybeneficial and essential compromises' to promote the trade agenda, and to assist weakcountries through South-South cooperation.

He agreed that countries engaging in open trade do better, but added that tradeliberalisation alone is insufficient. He warned that without companion policies tobuild institutions and trading capacity, 'trade liberalisation could actually create aperverse allocation of resources and deepen poverty.'

'Many African countries have faced this situation, explaining why over the past 20years even as Africa has liberalised, its share of global trade shrank from 6% to 2%. It is thus urgent for the international community to understand this is why low incomecountries have emphasised the need for a progressive and sequential liberalisationprocess.'

At a later session on WTO's institutional challenges, Peter Sutherland, former GATTand WTO Director General and Chair of the present Director General's ConsultativeGroup on the future of WTO, said those who play games with or hold up thenegotiations are playing with high stakes as failure would be deeply damaging todeveloping countries.

He described as a 'negative approach' the view (including that promoted by someNGOs) that if developing countries are to liberalise their regime, it is their sovereignright to do so in their own time without the threat by WTO. The Doha agenda isfestooned with special and differential treatment (S and D), so-called implementationissues and opt out for LDCs, due to this kind of thinking.

This negative approach, according to Sutherland, says that the name of the game isto get through the negotiations unharmed, without obligations, and with preferencesintact. This, he said, is 'not desirable.' The Round must have balanced results, withthe industrial countries being able to show something. There must be somethinggiven by 'large advanced developing countries', or else the deal won't work. Perpetual insulation from WTO rules won't help reform in developing countries.

He agreed that in many cases poor countries cannot afford to reform, and the questionis under what conditions does the WTO's role become positive. There is a view thatreforms don't work until fundamentals are in place. The WTO has relevance to thesefundamentals, as there is a range of WTO agreements that impinge on thepre-requisites, for example, services in relation to health and finance, and TRIPSaffecting technology transfer. The WTO can thus be as relevant to developingcountries as it is to large firms.

Referring to the Consultative Group report recommendation that the WTO set up aconsultative body of senior officials, he said such a body is needed for developmentissues to be properly discussed in the WTO as the normal negotiating process withinWTO is not conducive for discussions on broader political and economic issues.

Archbishop of Capetown N. Ndungane said the greatest institutional challenge for theWTO is to 'put people first.' Referring to the AIDS crisis, he said the WTO hasdone too little. Referring to the TRIPS agreement and recent developments on patentsand health, he said there is still limited flexibility in the IPR rules, which is complexto operationalise in practice and does not respond to the needs of anti-retroviraltreatment.

The trade system can respond better. While the WTO may be working and contributeto growth, 'it is important to ask for who it works.' Archbishop Ndungane said thesystem favours the rich, poor countries' share in trade has halved and it is a myth thatincreased wealth is enjoyed by all. He said an UNCTAD report showed that $2.4billion a day is lost to developing countries due to blocked market access, andextreme poverty has risen in Southern Africa.

Ndungane said he was optimistic that a change would come in 2005 due to risingworld public opinion. There had been just actions all over the world due to theGlobal Week of Action, with many groups campaigning for Trade Justice and tomake Poverty History, he said.

The Human Rights Declaration, in its article 25, had recognised everyone's right tothe fundamentals of life. WTO members are obliged to protect these rights, and theorganisation could perpetuate the current system or make a difference for people tohave access to the fundamentals of life. Saying that the WTO can do better, he saidthe S and D principle must be addressed effectively and the 'paper provisions mustbecome human reality.'

Another former WTO director-general, Renato Ruggiero, said the WTO has been asuccess. Although some arguments of the critics of WTO merit attention, the WTO'ssuccess cannot be overlooked. Although the benefits are not shared equally, with theLDCs not gaining, there were also the big gains in India and China, he said.

According to him, the WTO has three priorities: improve the LDCs' situation,strengthen the central role of the dispute settlement system, and restore the primacyof the multilateral system over bilateral agreements.

James Bacchus, former member of the WTO Appellate Body, made a strong plea totackle its foremost challenge of credibility, which is critical to its future. He appealedto WTO members to 'open up the doors' of the WTO to the public and the media.

'My best advice is to open the doors and let the public in, to see the WTO at work,show it has a human face, or else the WTO won't get public support,' he said. 'Onlywith more open doors will we achieve the goals of open trade.'

He suggested that proceedings of panels, Appellate Body, the Dispute SettlementBody and the General Council be open to the public. He added he was not suggestingthat deliberations of the panel or trade negotiations be opened or that NGOs andprivate parties have official standing as members have, and he understood thereservation of developing countries that fear they would be elbowed aside bywell-funded Northern organisations.

'But we can open up in the right way. The WTO calls its proceedings confidentialbut the world says it is secret.' Closing the doors would be self defeating and it givescredibility to those who criticise the WTO. 'How can we say there's an impartial ruleof law if the public cannot see that it's fair, impartial and working for them?' heconcluded.

The Korean Trade Minister, Kim Hyun-chong, remarked on three challenges facingthe WTO: the proliferation of free trade agreements, the demand for more focus ondevelopment, and the need for a strengthened institution.

He said he did not doubt the primacy of multilateralism, however bilateral agreements(which Korea is now entering into) were also useful. On development, he agreedthere should be more attention paid to it, for example, by prioritising products ofinterest to developing countries. However on SDT, he had reservations onexemptions or lesser obligations to developing countries. While there was short termpain, liberalisation results in more competition.

He added that Korea underwent painful reform but succeeded in getting rid ofcorruption and curtailing trade union activity. It was a blessing that Korea had afinancial crisis and indeed it might have been good if it went on longer so that therewould have been more profound structural reform.

John Hilary of War on Want (UK) and chair of the Trade Justice Movement, replyingto Sutherland's reference to the challenge to WTO from NGOs, said that a challengeto the current negotiations is not the same as a challenge to the multilateral tradingsystem.

Textbook economics does not work for developing countries in the agriculturenegotiations, and this is similar in the NAMA negotiations where more is beingdemanded from the developing countries than the developed countries, thus raisingthe danger of deindustrialisation in the developing countries. Hilary charged that theWTO was perpetuating unjust trade and a continuation of this would contribute to andnot alleviate world poverty.

Referring to the Sutherland report on WTO's future, Hilary said it distinguishedbetween friendly NGOs and those that were deemed not to be friendly, and that itrecommended that the WTO form partnerships only with friendly NGOs. He askedthat this opinion be revised.

A Senator from Pakistan questioned Sutherland why he had concluded thatdeveloping countries are not ready for reform.

Sutherland replied that he agreed that developing countries had huge challenges inreforming. He advocated that in dealing with developing countries, there is need todistinguish them by their levels of development. LDCs may not be required to openup to trade which should be required of developing countries, he said. The DohaRound should not be a one-way traffic and it is in the interest of developing countriesto open up to reform, so they should not see it as a concession that is dangerous butsomething that helps them.

Regarding NGOs, Sutherland said it is important to dialogue with and be open toNGOs as they bring to light the needs of developing countries, for example. However, his report said that those who seek to destroy the institution should not havethe same degree of dialogue.

A Canadian, representing farmers, responded to Sutherland that if you choosebetween NGOs to seek out those who are seeking to destroy, can you also make achoice between rules in the WTO that are destructive and those that are not? Thesame logic should apply, he said.

At another session, on trade, economics and growth, Dr Mariama Williams from theInstitute for Law and Economics and DAWN, said there is a pervasive underlyingmercantilism coupled with a pecuniary approach to competition in the WTOdiscussions, which explains why it is so difficult to get the development dimensionin the Doha Round and the unwillingness of rich countries to resolve the outstandingimplementation issues that are so critical to development.

She said the current negotiations on NAMA showed this. 'If the current push fordrastic and draconian tariff slashing, whatever the formula, succeeds, the ultimateresult will be that developing countries lose out in the manufacturing sector,' she said.

'This scenario has already been played out under IMF/World Bank structuraladjustment programmes, which cut tariffs on industrial goods in some Africancountries resulting in rapid deindustrialisation.

'A potential impact of NAMA is that developing countries may be locked intoprimary commodities and extractive activities. Thus, if developing countries are notcareful, they are headed towards a very familiar direction: back into the not so distantfuture.'

She also said that the relationship between trade and gender relations is complex, butthat gender considerations are important for the success of trade and growth policies.