[mgj-discuss] Great article on Africa and the WTO
basav at igc.org
basav at igc.org
Tue Dec 13 16:57:33 GMT 2005
No fear of failure: Will Africa stand firm in Hong Kong?
Demba Moussa Dembele
December 8, 2005
Deadlock. That's the current state of trade negotiations in the lead up to
a crucial World Trade Organisation meeting in Hong Kong from 13-18
December. Expect "rude battles and fierce negotiations" during the meeting,
writes Demba Moussa Dembele, as the United States and European Union try
their utmost to wrangle a deal that will give them license to loot. In the
face of intense pressure, African trade ministers must remember the welfare
of their people, stand firm and resist the heavy-handed tactics they will
be subjected to, Dembele writes.
In just a few days, Hong Kong will host one of the most important meetings
of the World Trade Organisation (WTO). After the failure of the last
ministerial meeting in Cancun (Mexico) two years ago, there are fears that
history may repeat itself, because so far there is no consensus on some of
the key issues to be discussed. The Draft Declaration issued by the
Director General on November 26, 2005 and revised on December 2, 2005, has
been criticized by several developing countries as being biased in favor of
developed countries in many of the issues under negotiation, notably on
services and industrial tariffs.
For African and other developing countries the stakes are clear: will this
round be a real development round or will it be subverted by developed
countries, notably the United States and the European Union (EU), to push
for more liberalization and the opening up of developing countries'
economies to multinational corporations? Indeed, the current round of
negotiations, called the Doha Development Round (DDR), was supposed to
foster development and give more attention to issues of interest to
developing countries. In particular, it was supposed to correct the
egregious inequities and imbalances of the Uruguay Round Agreement on
agriculture which allowed industrial countries to increase their support
for their farmers, leading to a dumping of subsidized products on
developing countries' markets and to big distortions in the world prices of
But the Cancun fiasco and the current impasse illustrate the gap between
developing and industrial countries regarding the interpretations of the
Doha Round. The major sticking points of the negotiations include
agricultural subsidies by developed countries, liberalization of the
services sector and non-agricultural market access (NAMA).
Over the last two years, African countries have tried to harmonize their
positions so as to strengthen their solidarity and defend more effectively
their interests. This is especially the case for African least developed
countries (LDCs) which joined other LDCs to raise their specific concerns.
In their last meeting held in Arusha (Tanzania) on November 24, 2005,
African trade ministers issued a statement called the Arusha Development
Benchmarks for the 6th WTO Ministerial in Hong Kong, in which they exposed
their views on some of the key issues to be discussed in Hong Kong.
They stressed the inadequacy of the proposals made so far on agricultural
subsidies, which are one of the most contentious issues in the current
negotiations. As is well known, cotton subsidies are the best illustration
of the inequities and injustice inherent in the world trading system. The
United States, which controls around 40 percent of the market, spends
between $3 and $4 billion annually to support 25,000 farmers. This has had
the effect of depressing cotton prices in world markets, hurting some 10 to
11 million African farmers. For African countries, the elimination of
agricultural subsidies has become one of the key tests of the sincerity of
developed countries to correct the imbalances that characterize the world
trading system. In their statement, African trade ministers insist that
agricultural subsidies be phased out by the year 2010 and call for the
removal of all other structural distortions.
Given the formidable pressure from African and other developing countries
on agricultural issues and the fear of another failure, the United States
and Europe are maneuvering to shift the blame to developing countries. Both
have made superficial concessions recently aimed at 'meeting' developing
countries' demands. For instance, on October 10, 2005, the United States
issued a proposal indicating that it is ready to slash its agricultural
subsidies by 60%. However the proposal is conditional on the EU and Japan
agreeing to slash their subsidies by percentages, already rejected by both.
In other words, the US proposal leads nowhere. On the other hand, the
European Union, while criticizing the US proposal as 'unrealistic' and not
feasible, has put on the table a proposal of its own, which puts the onus
on the US.
African trade ministers insist that obligations of African countries in
this area should be commensurate with the continent's development level and
that they should be granted flexibilities and retain policy space.
Moreover, any appropriate formula should allow Africa to pursue development
objectives, such as industrial policy, employment creation and product
This position contrasts with developed countries' push for drastic tariff
reduction and rapid liberalization of industrial markets. The satisfaction
of these demands would have a devastating impact on African economies.
Already, crippled by structural adjustment programs, the remaining African
industrial base would be eliminated and industrialization would be put on
hold for an indefinite period. With little industrial prospects, Africa
would attract ever fewer FDIs, except in the mining and extractive
industries, which would reinforce the continent's specialization in primary
products. Industrial impasse will translate into the acceleration of the
'brain drain', further clouding Africa's development prospects. Therefore,
African countries should not heed the call for significant tariff
concessions. They should retain these tariffs as a development tool.
Trade in services (GATS)
In this area, African trade ministers have rejected the call for rapid
liberalization and the introduction of new approaches to the GATS
framework. They have reiterated Africa's right to regulate the services
sector, to open up and liberalize fewer sectors in line with its
development level and priorities. African resistance in this area is
strongly echoed by other developing and emerging countries.
To understand the stakes in the services trade, one must keep in mind that
they permeate all aspects of economic, social and cultural development.
They range from education to health, from transportation to housing, from
banking services to trash collection. Trade in services accounts for more
than 25 percent of world trade and is growing rapidly. In several developed
countries, services account for about two thirds of economic activity and
over half of the world economy.
Therefore, liberalization in trade in services would represent a tremendous
opportunity to boost these countries' economies and pave the way for
foreign control of key sectors in developing countries, as already is the
case in many African countries. Indeed, a further liberalization in this
sector would deal a major blow to African development prospects since this
would lead to market delivery of many of these services, making them
inaccessible to the overwhelming majority of the population. Moreover,
liberalization in services would increase the role and power of foreign
investors, thus hampering or severely limiting state-led development
strategies. Furthermore, this would reinforce the current division of
labor. In light of this, African countries are right in opposing further
liberalization and the opening up of their services sector. They must have
the right to use them as development tools under the control of national
authorities to serve national development objectives.
The African agenda in Hong Kong
In light of the above, for African countries, a successful conclusion of
the Hong Kong meeting should mean the satisfaction of the following:
- Removal of structural distortions in agricultural goods markets as a
result of industrialized countries' policies;
- The sovereign right to use industrial tariffs and other instruments to
pursue their development objectives, especially to promote
industrialization and full employment;
- Non-reciprocal market access and trade liberalization given the asymmetry
between African and industrial countries in the world trading system;
- The right to protect their agricultural sector and use other policy tools
to enhance the welfare of their citizens, in particular the right to food
- Set a firm deadline and a timetable for the elimination of agricultural
subsidies, with transparent and verifiable monitoring mechanisms;
- Set up compensatory mechanisms for the trade losses due to those
- Opposition to the imposition of services liberalization and the right to
regulate services and liberalize them in line with their development
- Maximum flexibility in identifying special products (SP);
- Implementation of effective special and differential treatment (SDT)
- Inclusiveness and transparency in the negotiation process.
Given the gap between African and other developing countries' positions and
those of developed countries, the Hong Kong Ministerial will give rise to
rude battles and fierce negotiations. African countries will face an uphill
battle. Agricultural issues will be the make or break issue in Hong Kong.
As things stand now, only concessions by the US and the EU on subsidies and
on other areas may break the deadlock and give a chance to the Doha Round.
The efforts of the United States and the European Union to convince world
public opinion that they have made all the concessions needed have received
the help of several leading multinational corporations. On November 8,
2005, CEOs and Chairmen from a number of these corporations published an
editorial in the Financial Times, calling on WTO negotiators to conclude
the negotiations "on time"! This elicited a swift response from several
NGOs, which published a statement in the November 15, 2005 issue of the
same Financial Times.
All this shows that governments of industrial countries and multinational
corporations are united in pressuring developing countries into accepting
to make concessions to further liberalize their economies to the detriment
of their own populations. This campaign aims to intimidate developing
countries' negotiators and implicitly send the message that they would be
to blame if the Hong Kong meeting were to fail. Intense pressure, heavy
tactics and even physical threat may be applied by the US and the EU to get
African and other developing countries' negotiators to accept what they
have refused since Cancun.
However, African trade ministers must stick with their demands and resist
the pressures put on them. They must have in mind the fundamental interests
of their countries and citizens. They must not fear another failure of the
WTO, because Africa has nothing to lose. In reality, another failure of the
WTO ministerial will further expose the hypocrisy, lies and injustices of
the current trading system and illustrate its illegitimacy.
* Demba Moussa Dembele is Director, African Forum on Alternatives Dakar
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