NO DEAL IS BETTER THAN A BAD DEAL
WHAT HAPPENED IN CANCUN
(10-14 September 2003)
The Ministerial Conference concluded with the Ministerial Statement which recognises that more work needs to be done in some key areas to enable WTO member countries to proceed towards the conclusion of negotiations under the Doha mandate. The Ministerial Statement has instructed the officials to continue working on outstanding issues with a renewed sense of urgency and purpose and taking fully into account all the views expressed in the Ministerial Conference. The Chairman of the General Council of the WTO, working in close coordination with the Director General has been asked to coordinate this work and to convene a meeting of the General Council at senior officials level no later than 15th December 2003 to enable successful and timely conclusion of the negotiations.
Highlighting the positive aspects of the Cancun Ministerial Conference, Mr. Jaitley said: “We actively engaged in the negotiations and brought the concerns of developing countries at the centre stage of the trade talks. The two coalition of developing countries on agriculture and Singapore issues were active during the entire Ministerial Conference and succeeded in collectively projecting and protecting their interests till the end of the Conference. The developed countries would now find it difficult to ignore these concerns, if the Doha Work Programme has to make any meaningful progress.”
On Singapore issues, namely investment, competition policy, government procurement and trade facilitation, Mr. Jaitley highlighted that ignoring concerns of the developing countries, the draft ministerial declaration proposed launch of negotiations in trade facilitation and transparency in government procurement. The section on investment assumed that negotiations would commence on the basis of a General Council decision to be taken later. The text on competition policy on the other hand referred to possible negotiations, an obvious attempt to accommodate the interest of some developed countries. Further there was no reference to explicit consensus either in the paragraphs on investment or competition policy. There was no headway even after the European Commission, the main proponent, offered to take permanently out of WTO its proposal for negotiations on multilateral agreements on investment and competition policy. Certain countries refused to agree on negotiations on trade facilitation on the ground that uniform customs procedures would impose heavy costs and require administrative skills that were beyond their ability. On the other hand, some other countries opposed the removal of investment and competition policy from the WTO Work Programme. While the differences among the WTO Members made it difficult for the Chairman of the Ministerial Conference to reach a consensus on Singapore issues, Mr. Jaitley was of the view that some of these issues should now be removed from the WTO agenda as suggested by the European Commission.
Giving details of subsidies and domestic support provided by the developed countries in agriculture, Mr. Jaitley pointed out that these subsidies are not targeted to keeping small struggling family farms in business but to provide hefty rents to large farmers or corporates. In many developed countries, the average income of farmers is higher than the national average, reaching almost 200 per cent of the average in certain cases. Subsidies to cotton growers in a developed country totaled US$3.7 billion last year, which is three times that country’s foreign aid to Africa. The net effect of subsidising agriculture in developed countries at the expense of products of the relatively poor in developing countries is to aggravate global income inequalities. On the other hand, against equity, justice and fair play, developing countries were being asked to liberalise their agriculture.
Against this background Mr. Jaitley stated that the draft ministerial declaration would not only perpetuate the existing distortions, but would also introduce a slew of new measures that would increase market distortions. The continuation of blue box in an enlarged form without any commitment to significantly reduce and phase out these subsidies in future was a case in point. India also opposed the continuation of distorting subsidies in the amber box, which would otherwise result in the developed countries subsidising export of agricultural items. India expressed concern at the heightened ambition on market access pillar which ironically provided for Special and Differential Treatment in favour of developed countries and was viewed to be extremely insensitive to the large number of people living in poverty in developing countries. India’s position on agriculture found broad based support among other developing countries.
Elaborating on market access in non-agricultural products, Mr. Jaitley emphasised that India supported the formula devised by the Chairman of the Negotiating Group as it recognised and incorporated certain elements for the developing countries as mandated by the Doha Declaration, while achieving significant reduction in the tariffs of all Members. India opposed the proposal for mandatory tariff harmonisation and elimination as this would entail substantial contribution by the developing countries. On sectoral proposals, India expressed the view that not all the seven sectors were of export interest to all developing countries. It was also expressed that being at different stages of development, the developing countries did not have the capacity to undertake binding obligations in all the seven sectors.
Turning to development issues, Mr. Jaitley stated that at Cancun India expressed deep disappointment at the lack of progress in resolving development issues. India has now sought resolution of all outstanding Implementation issues by March 2004. On the issue of phasing out cotton subsidies, of particular concern to certain African countries, he pointed out that draft ministerial declaration sought to deflect attention from the specific course of action suggested by Benin and three other countries by seeking to address the impact of distortions that exist in the trade of cotton, man-made fibres, textiles and clothing to ensure comprehensive consideration of the entirety of the sector.
Looking to the future, Mr. Jaitley was cautiously optimistic about the completion of the on- going work programme at the WTO. “There is never a last day as far as the calendar of trade negotiations are concerned. India has been engaging constructively in the negotiations and is optimistic that in spite of the failure of the Cancun Ministerial Conference, it would be possible to move ahead in the weeks to come. Agriculture has been the core of the negotiations. It is important that the negotiations in this area are concluded in a manner which not only lead to increased market access but also remove the distortions and inequities in the trade of agricultural commodities caused by the extremely high levels of subsidies in the developed world. The onus is now on the developed countries to deliver on their promise of the WTO Work programme being a ‘development agenda’, if the negotiations are to conclude by the end of 2004. This can be achieved through a process of decision-making at the WTO which is both transparent and inclusive without ignoring the sensitivities of the developing countries”, he added.
THE STORY OF CANCUN - ARUN JAITLEY
It is now more than a fortnight since the Fifth Ministerial Conference of the WTO came to an abrupt end. The sound and the fury that the Conference generated have gradually died down and, hopefully, tempers would have cooled. It is necessary for all of us who were present there, for the entire Membership of the WTO, to reflect objectively on what happened, what went wrong, what went right, and in what manner we can move forward, as we have always done to achieve the goals that we had set out for ourselves at Doha.
2. In my view, it is a fundamental mistake to treat any Ministerial Conference as a one-off event where crucial decisions are taken by Ministers over a short period of four or five days. No Ministerial Conference can be a five day wonder. Success depends essentially on the months and months of painstaking negotiations that take place before any such event and the extent to which a reasonable outcome is worked out by technical experts and negotiators before the main event.
3. The story of Cancun, therefore, cannot be confined to what happened during those five days in that beautiful Mexican seaside resort. It started in fact at Doha and even before Doha and the heroic struggle that developing countries collectively waged to ensure that the development dimension becomes the focus of attention in the Doha Work Programme. When one talks of Doha, the image of my distinguished predecessor, Shri Murasoli Maran, comes immediately to mind. Shri Maran, even then an ailing and sick person, fought valiantly for hours on end to protect our national interests and the concerns of developing countries. His single-minded devotion to this cause has now passed into the folklore of the WTO.
4. The Doha Ministerial Declaration affirmed the importance of trade as an instrument for economic development, particularly in the developing and least developed countries. It says, “The majority of WTO Members are developing countries. We seek to place their needs and interests at the heart of the Work Programme adopted in this Declaration.” This is not a new concept. This is really what the negotiators of the Uruguay Round had also intended. The Marrakesh Agreement establishing the World Trade Organisation had also recognised “the need for positive efforts designed to ensure that developing countries, and especially the least developed among them, secure a share in the growth in international trade commensurate with the needs of their economic development.” The Doha Declaration was an attempt to bring the work of the WTO back to its first principles.
5. After Doha, however, negotiations in Geneva languished. For many months thereafter, there seemed to be no effective engagement between negotiators aimed at addressing the very real problems of development. The Doha Declaration had laid down some clear deadlines for achievement of development related results within a given time frame. These related to Special and Differential Treatment provisions, the so-called Implementation Issues (basically, problems which developing countries identified during the implementation of the Uruguay Round Agreements), the problem of creating an effective mechanism for addressing the difficulties faced by developing and least developed countries which have no or insufficient manufacturing capacity in the pharmaceutical sector and the deadlines laid down in respect of core market access areas like Agriculture, Non-Agricultural Market Access, and Services. Deadline after deadline passed without concrete results. Resentment amongst developing and least developed countries was building up. Some of our trading partners and the WTO Secretariat itself seemed to be oblivious to the changing atmosphere in Geneva.
6. It is not my intention here to expatiate at length on the various issues that were either on the negotiating table or under discussion in the WTO bodies. A high degree of distortion prevails in the agricultural sector, with heavy subsides being given in certain developed countries to their farmers. This not only limits access into markets in these countries, it also prevents fair competition in third country markets. Besides, inflow of subsidised products ruined the rural sector in many extremely poor developing countries. The developing countries, by and large, are heavily dependent on agriculture and the existing system was preventing growth and it was decimating agriculture in many developing countries. In countries like India, with a huge rural population, entirely dependent on agriculture and a large proportion of them either below or close to the poverty line, a small disruption in the market could bring down prices sharply, leading to a fall in incomes and to actual starvation and widespread misery. Likewise, industry in developing countries has to face its own problems of poor infrastructure, high capital cost, low levels of productivity arising out of capital and technology deficiencies and a host of other problems. Moreover, in order to mitigate the problems arising out of shortage of capital, we have had to depend on small-scale and cottage industries, which can provide much employment at relatively low capital cost. In areas in which we were productive and competitive, such as textiles, we have had to face serious market access barriers arising out of quotas and trade defence measures. In the area of Services, there has been inadequate attention paid to modes of delivery of interest to us, such as movement of natural persons and cross-border supply of services and also in certain specific sectors. The emphasis has been more on commercial presence, that is, freedom to establish joint ventures, foreign owned companies and so on.
7. We would have expected that these problems would have been addressed in the Geneva negotiations. The fact is that there was hardly any movement throughout the period after Doha and no genuine effort to address developing country problems. When I talk of developing country problems, I am of course conscious of the fact that developing countries themselves have varying positions on different issues and that what applies to India need not necessarily apply to other developing countries. However, what we saw at Cancun was a high degree of unity and commonality of interest amongst developing countries even though not all countries shared the same position on all issues. For example, not all developing countries had the same position as ours on the Singapore issues. Similarly, in agriculture, the emphasis varied from country to country on the three pillars of the Agreement on Agriculture - domestic support, export competition, and market access. What was really heartening was the desire of developing countries to reach out to each other, accommodate their problems in a spirit of understanding and goodwill and to forge common positions wherever possible. This is now universally recognised as a positive outcome of the Cancun Ministerial Conference.
8. Some movement took place just a few weeks before the Cancun Ministerial Conference. The US and the EU decided to come together and prepare a framework proposal on Agriculture. This was seen by many developing countries as no more than an attempt to accommodate each other’s concerns, without regard for the interests of developing countries. Developing countries, therefore, came forward to present their own ideas in the form of an alternative text. This was the genesis of the G-17, which has now become the G-22.
9. A word now about the Singapore Issues. These were new issues, relating to trade and investment, trade and competition policy, trade facilitation, and transparency in Government procurement, which had appeared on the agenda of the WTO at the Singapore Ministerial Conference in 1996 thus acquiring the nomenclature, “Singapore Issues”. India had expressed itself clearly against the expansion of the agenda of the WTO right from the start. We were always of the view that we have enough on our plate already, that there are many commitments and obligations to fulfil even with respect to existing Uruguay Round Agreements and that the limitations and constraints of developing countries as well as their right to retain policy space for fashioning their own development strategy should be recognised. However, following the decision at Doha to engage in a process of clarification of issues in respect of each of the Singapore tour, we put forward a large number of papers and involved ourselves actively in the discussions. At the end of the period, we found that the issues remained as unclear as before. What, for example, is the definition of investment? According to the Europeans and the Japanese, it means only foreign direct investment, but the US considers that even portfolio investment and short-term capital flows should be brought within the purview of a possible multilateral agreement on investment. How do we deal with the question of investors obligations and the obligations of home countries? In the area of competition policy, will the multilateral frameworks extend to international cartels spanning many countries? Will the concept of trade facilitation extend to all customs entry points or only to a few major ports? Since modernisation and automation of ports will involve huge expenditure, who will finance the costs? Does government procurement mean only procurement at the federal level, but also procurement at sub- federal levels and of public sector units? India and a group of other countries put forward a detailed paper indicating the areas that needed clarification in respect of each of the four issues.
10. Internal transparency is a subject that India and many otter developing countries have been emphasising for many years now. After Doha, India and 14 other countries put forward a paper with several suggestions regarding the manner in which there could be inclusiveness and transparency in the process leading upto a Ministerial Conference and at the Conference itself. This was discussed at the General Council meeting in December 2002 but with no tangible result. The WTO has developed the strange practice of the Chairman, General Council, submitting to the Ministerial Conference a draft text on his own responsibility without negotiation and without taking into account the differences in views that Members may express. This was done at Doha and, somehow, some countries felt that the same process could be repeated ad infinitum with success. As a result, one cannot escape the conclusion that the attempt throughout has been to downgrade and underplay the Geneva process of technical work, to come out with some paper on the Chairman’s responsibility just before a Ministerial Conference and then apply political pressure on weaker countries at the Conference itself. We had cautioned the membership against proceeding on the assumption that the Doha process can be repeated over and over again. At the meeting of the General Council held on 8 July 2002, the Indian Ambassador had stated: “We must not also presume that the Doha outcome necessarily justifies the Geneva process preceding the Ministerial or the procedures at the Ministerial itself. The Doha Ministerial Conference took place in a particular historical context; Cancun will take place in another context. Doha laid a framework for a work programme; Cancun will endeavour to flesh out this framework. Even the Doha framework has many holes in it. The fact that the mandate is not clear and explicit in all aspects is evident from the time and resources we spend here in Geneva in debating the meaning of certain decisions. My Delegation believes that in the Cancun Ministerial Conference, Ministers will demand a much higher degree of precision in the final draft as serious commercial and developmental interests would be at stake.”
11. Yet this is precisely what happened at Cancun. The Chairman of the General Council produced a draft Ministerial Text with which many developing countries were extremely uncomfortable. On agriculture, there was a perception that he was adhering closely to the EC-US draft. On Singapore issues, while he indicated the two alternatives of agreement on modalities and further clarification of the issues respectively, he also incorporated separate annexures indicating possible modalities for agreement. None of these modalities had been negotiate and agreed to. Thus, even to begin with, the atmosphere at Cancun was surcharged.
12. At Cancun, the Chairman of the Ministerial Conference, Minister Derbez of Mexico, appointed Facilitators to discuss various issues. There were Facilitators in charge of Agriculture, Non Agricultural Market Access, Singapore Issues, Developmental Issues, and Other Issues respectively; besides, on the crucial issue of cotton subsidies, the Director General of the WTO himself undertook negotiations. This issue had great emotive appeal, particularly to the Africa Group. Cotton subsidies given in one or two major countries were badly hurting the cotton farmers in African countries and four of them, Benin, Burkina Faso, Chad, and Mali had got the issue incorporated in the agenda of the Ministerial Conference for possible solution.
13. During the Conference, I had occasion to meet a number of Ministers of developing countries as well as developed countries, including the US and the EC. We were very active in the deliberations of the G-21 (which later became G-22 with the inclusion of Indonesia) and most of its meetings were held in the Conference Room of the Indian delegation at our hotel because conference facilities could not be organised at short notice in the Convention Centre. Similarly, we were in close contact with other developing countries on the Singapore Issues. On agriculture, there were several discussions between the G-21 and the Facilitator as also with the US and the EC. On Singapore issues, there was no doubt at all at any point of time that the vast majority of countries were against negotiation of the four issues. This included the LDC Group, the ACP Group, and the Africa Group as well as many others like India, China, Malaysia, Indonesia, and Philippines. In fact, there must have been at least a hundred countries opposed to the commencement of negotiations on the Singapore Issues. When I met the Facilitator for Singapore issues, Minister Pettigrew of Canada, I told him that his task was possibly the easiest of all. The Doha Declaration had called for explicit consensus on the modalities for negotiations to take place. He had only to report that there was no explicit consensus on any of the issues.
14. When the revised Chairman’s text came on Saturday, 13 August, however, we were absolutely aghast. Our concerns on agriculture had been sidelined. On the Singapore issues, negotiation was to begin on three of the four issues, investment, trade facilitation, and transparency in government procurement. Softer language was, however, used in respect of competition, clearly because the US had reservations on this issue. On cotton subsidies, the question of correction of distortions was totally bypassed and instead a study was to be started on the entire textile area, including manmade fibres and synthetics, a strange kind of a decision in a year that should see the end of the quota system now prevailing in some of the developed countries. There was a meeting of Heads of Delegations later in the evening on Saturday, which stretched out well past midnight. One after the other, developing countries came forward to strongly express their resentment in no uncertain terms. The accusation has been made by some prominent trading partners of ours that the atmosphere at the meeting of Heads of Delegations was emotionally surcharged and that the statements made were much too strong. I am sure that all would recognise the fact that the intensity of the reaction on issues that have social, economic and political repercussions affecting millions of people would be directly proportional to the extent of the provocation.
15. At the Green Room meeting next day, there were about 30 countries present. It would not be proper on my part to disclose what happened in the Green Room and who said what but I have seen some pretty accurate reports in newspapers and magazines of what transpired there. It is, however, common knowledge today that the Singapore Issues were taken up for consideration first and that one of the main protagonists of these issues, the EC, were willing to drop further work on two of the four issues, investment and competition, and that, of the remaining two, strong differences continued to persist on transparency in Government procurement. At this stage, I was optimistic about a result and felt that, with a few more hours of work, tangible progress on agriculture and development and some more deliberation on what remained of the Singapore issues, we may actually strike a deal at Cancun. At this time, however, to the surprise of most of us present in the Green room, the Chairman suddenly decided to terminate the Ministerial Conference without taking up the other key issues, as, indeed, one of the Ministers had suggested.
16. The abrupt closure of the meeting has led to much speculation and many unanswered questions. The Chairman of the Ministerial Conference, a wise and astute political leader with many years of experience in the economic field and trade, obviously had, on the basis of inputs received by him from various sources, come to the definite conclusion that no further progress was achievable. Our reading of the situation was totally different. Our expectation was that a positive outcome was not far and that some more work and effort would have yielded results. It would be counter productive at this stage to conduct a post-mortem of the events in the Green Room on the 14th or to impute motives or indulge in conjecture. We do not want to further vitiate the atmosphere.
17. It is now for us to pick up the pieces and try to achieve results by December when the General Council meeting is scheduled to be held. This would require commitment and dedication on the part of all Members. While there may have been no perceptible positive outcome at Cancun, I am of the view that progress has nevertheless been made. There has been forward movement on agriculture and on Singapore issues. There is a greater level of understanding of each other’s concerns and sensitivities. It is important that we continue with this exercise, focusing on issues and not allowing ourselves to be defleated to other areas. We hear nowadays some voices being raised regarding deficiencies in the decision making system of the WTO. I cannot understand this. The Uruguay Round negotiators had clearly laid down a process for decision making in Article IX of the Marrakesh Agreement. If consensus is not achievable, there is clearly the option of majority voting which could be adopted to take decisions. This is a modern system based on democratic traditions. Any change in this method of decision making would in effect amount to chaffing the basic character of the constitution of the WTO, which would have far-reaching implications on the structure of the organisation and would call in question some of the Agreements themselves, such as the TRIPS Agreement about which controversy persists.
18. We would also do well not to point accusing fingers at each other. It is wholly simplistic to categorise the membership of the WTO into the “good guys”, who agree with whatever we say, and the “bad guys”, who hold different views. We need to listen to one another, appreciate the concerns of all and find solutions that are multilaterally acceptable and that adhere to the Doha mandate
19. The Doha Ministerial Declaration had stated that “the Fifth Session of the Ministerial Conference will take stock of progress in the negotiations, provide any necessary political guidance, and take decisions as necessary.” I sensed that there were some areas of convergence on certain issues and some other areas of emerging convergence. There were some issues on which further negotiation and discussion was required. If we had put together an honest appraisal of the areas of convergence and the areas of divergence and avoided the temptation to force certain decisions on an unwilling majority, we would have had a Ministerial Text which could have formed the basis of productive future work. We lost an opportunity at Cancun but this should not deter us from working determinedly towards achievement of the goal we set out at Doha to finish the negotiations by 1 January 2005.
20. Cancun has proved the point that it is necessary to revive and revitalise the Geneva process. The bulk of the negotiations would need to be done at the technical level in Geneva. It is incumbent on all of us to provide the necessary flexibility to our negotiators to move forward boldly. It is important also for the Director General to move decisively to restore the status of the Secretariat as an objective and efficient adjunct to the negotiations. Dr. Supachai is a man of many parts. He is a top political leader in his own country, an administrator of note, a banker, an economist, even a highly talented chess player. There could be no one better than him to analyse what needs to be done to make the Secretariat a credible and effective institution. He needs to move fast. Perhaps it is he who will breathe new life into the Doha Work Programme and at the same time redesign the Secretariat so that it regains the trust and confidence of all Members, particularly developing country Members.
21. The outcome of the Cancun Ministerial Conference was obviously a non-result. Yet, the failure to achieve any result was greeted with undisguised glee by civil society activists in Geneva. When Brazilian Foreign Minister, Celso Amorim, who had played such an important role in negotiating for the G-21, went out to the media centre to conduct his final press conference, he was greeted with a standing ovation. It was my experience also that when I went to the media centre, there was invariably huge response from the representatives of the media as well as civil society activists. In many developing countries, the inability of the Minister’s at Cancun to achieve any tangible result was actually regarded as a satisfactory outcome. This is a curious reaction and the Membership of the WTO and the WTO Secretariat would be failing in their duty if they seek to sweep it under the carpet calling it “polemics” or civil society “extremism”. The fact is that there are large numbers of people in the poorest parts of the world who consider a zero result as a victory. The converse of this line of thinking is also that they think any result at all in the WTO would be adverse to the interests of the poor. The outcome at Cancun is also an assertion on the part of many developing countries that they have stakes in the Doha Work Programme and that they not accept any result that does not take into account their interests. They are saying in fact, “The Doha Round belongs to us. We will not accept just any solution and certainly not a solution which we consider would increase rather than reduce existing imbalances. If development is the cornerstone of the Doha Work Programme, we have definite views on how the multilateral trading system can be made to contribute to it and we must be heard.” The Cancun result should thus be seen as a statement of ownership of the Doha Work Programme by the developing countries.
22. From India’s point of view, we are firmly of the opinion that a fair, rules-based multilateral trading system is absolutely essential to ensure all round global development. We also believe equally strongly that the Doha Work Programme gives us a unique opportunity to make the changes that are needed to conduct trade and economic relations “with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand and expanding the production of and trade in goods and services....”, as the Preamble to the Marrakesh Agreement puts it. We need to work together shoulder to shoulder to build a system that benefits all.
(New Delhi, 3 October, 2003)
AGRICULTURE
FLAGGED AS INDIA'S KEY CONCERN IN WTO NEGOTIATIONS
Text of Arun Jaitley’s
statement at the Plenary of the Cancun Ministerial Conference
(10 September, 2003)
I thank you, Mr Chairman, and your Government for hosting this 5th Ministerial Conference and for the excellent arrangements and hospitality.
India has very warm and friendly ties with both Nepal and Cambodia. Nepal is also our close neighbour. We applaud the accession of these two Least Developed Countries to the WTO.
We welcome the recent decision of the General Council that would make it easier for poorer countries to import cheaper generic drugs if they are unable to manufacture the medicines themselves. But we have a responsibility to ensure that the system we have put in place works to meet legitimate humanitarian needs without being held hostage to procedures.
The developing countries participate in the multilateral trading system in the hope that this would lead to their economic development and not because trade liberalisation is an end in itself. The System has to meet this expectation. Effective measures are needed to make trade work as an engine of growth and human development. Given the differences in levels of development and the ability of countries to assume obligations, it is imperative to ensure that equal rules do not apply to unequal players. With very few exceptions, developed countries in the past practised and benefited from the same protection they now seek to deny to developing countries. Any one can dismantle all protection after growing wealthier and powerful. The multilateral trading system has to acknowledge that developing countries cannot afford to travel at the same speed as developed countries to achieve gains. Therefore, obligations to be undertaken by the developing countries should not arise out of coercion. Rather, they should have a feeling that these obligations are in their interest and that they are in a position to accept and implement them.
Over the years we have seen gradual increase in lack of internal transparency as well as reduced participation of developing countries in the decision making process in the WTO. We should not let the developing countries perceive the decision-making process of the multilateral trading system to be discriminatory, opaque and unresponsive to their needs. We look forward to this Ministerial Conference moving towards more inclusive decision-making process. There is also a need for prescribing clear and fair guidelines for conducting the preparatory process for Ministerial Conferences. The practice followed before Doha – and now, again – of sending the Chairman’s text to the Ministers on the Chairman’s own responsibility is not a healthy one. We need to deliberate on these issues and take appropriate decisions so that specific guidelines can be finalised before the next session of the Ministerial Conference. The proposals made by a large number of Members including India could serve as the basis for such discussions.
Although the Doha Work Programme was heavily overloaded and included a few issues that are not trade related, we saw some elements in it for a new beginning towards addressing issues of particular interest to developing countries. But as we see it now, we are engulfed in a sense of deep disappointment that the development dimension envisaged under the Doha Work Programme has been given short shrift. In our view, the draft Cancun Ministerial text is grossly inadequate on implementation issues and would severely affect the interests of developing countries in agriculture, industrial tariffs and Singapore issues. We cannot escape the conclusion that it does not accommodate the legitimate aspirations of developing countries and instead, seeks to project and advance the views of certain developed countries.
The progress achieved on implementation issues belies the understanding that Ministerial commitments once taken will be honoured. Negotiations on outstanding implementation issues were agreed to be “an integral part of the Work Programme” and were required to be addressed “as a matter of priority”. Yet, all the time-limits set at Doha for their resolution have been breached. On certain issues even the mandate itself has been questioned. To make matters worse, the draft Ministerial text accords low priority to these issues. It does not envisage any timeframe for taking decisions for resolving the outstanding issues. This is in sharp contrast to the issues of interest to developed countries for which time-limits have been provided for taking decisions. If we do not restore the priority accorded to the outstanding implementation issues, the developing countries would be forced to conclude that the “development” element in the Doha Development Agenda is only rhetoric. Let it not be said in respect of implementation issues that “often expectation fails and most often there, where most it promises”. It is also a matter of disappointment that the draft decision on Special and Differential Treatment provisions before us has left many issues unresolved. This is despite a clear decision from the Ministers that all S&D provisions should be made precise, operational and effective and non-mandatory provisions converted into mandatory ones within a specified time frame.
The commitment by the developed countries to eliminate distortions in world agriculture caused by their policies holds the key to resolving differences amongst us in this area. The “Global Economic Prospects 2004”, a World Bank publication, mentions that the protection in the developed countries faced by developing country exporters in agriculture is four to seven times higher than in manufactures. The effect is to stimulate over-production in high cost rich countries and to shut out potentially more competitive products from developing countries. It is no surprise that over the past few years, agricultural exports from developing countries to developed countries grew at just half the rate they did to other developing countries. Agricultural subsidies in developed countries are not targeted to keeping small struggling family farms in business but to provide hefty rents to large farmers or corporates. In many developed countries, the average income of farmers is higher than the national average, reaching almost 200% of the average in certain cases. Let us also remind ourselves that the agriculture subsidies provided by OECD countries are more than six times what they spend on official development assistance for developing countries. OECD Governments support sugar producers at the rate of US $6.4 billion annually – an amount nearly equal to all developing country exports. Subsidies to cotton growers in a developed country totalled US $3.7 billion last year, which is three times that country’s foreign aid to Africa. The net effect of subsidising agriculture in developed countries at the expense of products of the relatively poor in developing countries is to aggravate global income inequalities. On the other hand, against equity, justice and fair play, developing countries are being asked to liberalise their agriculture. What the farmers in developing countries demand is protection from distortions in the trade of agricultural commodities, created through the high level of subsidies in the developed countries. The plight of these farmers are directly linked with the level and kind of subsidies in the farming sector in the developed world. Hence, it would be difficult for us to agree to negotiations, which could potentially place at high risk the very livelihood of 650 million people in India, who are solely dependent on agriculture. It is only when the developed countries agree to take five steps forward in the removal of trade distorting subsidies that the developing countries can take one step forward in the area of market access. The legitimate concerns of billions of farmers in developing countries, for whom agriculture means survival and not commercial operation, cannot be sacrificed to sub-serve agri-business profits of a few millions elsewhere sustained through $ 1 billion subsidies each day in the OECD countries.
In order to secure sufficient gains from globalisation for developing countries there is an urgent need to bring down the high tariffs and non-tariff barriers on products of export interest to developing countries. Also to effectively take account of their development needs, including rural development and food security and livelihood concerns, it remains our duty to ensure that special and differential treatment for developing countries and policy space to deal with sensitive products remain an integral part of all elements of negotiations. India reiterates that under no circumstances can it accept any form of harmonisation of tariffs in agriculture or obligations to create and expand tariff rate quotas. India along with 20 other members has put forward joint proposals on agriculture that we believe offer a constructive and meaningful alternative. We look forward to discussing it at the Conference.
On market access negotiations on non-agricultural products, the Chairman of the Negotiating Group has devised a formula that recognises and incorporates certain elements for the developing countries as mandated by the Doha Declaration, while achieving significant reductions in the tariffs of all Members. We are of the view that amending any aspect of the formula or the formula itself would negate the entire work done so far. The suggestion for mandatory tariff harmonisation and elimination would be most iniquitous to developing countries because substantial, if not the entire, contribution would then be made by developing countries. On sectoral proposal, we believe that not all the seven sectors are of export interest to all developing countries. Being at different stages of development, they do not have the capacity to undertake binding obligations in all the seven sectors. Consequently all Members cannot be expected to participate equally in the initiative. Nor are all Members agreeable to a sectoral approach.
We do not believe that all the Singapore issues are trade related. Besides, the disciplines proposed in this area would require new policy actions to be taken only in developing countries. At Doha we agreed to join the consensus in favour of the Declaration only after it was made certain that these issues needed further clarification and that any decision on commencing negotiations on these would be dependent on an explicit consensus on the modalities of each of these issues in this Ministerial Conference. Our strongest arguments still remain that WTO is not the right forum, that the traditional WTO principles of non-discrimination particularly national treatment are not appropriate for a development policy related issue like investment and that trade negotiators are not the right people to deal with movements of capital that have dynamics of their own.
We have been participating actively and with an open mind in the discussions on the elements of these issues with a view to clarifying them better so that there is convergence on these issues for taking a decision on modalities. It is our assessment – and that of many other countries as well – that there are significant and deep differences in views of Members on many elements of these issues. Hence, we are not convinced of the appropriateness of taking a decision on modalities as it does not give us any idea of the substance and direction of obligations that agreements in this area may require us to undertake.
The need for a multilateral agreement on investment itself is not clear. It can neither promise additional investment flows nor reduce transaction costs for investors significantly. However, an agreement will certainly curtail the policy space of developing countries. An agreement in this area will not be advantageous to all Members as the benefits of such an agreement will accrue entirely to developed countries from which 2/3rd of all cross border investments originate. The process of clarification of issues has revealed the wide divergence in views on various elements including scope and definition, transparency, dispute settlement, performance requirement etc. While the demandeurs are seeking onerous obligations from host countries they are reluctant to agree to binding rules on foreign investors and home governments. We remain determined to resist such inequitable obligations being thrust upon us.
Countries at different stages of development have viewed competition issues differently based on the effects they have on their economies. Convergence in views can arise only between countries at similar stages of development. The WTO membership is too diverse to admit a framework that suits all. Further work needs to be done on understanding elements in competition such as core principles, cooperation mechanisms and the coverage and prohibition of hardcore cartels through appropriate mechanisms before we can start comprehending the implications of any multilateral discipline.
Multilateral rules, binding in nature, in respect of trade facilitation and transparency in government procurement would entail high costs for developing countries.
As far as services negotiations are concerned, liberalisation of certain sectors is essential to accelerate growth in developing countries. However there are certain sensitive sectors in which we need to tread with caution. I would like to emphasise that for developing countries including India the balance of benefit in the negotiations will accrue to the extent to which their service providers are allowed to supply services in important overseas market either from remote locations or through temporary movement of natural persons. In case the resistance among developed countries for agreeing to the request of developing countries for enhanced market access under Modes 1 and 4 continues, this would substantially erode our flexibility to make commitments in sectors of interest to developed countries.
We feel that it is necessary to make significant progress in areas of great importance to developing countries such as transfer of technology and trade debt and finance. It is now up to the Ministerial Conference to provide decisive political guidance so that meaningful progress is made on these issues.
We strongly support the initiative taken by certain countries regarding cotton subsidies and commodity price stabilisation which are areas of critical significance to the developing countries and look forward to addressing these issues.
Mr. Chairman, we are hopeful that with you as Chairman of this Ministerial Conference, the development dimension of the work programme will occupy centre stage. We are confident that under your guidance we will collectively find solutions to the various contentious issues in such a manner that the final declaration reflects the needs and aspirations of developing countries.
UNITED
NATIONS
MESSAGE OF THE UN SECRETARY-GENERAL, MR. KOFI ANNAN
(Delivered by Mr. Rubens
Ricupero, Secretary-General, United Nations Conference
on Trade and Development at Cancun, 10 September 2003)
The rhetoric of global trade is filled with promise.
We are told that free trade brings opportunity for all people, not just a fortunate few.
We are told that it can provide a ladder to a better life, and deliverance from poverty and despair.
And we are led to hope that the current round of trade negotiations will deliver on this promise.
Sadly, the reality of the international trading system today does not match the rhetoric.
Instead of open markets, there are too many barriers that stunt, stifle and starve. Instead of fair competition, there are subsidies by rich countries that tilt the playing field against the poor.
And instead of global rules negotiated by all, in the interest of all, and adhered to by all, there is too much closed-door decision-making, too much protection of special interests, and too many broken promises.
The issues are often technical, and do not usually lend themselves to dramatic television coverage, like war or extreme weather. But let there be no doubt: the damage is profound, and the victims can be counted in the billions.
They include poor farmers who, instead of being able to trade their way out of poverty, are driven out of business by trade barriers, or penalised with new barriers when, against considerable odds, they become successful.
They include the sick and the dying, whose suffering has been needlessly prolonged by lack of access to affordable, life-saving medicines.
And let us not forget the enormous opportunity cost: millions of jobs, and hundreds of billions of dollars in income, could be created with just a few reasonable steps that governments have so far been unwilling to take.
The answer is not to turn our backs on the potential of open markets. That would be disastrous.
After all, the World Trade Organisation, and its predecessor, the General Agreement on Tariffs and Trade, have helped to bring the world a remarkable half-century of economic progress.
But too many countries have been left on the margins. A system that was meant to be mutually beneficial sometimes seems more like a zero-sum game.
Far from being empowered, the fisherman in Vietnam, the cotton-grower in Burkina Faso, and the indigenous cultivator of medicinal herbs in Brazil are being held down.
The answer is to unleash their potential. Just as we need to improve the multilateral security framework, so we must rebuild faith in the multilateral trade framework. Without progress now, today’s bitterness may well become tomorrow’s backlash.
We cannot solve all these problems here at Cancun. But we must make a start.
An important step has already been taken on the issue of intellectual property and public health. I welcome the recent agreement on a mechanism to give developing countries which cannot produce cheap generic drugs the right to import them from other countries which can. We must now make sure that the agreed system is flexibly implemented, so that developing countries can gain access to medicines. This is a moral imperative. I urge all concerned to support developing countries - including with technical and legal assistance - so that they can make maximum use of the agreed mechanism to address their public health concerns.
But if the result here at Cancun is to be considered credible, we must tackle the broader issue of trade in agricultural products - an issue that can be economically decisive for many countries. We must eliminate the subsidies that push prices down and make it impossible for poor farmers in developing countries to compete.
Those who press poor countries to open their markets may indeed have those countries’ best interests at heart. But can we be surprised that poor countries are reluctant to take them seriously, when they find the markets of rich countries still closed to their products, and when they have to compete at home, and in the world market, against subsidised products from those same rich countries?
These barriers and subsidies in developed countries must be phased out, as fast as possible, for the sake of humanity.
To do so is in the interests of rich and poor alike. Trade barriers and distortions can hurt a country’s health whether it is developed or developing. Developed countries spend vast sums on subsidies, often propping up relatively small and unproductive portions of their economies. In the process, they hurt their own citizens twice - as taxpayers and as consumers.
There are surely better ways to help those farmers in rich countries who genuinely need help, than by subsidising big exporters so that much poorer farmers in poor countries cannot feed their families. It is not hard to imagine a system under which just about everyone would be better off.
Agriculture is a crucial issue. But it is not the only area where the existing world trade order is imbalanced. Opportunities for developing countries must also be opened by effective liberalisation of trade in textiles, by specific agreements that allow them to participate actively in the growing trade in services, and by faster transfer of technology.
Of course, developing countries also have a responsibility to help themselves.
As a group they have taken important steps — often unsung and unrequited — to liberalise trade in the last fifteen years. But some of them could do still more to seize export opportunities. For example, they could improve efficiency and competitiveness by reducing barriers to imports - particularly from other developing countries.
But trade liberalisation is no panacea for developing countries. For many of them, it involves considerable adjustment and social costs. There is a need for synergy and proper sequencing — between the capacities of the developing countries, the level of obligations they are to take on, the cost of implementation, and the adequacy of financial and technical resources available to them. Developing countries need aid for trade, and such aid must not come at the expense of aid for development.
Indeed, trade liberalisation must be carefully managed as part of comprehensive development strategies that encompass health, education, the empowerment of women, the rule of law and much else besides. Developing countries need help in building the institutions and infrastructure, acquiring the technology and skills, and putting in place the legal regimes, that will enable them to make the journey. The least developed countries in particular often need genuinely special and differential treatment - not simply more time to comply with new rules.
Trade is the most visible manifestation of globalisation. It has proved its ability to deliver jobs and wealth for some. Yet there is widespread unease, and even distrust, about the new economic and technological spaces we inhabit. So many people have yet to benefit, and in the developing world there has been great dislocation without a safety net.
You, the world’s trade ministers, must show those people that you have heard their cries for fairness. You must give them confidence that, from now on, your negotiations and decisions will really meet their needs and reflect their aspirations.
You have an awesome responsibility, and a great opportunity. Your decisions can make the difference between poverty and prosperity, and even between life and death, for millions upon millions of people.
Here in Cancun, I implore you to say: “no!” to trade policies that aggravate poverty, and “no!” to trade practices that undermine aid.
And I urge you to say “yes” to bold but sensible steps that will revive the global economy and set a new course for development.
You must, at long last, match deeds to the fine words that are in danger of losing their meaning.
Let Cancun send the world a message of hope - hope that trade will make good on its promise for all.
WHY
INDIA OPPOSED THE REVISED DRAFT CANCUN MINISTERIAL TEXT
Statement of Arun Jaitley,
Minister of Commerce & Industry at Cancun (September 13, 2003)
'Mr. Chairman,
The Indian delegation would like to thank you and the facilitators for your efforts over the past few days. We are disappointed that the draft text ignores several concerns expressed by us and many developing countries. I note that the pretence of development dimensions of the Doha Agenda has finally been discarded confirming the apprehension expressed by me at the plenary session that this is mere rhetoric.
At the outset, I would like to associate myself with the statement made by distinguished Minister of Brazil on behalf of G 21 on agriculture. Not only are the distortions prevalent today being perpetuated, but a slew of new measures to increase such distortions are being proposed. The continuation of Blue Box in an enlarged form without any promise of significant reductions and phasing out in future is a case in point. To give comfort to major subsidising countries, distorting provisions in the Amber Box are sought to be continued. Both these measures will result in subsidising exports of many items from these countries. Instead of negotiating disciplines on the Green Box, we have been reduced merely to reviewing the criteria of Green Box measures. Export subsidies are not only allowed to continue but are sought to be increased through a new parallelism process. We believe that we are compounding the distortions of the Uruguay Round by adding some more to them. The heightened ambition on market access pillar, which ironically provides Special and Differential Treatment in favour of developed countries, is utterly incomprehensible and extremely insensitive to the large number of people living in poverty in developing countries. How can we expect developing countries to reduce tariffs on a number of items to between 0% and 5% when the distortions against which such tariffs are supposed to compensate are sought to be enhanced?
The Geneva process and the consultations in the last three days have clearly revealed that the clarification process on Singapore Issues has not yet run its course. In the absence of clarity on many elements, a majority of the membership of the WTO have rejected launch of negotiations on these issues and sought a continuation of the clarification process. Ignoring this, Mr. Chairman, you have proposed launch of negotiations in trade facilitation and transparency in government procurement. The section on investment would seem to assume that negotiations would commence on the basis of a General Council decision on a date corresponding to finalisation of modalities in agriculture and NAMA. The text on competition policy, on the other hand, refers to possible negotiations-an obvious attempt to accommodate the interest of some developed countries. There is no reference to further explicit consensus either in the paragraphs on investment or competition policy. There is also no explicit consensus at present on any of the issues. It would appear that the views expressed by a large number of developing and least developed countries on the need for further clarification of issues through a Ministerial Conference document and through a letter addressed to the facilitator by my Malaysian colleague and me yesterday, have been completely ignored. This, Mr Chairman, is yet another instance of the deliberate neglect of the views of a large number of developing countries. It represents an attempt made to thrust the views of a few countries on many developing countries.
On NAMA (non-agricultural market access), we want a specific reference to the Chairman’s formula for further work. On sectoral initiatives, we believe that the participation has to be voluntary. The present text is, in fact, an attempt to make the sectoral initiative mandatory. To reflect less than full reciprocity in reduction commitments, the end-tariff for developing countries in the sectoral initiatives must be higher than that of the developed countries.
We are disappointed that no time frame has been prescribed for resolving the outstanding implementation issues. We are of the view that all outstanding issues should be addressed by a negotiating group under the TNC and thereafter decisions adopted by the General Council by March 2004. On S&D Issues, we strongly support the Africa Group’s position that has been stated many times in the past and therefore do not endorse the present decision.
We are unable to understand why on the issue of cotton subsidies the draft text deflects attention from the specific course of action suggested by Benin and three other countries by seeking to address distortions in products other than cotton. Mr. Chairman, we have to express our disappointment that the revised text brought out by you has arbitrarily disregarded views and concerns expressed by us. We have so far constructively engaged in the entire post-Doha process in the hope that this is a development round. We wonder now whether development here refers to only further development of the developed countries. Consequently, Mr. Chairman, we feel that this text does not lend itself to any meaningful dialogue. We still believe that this conference must be brought to a successful conclusion. We hope that circumstances and environment will be created to enable us to participate constructively.
NO
NEGOTIATIONS ON SINGAPORE ISSUES WITHOUT EXPLICIT CONSENSUS
(Joint Communication to H.E.
Mr. Pierre S. Pettigrew, Minister for International Trade of Canada & Facilitator for
the Singapore Issues, at the Cancun Ministerial Conference)
(12 September, 2003)
Dear Mr. Pettigrew,
On behalf of the delegations from Antigua & Barbuda, Bangladesh (on behalf of the LDCs), Barbados, Botswana, Belize, China, Cuba, Dominica, Egypt, Grenada, Guyana, Haiti, India, Indonesia, Jamaica, Kenya, Malaysia, Nigeria, Philippines, St. Kitts & Nevis, St. Lucia, St. Vincent & the Grenadines, Surinam, Tanzania, Trinidad & Tobago, Uganda, Venezuela, Zambia and Zimbabwe, we wish to convey to you, their views on the four new issues of ‘Relationship between Trade and Investment’, Interaction between Trade and Competition Policy’, ‘Transparency in Government Procurement’ and Trade Facilitation’.
The above delegations have concerns about the impact of multilateral rules on the four new issues on their domestic policies and consider that they have yet to fully comprehend the implications of having WTO rules on these issues. These concerns include, among others, the implications on domestic policies and availability of resources. The issues are highly technical and complex and require much more analysis. These delegations also consider that many developing countries do not have the capacity to implement obligations arising out of commitments such multilateral rules will entail, and there were also doubts on the benefits of WTO frameworks on the new issues. A number of other countries, apart from the above, have also conveyed similar views at the open ended meeting of the facilitation group chaired by you. Hence, we note that there is no explicit consensus on the modalities for negotiations as per the Doha mandate.
The above delegations also have concerns about the process through which these issues have been brought to this Ministerial without any prior discussion on the modalities.
The above delegations are of the firm view that there is no option to pursue other than the continuation of the clarification process. We, therefore, urge that the language enclosed in the Annex be incorporated into any revised text of the draft Cancun Ministerial Declaration (JOB (03)/150/Rev.l) in lieu of Paras 13 to 16.
With our best wishes,
Yours sincerely,
