Richard Melson

September 2006

South Bulletin No. 131

www.southcentre.org

South Bulletin 131

15 September 2006

This issue of the South Bulletin focuses on restoring multilateralism in world trade

In this Issue

Seizing New Opportunities for South-South Cooperation

A new study prepared for the 14th Non-Aligned (NAM) Summit in Havana outlines some of the potential areas of cooperation that the movement can seize on. A paper prepared by the Research and Information System for Developing Countries (RIS), based in New Delhi.

The NAM Summit, Trade And Women.

The 14th Non-Aligned Movement (NAM) conference, bringing together 118 developing nations together in Havana, Cuba from 11 September, holds its two-day Summit (15-16 September) with over 50 heads of state or government expected. Devaki Jain, a Former Member of the South Commission, calls on the Movement to give greater visibility to the role of women in trade.

Doha Round: Development content Must Not be Diluted

Even as the WTO’s Doha Round trade negotiations stand suspended, the ministries of trade around the world are active in reviving the talks. Ministers and high officials of several developing country coalitions such as the G-20, G-33, the ACP Group, the Least Developed Countries (LDCs) Group, the African Group, the Small, Vulnerable Economies (SVEs), the Cotton-4, and NAMA-11, met in Rio de Janeiro, Brazil.

WTO: An Opportunity for a Better Trading System

"The collapse of the Doha round talks in the WTO is an opportunity to set a new course. It is a chance for rich countries to rebuild trust with poorer countries. It is a chance for the WTO to rethink its role in the multilateral system." That is the opinion of Carin Smaller and Anne-Laure Constantin of the Institute for Agriculture and Trade Policy (IATP).

Free Trade Agreements: Analysing the Resistance

While the governments of the South are engaged in a painful exercise to extract the promised benefits of development from the current round of international trade talks at the WTO, a number of civil society groups are concerned with the proliferation of bilateral trade accords.

More in this issue

Nelson Mandela Memorial Lecture - (I)

G33 Statement

U.S. Trade Sanctions Seek to Pressure Latin America

‘The World Bank ‘Undermining Biosafety’

South Centre News

Editorial: WTO Pressure Building Up to Resume Doha Talks

Seizing New Opportunities for South-South Cooperation

A new study prepared for the 14th Non-Aligned (NAM) Summit in Havana outlines some of the potential areas of cooperation that the movement can seize on. Prepared by the Research and Information System for Developing Countries (RIS), based in New Delhi, the policy brief is based on a on a background document prepared by RIS in preparation of the 14th NAM Summit. The principal authors of the document are Dr. Nagesh Kumar, DG, and Dr. Ramgopal Agarwala, Senior Consultant, RIS, based on inputs provided by members of RIS faculty.

The Context: Why South-South Cooperation?

In 1990 when the South Commission Report was released, the developing countries were described as existing on the periphery of the North, mostly weak and powerless in the world arena. [1] However, things have changed over time and the South has now emerged as an important player on the world economic stage. In terms of GDP, saving, investment, exports, imports, foreign exchange reserves, financial assets at home and abroad, quality and size of its corporate world, IT sector, and capability in manufacturing, the South is rapidly catching up with the North. Yet within this overall picture, there are major disparities in the South, between regions and within regions. Poverty, inequalities, unemployment, gender gaps, social isolations have created, in many countries in the South, some serious risks of social and political upheavals. Most countries of the South are likely to fail in meeting most of the Millennium Development Goals (MDGs). They face challenges of energy security, environmental degradation and those arising from global warming.

The ongoing multilateral trade negotiations in Doha Round have demonstrated that the North is seeking access to Southern markets, while resisting liberalization of labour markets, markets for labour intensive goods and services and agriculture in which developing countries have an advantage. Global imbalances pose major risks of hard landing of the US economy with devastating consequences for the exports of the South. A number of these challenges cannot be adequately addressed at a country level but have to be faced together as a group.

The capacity and interest of the North in helping the South is declining and increasingly South-South Cooperation (SSC) will have to fill the vacuum. The South has to look increasingly within itself for mutual help. Development patterns of the past decades suggest that the South is no longer one ‘backward’ group. Different countries and even sub-regions within the countries are at vastly different ‘stages of development’. Thus the complementarities within the group have increased tremendously. The South working as a bloc can help each other in the vital areas such as trade, finance, investment, energy, environment, labour mobility, technology, designing of development strategy, and correcting global imbalances in an orderly fashion.

A number of initiatives have been taken in the past to promote SSC in regional and global contexts. Some of these initiatives need to be expanded in scope and new ones need to be taken. NAM can consider some of the proposals summarized below for seizing these new opportunities for SSC.

A New Vigorous Push to South-South Trade

The emergence of the South with supply capabilities in a wide range of goods and services as well as a growing centre of final demand resulting from the robust growth has made intra-South trade a viable trade strategy. Because of complementarities in capabilities, South-South (SS) trade has grown at 10 per cent during 1990-2001, that is twice as fast as the growth of world trade. During 2000-2003, the annual growth of SS trade further accelerated to 14.2 per cent compared to 5.2 per cent for global trade. As a result of this dynamism, SS trade now constitutes nearly 43 per cent of total trade of developing countries and 11 per cent of global trade. Accelerating this trend is becoming a necessity for reducing global imbalances without creating a global recession: as the US is constrained over time to reduce its net imports from the South to correct its unsustainable trade deficits, the South must find alternative sources of demand, much of which will have to be in the South itself. Promoting South-South trade has thus become a global public good, necessary for the North (in particular for the U.S.) as well for the South.

SS trade and economic cooperation in other areas has been promoted in the framework of regional and sub-regional groupings of developing countries. Developing countries in different regions have established their own schemes of regional economic integration, e.g. MERCOSUR, CARICOM, and Central American Common Market, COMESA, SACU, and Greater Arab FTA. In Asia, there is an ASEAN FTA and SAFTA and BIMSTEC FTA are taking shape. The Bangkok Agreement is being revitalized. There are also a few inter-regional initiatives such as India-Brazil-South Africa (IBSA) Trilateral Commission, Team-9 Initiative combining India and 8 West African countries, India-Mercosur, India-GCC and India-SACU Framework Agreements, among others. The Asian-African Conference held in Jakarta in April 2005 established the New Asian African Partnership. There is also a new Asia-Africa Sub-regional Organization Conference (AASROC) linking the regional groupings of developing countries in Asia and Africa.

Global System of Trade Preferences (GSTP) was conceived as a scheme of trade preferences among developing countries in the 1980s within the framework of G-77 and is serviced by UNCTAD. Two Rounds of GSTP have been completed in the past. A third round of GSTP was launched at the UNCTAD XI in 2004. However, progress so far has been very slow partly because of the positive list type approach adopted for exchange of preferences. The lists of products for which tariff preferences have been exchanged have been small and the depth of concessions shallow to make a difference. The preferences exchanged during the second round could not be ratified at all and hence have not been implemented.

One may argue that multilateral trade negotiations in the framework of WTO take care of promotion of South-South trade between the regions. However, studies find a case for giving greater emphasis to promotion and liberalization of SS trade. An empirical study shows that SS trade can have the effect of lowering the price of intermediate inputs and eventually allow Southern exporters to serve international markets. [2] An UNCTAD study within the framework of computable general equilibrium (CGE) model using GTAP database suggests that liberalization of SS trade has substantially greater (60 per cent) potential of welfare gains for South than liberalization of North-South trade. [3] Another UNCTAD study analyzing seven major south-south RTAs in the framework of a gravity model concludes that most of the South-South RTAs are not only tradecreating but are also trade-expanding, increasing overall trade, even with third countries, sometimes quite significantly. [4] Another study finds that MERCOSUR RTA combining Argentina, Brazil, Paraguay, and Uruguay has helped a reshaping of production according to internal comparative advantage. [5] The preferential arrangements like GSTP, even though of limited scope and coverage so far, have been effective. An empirical study has found that intra-South trade in commodities covered by preferential trade under GSTP has increased remarkably.[6] Furthermore, it is contended that promotion of South-South trade through mutual trade preferences rather than multilateral approaches would be more beneficial as it could assist them in building their supply capabilities and help them attract investment from developed countries.[7] The past patterns reveal that the bulk of SS exports have been in manufactured products and medium and high technology products have been most dynamic component of SS trade in contrast to NS trade that tend to be dominated by primary commodities, raw materials and intermediates and labour intensive goods. Therefore, promotion of SS trade could be instrumental in industrialization of Southern economies.

Therefore, NAM could consider giving a new thrust to revitalize the GSTP as an effective and broader framework for SS trade promotion. It will help in obviating the need for concluding multiple bilateral FTAs by developing countries that have been found to be creating a ‘spaghetti bowl’ syndrome. The recent suspension of the Doha Round of Multilateral Trade negotiations provides a fresh incentive for more developing countries to join the GSTP negotiations and demonstrate their commitment to calibrated trade liberalisation and developing country solidarity. In this direction following proposals may be considered:

a) Broader and deeper approach to ongoing trade liberalization: The ongoing third round of GSTP negotiations could be transformed by adopting a negative list approach where developing countries would offer concession to other developing countries on an across-the-board basis except for a small exclusion list of sensitive products. Also, since agriculture sector in most developing countries sustains livelihood of the bulk of the population, liberalization of agricultural trade could be on a different track. The depth of concessions could be 50 per cent of tariffs with eventual elimination subject to appropriate rules of origin. [8] The least developed countries could undertake tariff reduction of only 25 per cent.

b) Widespread Participation: A successful outcome of the GSTP negotiations would depend not just on the extent of tariff concessions but also on wide spread participation of members of the G-77 and China. At present, of the 44 countries that have ratified the GSTP Agreement, only about 25 countries have been participating in the third round negotiations, and just 13 countries have notified their products of export interest.

c) Framework Linking Regional Trading Arrangements (RTAs) of Developing Countries: GSTP could also provide a framework for linking different RTAs of developing countries and exchanging trade concessions to each other on a reciprocal basis. MERCOSUR has already joined the third round of GSTP as a party. Other regional groupings of the South could participate in the process and create a framework for exchange of trade preferences thereby creating a Southern Economic Space.

d) Extending the scope to cover trade in services: Service sector has emerged as the most dynamic sector in a number of the Southern economies. South is becoming an active and emerging player in trade in services. SS trade in services also assists in bridging the capability and skills gap in some areas. Hence, liberalization of trade in services between developing countries would be mutually fruitful. Therefore, the revitalized GSTP should be expanded to cover trade in services.

e) Trade Facilitation and NTBs: To exploit the full potential of GSTP, mutual cooperation would be desirable in trade facilitation and addressing various non-tariff barriers. First of all, there is need for improving flows of trade and business information between developing countries. A web-based information clearing-house could be set up exclusively for developing countries based exporters and importers. Secondly, there could be cooperation between standards and export inspection bodies of developing countries for evolving mutual recognition agreements (MRAs), and aligning their conformity assessment and customs procedures especially for products of mutual trade interest.

f) Finance and Banking Links: There is need for strengthening commercial banking links for facilitating the intra-South trade. Commercial banks of South or their consortia could strengthen their presence in other developing countries. Similarly, export-import banks or export financing agencies of developing countries could get together and develop reciprocal links for export financing. [9] Cooperation between clearing and payment agencies of developing countries may also be fruitful in evolving a framework for conducting mutual trade in local currencies. Finally, the South Bank proposed here could also have a separate window for financing of intra- South trade in goods and services.

Enhancing Supply Capacities through South-South FDI and Technology Transfers

Promotion of SS investments and technology transfers is important for development of supply capacities in the South, particularly for industrialization of the least developed and low income countries that are marginalized in the global FDI flows. Development of technological capability and entrepreneurship in a number of emerging and developing countries is now widely recognized. Intra-South flows of FDI and technology have grown over the past decade and accounted for nearly 37 per cent of global FDI inflows received by developing countries in 2003 compared to only 15.5 per cent in 1995. [10] The emergence of developing country enterprises as outward investors is an important development of the past decade. It widens the options of developing countries looking for FDI inflows and technology at least in standardized and matured industries. Emerging MNEs generally provide to their lesser developed host countries access to intermediate and generally more appropriate and cheaper technologies and skills. These intermediate range of technologies could be valuable in development of wage goods sectors and employment generation in dual economies. Developing countries are becoming sources for not only domestic market oriented FDI but also for export-oriented ventures. [11] The least developed countries may find it easier to attract FDI originating in developing countries than from industrialized countries.

Developing countries have begun promoting intra-South FDI inflows as is clear from the rising number of bilateral investment promotion and protection treaties (BIPAs) concluded between developing countries. Of the nearly 2400 such treaties signed globally by 2004, 25 per cent have been signed between developing countries and their proportion is constantly growing and they accounted for 39 per cent of such treaties signed in 2004. [12] Yet there appears to be a scope of institutional intermediation at the national, regional or international level for directing these flows to the poorer countries given the constraints of information and financing. NAM may consider following steps for promoting SS investments:

a) A South Investment Agreement: For promoting mutual investment flows, developing countries could evolve a South Investment Treaty providing post-establishment national treatment, MFN and investment protection and dispute settlement. This global arrangement will avoid the need of signing thousands of BIPAs that developing countries are signing between themselves. By limiting the national treatment to postestablishment, the treaty will not reduce the policy space that developing countries might need to protect domestic enterprises. In order to make the treaty a balanced one it could build certain principles of corporate ethics and investor behaviour that the developing country investors will be expected to follow.

b) A South Double Taxation Avoidance Treaty: NAM may also consider evolving a global South Double Taxation Avoidance Treaty (DTAA) to facilitate intra-South FDI flows.

c) Information Flows on Business Opportunities: The potential of SS investments may not be exploited fully for want of information on business opportunities and investment climate in different developing countries. Unlike western MNEs, Southern enterprises are generally small enterprises having operations in a few countries and are not equipped with captive information networks to track opportunities globally. This information gap is to be bridged by creating more opportunities for the South business and industry to interact regularly within the framework of an apex body. Here the G-77 Chamber of Commerce and Industry and the NAM Business Forum set up recently should play an effective role by organizing South trade fairs and interaction meetings regularly besides web-based information portals on opportunities for South-South trade and investments.

d) Financing and Guarantees for South-South Investments: The proposed South Bank could have a window reserved for supporting SS investments by providing term lending and venture capital support to these ventures. The Multilateral Investment Guarantee Agency (MIGA) of the World Bank could be asked to create a special window for covering intra-South FDI for non-commercial risks. For making it effective, more developing countries should join MIGA.

New Opportunities for Monetary and Financial Cooperation: A South Bank

In the field of monetary and financial cooperation, there have been many initiatives in the South over the last three decades. The Asian Clearing Union, which began operations in 1975, allows Governments of its member countries to side step the need for hard currency in clearing payments for regional trades. The Chiang-Mai Initiative of ASEAN+3 countries launched in 2002 has put together pledges of funds of over $20 billion, which can be mobilized to help countries in the group to address balance of payments crisis. Asian Development Bank’s Asian Bond Markets Initiative (ABMI) is intended to help develop mature bond markets in the region to tap the region’s surplus savings. Kim Hak-Su, Executive Secretary of UNESCAP, has proposed creation of Asian Investment Bank (AIB), which could provide infrastructure loans and collaborate with the banking community in both raising and investing resources amply available in Asia. In a similar vein, Datuk Seri Abdullah Ahmad Badawi, Prime Minister of Malaysia, has suggested that Asian countries could use "a fraction" of their massive foreign exchange reserves as capital for the fund, which would invest in basic economic infrastructure including super highways and super railways linking and binding the East Asian community. The Latin American Reserve Fund, created in 1991 to replace the Andean Reserve Fund, has continued to help to correct payments imbalances with loans and loan guarantees, co-ordinate monetary, exchange, and financial policies of members and promote trade liberalization and payments. Venezuela, in a bold initiative, is using part of its foreign exchange reserves to help some of the countries in the region to reduce their external debt. The Arab Monetary Fund, established in 1976, seeks to stabilize exchange rates, facilitate mutual convertibility among Arab currencies and co-ordinate national monetary polices and promote investment flows and trade by easing payments arrangements and dealing with imbalances. In the wake of recent increase in reserves due to oil price rise, many Arab countries are looking for opportunities to diversify their reserve portfolio away from excessive dependence on the US. In West Africa 15 member states of ECOWAS agreed in 2000 to create a common currency for the region and eventually move toward a monetary union of the member states.

These scattered efforts at monetary cooperation in the South have produced only modest results in the past, largely because of inadequate financial capacity of the South. Now in the first five years of the 21st Century, an altogether new situation has arisen which creates the possibility of a breakthrough in this important area. Since 2000, the South has experienced a current account surplus in every year, with the figure for 2005 (estimate) amounting to $245.6 billion (2.6 per cent of GDP). And these surpluses now obtain not only in East Asia, but also in Europe and Central Asia, Latin America and Middle East. Foreign exchange reserves of the South have increased at an annual average rate of $269 billion over the last five years and in 2005 they exceeded $2 trillion. With creative institutional innovations, this newfound power of the South can be utilized not only to facilitate trade and investment in the South but also to capture the seigniorage from intra-South financial flows which can go a long way to meeting the resource needs of development.

The low rate of return currently earned by the South from its high level of foreign exchange reserves has attracted international attention. Larry Summers, former Secretary of Treasury of the US has estimated [13] that the opportunity cost of excess reserves of emerging countries could be as high as $100 billion per year. He goes on to suggest globalizing ( i.e. handing over to an international facility managed by the IMF/World Bank) $500 billion at a fee of 100 basis points which would produce $5 billion a year that could go towards global public goods, multilateral grant assistance or debt relief. His suggestion is based on the perception that the Southern institutions do not have the technical and political capital to make such large financial investments, and that perhaps is based on a underestimation of the progress made by the South in developing its capabilities of financial management.

An alternative, utilizing the capabilities of the South, would be to seize this opportunity to create a South Bank, which can use part of these reserves to help meet the financial needs of the South and for funding the institutions for SSC. The proposed Bank will have several distinguishing features. It will be of substantial size, with authorized capital at least equal to that of the World Bank (about $200 billion). It will combine the functions of the World Bank and IMF by providing funds for investment and balance of payments support and provide the Southern equivalent of SDRs. An integral part of the Bank will be a think tank, which will assist the member countries in learning from each other’s development experience and promote SSC. In contrast with the present IFIs (including the regional development banks) but in tune with European Investment Bank, the proposed Bank will be of the South, by the South and for the South.

Backed by deposits from the surplus countries in the South, the Bank [14] will issue a fully convertible "Southern SDR" (SSDR), which will act as a parallel currency for trade, investment and reserves in the South. The issues of weights in formation of SSDR, its allocation procedures, interest on deposits and borrowings can be decided in the light of experience with SDR with the difference that SSDR will be an actual currency available for circulation and deposit. If only half of the current foreign exchange reserves of the South ($1 trillion) are deposited in this Bank and SSDR worth $2 trillion are issued over a five year period, the seigniorage earned could easily amount to about $40 billion year. Such seigniorage, though only a fraction of the seigniorage currently appropriated by the US, will be sufficient to double the level of ODA currently received by the South. From a global perspective too, this will be a win-win solution of the problem of global imbalances. While the South will gain from the supply side benefits of additional investment facilitated by the Bank, the world economy would benefit from additional demand generation thus reducing the risk of recession as the US inevitably moves to reduce its net imports from the rest of the world.

Although a proposal of the South Bank has been discussed intermittently at the NAM Summits and the G-77 meetings since the early 1980s, the time seems to have come for giving effect to it as the South now has the resources to make it happen.

Building Capabilities for Harnessing Fruits of Modern Technologies

Mobilizing ICTs for Empowering the Poor and for Development: Notwithstanding the concern about the digital divide which prevents developing countries from exploiting the fruits of information and communication technologies (ICTs) for their development, many promising experiences of their pro-poor deployment from across the world have been documented – for instance, use of ICT by rural communities facilitated by community owned computers with visual or graphic interface, use of public fixed line and mobile telephone bureaus in India and Bangladesh as sources of rural employment as well as for increasing the virtual teledensity, use of mobile phones by fisherfolks, use of internet for e-governance such as computerization of land records, among many other applications. NAM can formulate strategies for promoting cooperation in the area of ICTs for exploiting their potential for the development of member states. In particular, the South-South Cooperation could cover the following areas: [15]

¨ Education and training: Diffusion of ICT is constrained by lack of trained manpower. Some developing countries have expertise to assist other countries in education and training. NAM may promote such exchanges of training enterprises and institutions between the Member States by facilitating information exchange and FDI policy reforms wherever necessary.

¨ Joint Development of Hardware and Software for IT Diffusion: One of the reasons for underperformance of the South in terms of levels of diffusion of ICT is high cost of equipment and lack of software in local languages. Developing countries could pool resources to develop low cost computers and other equipment. They could also pool resources for joint development of local language software exploiting the opportunities thrown up by availability of open source platforms like LINUX. A number of NAM countries have developed substantial expertise in computer hardware and software. These capabilities could be exploited fully for promoting the diffusion of ICT in the Member States.

¨ Exchange of Experiences in Innovative Pro-poor Applications of ICT: There is need of learning from each other by documenting and sharing experiences in innovative applications in different parts of NAM. It could also be organized through the NAM Information Clearinghouse proposed here.

Exploiting the Potential of Biotechnologies for Propoor Growth: Biotechnologies can assist developing countries in achieving food security and rural development by breaking the yield barriers, by helping development of plant varieties tolerant to salinity and alkalinity, development of low-input agriculture that is of special significance for developing countries with large populations of small and marginal farmers among other ways. They can also help in fostering rural industrialization by integrating agriculture with production of food, animal feeds, energy, fertilizer, and a number of industrial products.

A number of encouraging experiences from countries like Brazil, China and India with the food-energy integrated systems are now available and could be replicated to other countries. NAM could promote mutual cooperation among the Member States for exploiting the potential of biotechnologies for their development. The SSC in this area could also cover education and training, joint R&D for common problems, exchange of experiences and technologies, cooperation in biodiversity conservation, protection and evolution of biosafety norms.

Cooperation in Medicines and Public Health: Development of more effective remedies and vaccines for dealing with common and pressing diseases of developing countries continues to be neglected by the global pharma industry despite the strengthening of international IPRs regime under the WTO’s Agreement on TRIPs. These include tropical diseases like malaria, TB, HIV-AIDS, among others, that affect millions of people in the South. R&D institutions in developing countries need to network and organize themselves to undertake R&D on such diseases following a consortia approach. It has been estimated that research on dealing with these diseases would require an additional funding of US$ 3 billion per annum. WHO is seeking an allocation of additional resources of this magnitude from developed countries.

NAM should press that these resources are passed on to eligible institutions and enterprises in developing countries for R&D relevant for their needs besides helping them strengthen their capabilities. A number of developing countries such as Cuba have developed capabilities in tropical medicine. Some others like India, Brazil, China have accumulated capability for development and production of life-saving medicines at affordable prices. A NAM initiative in promoting fuller exploitation of these capabilities for improving the public health systems in the Member States would be fruitful.

South-South Cooperation for Energy Security

South is the major producer of energy and with its rapidly growing economies; soon it is likely to become the major consumer of energy. Yet the South depends critically on intermediation by the Northern MNEs for managing supply as well as marketing of the energy products. As a result, the South often ends up paying a premium price on the supply it receives and faces the risk of supply shortfall in case of disruption in energy supply.

Looking forward, the major countries in the South (such as China and India) are linking up with suppliers in the South to enhance their energy security and trying to develop marketing facilities in the South. They are understandably facing resistance from MNEs in reducing their oligopolistic power over prospecting, development, transportation and marketing of energy. There is an urgent need for enhancing South-South cooperation which can overcome the resistance of Northern MNEs and provide a level playing field to the newly emerging companies of the South by giving them market-oriented opportunities in obtaining prospecting, development, transportation and marketing rights and thus enhance energy security of the South.

Increasing South’s Bargaining Power in Multilateral Trade Negotiations

Coalitions for Making Doha Really a Development Round

The process of decision-making in the multilateral trade negotiations has been highly asymmetric. Although the decision-making should be by consensus, conventionally the leading trading nations such as US and EU exercise a disproportionate weight in agenda setting and decision making process. The process of negotiations under the Doha Round that was supposed to address developmental concerns of developing countries, does not give any high hopes. Developed countries have been resistant to deliver the promises made in the Doha Declaration. However, developing countries have been able to articulate their position in a much more effective manner than ever in the past due to issue based coalitions set up on different key issues on the agenda. G-20, led by Brazil, India, South Africa, and China, has proved to be an effective coalition, which submitted a counter proposal to the US-EU proposals on agriculture negotiations at the Fifth Ministerial. It is to the credit of the leadership of the G-20 that it has held together despite the attempt by the developed countries to break their ranks by offering to phase out of export subsidies for select products of interest to some leading countries. Later on in the negotiation of the July framework, India and Brazil represented G-20 in the Five Interested Parties (FIPs) that hammered out the agreement. There is another coalition of South countries called G-33 on Special Products and Special Safeguard Mechanism (SP and SSM). This grouping is led by Indonesia and actively participates in the negotiations on AoA negotiations in the ongoing Doha Round. There is G-90 bringing together ACP countries and LDCs.

The G-90 and G-20 had made a grand alliance of G-110 at the Hong Kong Ministerial. That issue-based coalitions of developing countries have been highly effective in shaping the course of negotiations is evident by the ability of developing countries to have three of the four new issues, the so-called Singapore Issues, viz. investment, competition policy and government procurement off the agenda of the Doha Round. Longer-term sustainability of these coalitions, however, will need some constructive proactive agenda. The other aspect of South-South Cooperation could cover mutual cooperation in implementation of commitments, technical assistance for compliance of emerging standards, etc. NAM could facilitate such cooperation among the member countries by creating a Working Group on WTO issues to shape the agenda of WTO negotiations proactively. [16] NAM needs to raise concerns about the asymmetries in the emerging world trading system, and contribute to evolving a system that is more responsive to the development needs of its membership and playing field is more leveled. Following initiatives may be considered in this regard:

¨ Consultative Group on Reform of Decisionmaking in Multilateral Trading System: The process of decision-making in the multilateral trade negotiations is highly asymmetric, non-inclusive and non-transparent and needs reform for its sustainability. NAM could establish a Consultative Group to come up with a set of comprehensive proposals for reform of the trading system and bringing greater equity and transparency in the process of decision-making. These proposals can then be taken up proactively by the Group in the WTO negotiations on behalf of its members. Formation of such a group would also foster linkages between the trade policy think-tanks of the member countries. The G-20 could also extend its coordination to international financial issues now that WTO has a working group on trade, debt and finance.

¨ Proactively Setting the Agenda of Trade Negotiations: To level the playing field in the negotiations, coalitions of developing countries should begin to set agenda of the trade talks by bringing issues of their concern on the negotiating table. For instance, protection and benefit sharing from traditional knowledge and genetic resources is one such issue that they are trying to put on the table. Against the background of commercial exploitation and patenting of rich genetic heritage and indigenous knowledge of developing countries and tribal communities by MNCs, there is need for sui generis regimes for protection of indigenous knowledge at the national level and an international regime for recognition of the indigenous knowledge of originating in other countries and providing for a framework for prior informed consent and benefit sharing for the benefit for the communities owning the knowledge. It should be made mandatory for the patent applications to disclose the geographical source of the traditional knowledge or genetic resources from which the invention is derived. NAM could also proactively seek to build such a framework in coordination with the WTO TRIPs, WIPO, CBD, FAO, UNESCO and UNCTAD. NAM could set up a Task Force on Indigenous Knowledge to work out proposals for action in this regard.

¨ NAM/G-77 Watchdog on Implementation Issues in WTO: A brief review of the disputes that are taken up in the WTO framework indicates that the developed countries are well organized and quick in scrutinizing the implementation of commitments by developing countries and bring any cases of deficiency in implementation to the dispute settlement board (DSB) of WTO. On the other hand, the cases of underimplementation of commitments made by developed countries to developing countries remain unnoticed owing to the inability of developing countries to scrutinize the policies of industrialized countries and to seek a redressal under the WTO framework. Furthermore, developed countries have used their dominant position in the world economy to take unilateral initiatives (e.g. under S. 301 by the US) that militate with the multilateral framework. The US Anti-Dumping Act of 1916, which has been found violative of the WTO Agreement by its trading partners, has not been repealed as yet. Developing countries, individually, lack the capacity – physical, analytical and financial – to identify and pursue the cases of nonimplementation of commitments and autonomous or unilateral policy decisions concerning trade policy on the part of developed countries and seek their redressal under the existing framework. The recent case of the trade distorting export subsidy valued at $ 4 billion under Foreign Sales Corporations (FSC) Act by the US government which was successfully brought by the EU to the DSB is a case in point. There is a need for setting up a Watchdog by NAM jointly with G-77. This body should be equipped with the necessary professional, analytical, legal and financial expertise to scrutinize the implementation of WTO commitments by developed countries and, where appropriate, to bring them to the DSB on behalf of developing countries.

¨ Trilateral Cooperation/NAM Trust Fund for Assisting the Member-States in Implementation of WTO Requirements: Developing countries have undertaken substantial commitments under different WTO Agreements. They lack capacity and resources for their implementation. In addition, proliferation of NTBs in the form of enhanced environmental and health-safety requirements in the developed countries is affecting a substantial proportion of developing country exports. The technical assistance promised under the SPS and TBT Agreements of WTO for building capacity in developing countries for compliance with the standards is often inadequate or not timely. Most of the budgets for capacity building and technical assistance provided by developed countries and multilateral agencies is actually spent on workshops or seminars rather than actually assisting the affected exporters in compliance of the new requirements. It is observed that in many cases the relevant expertise for technical assistance may not be available in developed world (such as for treatment of food stuffs in tropical climate). Some of the developing countries may have the relevant expertise but lack financial resources for delivering the technical assistance. NAM could set up a Trust Fund for assisting the member countries in their compliance with the requirements with the help of experts from developing countries. The NAM Trust Fund could be augmented by contributions from developed countries and multilateral bodies in the interest of fair world trading system.

Exchanging Development Experiences

Different developing countries have accumulated a large body of experiences in fostering equitable development and pro-poor growth and moderating adverse effects of the process of globalization over the past decades. These experiences could be fruitfully shared by other developing countries. However, these experiments and experiences remain confined to the regions where they evolved for want of diffusion of information on them. For facilitating exchange of these experiences and cooperation among the thinktanks for providing analytical support for policy making, the following proposals may be considered:

¨ NAM Information Clearinghouse: NAM could facilitate the exchange of such experiences by creating an information clearinghouse on the internet. The NAM Information Clearinghouse could be interactive in that Member States and organizations based in them are able to post information on these experiments for dissemination among other countries. The information would also contain the contact details of the experts or resource persons that could be contacted for further information or assistance.

¨ NAM Network of Think-Tanks on International Economic Issues: Strengthening the analytical capacity in the South on international economic issues by setting up a NAM Network of Think-Tanks on International Economic Issues is crucial. The Network could become a source of ideas for consideration of the policy-making bodies of the Movement on a regular basis. This Network could further set up three Special Task Forces: o Task Force on Reform of International Financial Architecture, o Task Force on the Making the World Trading System more Responsive to Development, and o Task Force on South- South Cooperation. These Task-Forces would pool the existing capability available in the Member States to evolve policy responses for the consideration by the Movement. Furthermore, the Network should regularly monitor the trends in the world economy from the perspective of developing world and prepare Reports on World Economic Trends for the NAM Summits and Ministerial Meetings. These Reports could provide an independent assessment and viewpoints on the emerging trends and patterns and their implications for NAM Member-States and hence complement the reports emanating from the Bretton-Woods Institutions that are sometimes unable to capture developing country perspective adequately. Given the scarcity of resources among the low-income countries for such activities, a Trust Fund, created with the voluntary contributions of countries and international agencies out of their budgets for technical assistance, could be established to facilitate the activities of the Network and keep it active for facilitating the work of the Task-Forces. RIS for Developing Countries, an institution created by India within the framework of NAM after the Seventh NAM Summit, could be asked to coordinate the Network and provide secretariat to the Task-Forces.

South has emerged as a more confident participant in the international division of labour in the 21st Century. It has accumulated resources, experiences and capacity to shape its destiny more decisively than in the past. We believe that SSC can help in exploiting their synergies for mutual benefit and assist the South in meeting the many challenges it is facing. As a global forum of the South, NAM has a major role in fostering the SSC. It is in this context that an agenda has been outlined above for the XIV NAM Summit.

Notes

1. South Commission 1990. The Challenge of the South. New York: Oxford University.

2. Fugazza, Marco and F. Robert-Nicoud, 2006, "Can South-South Trade Liberalization stimulate North-South Trade?". Journal of Economic Integration, 21(2), pp. 62-90.

3. Fugazza, Marco and David Vanzanetti. 2006. A South-South survival strategy: The potential for trade among developing countries. UNCTAD, Geneva, UNCTAD/ ITCD/TAB/34.

4. Cernat, Lucian. 2004. Assessing South- South regional integration: Same issues many metrics. UNCTAD, Geneva.

5. Sanguinetti, P, I. Traistaru, and C. V. Martincus. 2004. The impact of South-South preferential trade agreements on industrial development: an empirical test. Mimeo.

6. Endoh, Masahiro. 2005. The effects of the GSTP on trade flow: mission accomplished?. Applied Economics, 37(5):487-96.

7. See B.L. Das. 2004. ‘GSTP for enhancing South-South Trade’, Third World Economics. 16-31 March 2004.

8. This proposal was first made in RIS (2004) UNCTAD XI and the Development Dialogue for the 21st Century. RIS Policy Brief #13.

9. Asian export import (exim) banks have started a dialogue between them for promoting cooperation. There could also be a global platform for cooperation between exim banks of South.

10. See World Bank (2006) Global Development Finance 2006, Washington, DC. (Chapter 4). Also see for the trends and patterns in SS FDI, Globalization, Foreign Direct Investment and Technology Transfers:

11. Impacts on and Prospects for Developing Countries, by Nagesh Kumar et al. (1998), Routledge: London and New York, ch. 7; Akyut, Dilek and Dilip Ratha (2004) ‘South- South FDI Flows: How big are they?’

12. Transnational Corporations, 13(1): 149-176.

13. For a discussion and evidence on the distinguishing features of SS investments see Kumar (ibid.), World

14. Bank (ibid.). An empirical study by Athukorala et al. (1995), ‘Multinational firms and export performance in developing countries: Some analytical issues and new empirical evidence’, Journal of Development Economics, 46:109-22, have found that affiliates of developing country investors in Sri Lanka performed significantly better in terms of export performance compared to either domestic or developed country MNE affiliates.

15. UNCTAD (2005) Recent Developments in International Investment Agreements. UNCTAD/WEB/ITE/ IIT/2005/1.

16. "Reflections on Global Account Imbalances and Emerging Markets Reserve Accumulation". L.K. Jha Memorial Lecture, Lawrence H. Summers, Reserve Bank of India, Mumbai, India. March 24, 2006 South Bank: a financial institution of the South, by the South and for the South

17. An outline of such a Bank in the context of Asia, has been presented in "Towards a Multipolar World of

18. International Finance" by Ramgopal Agarwala and Gauri Modwel, RIS Discussion Paper No. 46, 2003.

19. This section draws upon RIS (2003), Globalization and the Non-aligned Movement: An Economic Agenda for Action, New Delhi: RIS

20. See RIS Policy Brief # 20 Making Doha Really a Development Round, December 2005, for more details.

The NAM Summit, Trade And Women

The 14th Non-Aligned Movement (NAM) conference, bringing together 118 developing nations together in Havana, Cuba from 11 September, holds its two-day Summit (15-16 September) with over 50 heads of state or government expected. Revitalising the movement will be a continuing focus, with its attendant emphasis on promoting South-South trade. In the following article, Devaki Jain, a Former Member of the South Commission, calls on the Movement to give greater visibility to the role of women in trade. She was also a member of a Special Committee constituted by India’s foreign ministry for the NAM Summit at Havana.

Trade constitutes 30 per cent of India’s GDP to day, and in a few years will constitute nearly 40 per cent of India’s GDP, according to official statistics.

The last two decades have witnessed enormous changes in the way nations trade with each other in both goods and services. New trading opportunities have emerged across the world and developing countries have been able to effectively use trade to supplement their development efforts. South-South trade has grown at 10 per cent during 1990-2001 that is twice as fast as the growth of world trade. As a result of this dynamism, South-South trade now constitutes nearly 43 per cent of total trade of developing countries and 11 per cent of global trade.

In the last 15 years, countries of the South such as India, China, South Africa and Brazil among others, have shown the vitality of their economies in their growth rates and the value of their trade.

It was a deliberate decision to place the development dimension at the core of the Doha Round. However the suspension of the Doha Round of Multilateral Trade negotiations has been a wake up call to Developing Countries – that they not only have to forge stronger bonds to put forth a collective front, but that they have to strengthen South-South trade – however much it contradicts free trade theorems.

Given these negative features namely the failure of the Doha round, and positive features namely the improvement in South-South trade, the NAM Summit offers an opportunity to negotiate deepening of these processes. In fact since the name of today’s game is trade, one proposal was to announce NAM as a global trading centre. While this may sound poetic to some, many felt that it is this kind of transformation of the NAM symbol or signature that could reclaim the Non Aligned Movement – give it current relevance.

It is commonplace these days to assert that globalization provides enormous challenges as well as opportunities. This observation is particularly relevant with regard to employment. Employment is the primary channel through which the majority of the population can share in the benefits of economic growth. In particular, employment plays a critical role in ensuring that economic growth translates into poverty reduction.

However, discussions on trade liberalization, and trading, including the basis for setting up Regional Trade Agreements, do not go into the issue of employment, with the kind of zest with which they see the success of their commerce. An exception to this generalization, is a report that has been prepared by the Research and Information System, RIS, as well as the recent Asia Pacific Human Development Report Trade on Human Terms, both of which expand on the connections, both positive and negative in relation to employment.

The era of global integration has been associated with far-reaching changes in the structure of employment, including pressures for increased flexibility, episodes of "jobless growth," growing informalization and casualization, expanding opportunities for the highly skilled, but vanishing opportunities for the less skilled.

The transformation of women’s employment during this period has been similarly far reaching. More women participate in paid employment than at any other time in history. The entry of women into the labour force has meant that, in many cases, the economic opportunities available to them have grown. However, equality of opportunity remains elusive. Sex segmentation of labour markets is endemic, with women concentrated in lower quality, irregular and informal employment. Economic stabilization programmes and the process of global integration have frequently squeezed household incomes, pushing women to enter the paid labour force.

At the same time, economic reforms have intensified demands on women’s unpaid work, creating a situation in which increasing the supply of women’s labour is a central strategy by which families cope with fundamental economic change. At a basic level, women’s employment, paid and unpaid, may be the single most important factor for keeping many households out of poverty.

For most countries of the region the period between 1985 and 1997 witnessed a massive increase in the labour force participation of women. This process was most marked in the Southeast Asian region which was also the most dynamic in terms of exporting.

The two South Asian countries in which export-oriented production has been or has become more important - Sri Lanka and Bangladesh - show female shares in total employment which are comparable to the South-East Asian countries.

In the export-oriented ready garment industry of Bangladesh about 90 percent of the workers are women. Similarly, in South East Asian countries, such as Cambodia and Philippines, female workers make up to 90 percent and 72 per cent of total workers in the textile and apparel sector. However, labour conditions are a major cause of concern for women employed in the textiles and clothing sector. Studies show that working conditions for women include excessively long hours of work, poor pay, hazardous and unhealthy work conditions, absence of opportunities for upward mobility and poor treatment of women workers (Choudhary, Parthapratim Pal and Manghnani, 2004).

The numbers of women migrants has increased significantly over the last three decades, and they now comprise approximately half of the estimated 200 million migrants worldwide. The feminization of labour migration is particularly pronounced in the Philippines, Indonesia and Sri Lanka, where national-level estimates indicate that women comprise 60-75 percent of legal migrants, many of whom are employed as domestic workers in the Middle East and Asia. Their remittances have often been the predominant foreign exchange earnings for their countries. There are also a large number of illegal women migrants, following the transnational companies as they stride across nations, looking for cheaper and cheaper labour. Often these women are hijacked into trafficking, especially into the flesh trade.

However, despite the growing involvement of women in recognised economic activity in Asia, they have continued to remain dominant in unpaid household work. It is obvious that one of the important reasons for preferring women workers in many export-related activities in particular, has been the lower reservation and offer wages of women. Women workers’ wages have been consistently and significantly lower than male wages in the aggregate. The differentials are particularly sharp in the case of the Republic of Korea, Malaysia and Singapore, where the average female wages are just above half those paid to male workers.

The current situation of the participation of women in the trend of globalization with special emphasis on expanding trade reveals the need for the NAM movement to once again see the role of women, as principal actors, agents in the economic field, and give special attention to that identification.

Over the years 1975 to 1985, NAM was the most enabling space for the women of the South to both reveal their particular location in the political economies of the NAM countries, but also to shift the imagery given by the UN system, that women were basically to be perceived and enabled as objects of social welfare, to affirming their central role in their economies as producers as well as farmers etc This shift further endorsed in the Delhi conference in 1985, was an important source of self affirmation for women of the South.

NAM could flag the fact that gender operates in all the critical economic trend areas of the current global economic landscape in that women are often the major economic actors in these production and trading lines and therefore NAM would like to visibilise this and make special arrangements to reduce some of its negative aspects. Ensure that women are protected and opportunities are given far greater opportunities in economic management.

The Puthrajaya document, the official document which will be negotiated at the Summit, while noticing the serious challenges faced by workers in the new globalised economic paradigm, does not highlight that it is women who are the major migrants as well as exploited workers in this new trend of roving TNCs looking for cheaper labour and less stringent labour laws.

NAM could design a social charter, which addresses both the legal issues of migration, protection of workers, social amenities and most of all secure employment in the national economy to inhibit the need to migrate at personal risk, a crucial element of the intersection of trading and social protection.

In the 60s and 70s during the hey days of the movement, when big issues like freedom from colonization, apartheid , slavery, liberation of Palestine were issues that NAM participated effectively in, NAM was also a strong and supportive presence, though physically invisible, in the UN conferences on women. Its attention to women’s contributions to economic development was sparked by the UN’s International Women’s Year. The Ministerial Conference of the Non-Aligned Countries that was held in Lima in August 1975, which took place right after the Mexico City conference, strongly supported and reiterated the Plan of Action, the document that emerged from the Mexico conference This support was reaffirmed in the many conferences that followed, including the Fifth Summit Conference of Heads of State of Government of Non-Aligned Countries in Colombo in 1976 and the Conference of Foreign Ministers of Non-Aligned Countries in Belgrade in 1978.

The NAM passed a series of resolutions on the issue of economic development in succeeding conferences, culminating in its Conference of Non-Aligned and Other Developing Countries on the Role of Women in Baghdad in 1979. Representatives from forty-five developing nations attended the conference, and the UN sent observers from the ILO, ECWA, the UNDP, the United Nations Industrial Development Organization (UNIDO), and the WHO. As a result of dialogues in conference venues, the NAM saw women’s role in development as an international and political issue, in contrast to its earlier conceptualization of issues relating to women’s status as social or cultural phenomena.

Here is an opportunity, in a new world order, where NAM is trying to make itself into a powerful voice, standing for the less powerful, to bring back its role in strengthening the women of its countries, who indeed are the shoulders on which their trade is riding.

Table 1

Share of women in employment in EPZs and non-EPZ manufacturing

(per cent)

Country

Year

Whole economy

EPZs

Other manufacturing

Malaysia

1980

33.4

75.0

35.6

Malaysia

1990

35.5

53.5

47.2

Philippines

1980

37.1

74.0

41.0

Philippines

1994

36.5

73.9

45.2

Republic of Korea

1987

40.4

77.0

41.7

Republic of Korea

1990

40.8

70.1

42.1

Source: Susan Joekes [1999].

Table 2

Female wages as percentage of male wages

Economy

Percentage

Bangladesh

71.7

Hong Kong, China

65.9

Republic of Korea

52.3

Malaysia

57.9

Philippines

84.0

Singapore

57.1

Sri Lanka

87.8

Thailand

63.8

Source: ILO 1998.

Note: The data refer to an average of years for which data were available in the 1990s.

Doha Round: Development content Must Not be Diluted

Even as the WTO’s Doha Round trade negotiations stand suspended, the ministries of trade around the world are active in reviving the talks. Ministers and high officials of several developing country coalitions such as the G-20, G-33, the ACP Group, the Least Developed Countries (LDCs) Group, the African Group, the Small, Vulnerable Economies (SVEs), the Cotton-4, and NAMA-11, met in Rio de Janeiro, Brazil, on 9 September to discuss taking the process forward. They are ready to re-engage in the talks but at the same time preserve the development content of this round. Following is their joint statement.


1. "We, Ministers and High Officials of the G-20 countries and, as special guests, the coordinators of the G-33, the ACP Group, the Least Developed Countries (LDCs) Group, the African Group, the Small, Vulnerable Economies (SVEs), the Cotton-4, and NAMA-11, met in Rio de Janeiro, Brazil, on 9 September 2006, to consider the situation of the negotiations in the Doha Round. We deeply regret that the WTO’s Doha Development Agenda negotiations have been suspended. This is a setback for a Round that is to place development and agriculture at the heart of the multilateral trading system. Not only the Round is threatened, but the multilateral trading system itself now faces a serious crisis. This is an unacceptable situation for all developing countries.

2. Agriculture lies at the center of the Doha Development Agenda. Most of the world’s poor make their living out of agriculture. Their livelihood and standards of living are seriously jeopardized by the subsidies and market access barriers prevailing in international agricultural trade. Any Round that would be faithful to its development dimension must urgently redress this situation.

3. At such a critical juncture, we reaffirm our willingness to join efforts with a view to ensuring that WTO negotiations in agriculture live up to the commitments of the Doha Mandate. This would entail results that guarantee substantial and effective reduction in trade-distorting domestic support coupled with necessary disciplines to prevent box-shifting and product-shifting of support; substantial improvement in market access; and expeditious elimination of all forms of export subsidies.

4. We underscore the importance of Special and Differential treatment (S&D) for developing countries in all areas of the negotiations. In this context, we emphasize the overall proportionality in the reduction commitments and the vital role of special products (SPs) and the special safeguard mechanism (SSM) in addressing the food security, rural development and livelihood concerns of developing countries. We reiterate our determination to achieve a balanced and proportionate outcome with a comparable high level of ambition both in agriculture and in NAMA, as agreed under Paragraph 24 of the Hong-Kong Ministerial Declaration.

5. We recall the pledge made at Doha to place the interests and needs of developing countries, especially the least-developed among them, at the heart of the Round. We reiterate our shared interest in a pro-development outcome of the Round and we highlight the indivisibility of such a development agenda, in particular the need to preserve a balanced and proportionate level of ambition.

6. We recognize the urgent need to make operational the Hong Kong Ministerial Decision on Duty Free and Quota Free market access for the LDCs, as well as the simplification of rules of origin applicable to them. We reaffirm the need to address the issue of cotton ambitiously, expeditiously and specifically in its trade-related and developments aspects. We stress the need to address the concerns of recently acceded developing Members and trade-related issues raised by SVEs. We further recognize the need to address the issue of tropical products and products of particular importance to the diversification of production. We fully recognize the importance of long-standing preferences and the need to address the issue of preference erosion.

7. We welcome the recommendations of the WTO Task Force for operationalizing Aid for Trade which emphasize, inter alia, the need for having additional, predictable, sustainable, unconditioned and effective financing. We, therefore, urge WTO Members to expeditiously consider implementing the recommendations of the Task Force on a fast track and stand alone basis at the national, regional and global levels. We also urge the Director General to pursue his consultations with donor community for securing additional financial resources under Aid for Trade.

8. We stress that the only acceptable outcome is one that fully delivers on the Doha commitments as complemented by the July Framework and by the Hong Kong Ministerial Declaration. Therefore, any attempt to renegotiate or rewrite these would not be acceptable.

9. Developed members, in particular the major trading countries, bear a special and specific responsibility for the outcome of the Round. They must show their readiness to implement measures that remove trade distortions and significantly open their markets. Their current positions do not provide an adequate basis for leading the negotiations to a successful conclusion. They must, therefore, significantly improve their proposals especially in the two crucial areas of domestic support and agriculture market access, as well as be prepared to deliver on the development dimension of the DDA.

10. We note that the substantial political and technical work carried out until now provides a solid platform for the eventual resumption of the negotiations. We reaffirm that our countries remain committed to an ambitious, balanced, pro-development outcome for the Round and we are prepared to contribute to that end. This will strengthen the multilateral trading system and inscribe development at its heart. We confirm our readiness to re-engage immediately in the negotiations and to work towards its prompt resumption.

11. Ministers and High Officials urge the Director-General of the WTO to intensify the process of consultations with Member countries, in an inclusive and transparent manner in order to create the necessary conditions for the prompt resumption of the negotiations with a view to arriving at an agreement on full modalities and final commitments that is ambitious, balanced, and pro-development."

WTO: An Opportunity for a Better Trading System

"The collapse of the Doha round talks in the WTO is an opportunity to set a new course. It is a chance for rich countries to rebuild trust with poorer countries. It is a chance for the WTO to rethink its role in the multilateral system." That is the opinion of Carin Smaller and Anne-Laure Constantin of the Institute for Agriculture and Trade Policy (IATP). They say governments need to make the WTO work cooperatively with UN institutions, looking to integrate trade into long-standing obligations to respect and promote human rights, to protect and rehabilitate our polluted planet and natural resource base, and to end the scourge of poverty. Following are extracts from their article published last month.

Putting Trade into Perspective: how to deal with the disappointment

The WTO is at a crossroads. The Doha Agenda, launched in 2001, and tasked to put development at its centre, is in a state of crisis. In July WTO members decided to suspend the Doha negotiations indefinitely and to take time-out for a period of reflection. The temptation is strong to think small and simply use this time to stay within the current framework and play around with numbers. If this happens, the status quo, or worse, will remain. If, however, WTO members take the time needed to refocus their negotiations and rethink the model of trade needed to support development and employment objectives, trade rules have the potential make significant improvements to our world.

Since the WTO was established in 1995, developing country members have consistently demanded that new trade rules address development concerns. In 2001, in the wake of September 11 attacks in the U.S., the Doha Development Agenda was launched, full of fine-sounding promises to put development at the heart of reforming the trading system. But even before the Doha Agenda was agreed, it was clear that neither of the two dominant players at the WTO, the U.S. and the EU, had really responded to the demands of developing countries. The interests of transnational corporations remained at the heart of the Doha Agenda: maximizing market access while protecting intellectual property rights. The current collapse can be linked back to mistakes made when WTO members agreed to the Doha Agenda.

When the suspension was announced by the WTO Director-General, Pascal Lamy, to WTO members at the General Council, many developing countries reacted with deep disappointment. Understandably so: the existing system is deeply flawed and impedes efforts by developing countries to tackle poverty and promote development. There are significant inequalities built into the system, inequalities that discriminate against the very countries that most need support.

Few developing countries were happy with the direction of negotiations, especially as it became clear that developed countries were still not ready to really open up their textile and agricultural sectors. Nonetheless, these countries had put an enormous amount of effort into the negotiations, and they know they are stronger in multilateral negotiations than they are in bilateral and regional deals where the richest countries are involved.

There is pressure from many sides to restart the talks soon. Pascal Lamy will continue to consult with members. Bilateral meetings between various members started almost immediately after the suspension was called. Australia has called for a G6 Ministerial Meeting on the sidelines of the Cairns Group 20th Anniversary Ministerial Meeting, set for September 20-22 in Cairns, Australia. Clearly some members are determined to keep going in the same direction without reflecting and Pascal Lamy believes that members simply need to move a little from their entrenched positions.

Yet, the WTO talks failed because the members are not working with a framework that is able to address some of the most fundamental issues that all countries struggle with, including the need to generate sufficient, stable, well-paying jobs; to ensure access for all to adequate and affordable food; and to diversify sources of foreign exchange to avoid shocks to government finances. Without the right mix of policies, liberalizing trade exacerbates these problems rather than contributing to their solution.

The major beneficiaries of the model of trade promoted in the WTO are transnational corporations (TNCs), many of which are headquartered in developed countries, and which control a huge share of global production and exports. Their over-riding interest is in ready access to the lowest cost raw materials and labour and in as few barriers to trade as possible. On the other side, especially in developed countries, there are some well organized sectors fighting to protect the status quo-the cotton industry in the U.S., the sugar industry in the U.S. and EU, and the shipping companies from the U.S. that benefit from food aid deliveries, for instance. Some of these groups resist change because they are profiting handsomely from the existing programs. Many of the farmers opposed to change have already seen their income fall precipitously over the past ten years and do not want to jeopardize such protection as they now have until they know what will take its place.

The vast majority of people affected by trade, including millions of small-scale farmers and workers in the developing world, are severely marginalized by the trade agenda and are the most negatively affected by the existing system. If any of the small farmers’ production is sold abroad, it is for the most part exported by firms in which the farmers have no stake, so they do not necessarily benefit from the expanded markets. At the same time, their local markets are filling with imports, often at dumped prices. The imports depress demand for their production in the markets where they have the most control over profit margins.

Simply calling for the Doha negotiations to restart immediately, as many WTO members are, particularly developing country members, will not guarantee the changes needed to address these concerns. In fact, recent projections and research by the World Bank, the UN and a variety of independent think tanks consistently confirm that the poorest countries would be the biggest losers if the current Doha framework were agreed to.

The model of trade promoted in the Doha negotiations would perpetuate a system that accumulates wealth in the hands of a few and further marginalizes the poor.

The suspension of trade talks is no reason for dismay. It is a reflection of changing relations among countries in trade negotiations. In the past five years, power relations in the WTO have gradually shifted and the interests of developing countries are better reflected in the negotiations. Now the challenge is to consolidate these gains, while tackling the model of trade itself. There remain long-standing and deep divisions in how countries view trade as a tool for development and economic growth. The current framework is inadequate to respond to these different interests. It is now time to build a new framework that can better respond to each country’s right to set their own development and employment objectives according to the needs of their people, while at the same time ensuring that they do not harm other countries’ ability to do the same.

Understanding the Collapse: hope for the future

The immediate cause for the collapse of trade talks was attributed to a lack of agreement over how much to reduce agricultural subsidies in the U.S., agricultural tariffs in the European Union and industrial tariffs in the largest developing countries. Neither U.S. Trade Representative (USTR), Susan Schwab, nor E.C. Trade Commissioner, Peter Mandelson, had sufficient political support back home to offer what was needed to get agreement from the rest of the WTO membership. U.S. Congressional leaders, in particular, voiced strong opposition to the offers of other WTO members in Geneva and they made repeated public statements about their refusal to support any compromise. A number of the large farm and commodity groups in the U.S., groups that supported the USTR during the Uruguay Round, oppose the Doha negotiations. These groups are not convinced that the opportunity for expanding markets abroad is great enough to justify the cuts to domestic support that are being asked of them.

The division of executive and legislative power in the U.S. means the USTR has to be sure Congress will support its offers at the WTO. In most countries, the executive and legislative branches of government have one head, a Prime Minister, who controls parliament and who’s representative (a Trade Minister) negotiates on behalf of the government. President Bush does not control Congress in this sense, not even when his party holds a majority of the seats. U.S. trade negotiators in Geneva therefore cannot assume they have Congressional support, but must work closely with the Congressional leadership to ensure the leadership is supportive of what USTR is doing. The U.S. system has important strengths. It allows more direct participation of different stakeholders in trade negotiations. It also provides important checks and balances on trade negotiators to ensure that they are not negotiating against the national interest. On the other hand, it complicates international negotiations because U.S. domestic politics have a disproportionate influence on the outcome of negotiations and the voices of U.S. interests are heard more loudly than those of other countries.

In fact, many of the other WTO members lack domestic political support to conclude the Doha Agenda in its current form. This resistance is heard in different ways. Millions of small-scale farmers in India have held demonstrations recently and their representatives have voiced strong opposition to the current negotiations. This has resonance in Geneva. Indian Commerce Minister, Kamal Nath, has repeatedly made it clear that he will not sacrifice the livelihoods of millions of small-scale farmers for the sake of an agreement.

South African Trade Minister, Mr Mandisi Mpahlwa, is facing serious political resistance from the union movement, particularly from the Congress of South African Trade Unions (COSATU). COSATU opposes the direction of the non-agricultural market access (NAMA) negotiations. COSATU says the proposals threaten thousands of jobs and would ruin the possibility to further develop an industrial base in South Africa. This has led to South Africa taking on the leadership of the NAMA 11-a group of developing countries fighting to reclaim space for development needs in the NAMA negotiations.

Trade Ministers from Indonesia and the Philippines, Mari Pangestu and Peter B. Favila respectively, have strongly defended the food and livelihood security concerns of their small-scale farmers, reflecting well-organized political demands at home. They have successfully resisted the aggressive push by the U.S. to limit the flexibilities available to developing countries in the form of Special Products and a Special Safeguard Mechanism for agriculture.

While the interests of organized lobbies from the U.S. and the E.C. are still predominant, it is clear that voices from developing countries are increasingly reflected in the negotiations. This is cause for hope. It is no longer possible, as was the case in the Uruguay Round, for a handful of developed countries to set the outline of a deal among themselves and then impose that on the rest of the membership. Continuing to strengthen the voices of people at the national level in trade debates so as to be able to influence their governments’ trade positions is an essential step towards making the multilateral trading system more accountable.

The Take-Over of Bilateral & Regional Trade Agreements: Myth or Reality?

Whenever negotiations in the WTO are stalled, anxiety among WTO members rises that a failure of the multilateral system will trigger a wave of bilateral and regional trade agreements (BTAs and RTAs). As a result, many WTO members are eager to resume negotiations as quickly as possible, whether the problems underlying the stalled negotiations are properly addressed or not, so as not to lose momentum at the multilateral level. Pascal Lamy’s letter to trade ministers published in the International Herald Tribune on 27th July was no exception: "There are clear signs", he said, "that the failure this week has already given rise to two phenomena that threaten the multilateral system: a shift in priorities to bilateral or regional agreements (...), and a surge in threats to achieve through our highly effective dispute settlement system what could not be achieved through the negotiations."

Many developing country WTO members prefer multilateral trade negotiations because it provides a more balanced environment for developing countries to defend their interests. BTAs and RTAs tend to extract greater commitments to lower or remove trade barriers than the WTO (sometimes known as WTO-plus commitments) with less special and differential treatment to take account of development needs. BTAs and RTAs also tend to overlap, which creates a confusion of rules that complicate (and add expense to) traders’ business. Many countries, reflecting the interests of their traders, prefer a harmonized global trade system, with as few rules as possible.

But will an immediate restart of the Doha negotiations lessen the threat of a renewed focus on bilateral and regional trade negotiations?

According to the FAO’s 2004 State of Agricultural Commodity Markets Report: "The number of regional trade agreements (RTAs) has grown at a rate of 15 per year since 1995, more than five times the rate during the previous 45 years." The number of BTA and RTA negotiations has been at its highest since the WTO was established. Far from being alternatives to one another, the different trade negotiating forums are on parallel tracks, progressing in tandem. Even though a deadlock in at the multilateral level might increase the energy spent at a bilateral and regional level, they are not mutually exclusive. Rather, they are pursued simultaneously, as part of the same ideological push for deregulated world markets.

Regional trade arrangements can actually provide an opportunity for developing countries to expand their markets in the region and provide new opportunities for their producers. As FAO puts it, "in many developing regions, RTAs are seen as a vehicle for promoting and diversifying trade." Some problems do arise, however, when countries within a region are at very different levels of development. "NAFTA’s impact on Mexican agriculture provides a stark reminder that RTAs can produce losers as well as winners, particularly when they include countries at different levels of economic development." (FAO, State of Agricultural Commodity Markets 2004).

Countries in South America have demonstrated that it is possible to resist the demands of developed country counterparts in BTAs and RTAs. The Bolivian government, for example, recently issued a paper outlining conditions it will impose on any further engagement in trade negotiations. The Free Trade Area of the Americas’ talks stalled because the U.S. could not persuade Latin America to meet its terms. This resistance is a reflection of the strong campaigns by Latin American social movements and civil society organizations, which have had a significant influence on their governments.

Unfortunately, poorer countries like those in sub-Saharan Africa that are currently negotiating Economic Partnership Agreements (EPAs) with the European Union, face a much harder challenge. Many of the African, Caribbean and Pacific (ACP) countries have old colonial ties to the EU that are reflected in current trade patterns. These countries are also often heavily dependent on preferences first granted by the EU under the Lomé Conventions (now the Cotonou Agreements). Civil society organizations both in the EU and in the ACP countries have a lot of work ahead to prevent the EC, on the one hand, striking a damaging deal for people in ACP countries, and, on the other, to pressure the ACP governments not to sign a trade agreement that does not serve development interests.

Yet the EPA negotiations will continue with or without negotiations on the Doha Agenda. The question to be posed for all trade agreements is less whether multilateral trade agreements are better than bilateral or regional trade agreements, or whether deadlock in one forum triggers movement in another. The central question is more whether the model of trade and the types of power relations that govern these different negotiations allow countries to fulfill their development and employment objectives. Unless countries start to tackle these fundamental questions they will continue to face opposition to all types of trade negotiations.

A Time for Reflection

The collapse of talks is an opportunity to set a new course. It is a chance for rich countries to rebuild trust with poorer countries. It is a chance for the WTO to rethink its role in the multilateral system. Governments need to make the WTO work cooperatively with UN institutions, looking to integrate trade into long-standing obligations to respect and promote human rights, to protect and rehabilitate our polluted planet and natural resource base, and to end the scourge of poverty.

For trade rules to have any chance of tackling these more fundamental issues, the mindset of governments, and particularly trade ministries, needs to change. Trade does not operate in a vacuum. Trade ministries need to be able to locate trade in a broader context. Trade ministries need to communicate and collaborate more with other ministries that are affected by trade rules, to ensure that proposals on trade policy do not undermine efforts to increase employment, build up industries and agriculture production, protect the environment, and improve access to health care. In addition, all ministries must be more aware of how trade policies affect them and engage more with the trade ministries in the formulation of trade policies at the national level. Without this change, trade negotiations will continue along the same trajectory, simultaneously at all levels-unilateral, bilateral, regional and multilateral.

It is time to think outside the box. WTO members have been given a unique opportunity to fundamentally change the course of the trading system. It is time for WTO members to confront the challenges and work towards a different model of trade that supports genuine development and employment objectives.

The WTO Goes On

Even though the Doha negotiations have been suspended, the WTO will continue to function. The WTO houses regular committees that monitor the implementation of the existing agreements. These will continue as normal. The WTO’s Dispute Settlement System will also continue to operate and is actually expected to increase its workload if WTO members decide to use legal measures to challenge the trade policy measures of other members. Oxfam has already released a report indicating that developing countries such as Chile, Costa Rica, Argentina, Kenya, Peru, Ghana, Zimbabwe, Uganda, Egypt, Thailand and Nigeria, could bring cases against the EU and US on rice, corn, sorghum, milk, butter, tobacco, fruit and tomato subsidies.

Governments are also expected to continue negotiations in two other areas, both technical assistance measures for developing countries: "Development-Assistance Aspects of Cotton" and "Aid for Trade." The Aid for Trade taskforce submitted recommendations to the General Council, which were adopted (see www.wto.org WT/AFT/1). The taskforce members and other donors called for members to approve continuation of the work of the taskforce.

Free Trade Agreements: Analysing the Resistance

While the governments of the South are engaged in a painful exercise to extract the promised benefits of development from the current round of international trade talks at the WTO, a number of civil society groups are concerned with the proliferation of bilateral trade accords. The following analysis is based on a workshop organized by FTA Watch in cooperation with bilaterals.org, GRAIN and Médecins Sans Frontières in Bangkok end-July. The following are extracts from the summary report just released by the workshop organizing team.

In recent years, the US, Europe and other industrialised powers have been stepping up their efforts to sign bilateral free trade agreements (FTAs) and bilateral investment treaties (BITs). This increased attention to bilateral deals goes hand in hand with the deadlock in global trade talks at the World Trade Organisation (WTO). FTAs commit countries not only to accelerated liberalisation of trade in goods, such as agricultural products, but bring in new rules for trade in services, intellectual property rights, investment, etc. Negotiated outside the multilateral system, even further away from public scrutiny, they provide even greater freedom for the world’s most powerful governments to push developing countries, and smaller industrialised countries, to adopt policies that are much worse than what is agreed to at the WTO.

Despite their name, these agreements are about much more than trade. They provide transnational corporations (TNCs) with vast, new, legally enforceable rights in foreign markets. Countries are being hand-picked for bilateral agreements on the basis of geopolitical concerns. Much of the FTA "chess game" today is a competition between large powers trying to secure spheres of political and economic influence. Competition between the US and the EU is a key part of that dynamic. But China, India, Japan, Brazil and others are also vying for a place in the emerging new landscape.

People’s movements have been fighting FTAs ever since the North American Free Trade Agreement (NAFTA) was signed between Mexico, the US and Canada in 1993. Over the years, that fight has multiplied and grown - from Morocco to Korea and from Ecuador to Thailand. To our knowledge, so far only one FTA negotiation process has been stopped as a result of social mobilisation and pressure. In other instances, particularly in Korea, social movements have caused significant disruptions and delays of their government’s FTAs. Still, many grassroots struggles against FTAs and BITs have remained cut off from each other, a direct result of the "divide and rule" logic of bilateralism. FTA Watch, a loose coalition at the forefront of the struggle in Thailand, felt a strong desire to break this logic and share experiences with anti-FTA movements in other countries. It called on bilaterals.org, GRAIN and MSF - all of whom had been involved in global work against FTAs and BITs for many years - to help them organise an international strategy meeting, which was held in Bangkok on 27-29 July 2006.

This workshop brought together, for the first time, movements from many different countries which have been fighting FTAs and BITs. Participation hinged on people who have been directly involved in grassroots struggles to derail these agreements. Nearly 60 participants came from 19 countries across every time zone. Rather than attempting to set up a new network or build a common agenda, the workshop’s objectives were to share people’s experiences fighting FTAs in different countries and to build strategy ideas to strengthen national, regional and international struggles against FTAs.

Analysis of contexts and trends

WTO in crisis, shift towards FTAs: While FTAs are just one tool to make countries more friendly to transnational capital, the failure of the WTO to reach any agreement is clearly adding to the impetus behind many governments’ vigorous pursuit of FTAs. The collapse of the Doha Round the day we arrived in Bangkok was just one more reminder of this obvious connection. But FTAs do much more than make up for a failed WTO. For nearly two decades now, they have been used to deliberately lock countries into political, economic and social policies - such as stronger patent monopolies on medicines - which are far more extreme than the US and Europe could ever achieve in the multilateral fora.

Global neo-imperialism: The push for FTAs is a complex, global phenomenon with both North-South and South-South agreements on the rise. The North-South deals are comprehensive (they cover a huge number of issues) and serve to instantly open up new opportunities for TNCs to extract more profits from developing countries. They further help dismantle states through privatisation, deregulation and by pulling jurisdiction over disputes away from national courts. The South-South deals tend to be less comprehensive and less oriented towards an overhaul of national laws, but their impacts on farmers, workers and the environment can and have been devastating.

North-South FTAs are neo-colonial. They turn developing countries into a pool of natural resources or cheap labour for the benefit of TNCs. Many industrialised countries are pursuing deals similar to the US model, even if the language differs. With the promise of greater access to US markets, and the blockage at the WTO, governments of many developing countries are eager to go into such agreements. The surge in South-South FTAs is often limited to specific sectors but, like the North-South deals, also revolves around an intense jockeying for power. Emerging giants such as China and India are pursuing FTAs as a way to gain influence in Asia and beyond. In Latin America, FTAs are both a theatre and a tool of power struggles in the region, especially between Mercosur, the Andean Community and the new alliance between Venezuela, Bolivia and Cuba.

Beyond trade: The term ‘free trade agreement’ is a misnomer. FTAs basically give corporations in one of the signatory countries a very broad set of new rights in the other: rights to dictate the terms of their investments there, rights to buy state industries, rights to deliver local services such as education and health, rights to get access to natural resources and energy sources and rights to effectively sue the government of the other country if it does not fully meet their wishes. FTAs are also highly geopolitical treaties, aimed at cementing political alliances between specific countries. FTAs with the US are inextricably linked to American military and national security interests, invariably requiring support for US foreign policy.

Pure secrecy: In all countries, North or South, the secrecy surrounding these agreements is often more intensive than any Green Room process at the WTO. The public and its parliamentary representatives are routinely denied the right to see any text before it is signed. In FTAs with the US, some countries are even obliged to keep the negotiating history secret for several years. For all the hype about democracy, FTAs are profoundly anti-democratic. To speak of FTA "negotiations" is, in this sense, another misnomer. It is more accurate to say that FTAs are imposed, rather than negotiated.

Shifting accountabilities: A common feature of bilateral free trade and investment agreements are provisions that give transnational corporations the power to effectively sue governments for any claimed acts or omissions which a corporation says is interfering with its rights as an investor. These rights include the right to "anticipate" a profit. Investor-state disputes are on the rise. Under bilateral investment treaties, Bolivia and Argentina have been sued by Bechtel and Azurix (a former Enron subsidiary) respectively, for hundreds of millions of dollars even though it was the Bolivian and Argentine people who were denied proper or affordable water services by these companies. These cases are not fought openly in national courts under national laws, but through closed-door arbitration proceedings at the World Bank’s International Centre for the Settlement of Investment Disputes.

The real losers: It is very clear from many different country experiences of FTAs that they do not benefit farmers or workers. This is sometimes hard to explain to people because governments and the corporate media bombard us with the message that agricultural exports will increase. Yet even where they do increase, none of the gains go to the producers - they go instead to retailers and traders. Through FTAs, countries are being pushed to export the same products to the same slim market openings, squeezing poor people into ruthless competition over breadcrumbs. At the same time, the experience on the ground is that neither job security nor wages have improved as a result of FTAs. Korea is often portrayed as a model of success in neoliberal reform, and has signed many FTAs to lock this in, but the hidden unemployment of Korea’s youth is staggering. Chile is not much different, while the negative impact of FTAs on workers in Mexico (1.5m agricultural jobs lost because of NAFTA) and Jordan (human trafficking into textile factories to take advantage of the US-Jordan FTA) have been well documented. In Morocco, a lot of companies have had to close down and people have lost their jobs because of the FTA with the US. In the longer term, the violation of people’s land rights, the push towards greater migration and the further dismantling of the state - all of which we see happening through FTAs - will further deepen their devastating consequences.

Shared experiences in the resistance

Strengths / successes...

¨ Certain countries have been successful in building very broad anti-FTA coalitions at the national level, such as Morocco, Costa Rica, Thailand and Korea. This was through mobilisation on the basis of an understanding that the FTA will affect every aspect of social and economic life in the country. In Morocco, for example, the protection of human rights (right to food, right to health, right to education, right to self-determination, etc) was the banner for uniting a broad range of social sectors to campaign against the US-Morocco FTA. In Korea, the opposition movement started in the peasant sector but has quickly spread out to trade unions, the cultural sector, health workers, teachers, consumers, the media, etc. In Costa Rica, the anti-CAFTA movement has also been highly diverse — and strongly uncentralised, making it hard to manipulate. In Thailand, the cooperation between people living with HIV/AIDS and farmers has been a backbone of the resistance.

¨ A number of countries have been very successful in mobilising mass actions. In Colombia, a million people took to the streets in organised anti-FTA protests. In Ecuador, social movements were able to exert enough pressure for the government to cancel Occidental Petroleum’s oil extraction contract, effectively putting the US-Ecuador FTA in limbo. The second round of US-Korea FTA negotiations brought 100,000 people into the streets of Seoul.

¨ Detailed, independent research and analysis has been crucial to our campaigns. Rather than focusing on one issue, research on FTAs needs to cover all the issues in order to be relevant and support movement-building. In Korea, a team of 300 was mobilised to investigate the different aspects of the proposed US-Korea deal, illustrating how it will affect farmers, workers, film-makers and service sectors. Mapping the impacts in detail is difficult and time-consuming, especially when the proposed text is not available. But looking at what happened in other countries that have already signed FTAs, such as Mexico and Chile, has often been very useful.

¨ Countries such as Colombia, Ecuador and Costa Rica have succeeded in mobilising extensively by using new pedagogies based on people-to-people communication.

¨ In many places, resistance movements have succeeding in getting media coverage of the people’s struggles against FTAs, though not without diffifculty.

¨ Some groups fighting bilateral FTAs have been able to use parliamentary and other legal processes (freedom of information laws, constitutional provisions) to get information, arouse public attention, and in some countries even delay the deal, for example in the Philippines and Costa Rica.

¨ In a number of countries, building and sustaining common ground and tactical alliances with small and medium-sized businesses has been important to the campaigns. FTAs usually only benefit a small minority within the business community. It is common for some local firms, such as pharmaceutical companies or livestock operations, to come out in opposition to FTA talks. Social movements have various (and mixed) experiences working with them in the national campaigns.

¨ Largely because of the pressure generated by social movements, FTAs have become a key issue in elections, and periods of popular mass mobilisation against goverments, in several countries. This focuses the debate on the real social and political implications of the agreements, rather than their technical details. Australia, Ecuador, Peru, Costa Rica, Thailand, Mexico and Colombia have all experienced this process.

Weaknesses / drawbacks...

¨ FTAs do get signed, despite people’s resistance. We cannot rely on parliamentary processes, media exposure or sporadic actions. We need to build mass public pressure through sustained campaigns to stop the agreements. If our struggle does not succeed in stopping the signature or ratification of an agreement, it is not the end of the struggle - we need to continue the fight.

¨ Links with other movements and campaigns - be they national, regional or international - have sometimes been weak. Globally, most people have been organising against WTO. Campaigns against bilateral agreements have been restricted to countries where they are being negotiated, mostly in the South. While bilaterals.org has been a useful source of written material, this workshop was the first effort to physically link up activists from so many different countries who are actually engaged in the same struggle worldwide. And while there are many commonalities in the impacts of neoliberalism, and between our struggles, we are quite aware that our movements and contexts are very different. This will necessarily impact on strategies and the kinds of alliances we can build at the national level, which is where we have to fight these FTAs.

¨ It has been very difficult to establish common purpose with groups from countries at "the other end" of the FTA - especially with the North-South deals - given the differing contexts between and impacts upon the two sides. There have been few successes among us in building alliances with groups in the North - such as the US, Japan or Europe - in fighting FTAs. However, several groups present at the workshop will try to build these links further.

¨ It has proven difficult in some countries to link up all sectors within the domestic battles against FTAs. For example, some campaigns have not managed to link up successfully with organised labour. In other cases, workers’ interests have been perceived as different from farmers’ and indigenous peoples’ concerns. In yet other cases, indigenous peoples and farmers have been divided.

¨ Access to detailed information from the government’s negotiating draft has been difficult in all countries. However, given the lack of publicly available information, it is not worth spending a lot of time and energy trying to find out the details of the texts. Much can be learned by analysing other countries’ experiences.

¨ Our analysis must go deeper and lead to action. We need to do more to examine the role of specific TNCs in pushing for, and reaping the profits from, FTAs and investment treaties. Also, especially with militarism and security concerns gaining ground, we need to better analyse broader geopolitical rationales linked to FTAs, including getting a better understanding of the interests of countries like China, India, Brazil and South Africa.

Strategies to take us forward

Overcome the tactics of divide and rule: Many governments are using divide and conquer tactics to confuse and divert people’s concerns about FTAs while they go ahead and negotiate on the basis of promoting their private interests. Many times the question was asked: how do we deal with such tactics, when the FTA is expected to have winners and losers in different sectors? The losers are expected to sacrifice for the benefit of other sectors. Countries who have faced FTAs for many years now, such as Mexico and Chile, and even more recent experiences in Australia, have shown that the promised gains were greatly overstated, and in some cases ’bald lies’. Where benefits have come to the less powerful country in the deal, these have accrued to a very select group of business elites. In some cases, the main local beneficiaries are local partners of transnational corporations. Where FTAs open up new opportunities for foreign corporations to take over a country’s essential services, utilities and the finance sector, everyone will be affected.

Expose and confront co-optation strategies: The language of social movements and concepts like "partnership" are increasingly being co-opted by promoters of neoliberalism. Governments are co-opting NGOs and communities, and even creating pro-FTA "community organisations", in their drive to sign FTAs. USAID and other so-called development assistance agencies have been effectively supporting this strategy in all of our regions. We need to expose "dialogue" and "participation" processes that are designed to neutralise opposition and legitimise neoliberal policies like FTAs, and counteract them with our own analysis and action.

Alternatives? When fighting FTAs, social movements are often challenged to come up with an alternative. Many workshop participants felt there was no need to engage in such an argument. Our coalitions are built around stopping the advance of neoliberalism, and we have to uphold consensus positions and baseline objectives. In many cases, we do not need to look for an alternative: the things that FTAs aim to destroy, such as peasant agriculture or collective rights, already exist as an alternative. Besides, as FTAs are much more about investors’ rights than trade, what are we supposed to develop an alternative to? Rather than provide governments with an alternative, the onus should be put on governments to explain, and try to justify, what they are trying to achieve through their FTA.

Beware of regional integration when it promotes neoliberalism: People’s organisations value solidarity and cooperation, and some have been open to discussions about redesigning trade relations at the regional or subregional level based on these principles. The example of ALBA — the Bolivarian Alternative for the Americas promoted by Hugo Chavez to oppose George Bush’s Free Trade Area of the Americas — was particularly debated in this respect. However, as ALBA is still at an experimental stage, more time is needed to assess how far it can meet its aims without running into contradictions. Others felt that given the non-representativeness of governments, South-South trade arrangements and regional blocs will not deliver any better results for the majority of the people than the North-South agreements. As one participant put it, "Neoliberalism is never questioned. That’s where the problem lies."

"No FTA" means no to neoliberalism: It is important to draw the line, take a clear "no" position and lay bare the real issues early on in the struggle against FTAs. Many participants commented that the most successful struggles among the experiences we shared were those that linked FTAs to neoliberalism more generally. Privatisation affects everyone — from high school students to pensioners. So does deregulation. These are what FTAs are trojan horses for PLUS investors’ rights and geopolitical-military alliances. This is what the workshop honed in on as the core substance of FTAs. Therefore, while we focus on free trade agreements as very specific instruments, we need to be clear about what is at stake, what our positions are and what the battle is really about.

Nelson Mandela Memorial Lecture – (I)

The 4th annual Nelson Mandela Lecture was delivered by President Thabo Mbeki at the University of Witwatersrand on 29 July, 2006. The guest list included Nelson Rolihlahla Mandela, Dr. Graca Machel, and the Deputy President of South Africa, Phumzile Mlambo-Ngcuka. This issue of the South Bulletin carries the first part of this lecture, with the remainder being carried in the next issue.

"I believe I know this as a matter of fact, that the great masses of our country everyday pray that the new South Africa that is being born will be a good, a moral, a humane and a caring South Africa, which, as it matures, will progressively guarantee the happiness of all its citizens.

I say this as I begin this Lecture to warn you about my intentions, which are about trying to convince you that because of the infancy of our brand new society, we have the possibility to act in ways that would, for the foreseeable future, infuse the values of Ubuntu into our very being as a people.

But what is it that constitutes Ubuntu - beyond the standard and yet correct rendition - Motho ke motho ka motho yo mongoe: Umuntu ngumuntu ngabantu!

The Book of Proverbs in the Holy Bible contains some injunctions that capture a number of elements of what I believe constitute important features of the Spirit of Ubuntu, which we should strive to implant in the very bosom of the new South Africa that is being born - the food of the soul that would inspire all our people to say that they are proud to be South African!

The Proverbs say:

"Withhold not good from them to whom it is due, when it is in the power of thine hand to do it. Say not unto thy neighbour, Go, and come again, and to morrow I will give; when thou hast it by thee.

"Devise not evil against thy neighbour, seeing he dwelleth securely by thee. Strive not with a man without cause, if he have done thee no harm. Envy thou not the oppressor, and choose none of his ways."

The Book of Proverbs assumes that as human beings, we have the human capacity to do as it says - not to withhold the good from them to whom it is due, when it is in the power of (our) hand to do it, and not to say NO to our neighbour, come again, and we will give you something tomorrow, even when we can give the necessary help today.

It assumes that we can be encouraged not to devise evil against our neighbours, with whom we otherwise live in harmony.

It assumes that we are capable of responding to the injunction that we should not declare war against anybody without cause, especially those who have not caused us any harm.

It urges that in our actions, we should not seek to emulate the demeanour of our oppressors, nor adopt their evil practices.

I am conscious of the fact that to the cynics, all this sounds truly like the behaviour we would expect and demand of angels. I am also certain that all of us are convinced that, most unfortunately, we would find it difficult to find such angels in our country, who would number more than the fingers on two hands!

It may indeed very well be that, as against coming across those we can honestly describe as good people, we would find it easier to identify not only evil-doers, but also those who intentionally set out to do evil. In this regard, we would not be an exception in terms both of time and space.

To illustrate what I am trying to say, I will take the liberty to quote words from the world of drama. I know of none of Shakespeare’s Tragedies, except Richard III, that begins with an open declaration of villainy by the very villain of the play.

This well-known play begins with an oration by the Duke of Gloucester, who later becomes King Richard III, in which he unashamedly declares his evil intentions, in these famous words:

"Now is the winter of our discontent

Made glorious summer by this sun of York;

And all the clouds that lour’d upon our house

In the deep bosom of the ocean buried.

Now are our brows bound with victorious wreaths;

Our bruised arms hung up for monuments;…

And therefore, since I cannot prove a lover,

To entertain these fair well-spoken days,

I am determined to prove a villain

And hate the idle pleasures of these days.

Plots have I laid, inductions dangerous,

By drunken prophecies, libels and dreams,

To set my brother Clarence and the king

In deadly hate the one against the other…"

This open proclamation of evil intent stands in direct opposition to the directive in the Proverbs, which said, "Devise not evil against thy neighbour, seeing he dwelleth securely by thee. Strive not with a man without cause, if he have done thee no harm."

Surely, all this tells us the naked truth that the intention to do good, however noble in its purposes, does not guarantee that such good will be done.

Nevertheless we must ask ourselves the question whether this reality of the presence of many Richards III in our midst, dictates that we should, accordingly, avoid setting ourselves the goal to do good!

Many years ago now, Nelson Mandela made bold to say that our country needs an "RDP of the soul", the Reconstruction and Development of its soul.

He made this call as our country, in the aftermath of our liberation in 1994, was immersed in an effort to understand the elements of the Reconstruction and Development Programme that had constituted the core of the Election Manifesto of the ANC in our first democratic elections.

That RDP was eminently about changing the material conditions of the lives of our people. It made no reference to matters of the soul, except indirectly. For instance, the RDP document said:

"The RDP integrates (economic) growth, development, reconstruction and redistribution into a unified programme. The key to this link is an infrastructural programme that will provide access to modern and effective services like electricity, water, telecommunications, transport, health, education and training for all our people…This will lead to an increased output in all sectors of the economy, and by modernising our infrastructure and human resource development, we will also enhance export capacity. Success in linking reconstruction and development is essential if we are to achieve peace and security for all."

All of these were, and remain critically important and eminently correct objectives that we must continue to pursue. Indeed, in every election since 1994, our contending political parties have vied for the favours of our people on the basis of statistics that are about all these things.

All revolutions, which, by definition, seek to replace one social order with another, are, in the end, and in essence, concerned with human beings and the improvement of the human condition. This is also true of our Democratic Revolution of 1994.

Assuming this assertion to be true, we must also say that human fulfilment consists of more than "access to modern and effective services like electricity, water, telecommunications, transport, health, education and training for all our people", to use the words in the RDP document.

As distinct from other species of the animal world, human beings also have spiritual needs. It might perhaps be more accurate and less arrogant to say that these needs are more elevated and have a more defining impact on human beings than they do on other citizens of the animal world.

Thus do all of us, and not merely the religious leaders, speak of the intangible element that is immanent in all human beings - the soul!

Acceptance of this proposition as a fact must necessarily mean that we have to accept the related assertion that, consequently, all human societies also have a soul!

To deny this would demand that we argue in a convincing manner, and therefore with all due logical coherence, that the fact that individual human beings might have a soul does not necessarily mean that the human societies they combine to constitute will themselves, in consequence, also have a soul!

I dare say that this would prove to be an impossible task. Nevertheless, we must accept that, as in the contrast provided by the Proverbs and Richard III, and with regard to the construction of a humane and caring society, we must accept that this entails a struggle, rather than any self-evident and inevitable victory of good over evil.

The question must therefore arise - for those among us who believe that we represent the good, what must we do to succeed in our purposes!

Since no human action takes place outside of established objective reality, and since we want to achieve our objectives, necessarily we must strive to understand the social conditions that would help to determine whether we succeed or fail.

What I have said relates directly to what needed and needs to be done to achieve the objective that Nelson Mandela set the nation, to accomplish the RDP of its soul.

In this regard, I will take the liberty to quote what I said in 1978 in a Lecture delivered in Canada, reflecting on the formation of South African society, which was later reproduced in the ANC journal, "Sechaba", under the title "The Historical Injustice".

"The historic compromise of 1910 has therefore this significance that in granting the vanquished Boer equal political and social status with the British victor, it imposed on both the duty to defend the status quo against especially those whom that status quo defined as the dominated. The capitalist class, to whom everything has a cash value, has never considered moral incentives as very dependable. As part of the arrangement, it therefore decided that material incentives must play a prominent part.

"It consequently bought out the whole white population. It offered a price to the white workers and the Afrikaner farmers in exchange for an undertaking that they would shed their blood in defence of capital. Both worker and farmer, like Faustus, took the devil’s offering and, like Faustus, they will have to pay on the appointed day.

"The workers took the offering in monthly cash grants and reserved jobs. The farmers took their share by having black labour, including and especially prison labour directed to the farms. They also took it in the form of huge subsidies and loans to help them maintain a ‘civilised standard of living’."

Of relevance to our purposes this evening, the critical point conveyed in these paragraphs is that, within the context of the development of capitalism in our country, individual acquisition of material wealth, produced through the oppression and exploitation of the black majority, became the defining social value in the organisation of white society.

Because the white minority was the dominant social force in our country, it entrenched in our society as a whole, including among the oppressed, the deep-seated understanding that personal wealth constituted the only true measure of individual and social success.

As we achieved our freedom in 1994, this had become the dominant social value, affecting the entirety of our population. Inevitably, as an established social norm, this manifested itself even in the democratic state machinery that had, seemingly "seamlessly", replaced the apartheid state machinery.

I am arguing that the new order, born of the victory in 1994, inherited a well-entrenched value system that placed individual acquisition of wealth at the very centre of the value system of our society as a whole.

In practice this meant that, provided this did not threaten overt social disorder, society assumed a tolerant or permissive attitude towards such crimes as theft and corruption, especially if these related to public property.

The phenomenon we are describing, which we considered as particularly South African, was in fact symptomatic of the capitalist system in all countries. It had been analysed by all serious commentators on the capitalist political-economy, including such early analysts as Adam Smith.

Specifically, in this regard, we are speaking of the observations made by the political-economists that, since the onset of capitalism in England, the values of the capitalist market, of individual profit maximisation, had tended to displace the values of human solidarity.

In despair at this development, R. H. Tawney wrote in his famous book, "Religion and the Rise of Capitalism":

"To argue, in the manner of Machiavelli, that there is one rule for business and another for private life, is to open the door to an orgy of unscrupulousness before which the mind recoils…(Yet) granted that I should love my neighbour as myself, the questions which, under modern conditions of large-scale (economic) organisation, remain for solution are, Who precisely is my neighbour? And, How exactly am I to make my love for him effective in practice?

"To these questions the conventional religious teaching supplied no answer, for it had not even realised that they could be put…Religion had not yet learned to console itself for the practical difficulty of applying its moral principles, by clasping the comfortable formula that for the transactions of economic life no moral principles exist."

In his well known book, "The Great Transformation", in a Chapter headed "Market and Man", Karl Polanyi went on to say:

"To separate labour from other activities of life and to subject it to the laws of the market was to annihilate all organic forms of existence and to replace them by a different type of organisation, an atomistic and individualist one.

"Such a scheme of destruction was best served by the application of the principle of freedom of contract. In practice this meant that the non-contractual organisations of kinship, neighbourhood, profession, and creed were to be liquidated since they claimed the allegiance of the individual and thus restrained his freedom.

"To represent this principle as one of non-interference, as economic liberals were wont to do, was merely the expression of an ingrained prejudice in favour of a definite kind of interference, namely, such as would destroy non-contractual relations between individuals and prevent the spontaneous reformation."

In a Foreword to a recent edition of this book, Joseph Stiglitz says: "Polanyi stresses a particular defect in the self-regulating economy that only recently has been brought back into discussion. It involves the relationship between the economy and society, with how economic systems, or reforms, can affect how individuals relate to one another. Again, as the importance of social relations has increasingly become recognised, the vocabulary has changed. We now talk, for instance, about social capital."

With reference to this Lecture, the central point made by Polanyi is that the capitalist market destroys relations of "kinship, neighbourhood, profession, and creed", replacing these with the pursuit of personal wealth by citizens who, as he says, have become "atomistic and individualistic."

Thus, everyday, and during every hour of our time beyond sleep, the demons embedded in our society, that stalk us at every minute, seem always to beckon each one of us towards a realisable dream and nightmare. With every passing second, they advise, with rhythmic and hypnotic regularity - get rich! get rich! get rich!

And thus has it come about that many of us accept that our common natural instinct to escape from poverty is but the other side of the same coin on whose reverse side are written the words - at all costs, get rich!

In these circumstances, personal wealth, and the public communication of the message that we are people of wealth, becomes, at the same time, the means by which we communicate the message that we are worthy citizens of our community, the very exemplars of what defines the product of a liberated South Africa.

This peculiar striving produces the particular result that manifestations of wealth, defined in specific ways, determine the individuality of each one of us who seeks to achieve happiness and self-fulfilment, given the liberty that the revolution of 1994 brought to all of us.

G-33 Statement

The following is the statement issued by the Minister/High Level Meeting of the Group of 33 (G-33) developing country coalition after in Rio De Janeiro, Brazil, on 10 September 2006.

1. We, Ministers/HODs of the G-33 present in Rio de Janeiro, Brazil on 10 September 2006 have met to discuss current situation of the Doha Round developments and to reflect on our course of action with a view to ensuring that the negotiations lead to an outcome that is consistent with the development mandate of the Doha Round.

2. We stress our political commitment and readiness to put the negotiations back on track as soon as possible as a successful outcome is critical for economic growth, development and livelihoods in developing countries. We once again emphasize that the negotiations must be fully consistent with the Doha mandate, the July Framework Agreement and the Hong Kong Declaration which place development at the heart of these negotiations. Therefore, any move to reverse or renegotiate the architecture of the negotiations can not be acceptable. A successful outcome must have as an integral component effective and operational provision for Special and Differential Treatment, especially the provisions for SPs and SSM to address the food security, livelihood security and rural development needs of the developing countries.

3. Towards this end, all members, in particular the major players, have to show requisite political will and readiness to make tangible contributions to bring the negotiations to a successful resumption and conclusion. In parallel with this political movement, we urge the members to intensify technical level consultations based in Geneva in a transparent and inclusive process.

4. We remain fully committed to a dialogue with all developing country groups with a view to achieving a common understanding and position on all aspects of SPs and SSM. We also reiterate that the purpose of these instruments is not to impede market access. It is more to provide effective instruments for developing countries to address fundamental development concerns as they engage in the Doha round and make a contribution towards its success. That contribution cannot be however, at the expense of the livelihood of the rural poor and disadvantaged in our countries.

5. We reiterate that resolution of these issues is central to deliver up on the development promise of this Round.

U.S. Trade Sanctions Seek to Pressure Latin America

The recent announcement by the United States government of its intention to review trade preferences and concessions for a number of developing countries does not really come as much of a surprise. Such tools have been used in the past under various regulations. In the following article, Ariela Ruiz Caro, a Peruvian economist, analyses the pressures being put on some Latin American countries to fall in line with the US plan on regional integration. Written for the Americas Program of the International Relations Center (IRC), the article has been translated by Laura Carlsen.

The U.S. government’s announcement that it will review the possibility of limiting, suspending, or withdrawing trade preferences under the General System of Preferences (GSP) to three Latin American countries - Argentina, Brazil, and Venezuela - is political pressure to make these nations participate in the model of regional integration proposed by the United States.

The GSP is a mechanism through which developed countries (especially the United States, the European Union, and Japan) offer preferential access to their markets to products from underdeveloped countries, through exemption from tariffs and customs fees. This preferential and unilateral treatment from industrialized nations, delivered for more than three decades, has been used often as an instrument of political intimidation toward the beneficiary countries.

The recent failure of multilateral negotiations in the World Trade Organization (WTO), and the recognition by industrialized countries that they will only be able to impose a trade system based on their requirements if it is built through bilateral agreements, has led some countries that give preferences to threaten to withdraw them. Specifically, the United States has announced it will carry out a review to determine whether to continue to offer the preferences to twelve countries, among them, the three Latin American nations mentioned.

The justification for this review is ostensibly to improve the distribution of duty exemptions, as the U.S. Congress has requested in order to renew the program, which runs out at the end of this year. But this change in rules has been interpreted by some of the Latin American governments cited as a threat in retaliation for their stand against the Free Trade Area of the Americas (FTAA) proposed by the United States at the recent presidential summit of the Americas held in Mar del Plata in November of 2005, and the resistance of the G-20 to accept the U.S. and European Union proposals in the WTO.

President Kirchner immediately declared that Argentina is a sovereign nation and that an eventual U.S. suspension of trade preferences responds to "sanctions reminiscent of the old theories of the Roman Empire toward countries that didn’t agree with its policies."

The United States is pressing hard to consolidate an economic system that it has not been able to achieve within the WTO. To that end, a fundamental part of its strategy consists of sabotaging the advance of multilateral negotiations in this sphere and blaming their failure on the "stubbornness" of underdeveloped countries that "demand an end to agricultural subsidies, but refuse to open their markets to services, government purchases, and industrial products …" The United States has also threatened to eliminate tariff preferences, which it unilaterally conceded before for political ends or to promote the exports of less-developed countries, if nations don’t accept implementation of legal reforms in several areas of the economy that affect the institutional composition of the nations that submit to them.

In South America, Chile has been the best follower of this strategy of the U.S. government. The surprising decision of President Alan Garcia of Peru to go to Washington tin October to promote the signing of the FTA in the U.S. Congress now indicates the configuration with Colombia of a "Pacific Axis." Here Ecuador continues to be the wild card. The incorporation of Chile as an associate of the Andean Community (the same status that it has in the Mercosur) facilitates U.S. policy in the region and weakens the capacity for joint South American negotiations. With these characteristics, Bolivia no longer has much affinity with the Andean Community block.

The position of the Andean countries lends important support to U.S. government pressures for the smaller nations of the Mercosur to sign FTAs. This is the case of Uruguay and to a lesser degree Paraguay. In the first country, negotiations are taking place behind closed doors and the government of the Broad Front (Frente Amplio) only recently admitted, following declarations by U.S. officials, that indeed it was negotiating a "classic" FTA and not just broadening access to the U.S. market as it had previously declared.

The positions of the "Pacific Axis," although adorned with the rhetoric of diplomatic language, facilitate the configuration of the kind of economic system and model of regional integration that Washington promotes.

The World Bank ‘Undermining Biosafety’

Known for imposing conditionalities while advancing loans to developing countries - effectively reducing their policy space for guiding development - the World Bank also stands accused of preparing the ground for genetically modified crops in the developing world. "The real aim here is to push GM crops into the very heart of the region’s peasant agriculture and food sovereignty," say groups such as the African Centre for Biosafety, GRAIN, Red por una América Latina Libre de Trasngénicos. They say the World Bank is involved in ‘biosafety projects’ which are actually about managing GM contamination! Biosafety, in fact, is being hijacked, it is contended.

The World Bank is set to secure funding from the Global Environment Facility (GEF) for two projects that will undermine public debate and aggressively drive GM crops into the heart of peasant agriculture. The two projects, one in West Africa and the other in Latin America, (for details of both projects, see the GEF website: http://www.thegef.org/Documents/Council_Documents/GEF_C28/WP.html) will hasten the spread of GM crops into farmer seed systems and even into certain centres of origin.

Harmonise....

The projects are clearly being driven by an outside agenda. At their core is a long-standing strategy pursued by the World Bank and the US government to harmonise regulations for GM crops across regions in order to override national processes that are more susceptible to local opposition. The idea is to establish favourable regulations in a few countries whose governments are open to GM crops and then to use these regulations as a model that can be imposed on neighbouring countries by way of regional policy bodies. In this way, harmonisation side-steps any possible democratic debate and provides corporations with a large, one-stop shop for their GM crops.

The project’s preliminary processes have already shown a complete disregard for genuine public debate. There is still no French version of the West African project proposal, even though all of the participating countries are Francophone. In Benin, NGOs participating in an initial project consultation organised by the US consulting firm Market Strategies were presented with the introduction of GM crops as a foregone conclusion. The NGOs were confined to a meeting separated from the previous day’s meeting with farmers’ organisations and government officials, which they were not allowed to attend. Likewise, in Costa Rica, the World Bank project builds on a GEF funded biosafety process that has already been denounced by the national network of civil society organisations active on biodiversity issues (Red de Coordinacion en Biodiversidad) for its lack of effective civil society participation and for bringing forward a biosafety bill that excluded the network from participation in the National Biosafety Commission, something which is guaranteed by presidential decree.

In contrast, the GM lobby has a direct hand in the World Bank projects, as partners, advisors and even funders. Participants in the projects include CropLife—the main lobby arm of the GM corporations—as well as GM industry front groups like the Public Research and Regulation Initiative and AfricaBio.

Contaminate...

The project’s other core objective is to advance the GM industry’s on-going strategy of contamination. The projects will facilitate or initiate field trials and pave the way for the commercialisation of GM crops, with a focus on crops that are central to the peasant farming systems in the respective regions. The Latin American project specifically sets out to facilitate the "deployment" of GM crops in the centres of origin for these crops. Contamination will be inevitable, as the World Bank certainly understands. Indeed, the projects assume that the GM crops will be introduced on a large-scale in the regions. Biosafety "capacity-building" in this sense is merely about managing the ensuing contamination.

Usurping sovereignty in West Africa

The West Africa Regional Biosafety Project is a direct descendent of the US Agency for International Development’s (USAID) activities in the region and the UNEP-GEF project that came to an end last year. As national debate over GM crops has erupted in the region, leading to a wide variation in national biosafety process, USAID has been aggressively supporting regional biosafety harmonisation and the introduction of transgenic Bt cotton, the main cash crop for West African peasants.

The US government has a three-fold agenda in pushing Bt cotton in West Africa: bringing African support to the small club of GM nations on the international stage; distracting attention from unfair US domestic cotton subsidies; and, securing US corporate control over West Africa’s lucrative cotton production. The World Bank project plans to piggy-back on several US Bt cotton projects [1] and use field trials to develop a single uniform model for risk assessment and regulation that can be adopted throughout West Africa.

USAID is also busy supporting biosafety harmonisation initiatives in the region. The Sahel Institute is drafting a regional biosafety framework for Burkina Faso, Mali and Senegal. The West and Central African Council for Agricultural Research and Development developed a $25 million regional project on biotechnology and biosecurity with USAID support that was then approved at a Ministerial Meeting on Biotechnology of the Economic Community of West African States (ECOWAS) in Bamako in 2005. During the Bamako meeting, which was also funded by USAID, the ECOWAS Ministers pledged to harmonise their biosafety regulations within 5 years.

The World Bank project is the next step forward in this harmonisation process. ECOWAS covers a large market, covering all 15 countries of West Africa, but, according to the World Bank, it doesn’t have the authority to force member countries to adopt common legislation; it can only make policy recommendations. The World Bank project, therefore, focuses instead on WAEMU - a smaller grouping of 8 West African states that has the power to impose the "fast-track adoption" of compulsory "enabling" legislation on its members. As stated in the project proposal: "If WAEMU is able to harmonise national biosafety legislations and later to enforce a decision taken in one country in the other countries, it will drastically improve the investment climate in biotechnology for cash and food crops in the WAEMU area...by diminishing the costs of doing business." Once adopted within WAEMU, the Bank says it will then look to "scale-up" the project to the much bigger market of ECOWAS.

Harmonisation is part of the agenda for the Latin America project as well. The countries in that region were in part selected because of the "political, strategic, future role they might play in biosafety management in their respective regions". Such "harmonisation" is inherently unscientific and contrary to sound biosafety practice. It does not respect even the minimum standards laid out in the Biosafety Protocol because the projects will usurp sovereign rights of countries to take biosafety decisions, on a country-by-country, case-by-case basis. The Protocol envisions that biosafety decision-making take place at the national level, in the context of open and transparent public awareness and participation (Article 23), respecting the rights of local and indigenous peoples (Article 26), and conserving centres of origin and genetic diversity. To be scientifically rigorous and sensitive to local realities, assessments must be based on a country’s specific ecological socio-economic context and they must be informed by genuine public debate. The research required to support effective environmental risk assessments is extensive and long-term, and all countries must have enough policy space to set their own priorities and not be pressured, from a lack of resources and capacity, to adopt those that are reactionary or merely responsive to industry developments.

Destroying food sovereignty in Latin America

The main reason for selecting the five countries involved in the Latin American project is that as a group they are among the most important centres of biodiversity in the world and centres of origin for four of the five crops targeted by the project. This central objective is explicit in the name of the project: "Biosafety in Centers of Biodiversity: Building Technical Capacity in Latin America for Safe Deployment of Transgenic Crops".

There are five crops that the project focuses on: cassava, cotton, maize, potato and rice. Millions of people in Latin America depend on these crops for food, medicine, livelihoods and cultural identity. The rich diversity within these crops that exists in the region is directly attributed to indigenous and peasant farmers’ communities, who have conserved, recreated and utilised the crops and maintained deep cultural and spiritual relationships to them. Maize, potatoes, cotton and cassava make up the most important crops for Mesoamerican, Andean and Amazonian communities. Rice is also an extremely important crop in the region since it makes up an essential part of the basic diet of local communities.

It is impossible to accept the project’s purported concern in strengthening the capacity of participating countries to implement the Biosafety Protocol, an agreement dealing with transboundary trade in GMOs, when it focuses mainly on local food crops that are rarely traded across borders in the region. Rather, the real aim here is to push GM crops into the very heart of the region’s peasant agriculture and food sovereignty. The project’s introduction of GM varieties of these crops will inevitably contaminate traditional varieties and thus pave the way for the destruction of the seed and food systems that indigenous and peasant communities have developed over millennia.

The fierce resistance to GM crops among indigenous and peasant communities in Latin America is rooted in their determination to defend their seed systems from such GM contamination. The World Bank’s project is a direct effort to undermine this opposition by putting scientific agencies that have already demonstrated their support for GM agriculture, such as CIAT, the Centre for Cellular and Molecular Biology Research (Costa Rica) and EMBRAPA (Brazil), in charge of developing field test protocols and regulations that can give the veneer of legitimacy to the deliberate GM contamination of farmer seed systems. The national scientific centres participating in the project are even referred to as "ports of entry".

Biosafety hijacked

It’s not a big surprise to see governments in Latin America and Africa signing up for these World Bank projects. Few governments are willing to uphold the opposition to GM crops that is expressed by their people, especially when money is on the table and powerful actors like the World Bank and USAID are involved.

These regional projects shift decision-making power even further to international and regional bodies that are removed from local influence and they give undue power to agencies like the World Bank, that are well-known for championing the interests of GM corporations. Such projects make a mockery of the vibrant national and local debates on GM raging around the world.

With another 10 regional biosafety projects supposedly in the GEF pipeline, the gulf between the official decision-makers and the people they supposedly represent could grow even deeper. Once again, real biosafety will have to be secured at the grassroots, in local struggles to keep GM crops out.

Notes

[1] Current US programs to introduce Bt cotton in the region include a $7 million "West African Cotton Improvement Programme" that promises to "improve the enabling environment for agricultural biotechnology", a USAID-financed project for field trials of Bt cotton in Mali, and USAID’s Bioengineerd Cotton in Africa project.

South Centre News

Executive Director

The Executive Director of the South Centre, Prof. Yash Tandon, is attending the 14th Conference of the Non-Aligned Movement (NAM) being held in Havana, Cuba, from 11 to 16 September. The South Centre has an Observer status at the NAM. Earlier, Prof. Tandon met with the senior officials of the Commonwealth secretariat and with other organizations in London (6-7 September, 2006) to explore project funding possibilities.

Global Governance for Development

The staff of this programme:

· Spoke on the negotiating objectives of developing countries in trade and environment negotiations in the WTO at the University of Geneva, Faculty of Economic and Social Sciences’ Certificate of Advanced Studies in Environmental Diplomacy, Chateau de Bossey, Geneva. The course’s students were mid- to senior-level civil servants and civil society representatives from Africa, Central Asia, Eastern Europe, Latin America, and South and Southeast Asia. They were apprised of some of the key developing country concerns, issues and policy objectives in relation to the trade and environment debate and negotiations in the WTO (4 September 2006)

· Represented the South Centre at the formal opening of the Group of 77 and China’s Geneva office facility at the Palais des Nations, UN Office in Geneva. This is in line with the South Centre’s objective of fostering greater collaborative ties with the G-77 and China (5 September 2006).

· Attended the first WTO Appellate Body Research Series where young academics or doctoral students will be presenting papers of interest to the WTO community. Isabelle Van Damme (University of Cambridge) presented a paper on "The Interpretation of Schedules of Commitments", in light of recent WTO case law on the interpretation of schedules of commitments and concessions under the GATT 1994 and the GATS. The event was pertinent to the South Centre’s ongoing work on WTO dispute settlement (11 September 2006).

· Participated in the High-Level Dialogue on Promoting Policy Coherence for Development organized by the German Marshall Fund of the United States, the Government of the Netherlands, and the OECD in cooperation with the Kenya Ministry of Trade and Industry, at the Hotel Intercontinental in Geneva (12 September 2006).

Innovation, Access to Knowledge and Intellectual Property

The Programme staff:

· Launched the pre-publication copy of its Research paper No. 9 on "The Proposed WIPO Treaty on the Protection of Broadcasting Organisations: Are New Rights Warranted and Will Developing Countries Benefit?" on 11 September 2006. The research paper discusses the main elements of the proposed treaty at WIPO on the protection of broadcasting organisations in the context of the evolving role and concept of broadcasting, the role of broadcasting organisations in developing countries and the existing international legal framework for copyright and related rights.

· Organised the first South Innovation Perspective Series seminar on the 4 Monday 2004 in Geneva. Dr. Padmashree Gehl Sampath, from the UN-MERIT presented the results of her various research works under the title of "Linking Intellectual Property, Innovation and Development: Some Evidence from the Indian Pharmaceutical Sector." The meeting was attended by more than 30 delegates and participants from various constituencies including NGOs and inter-governmental organizations. The presentation was well received and utilized as important forum for discussion on the linkage between intellectual property rights and innovation as well as determining factors for innovation activities.

· Attended the fifteenth session of the WIPO Standing Committee on Copyright and Related Rights (SCCR), form 11- 13 September. The staff circulated the pre-publication version of Research Paper No. 9 during the meeting and discussed various strategic issues with developing country delegates.

· Attended as a speaker the meeting on "New Tools for the Dissemination of Knowledge and the Promotion of Innovation and Creativity: Global Developments and Regional Challenges" which took place from 7- 8 September, in Egypt. The meeting was organized by the Library of Alexandria.

Trade for Development

The programme staff:

· Met with Luis Morago, Head of Oxfam’s EU Advocacy Office to exchange views on the EPA negotiations between the European Union and the ACP States. The meeting helped identify possible areas of synergy between Oxfam and the South Centre in their work on EPAs.

· Provided input to developing country delegations as some of them prepared to engage in important Ministerial meetings to discuss the possible resumption of the Doha round negotiations in Brazil.

Editorial

WTO: Pressure Building Up to Resume Doha Talks

On the face of it, the Doha round of international trade talks stand suspended. But in reality, the senior officials and Ministers in charge of commerce appear to be busy in talks aimed at resuming the stalled negotiations. Over the week-end of 9-10 September, a number of Ministers and senior officials from the South met Rio De Janeiro, Brazil. Among those present were their counterparts from the United States, Europe and Japan. It is also clear that the deadlock is not easy to break. Because that means coming up with new positions that can converge. That convergence is dictated by the mandate of the Doha Agenda, subsequently amplified in the July Framework and the Hong Kong Ministerial Declaration. That, says the joint statement of the Group of 20 and all other developing country coalitions, is ‘the only acceptable outcome’ and one that fully delivers on the Doha commitments. The pledge made at Doha was to place the interests and needs of developing countries, especially the least-developed among them, at the heart of the Round. Development and agriculture are to be at the heart of the multilateral trading system and not on its periphery.

There cannot be a dispute over the fact that agriculture lies at the centre of the Doha Development Agenda. Most of the world’s poor make their living out of agriculture. Their livelihood and standards of living are seriously jeopardized by the subsidies and market access barriers prevailing in international agricultural trade. Any Round that would be faithful to its development dimension must urgently redress this situation. The WTO negotiations in agriculture have to live up to the commitments of the Doha Mandate. This would entail results that guarantee substantial and effective reduction in trade-distorting domestic support coupled with necessary disciplines to prevent box-shifting and product-shifting of support; substantial improvement in market access; and expeditious elimination of all forms of export subsidies. A forward movement in agriculture holds the key to a successful Doha round. Success now can open more ambitious rounds in the future for the trade majors.

For their part, the developing countries have reiterated their determination to achieve a balanced and proportionate outcome with a comparable high level of ambition both in agriculture and in NAMA, as agreed under Paragraph 24 of the Hong-Kong Ministerial Declaration. As of now, the ball is clearly in the court of the rich industrialized nations to make the right moves. Developed members, in particular the major trading countries, do bear a special and specific responsibility for the outcome of the Round. They must show their readiness to implement measures that remove trade distortions and significantly open their markets. Their current positions do not provide an adequate basis for leading the negotiations to a successful conclusion. Clearly, they need to significantly improve their proposals especially in the two crucial areas of domestic support and agriculture market access, as well as be prepared to deliver on the development dimension of the DDA.

The current situation threatens not only the Doha round. The multilateral trading system itself now faces a serious crisis. Brazil’s Minister Celso Amorim noted, ‘it is s not just trade that is at stake, but the whole world order.’ To the extent that this Development round was meant to correct the imbalances of the past written into the international trading system, a failure to do so means perpetuating the trading inequities between the rich industrialized countries and the developing world which is ready to throw down its shackles of under-development. Indeed, there are bigger questions of ‘freedom, democracy and human rights’ embedded into the success of this present round. The rich nations must allow trade to prove its development potential. In shaping the contours of a new world order, both the North and the South have a major role to play.

Attached please find the latest issue of the 
South Bulletin no. 131 in pdf and word formats. 

Focus on restoring multilateralism in world trade.

Best regards,

See attached file: bulletin131.pdf
See attached file: South Bulletin 131Word.doc

Someshwar Singh

Senior Editor
South Centre
Ch. du Champ d'Anier 17
1211 Geneva 19
Switzerland

Tel-(4122)7918044
Fax-(4122)7988531

singh@southcentre.org
web site: www.southcentre.org

Latest issue of the South Bulletin no. 131

Attachment: bulletin131.pdf (0.17 MB) SouthBulletin131Word.doc (0.29 MB)

singh@southcentre.org

Thursday, September 14, 2006