Richard Melson

November 2005

Right To Development


South Centre TRADE Analysis and Publications for the 6th WTO Ministerial Conference, Hong Kong - China, 13-18 December 2005

last update: 30 November 2005

South Bulletin 115

30 November 2005

The focus of this issue of the South Bulletin is on

‘Fight for the right to Development’

In this Issue

Doha Development Agenda Thrown Off-Track

Frustrated by the attempts of leading developed nations to continue to demand more from developing nations while giving in little themselves, a group of developing countries have made a new submission seeking to ‘reclaim’ development in the current WTO round of trade negotiations. As they stand, "The outcome of these negotiations would thus be totally unfair and exacerbate the crises of legitimacy of the WTO," they warn.

Making NAM Dynamic with Better Information Flows - Badawi

The 114 member Non-Aligned Movement (NAM) of developing countries appears set on embarking on a new information and communications agenda. At the Sixth Conference of Ministers of Information of Non-Aligned Countries (COMINAC), Prime Minister of Malaysia, Abdullah Bin Haji Ahmad Badawi, called for a greater exchange of information, perspectives and experiences among NAM member countries.

NAM Information Ministers’ Kuala Lumpur Declaration

The Kuala Lumpur Declaration on NAM Information and Communication Collaboration, adopted by the Ministerial Meeting of 21-22 November 2005, highlights the importance of information and communication strategies that contribute to Development in the developing countries. Cuba has offered to hold the next meeting of NAM Information Ministers in two years’ time.

Argentina & the IMF: Learning Lessons from Experience

Using Argentina’s experience in dealing with the International Monetary Fund (IMF) during its recent crisis, the country’s executive director at the IMF, Héctor R. Torres draws some important lessons that could be relevant for other developing countries that may face similar debt crisis. He proposes changes in two of the most critical policies of the Fund, i.e. conditionality (on both, structural and macroeconomic objectives) and its role in dealing with full-blown debt crisis.

The Monumental Struggle for Trade Justice

A pre-occupation with ‘free trade’ and ‘liberalization’ by the powerful members of the World Trade Organization, as opposed to respect for people and their welfare, makes for a narrow view of priorities, according to the UK-based World Development Movement. WDM’s Head of Policy, Peter Hardstaff, looks at what’s at stake in the WTO negotiations

More in this issue

Timely Demise for Free Trade Area of the Americas

The EU Corporate Trade Agenda

Internet Governance

Agreement finalized on Trans-Asian Railway

South Centre News


Doha Development Agenda Thrown Off-Track

Frustrated by the attempts of leading developed nations to continue to demand more from developing nations while giving in little themselves, a group of developing countries have made a new submission seeking to ‘reclaim’ development in the current WTO round of trade negotiations. Argentina, Brazil, India, Indonesia, Namibia, Pakistan, Philippines, South Africa and Venezuela have together given a paper entitled ‘Reclaiming Development in the WTO Doha Development Round’ to the WTO Committee on Trade and Development on 25 November, 2005. "The outcome of these negotiations would thus be totally unfair and exacerbate the crises of legitimacy of the WTO," they warn. The current proposals by developed countries would result in ‘an anti-developmental outcome with the hopes and aspirations of developing countries raised by the prospect of a Doha Development Round becoming dimmer and dimmer.’ Reproduced below are the views of the group of developing countries.

1. The recent proposals of some major developed countries have attempted to sow division among developing countries, re-interpret the framework and trajectory of the negotiations and, in a self-serving manner, narrow, limit and - ultimately - undermine the developmental objectives of the Doha Development Agenda. It is thus timely to reclaim the developmental objectives and trajectory of the negotiations.

development should be at the heart of the DDA …

2. We recall paragraph 2 of the Doha Declaration:

"International trade can play a major role in the promotion of economic development and the alleviation of poverty. We recognize the need for all our peoples to benefit from the increased opportunities and welfare gains that the multilateral trading system generates. The majority of WTO Members are developing countries. We seek to place their needs and interests at the heart of the Work Programme adopted in this Declaration. Recalling the Preamble to the Marrakech Agreement, we shall continue to make positive efforts designed to ensure that developing countries, and especially the least-developed among them, secure a share in the growth of world trade commensurate with the needs of their economic development. In this context, enhanced market access, balanced rules, and well targeted, sustainably financed technical assistance and capacity-building programmes have important roles to play."

3. Placing development at the center of the round should be understood along several integrated dimensions. Development is not just an adjunct to the global economy but an essential stimulus for sustained global economic growth. The key to sustained global growth lies in unlocking the growth potential of developing countries. To achieve this, developing countries must pursue economic development and industrialization in sectors where they possess comparative advantage. The strategic objective for the negotiations is thus for developed countries to undergo structural adjustment by reducing a range of protective and support measures in inefficient sectors in their economies. Such adjustment will boost investment in the agricultural sector of developing economies, promote industrialization, development and trade and provide much needed impetus to global growth.

4. An early conclusion of the current round of the Doha negotiations, consistent with the mandate agreed in Doha, would deliver the best context for this outcome. More open and undistorted international trade would make a positive contribution to global economic growth, and create an environment in which developing economies could diversify their exports by destination and in higher value added production.

agriculture is the central issue…

5. A development round requires the removal of trade distortions in international trade rules that inhibit the export growth of developing countries. The largest structural distortion in international trade occurs in agriculture through the combination of high tariffs, trade distorting domestic support and export subsidies that protect inefficient farmers in developed countries, principally, the European Union, and the US. Taken together, these measures frustrate the development prospects of many developing countries. Removing these anti-development measures is a core objective of the DDA as it will lead to the expansion of developing country exports and their meaningful integration into the global economy. It is for this reason that agriculture is the central issue of the Doha Round.

6. Two thirds of all poor people in developing countries live and work in the agricultural sector, depending on agriculture for their livelihoods. In contrast agriculture accounts for less than 5 percent of output and employment in the EU and the US. For some developing countries as in the case of the West African cotton producers of Mali, Benin, Chad and Burkina Faso, high subsidies for rich farmers in developed countries are responsible for the devastation of the livelihoods of millions of poor farmers. For many other developing countries where agricultural production remains largely subsistence based the need to ensure that WTO disciplines are strengthened so as to enable these developing countries to meet their food and livelihood security, and rural development needs is paramount.

7. The Uruguay Round (UR) brought agricultural policies, and trade in agriculture, under GATT/WTO disciplines for the first time. However, the new UR Agreement on Agriculture created minimal market opening and failed to ensure that the main subsidizes; the EU, US, and other OECD countries, reduced their extremely high levels of farm subsidies. These farm subsidies of the main subsidizers did not decrease substantially even after the Agreement on Agriculture came into force in 1995. Ironically, farm support actually increased in some developed countries. In sharp contrast both developed and developing countries have been liberalizing their markets in the industrial sector for over 50 years as a result of over 8 rounds of GATT negotiations.

8. It is for these reasons that agricultural protection in developed countries must bear the greatest burden of adjustment in this round.

contributions to NAMA should be commensurate with level of development…

9. Turning to the negotiations on non-agricultural market access (NAMA), we recognize that this Round should increase liberalization and foster positive adjustments in all countries, developed and developing, providing genuine market access for all. In addition, whilst recognizing the efforts of many developing countries in making autonomous liberalization commitments, this Round provides an opportunity to increase the level of bindings for all WTO members thus creating a more inclusive and certain trading system.

10. However, due recognition must be given to the enormous imbalances in the global trading system reflected in the inequitable distribution of the gains from globalization and the continued protection in developed countries against products from developing countries.

11. Developed countries have largely become highly competitive in the industrial sector and will need to make relatively insignificant adjustments in this round. However, many developed countries still maintain high tariffs, tariff peaks and tariff escalation on products of interest to developing countries. In addition a range of non-tariff barriers, including strenuous technical regulations and excessive anti-dumping measures, are frequently utilized by developed countries to disrupt developing country exports and potential to export their products to these markets.

12. The bulk of developing countries on the other hand, whilst having increased their share of world trade in manufactures in the past two decades, continue to reform and industrialize their economies, with their industrial sectors still occupying a significant part of their labour intensive employment and output. Whilst many developing countries have continued to undertake unilateral liberalization beyond their WTO Uruguay round commitments and reform their industrial sectors, a significant part of their production and employment remain in sensitive sectors, and further liberalization of these sensitive sectors would have to be preceded by carefully managed adjustment policies.

13. Thus, the modalities for liberalization in NAMA must accomplish two things simultaneously: i) ensure that the remaining high tariffs, tariff peaks and tariff escalation in developed countries are eliminated in this round and; ii) ensure sufficient flexibility to accommodate the sensitive sectors and adjustment needs of developing countries, to create the conditions for further liberalization.

14. Developing countries cannot be expected to pay for the much needed reforms in the agriculture sectors of developed countries (referred to above), by overly ambitious requests of them in industrial tariffs that do not take into account the realities of their levels of economic development and their adjustment needs. Developing countries are prepared to make a contribution to the NAMA negotiations in this round, provided that their concessions will be commensurate with their levels of development in a full expression of the principle of special differential treatment. In addition, the principle of less than full reciprocity, agreed to in the Doha Mandate needs to be adhered to.

Paragraph 8 flexibilities are an essential element…

15. It is for these reasons that we argued that the paragraph 8 flexibilities that all WTO members negotiated and agreed to in the WTO July 2004 Framework Agreement is an essential element of the flexibilities required by developing countries to manage their adjustment processes. We therefore oppose attempts being made to reinterpret this agreement by establishing further conditionalities on the use of paragraph 8 and thus change the balance of the agreement that was reached by all WTO members in the July 2004 Framework Agreement. We view the numbers currently contained within the brackets in paragraph 8 as constituting the minimum percentages required by developing countries. We retain the right to adjust these numbers upwards to enable some of our economies to manage the adjustment of sensitive sectors and prevent the social disruption caused by job losses and closure of enterprises that would result from further liberalization.

16. In addition, we emphasize that paragraph 8 is a ‘stand-alone’ provision in the agreed NAMA framework and its position as such must be recognized if negotiations are to move ahead. Any move to link it, or use it as a trade-off with the tariff reduction formula will create unnecessary difficulties in the negotiations. The two issues are separate and should be treated as such.

solutions need to be found for preference erosion…

17. Not all developing countries stand to gain from the DDA in the short to medium term. A significant number of developing countries including, small, weak and vulnerable countries and Least Developed Countries (LDCs) will face significant transitional costs, especially those countries that are preference dependant and will suffer significant preference erosion. The particular development challenges of small, weak and vulnerable countries need to be addressed in the Doha round without creating a new category of developing countries and sowing division amongst developing countries. In addition, creative and progressive solutions will need to be found to address the problem of preference erosion for preference dependant countries, without further delaying market access for products from developing countries. The EU proposal to delay liberalization in areas of its own sensitivity with the excuse of helping preference dependant countries is a self- serving argument.

an ambitious "aid for trade" package should be launched…

18. WTO members should launch an ambitious "aid for trade" package in Hong Kong to address the trade related capacity building needs of developing countries. Such a package should include a commitment to strengthen the financial base for enhanced trade related capacity building that enables the most vulnerable WTO Members to meet international standards, to meet new WTO obligations (trade facilitation, for example), and to promote their efforts at diversification and enhancing their export competitiveness. In addition, WTO members should agree to create a grant aid fund to assist developing countries to manage the impact of preference erosion that would arise from the Doha round.

duty free, quota free market access for LDCs…

19. For the Least Developed Countries (LDCs), we support the need for a package of development measures to foster their integration into the world trading system and enhanced development. In this regard, the package of five prioritized LDC proposals is an important objective for Hong Kong. In particular, we pledge to work for the provision of duty free and quota free market access for all LDCs, and we urge developed countries to make a firm commitment in this regard by the Hong Kong Ministerial Meeting. Developing countries in a position to do so are also encouraged to make efforts to open their markets to LDCs on a non-reciprocal basis.

the greatest gains can be made for all in mode 4…

20. Perhaps the greatest gains from the Doha round can be made for both developed and developing countries from serious efforts to liberalize the temporary movement of natural persons (mode 4), from developing to developed member countries. For example, one study reveals that an increase in developed countries’ quotas on the inward movement of temporary workers equivalent to 3 percent of their work forces would generate an estimated increase in world welfare of over $150 billion per annum. To date however developed countries have been reluctant to make any significant commitments in the WTO on mode 4 relaxation of restrictions on temporary entry. We urge developed countries to seize yet another opportunity to unlock the potential to increase global growth and the welfare of all countries.

imbalanced rules need to be reviewed…

21. The Uruguay Round created a number of new trade rules, such as the agreements on Anti-Dumping, TRIMS and TRIPS, that developing countries consider to be imbalanced, in favour of developed countries. Developing countries have called for these agreements to be reviewed during the Doha round. For example, the TRIPS agreement has strengthened the rights of private ownership without providing equivalent protection for the intellectual property rights of communities. Developing countries are a recognized repository of traditional knowledge that is also enhanced by their bio-diversity. In the recent past attempts have been made to misappropriate this knowledge for commercial gain, without providing a just reward to these communities. Developing countries have therefore sought amendments in the TRIPS Agreement to prevent bio-piracy of biological material and to prevent misappropriation of traditional knowledge. In this regard, we call on the developed countries to consider proposals for new disciplines on disclosure of the source and country of origin of biological resources and traditional knowledge, and to secure prior informed consent and equitable benefit sharing.

the EU has made insignificant offers to open its markets…

22. The recent proposals of developed countries, including the EU’s 28th October proposals, have made demands on developing countries to make commitments in the NAMA negotiations that are totally disproportionate. The enormous burdens of adjustment that developing countries would have to bear in their industrial sectors bear no resemblance to the relatively insignificant adjustments that developed countries will need to make in this sector. Developing countries are being called upon to reduce their tariffs from their applied rates with limited space to manage the adjustments in their sensitive labour intensive sectors. In sharp contrast the EU has made insignificant offers to open its markets in the Agriculture negotiations, with its call for additional flexibility for the bulk of its sensitive products, allowing it to close off the possibility of any significant new market opening for agricultural products from developing countries.

developed countries are seeking a round for free…

23. In addition, developed countries are not offering to make any significant cuts in their industrial sectors with their offer to reduce their tariffs by a co-efficient of 10 (using the Swiss formula). This offer will not result in any deep cuts in the high tariffs, tariff peaks and tariff escalation that developing countries called for in the Doha mandate. A large number of industrial products of developing countries can thus still be kept out of developed country markets. The EU and other developed countries are thus seeking a round for free! Developing countries are being called upon to bear the burden of any new market opening in this round.

24. The totally disproportionate demands the EU is making of developing countries in this round, compared to its own offer to make much needed reforms in its agricultural sector, threatens to create an imbalanced outcome in the Doha round. The outcome of these negotiations would thus be totally unfair and exacerbate the crises of legitimacy of the WTO. The EU proposals in agriculture and NAMA would thus result in an anti-developmental outcome with the hopes and aspirations of developing countries raised by the prospect of a Doha Development Round becoming dimmer and dimmer.

25. We urge the EU and other developed members of the WTO to ensure that their offers and demands made on other members comply with the objectives set for this round in paragraph 2 of the Doha mandate (referred to above). We for our part are committed to work for a genuine development outcome of the round that is fair and balanced and that will create new opportunities for all members, developed and developing, to grow their economies and foster their development.

Submitted to the WTO (CTD) by the following countries:

Argentina, Brazil, India, Indonesia, Namibia, Pakistan, Philippines, South Africa &Venezuela.

Making NAM Dynamic with Better Information Flows - Badawi

The 114 member Non-Aligned Movement (NAM) of developing countries appears set on embarking on a new information and communications agenda. Addressing the Sixth Conference of Ministers of Information of Non-Aligned Countries (COMINAC), Prime Minister of Malaysia, Abdullah Bin Haji Ahmad Badawi, called for a greater exchange of information, perspectives and experiences among NAM member countries. "Ultimately, the strength and dynamism of NAM rests largely on the realisation of this Agenda," he said. Malaysia’s proposal for a "NAM News Network" to be handled by its national news agency - Bernama – was approved by the Ministers and is likely to go into operation in the first quarter of 2006. Following are excerpts from Prime Minister Badawi’s keynote address on 21 November, 2005 in Kuala Lumpur.

"It gives me great pleasure to welcome you to Malaysia for the Sixth Conference of Ministers of Information of Non-Aligned Countries (COMINAC). As Chairman of The Non-Aligned Movement (NAM), Malaysia is honoured to host this important event.

It is heartening to see so many representatives and delegates from the various NAM Member Countries gathered here today. I would like to thank each of the governments represented here for their positive response to Malaysia’s invitation to attend this meeting. Your presence demonstrates the strong commitment of NAM Member Countries to deliberate upon and advance the theme of this year’s conference, that is, "Advancing Information and Communication Collaboration towards a More Dynamic NAM"

The Non-Aligned Movement has since its inception in 1955 played an active, even central role, in issues of concern and of vital importance to its members. These issues include decolonisation, apartheid, the situation in Palestine and the Middle-East, disarmament, poverty eradication and socio-economic development, among others. Nevertheless, the end of the cold war had a significant effect on the movement, mainly the loss of the movement’s raison d’etre. The poor level of cohesion among NAM member countries also became more apparent thereafter, due to member countries’ diverse socio-economic levels as well as assorted cultural and social contexts.

The 13th NAM Summit Held in Kuala Lumpur in 2003 was perhaps a turning point for the movement. It was agreed that a comprehensive review of the role, structure and work methods of the movement would be conducted, in keeping with the times and the new realities of the day. The continued relevance of the movement will depend, to a large extent, on the unity and solidarity of its members, as well as on NAM’s ability to adapt to changes in the global economic, social and political scenarios.

As such, to ensure that the on-going revitalisation process of NAM continues unabated, member countries must maintain their unity and enhance their commitment to the movement. In order to strengthen NAM’s cohesion and to foster a greater sense of community, it is necessary that we strengthen our common vision and engender a higher degree of communication, understanding and trust among ourselves. This can be achieved through the exchange of information, perspectives and experiences among governments, businesses, and civil society in NAM member countries.

Indeed, by communicating and by sharing information, views and perspectives among ourselves, we would not only be creating a stronger, more cohesive community, we would also be creating a more powerful and influential comity of nations. After all, with better access to information and data sources, our governments would be able to make better, more informed decisions on a wide variety of issues that affect the lives of our people. Businesses too would be able to benefit as they become better acquainted with the economic scenario beyond their own shores. Society at large would also benefit in the sense that the more they learn about other cultures, the more tolerant and accepting they would be of differences and diversity.

Clearly, there is a lot of merit in the idea of sharing information, news and views among NAM member countries as a way to strengthen relationships. In reality however, the practice may prove to be more difficult, especially as developing countries face a multitude of constraints and challenges. These range from limited financial and human resources, lack of adequate information and communications technology (ICT) infrastructure, to poor levels of technical expertise.

Beyond these constraints and challenges, another issue of paramount importance to developing countries, including NAM member countries, is the issue of the "Information Divide". This term has been coined to define the imbalance in information flows and in ICT advancement between the developed and developing world. This is particularly evident if viewed in the context of the current trend in the global information and media landscape, in the move towards consolidation and the creation of a few information and media giants in developed countries.

As such, it is inevitable that the nature and flow of information is increasingly dominated and influenced by a handful of media players in developed countries, at the expense of smaller organisations in developing countries. As a result, the news and information that is reported may not necessarily reflect the needs of developing countries’, nor consider their perspectives and views. The outputs of smaller media players, particularly from the developing countries, are seldom quoted in the global mainstream media. Therefore, there is a critical need to correct this imbalance and to improve the flow of information among NAM member countries.

As Chairman of NAM, Malaysia feels it is necessary for the movement to address this crucial issue of Information Divide among developed and developing countries, as well as between NAM member countries themselves. We believe that in bridging the Information Divide, it is necessary to focus our attention, optimise our resources, and manage more effectively the content and form of our information flows.

As Such, Malaysia would like to propose that NAM pursue a New Information and Communications Agenda. Besides seeking to eliminate imbalances in information flows, which characterise the current situation, this Agenda is also aimed at promoting communication between NAM member countries. This is predicated on the belief that information is a social good and has a cultural value attached to it. Each country should have the right and freedom to tell its own story from its own perspective, and to have the means to do so. Essentially, this Agenda seeks to promote freer flow of information and views, and to disseminate them to a wider group of people. Ultimately, the strength and dynamism of NAM rests largely on the realisation of this Agenda.

To realise the goals of this Information and Communications Agenda and to facilitate greater information flows between NAM member countries, Malaysia has proposed the setting up of a "NAM News Network" or "Triple-N." The "Triple-N." is modelled after the many successful news exchange arrangements that are currently in operation around the world. These News Exchange Arrangements utilise the power of the internet and other information technologies to enable the free and unencumbered flow of information at lower and lower costs. In this way, the resources of many smaller news organisations can be shared and pooled together, creating a viable news source alternative to the mainstream media giants.

The "Triple-N." would be dedicated to promoting news and information from a developing country perspective, and thus provide an important working platform for NAM. To demonstrate my government’s commitment towards this initiative, Malaysia is pleased to offer the services of Bernama, the Malaysian National News Agency, to act as the primary coordinating body of the "Triple-N.". As many of you are aware, Bernama has considerable experience in handling Multilateral News Exchange Networks, especially among NAM member countries.

I am pleased that this proposal has thus far been well-received. Malaysia will do our best to provide a world-class news exchange network in moving the "triple-N" forward. Further details of the project, including the financing and modalities of the network, will be worked out in due course, I am sure.

Ultimately, I believe that the "Triple-N." would be an important window for NAM to the world. It would become a significant medium for NAM member countries to tell their stories to each other, as well as to the wider world.

To set up a truly effective and efficient information and communications system, it is not enough to merely have the appropriate communications infrastructure and equipment in place. It is also necessary to invest in the development of human capital in order to make meaningful use of the equipment and infrastructure available. Therefore, NAM member countries should explore the possibility of creating various exchange programs for those involved in the information and communications arena, including journalists, reporters and media organisation managers. Besides acquiring technical expertise, those participating in the exchange programs would also acquire wider perspectives and a better understanding of other NAM member countries in the process.

Despite our limitations, I would like to offer to share Malaysia’s experience in the area of information and communications with other NAM member countries. We also welcome the use of our facilities by other NAM member countries. By doing so, we hope to enhance our joint capacity-building efforts.

By hosting this ministerial meeting, Malaysia hopes to provide a forum to plan, deliberate upon and address this important issue. We are convinced that international cooperation and positive results can be achieved via this forum. Indeed, the time is right for NAM to move toward greater collaboration. The creation of new modalities and facilities for the sharing and exchange of information among member countries will go a long way toward achieving this.

Before I conclude, I would like to thank the Malaysian Ministry of Information, in cooperation with the Ministry of Foreign Affairs, for successfully organising this event. I would also like to thank NAM member countries once again for your support and presence at this important meeting. I wish you successful deliberations in the days ahead. Your active participation and intervention will ensure the success of this meeting and ultimately, enhance NAM’s strength and capacity to face the myriad of challenges ahead.

On that note, it is my pleasure and privilege to officially declare the sixth conference of the ministers of information of non-aligned countries open."

NAM Information Ministers’ Kuala Lumpur Declaration

The Kuala Lumpur Declaration on NAM Information and Communication Collaboration, adopted by the Ministerial Meeting of 21-22 November 2005, highlights the importance of information and communication strategies that contribute to Development in the developing countries. Reproduced below, the Declaration underscores the need to strengthen information links within the South so as to better portray its perspectives and realities, respecting its culture, heritage and priorities. It also provides a background of the efforts made in the past and the new steps planned. Cuba has offered to hold the next meeting of NAM Information Ministers in two years’ time.


1. The Ministers of Information of the Non-Aligned Countries convened their Sixth Conference in Kuala Lumpur, Malaysia, from 19-22 November 2005 on the theme "Advancing Information And Communication Collaboration Towards A More Dynamic NAM."

2. The meeting was held after a lapse of nine years following the Fifth Conference of Ministers of Information of the, Non-Aligned Countries (COMINAC V) in Abuja, Nigeria- from 3-6 September’ 1996, and in pursuance of a call for its convening by the 12th Ministerial Conference of the Non-Aligned Countries on 8-9 April, 2000 in Cartagena, Colombia.

3. The Ministers reviewed the global trends and developments in information and communication and noted that the dissemination of discriminatory and distorted information of events taking place in developing countries continues unabated.

Overview of Global Trends and Developments in Information and Communication

4. Noting that the continued situation of lopsided information places the vast majority of mankind at a disadvantage, the Ministers reaffirmed the need for urgent redress of the imbalances.

5. The Ministers called for the acceleration of the pace of advancement and consolidation of collaboration among Non-Aligned and other developing countries in information and communication processes.

6. The Ministers noted that decreasing costs of communications and easy access to Internet services now afforded member countries an unprecedented opportunity to increase information linkages among them.

Therefore, the Ministers urged all member countries to take advantage of the advancement of Information and Communication Technology (ICT) to forge these links.

7. The Ministers, however, acknowledged that to fully harness ICT in developing countries, it is imperative to eradicate poverty, illiteracy and exclusion that prevent developing countries from’ joining the Information Society.

8. The Ministers are against the imposition of unilateral and coercive measures on developing countries, considering that those measures violate international laws and prevent the full access of the affected countries to the advancement of the ICT, undermine their efforts to develop their information and communication networks and impede the full achievement of economic and social development for their peoples.

9. The Ministers assessed the performance of member countries in the field of information and communication during the last nine years and noted their continuing and increasing efforts to bring efforts to bring about balanced and free flow of information.

10. The Minister acknowledged the increased efforts being made by some member countries and other developing nations to develop their information and communication networks.

11. The Ministers reiterated their call for greater investments in the relevant ICT according to the specific situation and capacity of each country in efforts to move forward the interests of the respective countries as well as the interests of the member countries as a whole.

Another Look at the New World Information and Communication Order (NWICO)

12. The Minister regretted the continued imbalances and inequalities in the field of international information and communication. They highlighted the serious implications which the negative situation portends for member countries and advocated effective strategies for confronting the challenge.

13. The Minister observed that the long history of the struggle for a New World Information and Communication Order (NWICO) notwithstanding, the salient objectives are yet to be realised.

14. The Ministers reaffirmed the need to continue working for a NWICO which would guarantee greater impartiality and balance of information in order to improve the information and communication infrastructure and the development of capacities in developing countries.

15. The Ministers expressed concern that developing nations are still impoverished, not only materially and economically, but in terms of equitable endowments and opportunities in the field of global information and communication.

16. The Ministers noted that although the objectives of the NWICO have yet to be fully realised, some member countries have, individually, made significant strides towards attaining a balanced flow of two-way information among themselves and with non-member countries.

17. The Ministers stressed that self-reliance and South-South cooperation should be intensified to attain a higher level of activities to strengthen the information and communication infrastructure both at national and grouping level. In this context, the Ministers proposed that the more developed members extend assistance and share their experience and expertise with the others.

18. The Ministers agreed to reduce dependence on information from industrialised nations on member countries by initiating and supporting co-operative activities that will augment the new order, through fresh and dynamic approaches to programming, content and networking in the media systems of member countries and other developing countries.

19. The Ministers noted the effects of an unjust global economic system which severely impede the ability of member countries to realise their optimum potentials for economic growth and development. They noted the adverse implications of the economic constraint in seeking to evolve more effective strategies for developing efficient and independent information networks that will facilitate the preservation and promotion of national interests.

20. The Ministers recognised that the existing imbalances in the information system result in adverse effects on the global economic system and thereby impede the ability of member countries to realise their optimum potentials for economic growth and development. The Ministers therefore urged all members to take practical steps in ensuring that ICTs should be utilised to develop economies and societies of developing countries and transforming the lives of socially and economically disadvantaged people.

21. The Ministers declared that the imbalances and inequalities found in global trade and the debt burden still constitute monumental hindrances to genuine social, economic and political progress in developing nations of the world. Accordingly, together with reaffirming their own commitment towards achieving economic and social progress, they called for urgent and sustained international action to create the necessary conditions for each nation to realise their own potential and ensure genuine global peaceful co-existence.

22. The Ministers called for increased investments in human capital and material resources in the area of information and communication and noted that some member countries are moving in that direction.

23. The Ministers emphasised the need for training in ICT to produce practitioners to raise the overall standard and quality of the sector to facilitate information dissemination and communication to meet the ever growing challenges emerging in a globalised world. They stressed the importance of effective measures to prevent the brain-drain of those personnel which has a negative impact on the strategies to develop and improve the human resource of developing countries.

24. The Ministers proposed that training programmes be organised, both at institutions of higher learning and by professional journalism institutes, to upgrade the skills of journalists in the coverage of common themes such as global disasters and terrorism, as well as promoting tourist destinations in the member countries.

25. The Ministers also urged these institutions of higher learning and professional journalism institutes, to realise the importance of their contribution towards development and to continue to upgrade the skills of media practitioners so that their reports contribute to the development of their countries.

26. The Ministers emphasised the need for information and communication strategies to be rooted in historical and cultural processes, and urged that the views, models and perspectives of the media of developed countries should respect those of the developing countries to ensure the continuing dialogue between civilisations.

27. Expressing concern about the orchestrated smear campaigns which developing nations have suffered from biased and distorted Western media reports, the Ministers re-emphasised the need for sustained efforts by the mechanisms charged with the dissemination of news and information among and about member countries to counter this threat.

28. The Ministers opposed the use of the Media as a tool for hostile propaganda against developing countries which are aimed at destabilising their Governments. They called for an immediate cessation of the radio electronic aggression against NAM countries as it is an action contrary to the principles of international law. They reaffirmed that the radio electronic frequencies spectrum must be secured in favour of public interest and in accordance with the principle of legality.

29. The Ministers agreed that NAM should initiate steps for establishing International norms, ethics and/or code of conduct for the media.

30. The Ministers reiterated their profound condemnation of all acts of terrorism and appreciated the profound role of media in supporting the international efforts to combat terrorism. They regretted the continued tendency of the Western Media in stereotyping and profiling perpetrators of terrorist acts as Muslims.

31. The Ministers agreed that the continuing struggle for the NWICO should be intensified since the challenges and realities which formed the call for a NWICO are still prevalent in the world order.

Broadcasting Organisation of Non-Aligned Countries (BONAC)

32. The Ministers agreed that renewed efforts be taken to revitalise BONAC in order for it to play its rightful role in disseminating information via radio and television among member countries and the world at large.

33. Towards this end, the Ministers urged all member countries to cooperate in the consolidation of the organization by mapping out common strategies that would create a conducive environment to operate in a more effective manner.

34. The Ministers reaffirmed their belief in BONAC as an effective medium for transmitting factual news of events of the developing countries to the world. Accordingly, they acknowledged the need to re-position and re-vitalise BONAC in order to enable it to attain its primary goals and objectives.

35. The Ministers stressed that BONAC must not be allowed to experience any impediment and advised the BONAC Co-operation Committee and Technical Committee, to endeavour to work harder and avail member countries with effective operational and technical strategies to enhance their functions.

36. The Ministers acknowledged the role of private broadcasting in modern public information and communication processes and agreed that private practitioners should be encouraged to complement the efforts of government agencies.

37. The Ministers, nevertheless, reaffirmed the importance of and the vital role played by public broadcasters, both radio and television, in developing countries and agreed that steps be taken to further develop public broadcasting.

38. The Ministers, noting the - rapid advances in broadcasting technology, especially digitalisation, resolved to work together to face all the challenges ahead.

Non-Aligned News Agencies Pool (NANAP)

39. The Ministers expressed their thanks and gratitude to the Islamic Republic of Iran and its national news agency IRNA for their relentless efforts to develop and nurture the Non-Aligned News Agencies Pool (NANAP) during their tenure as chairman of the pool. The Ministers noted that despite IRNA’s untiring efforts to make NANAP a success, it has for many years been inactive due to declining support from member countries.

40. In furtherance of the common ideals of NAM, the Ministers agreed that NANAP should be revitalised through a new workable mechanism, if necessary in a new form, to move forward.

41. Ministers welcomed Malaysia’s proposal to replace the pool with a new mechanism, to be called NAM News Network (NNN), to effect a more sustained and efficient flow of news and information among Non-Aligned and other developing countries.

42. The Ministers thanked Malaysia for its generous offer to host the NNN and underwrite its start-up cost and mandated that a committee of member countries work with Malaysia to formulate operational guidelines for the establishment of NNN.

43. The Ministers acknowledged the need for a concerted effort by member countries to expand their information dissemination capacity to boost the development process of member countries.

The Ministers agreed that progress of the NNN be reported to COMINAC.

Vote of Thanks The Ministers commended and thanked the Government and the people of Malaysia for the excellent organisation of COMINAC VI and the warm hospitality accorded them during their stay in the beautiful city of Kuala Lumpur."

Argentina & The IMF: Learning Lessons From Experience

Using Argentina’s experience in dealing with the International Monetary Fund (IMF) during its recent crisis, the country’s executive director at the IMF, Héctor R. Torres draws some important lessons that could be relevant for other developing countries that may face similar debt crisis. Also representing a constituency of six Latin-American countries (Argentina, Bolivia, Chile, Paraguay, Peru and Uruguay), he [1] proposes changes in two of the most critical policies of the Fund, i.e. conditionality (on both, structural and macroeconomic objectives) and its role in dealing with full-blown debt crisis. The paper, presented below, was presented to the South Centre recently.


The Fund has already produced an evaluation of the lessons that could be drawn from the crisis in Argentina.[2] That assessment mainly dealt with Argentina’s authorities’ errors that lead to the crisis and, to some extent, also with the role that the Fund played in supporting those policy failures.

This paper analyses Argentina’s experience in dealing with the Fund during the aftermath of the crisis [3] and draws some lessons on what changes could be introduced into two of the most critical policies of the Fund, i.e. conditionality (on both, structural and macroeconomic objectives) and its role in dealing with full-blown debt crisis.

The first section of this paper analyzes whether the structural reforms included in the two arrangements signed with the country after 2002 were strictly critical to the achievement of Argentina’s macroeconomic objectives and foremost, regarding its debt sustainability. We conclude that some of the structural conditionality was unnecessary and that when the required reforms are beyond the reach of the government’s executive branch, performance criteria could actually backfire.

In the second section we look into Argentina’s experience on macroeconomic conditionality trying to explore whether it is sensible to pursue a one-size-fits-all primary surplus criterion. We conclude that it was not appropriate to press Argentina to achieve similar fiscal surpluses as those included in arrangements with countries like Turkey or Brazil, since the underling comparisons were not tenable.

The third section considers Argentina’s experience in dealing with the "Lending into arrears" policy and particularly whether the Fund, in conditioning its new lending to demonstrations of "good faith", is consistently avoiding the moral hazard that stems from bailing out private creditors. We conclude that the Fund seems to be still undecided on what role (if any) it should play when a sovereign is in financial distress and needs to restructure its debt with private creditors. We also conclude that using the Fund’s financial leverage to impose ambitious fiscal surpluses and conditioning new lending to improvements in the debt restructuring offer could be as morally hazardous as bailing-out private creditors.

In short, using Argentina’s experience as a model, the paper draws some lessons and proposes changes in the Fund’s approach to conditionality and to its role in full-blown debt crisis. We think that it is particularly timely to take stock of these lessons since the Fund has just launched a review of the Fund’s Medium Term Strategy and both, conditionality and the "lending into arrears" policy are issues of the utmost importance for developing countries.

Section I

Conditionality on structural reforms: Should the Fund limit them to the strictly indispensable?

It is a common understanding that the Fund should focus on macroeconomic objectives usually regarded as the core areas of IMF’s responsibility (i.e. monetary, fiscal and exchange rate policies as well as financial sector issues). However, the identification and inclusion of structural conditionality in arrangements with member countries is justified when it is instrumental to the achievement of the aforementioned macroeconomic objectives.

The Fund should, consequently, exercise restrain in using its financial leverage to impose structural conditionality as "performance criteria" [4] in arrangements with borrowing countries. In our view this could be boiled down into three principles:

Ø be as less intrusive as possible (ownership of reforms is compromised when citizens see them as resulting from external pressures);

Ø limit conditionality on structural reforms to the strictly indispensable (those that truly compromise macroeconomic results) [5] and;

Ø always give governments flexibility in implementing structural reforms (cornering governments with fixed or very ambitious deadlines creates fatigue and may play into the hands of those opposing reforms, particularly in the cases where the executive branch of a government needs the support of the congress to implement them).

Using Argentina’s experience to illustrate these points we can quote two examples of misplaced structural reform:

1) In 2002 the staff insisted in getting the Congress to overturn a law that had been enacted by the last military dictatorship (i.e. the "Economic Subversion Law"). Admittedly this law gave leeway to the executive branch of the government to prosecute almost any economic activity by adducing that it was "subverting" order (imposed by the military junta). It was an awful piece of legislation that had never been applied by any democratic government and that Mr. Duhalde’s government [6] had no intention of applying. Nevertheless during the financial, economic and social turmoil that followed the abandonment of the Currency Board ("Convertibilidad") and the declaration of default in January 2002, some voices were raised in Argentina on the need to punish those considered "responsible" for the capital flight that preceded the debacle. In this context, the aforementioned "Economic Subversion Law" appeared as giving the necessary legal basis to those isolated attempts. The law was finally overturned, but at a great political cost for a government that had to withstand accusations of sheltering those that had benefited from capital flight from the country. Naturally, the government had several other more sensible priorities on which to spend its very scarce "political capital" more worthily. [7]

2) Moving to a more recent experience. In the stand-by arrangement approved in September 2003, the Fund staff insisted in including structural conditionality (as a "structural performance criterion") on the approval of a new fiscal revenue sharing system. This required Congress to pass a new "Co-participation Law" to settle, on the basis of objective criteria [8], the distribution of fiscal revenues amongst Argentina’s provinces and between the provinces as a whole on the one hand, and the federal government on the other. Fiscal revenue is currently shared on the basis of a knotty legal system that bundles many ad-hoc and old laws that result in a very intricate process. Needless to say, it is in Argentina’s long-term interest to replace this knotty system with a straightforward new revenue sharing arrangement that reflects objective criteria for distribution, rather than the over-representation [9] of small provinces at the Senate. In fact, Argentina’s constitution itself requires—as a result of its last amendment—that such a new law should be enacted, so in this specific case there is no ownership problem regarding this particular structural reform. However, the approval of a new revenue-sharing law poses extremely difficult political challenges. Although applying "objective criteria" to distribute scarce fiscal revenue is desirable, such a change would benefit the more populated provinces at the expense of smaller provinces. Naturally, smaller provinces—and Senators representing them—oppose such a reform. As a consequence, to comply with the Fund’s conditionality the federal government should itself reduce its participation in fiscal revenue. Needless to say, this would compromise its capacity to generate the ambitious primary surplus required to serve the country’s public debt. There were several attempts to pass a new co-participation law but all failed because it proved to be impossible to find a balance between the "entitlement" of Buenos Aires province (by far the most populated) for a bigger chunk of fiscal revenue and the capacity of senators representing small provinces to block such a reform. The current government managed to ensure fiscal discipline in provincial governments (provinces are generating record fiscal surpluses after more than a decade in the red) [10] and would have been more than happy to have such a law approved by Congress. However as it was publicly known that the Fund was conditioning its financial support to the approval of such a piece of legislation, provinces felt that they had gained leverage in the negotiations with the federal government. [11] In short, the Fund’s requirement backfired [12] by creating a sort of "political rent" that played into the hands of provinces indebted to the federal government. Rather than helping the federal government to rein in provincial expenditures (as the government was, indeed, doing) it benefited those opposing reform.

Thus, the lesson that we can draw from Argentina’s experience is that when a Fund program imposes structural conditionality that requires action that is beyond the reach of the executive branch of government (e.g. requiring specific action by congresses, provinces or courts) the end-result may be at odds with the initially intended effect. At the same time, the Fund should restrain from requiring structural reforms that do not truly compromise macroeconomic results, avoiding both the waste of the government’s political capital and reform fatigue.

Section II

Primary Fiscal Surpluses: Is There A One-Size-Fits-All Primary Surplus Criterion Or Should Arrangements With The Fund Set Fiscal Primary Surplus Criteria On A Case-By-Case Basis?

In this point let us start by referring directly to Argentina’s experience. Some at the Fund argued that Argentina’s target of a 3 percent of fiscal surplus was too modest and supported their position by comparing Argentina’s surplus with Brazil’s (4,25%) and Turkey’s (6,5%). These comparisons have the attractiveness of simplicity, however, they are disingenuous.

ü Due to the privatization program implemented in Argentina during the 90s (with the Fund’s enthusiastic approval and IFIs support), Argentina’s government has no public enterprises left and consequently no revenue additional to that of tax collection. Brazil and Turkey do have public enterprises and in both cases, these have made significant contributions to the fiscal surpluses obtained by their governments.

ü Because of the 1994 reform to Argentina’s social security system (reform that at the time was very much cheered by the Fund) the government has no net revenues coming from pension’s contributions. Whereas this reform was aimed at reducing the governments medium and long term liabilities, in the short run, the government has, however, to continue providing pensions and other social security services to all pensioners that remain in the pay-as-you-go system and, also cover a Minimum Universal Benefit. In 2004, the corresponding fiscal transfers to the retirement and pension fund administrators [AFJP] amounted to 0.8 percent of GDP. This is not, fortunately, the situation neither in Brazil nor in Turkey.

ü More importantly, it is necessary to recall that Argentina’s social and economic context does not support the comparison. The Argentine crisis could not be contained and produced a widespread and sudden impoverishment of the population. Sudden impoverishment, unlike structural poverty, generates profound political resentment and social instability. The country was on the brink of generalized civil unrest. Unemployment peaked at 21.5 percent in May 2002. It now stands at 12.1% percent (and would be higher without government-supported employment program known as "Jefes y Jefas de Hogar"). Conversely, Brazil and Turkey could avoid the crisis, consequently their population was spared the sudden impoverishment experience, and their level of unemployment is substantially lower.

Last but not least, Argentina is the only one of the three main Fund’s debtors that has not received any net financial support from the IFI’s, nor from bilateral creditors, since late 2001. To the contrary, Argentina has protected the Fund’s preferred creditor status, and in this context has made large net transfers to the IFIs (of over 13.5 billion US dollars) from the start of the crisis in January 2002 to August 2005, of which 7.7 billion were paid back to the IMF, reducing its debt with the Fund by more than 30% since the beginning of the Argentine crisis. [13]

Section iii

"No Public Funds Used To Bail Out Private Risks". Is This Really Working?

We are all for avoiding the moral hazard stemming from the use of public funds to cover private risks or absorb private losses. However, in our opinion this "new paradigm" is not being applied consistently.

It is an incongruity to decide, on the one hand, that international financial institutions (IFIs) should not provide fresh financing to rescue a sovereign debtor in distress because this would imply "socializing" private risks whereas, on the other, telling the sovereign debtor that if it doesn’t show "good faith" in negotiations with private creditors by improving its offer, IFIs will cut-off all refinancing.

We need to agree on whether preventing or minimizing the consequences of a government default is a public good to be pursued. If in doing so the Fund would secure a public good, namely safeguarding financial stability and preventing a harsh adjustment that could negatively affect overall welfare, then it should be, in principle, legitimate to use public funds to rescue or assist the sovereign. Conversely, if the public good to be pursued is the avoidance of the moral hazard stemming from getting markets to believe that lending to sovereign debtors is risk-less because, ultimately, IFIs will act as lenders of last resort [14] (or twist the arm of the government forcing it to generate primary surpluses to pay back); then IFIs should stay clear from interfering in any way in the debt restructuring negotiations between a sovereign debtor and its private creditors.

As we will discuss below, current practice is, to say the least, ambiguous and may possibly imply an abusive use of political and financial leverage (albeit not public funds) in pursuance of private interests.

The Fund’s "lending into arrears" (LIA) policy [15] requires that sovereign debtors and private creditors should attempt, in good faith, to reach an agreement whose overarching objective should be to restore financial sustainability for the sovereign in distress. This implies that both parties must act in good faith. However, financial interests, unhappy with the Fund’s hand-off policy, have been quite successful in lobbying some rich countries’ governments and the Fund, arguing that "good faith" had to be demonstrated by the debtor during negotiations by its readiness to improve its payment offer. [16]

This is, in our view, inconsistent with the overarching objective of restoring financial sustainability and possibly also a breach by private creditors of their "good faith" obligation. Would an "agreement" between a developing country in financial distress and a politically backed private creditor lobby ensure a sustainable solution to the debt problem, as required by the Fund’s LIA policy?

The result of a negotiation between unequally backed parties will tend to reflect their bargaining strength rather than medium term sustainability. Hence, an "agreement" in which a debtor faces a politically backed financial lobby that succeeded in conditioning the country’s access to Fund’s financial support to its capacity to "demonstrate good-faith", will most likely be financially unsustainable and eventually require additional net financing from the IFIs. Such a solution is certainly not in the overall interest of the international community.

This is not to say that securing a high level of acceptance by the private creditors for a debt-restructuring offer is not in the interest of the sovereign debtor in financial distress. However, debt sustainability is not assured by pleasing the private markets nor should their acceptance be taken as a reliable objective criterion to evaluate the debtor’s "good faith" in complying with the Fund’s LIA policy, as some suggested in Argentina’s case.

It is also important to note that any debt-restructuring proposal requires important fiscal efforts. This makes "ownership" of the policies to be taken by the government essential particularly in democratic societies and requires that due consideration be given to the interests of all of the country’s creditors and stakeholders, including pensioners, workers and direct investors (both domestic and foreign).

In short, it may not be possible to reconcile the new paradigm that considers the use of public funds to bail out private creditors erroneous with the expectation that public debtors achieve very high levels of acceptance in a restructuring from private creditors.

Specifically in Argentina’s case, some argued that it was necessary for the country to ensure a very high level of acceptance of its restructuring proposal so as to regain rapid access to capital markets. The assumption was that the more generous its restructuring proposal was, the less reluctant that potential investors and creditors would be to provide new financing to Argentina. This assumption was, to say the least, questionable as it failed to acknowledge the tension between the "attractiveness" of a restructuring proposal and the debt-sustainability or capacity of a debtor to honor its terms. The more attractive the proposal is for creditors, the more likely that the debtor will have to depend on new borrowing and, consequently, the more compromised its future payment capacity will result. [17]

With the benefit of hindsight, we can say that the game of appeasing the creditors with extremely generous promises, beyond constituting a breach of good faith [18], does not pay and that markets, far from penalizing a tough negotiating debtor, line up to lend again when prudent fiscal policies ensure improved financial, i.e., fiscal and debt sustainability.

In short, yielding to political pressure of private creditors ends compromising debt sustainability and future access to capital markets. To be consistent with the "new paradigm" the international community should only support a restructuring agreement that, with prudent fiscal policies in place, would ensure the debtor’s capacity to restart economic growth, on which its capacity to honor its liabilities ultimately depends.

Closing Remarks

Learning from experience is, of course, of the utmost importance. There are several lessons that we could draw from Argentina’s experience in dealing with the aftermath of the crisis. The Fund seems to be still undecided on what a role it should have, if any, in the event of a default from a member country. This lack of clarity puts the Fund in a hesitant and unclear position. It no longer acts as a lender of last resort out of the fear of inducing a moral hazard by absorbing private risks or, even worse, private losses. However, it does not have yet a clear hands-off policy. It uses, albeit hesitantly, its financial leverage to exercise pressure on the sovereign debtor in distress in favor of private financial interests. This is, obviously, in response to pressures that the Fund itself gets from some of its major shareholders that are unhappy seeing that while their citizens bear the cost of the default the Fund and the other IFIs are paid in full in a timely manner.

Last but not least, it should also be noted that the advice provided by the Fund in the immediate aftermath of the crisis was neither timely nor appropriate and, fortunately, was rarely followed by Argentina’s authorities. This is not to imply that the staff’s position was capricious but that the Fund’s view relied on a wrong assessment of Argentina’s economic, social and political situation. In their view, Argentina had a large monetary overhang that would rapidly be translated into high inflation if monetary policy were relaxed. Argentina’s authorities considered that there was, instead, a large pent up demand and excess production capacity which, in the context of responsible fiscal policies, would absorb a substantial growth of money supply and jump start a rapid recovery without risking high inflation. With the benefit of hindsight we now know evidence has proven that Argentina’s government was right in its assessment.

To put it in a nutshell, the most important lesson that could be distilled from Argentina’s most recent experience is that the Fund doesn’t seem to be entirely prepared to deal with a full-blown crisis.

The purpose of this analysis is not to dig into past mistakes. On the contrary we wish to look ahead, learning from the past. Our only aim is to invite reflection on how to prevent these mistakes from happening again.

In order to move forward we should take stock and learn from Argentina’s sad experience. We should ensure that the Argentina’s difficulties in dealing with the aftermath of the crisis are truly capitalized as a learning experience for the Fund. It is in the interest of us all to ensure that the international community draws the correct lessons from Argentina’s crisis so as to be well prepared to promptly and efficiently advise other member countries’ authorities that could, hopefully not, confront analogous situations in the future. In particular, by following the philosophy of its own guidelines: "The Fund shall be guided by the principle that the member is responsible for the design and implementation of its economic policies." [19]


IFI’s Argentina: Net Transfers































(*) January- August 2005

Note: Positive figures denote net payments to the IFIs.

Exchange rate: 1 SDR = 1.46414 US$

Net Payments to the IMF

In US$ million






































[1] I have benefited greatly from discussions and comments provided by Roberto Lavagna, Guillermo Nielsen and Pedro Lacoste. I am particularly thankful to José Costa and Cecilia Todesca Bocco for their insightful suggestions. This article, however, expresses only my own personal views. The author is Executive Director at the IMF for the Southern Cone countries.

[2] See Independent Evaluation Office (IEO), "Report on the Evaluation of the Role of the IMF in Argentina 1991-2001", July 2004. Available at:

[3] The paper was drafted in September 2005.

[4] "Performance Criteria" are mandatory targets, i.e. variables or measures whose observance or implementation is established as a formal condition for the making of purchases or disbursements under a Fund arrangement. Performance criteria should be applied to clearly-specified variables or measures that can be objectively monitored by the staff and are so critical for the achievement of the program goals or monitoring implementation that purchases or disbursements under the arrangement should be interrupted in cases of nonobservance (based on "Selected Decisions and Selected Documents of the International Monetary Fund", Twenty-Eight Issue, December 31, 2003, Use of Fund Resources, page 238).

[5] According to "Guidance on the Design and Implementation of IMF Conditionality, June 3, 2002" instruments such as prior actions or performance criteria are "to be used sparingly and should be focused on those measures that are necessary for the achievement of the macroeconomic goals of the program and to safeguard Fund resources." (emphasis added). Unfortunately, as we will discuss further, this is far from being the practice.

[6] Mr. Eduardo Duhalde was Argentina’s President between January 1, 2002 and May 25, 2003. He was elected by Congress at the climax of the crisis and after the resignation of President De la Rúa and three other ephemeral successors.

[7] Incidentally this was presented as a sort of prior action on the part of the Fund to enter into formal discussions with Argentina on an economic program to be supported by the Fund. The prior action was met but, nevertheless, the year 2002 passed by and Argentina was unable to get the desired support during this most critical time of its economic history, despite the fact that the key macroeconomic indicators were already pointing in the right direction.

[8] "Argentina—Letter of Intent, Memorandum of Economic and Financial Policies, and Technical Memorandum of Understanding", September 10, 2003, page 10, paragraph 31. Available at:

[9] According to Argentina’s constitution each province is represented by three senators, regardless of its number of inhabitants (Article 54 of the Argentine Constitution).

[10] Since 2003, the Government has accomplished primary fiscal surpluses (at the National Public Sector, i.e., including provinces) well above 3% of GDP.

[11] During the crisis, several provinces issued provincial bonds that were circulating together with the peso in Argentina’s territory. The federal government withdrew these cuasi-money and the provinces remain indebted to the federal government.

[12] The government suspended the pursuance of this performance criterion when it came to the conclusion that achieving it attempted against its decision to put together an ambitious primary surplus

[13] Please find attached at the end of this document the net payments figures for Argentina to the IFIs as well as the net payments to the IMF from Argentina and other emerging markets.

[14] Nouriel Roubini and Brad Setser depict two moral hazards, as IMF lending to manage debt crisis could be interpreted as a form of "insurance" that could "encourage reckless policies in emerging economies (debtor moral hazard) and reckless lending by creditors in industrial countries (creditor moral hazard)", Bailouts or Bail-ins? Responding to Financial Crises in Emerging Economies, Institute for International Economics, Washington DC, August 2004, page 77.

[15] Main documents on the IMF’s Lending into Arrears Policy are available at the IMF’s website, mainly: "IMF Policy on Lending into Arrears to Private Creditors", prepared by the Policy Development and Review and Legal Departments, June 14, 1999, available at:; "Fund Policy on Lending into Arrears to Private Creditors—Further Consideration of the Good Faith Criterion", prepared by the International Capital Markets, Policy Development and Review and Legal Departments, July 30, 2002, available at:; Public Information Notice (PIN) No. 02/107, IMF Board Discusses the Good-Faith Criterion under the Fund Policy on Lending into Arrears to Private Creditors, September 24, 2002, available at:

[16] This was repeatedly argued at the Board during discussions on Argentina. It is also worth noting that the "Principles for Stable Capital Flows and Fair Debt Restructuring in Emerging Markets", presented by the IIF (Institute of International Finance) in October 2004, require that, "as a sign of good faith", during the negotiations the debtor should resume partial debt service (to the extent feasible and full payment of principal and interest as conditions allow). It seems obvious to us that this is a unilateral "sign of good faith" as it does not require from creditors to resume financing during the negotiations. The final version of these principles is available at:

[17] I acknowledge that some potential creditors, in particular professional investors, may be willing to take advantage of the short-term bonanza that could follow a debt-restructuring proposal that defaulted creditors could find particularly appealing. However, they will surely be ready, at the same time, to quickly revert their positions at the first symptoms of distress that would likely appear at the first hint of the country’s difficulty to borrow enough to honor its restructured commitments.

[18] The "careless promisor" attitude is a breach of good faith in itself. In French civil law, the "overriding rule is that ‘one must not create the expectation that a contract will be forthcoming unless one so intends’". Very much in the same line, in German law, Jhering, the undisputed father of the doctrine of "Culpa in Contrahendo" (loosely translated as "fault in negotiating"), considers that a "careless promisor", namely a party making promises that are unlikely to be fulfilled, would be acting with "lack of diligence". It follows that a "careless promisor" would be acting in bad faith and, therefore, liable.

[19] Guidance on the Design and Implementation of IMF Conditionality, June 3, 2002.

The Monumental Struggle for Trade Justice

A pre-occupation with ‘free trade’ and ‘liberalization’ by the powerful members of the World Trade Organization, as opposed to respect for people and their welfare, makes for a narrow view of priorities, according to the UK-based World Development Movement. And it leads to a perverse set of rules. WDM’s Head of Policy, Peter Hardstaff, looks at what’s at stake at the WTO in the following article. He notes that rich countries’ development history was characterised by economic advances resulting from industrial policy; in other words, government policies aimed at boosting the competitiveness and success of domestic businesses. Yet the same is now sought to be denied top developing countries and that too, in a so-called development round of trade negotiations.

Europe’s Trade Commissioner Peter Mandelson has a "passion for trade justice", or at least so he claimed in early October. While it may be easy to laugh-off the faux sincerity of New Labour’s alleged ‘king of spin’, his appropriation of the ‘trade justice’ message presents a major challenge.

What is trade justice?

As ‘trade justice’ becomes increasingly well recognised, it is vital that we explain what it means. Contrary to Peter Mandelson’s version of reality, trade justice is about regulating trade to benefit people and the environment, not more liberalisation.

Yet the focus of the World Trade Organisation (WTO) and powerful members like the EU, is solely on liberalisation. In the name of market forces, WTO rules elevate above all else the goal of eliminating so-called ‘distortions’ or ‘restrictions’ on trade.

But since when has this been a guiding principle on which we base our societies? You can have human rights – as long as they don’t distort trade; workers rights – on condition that they don’t distort trade; environmental protection – but not if it distorts trade; development – fine, if it is not trade-distorting.

Such a narrow view of priorities leads to a set of perverse rules (see below). And the current round of talks is aimed at tightening them yet further which could be a disaster for the world’s poor.

The perverse world of the WTO

· Europe’s precautionary ban on hormone treated beef was ruled a barrier to trade.

· Requiring companies to label products containing GMOs is likely to be challenged as a barrier to trade.

· The ability of poor countries to ensure multinationals reinvest profits and spread benefits to local people is deemed a barrier to trade.

· Poor countries’ efforts to protect the livelihoods of millions of poor farmers is attacked as a barrier to trade.

· Poor countries’ ability to easily exchange cheap generic medicines is restricted: it’s a ‘barrier’ to pharmaceutical companies selling expensive patented medicines.

· The ability of poor countries to use the same industrial development policies as we used while we got rich is being attacked as a barrier to trade.

Re-writing history

The ‘end of history’ – as proclaimed by author Francis Fukuyama in 1992 – was supposedly the ultimate triumph of western style free market capitalism. However, the real triumph seems to have been convincing people that rich countries really developed and grew wealthy through free markets and so-called ‘free trade’.

The reality is very different. Rich countries’ development history was characterised by economic advances resulting from industrial policy; in other words, government policies aimed at boosting the competitiveness and success of domestic businesses. The same is true of more recent developers such as Taiwan or South Korea.

So far so obvious, but the problem is this: once countries get rich and their companies globally competitive, those at the helm develop amnesia. They decide that so-called ‘protectionism’ is a bad thing and must be stamped out. They develop a near theological belief in free markets and become vociferous cheerleaders for what they call ‘free trade’.

This is because the best way of protecting the interests of many European companies is now by promoting so-called ‘free trade’ and stopping other countries from using the same policies we used to develop. As one writer has described it, now that we have reached the top, we want to kick away the ladder to stop others following us.

So rich countries – including our own – are telling poor countries to liberalise more in order to develop; this is despite the fact that we did the opposite when we were developing.

Now, such a stunning and audacious bit of hypocrisy might not be such a problem if it constituted a bit of friendly – albeit erroneous – advice over a pint in the pub. However, poor countries are caught in a pincer movement by the industrialised world.

On one side they have the IMF and World Bank requiring more liberalisation in return for aid, loans and debt relief.

On the other, they have got rich country pressure to ‘lock-in’ these policies through the WTO, most obviously through the ‘grand bargain’ being demanded. That is, some agricultural reform in Europe and other rich countries in return for liberalisation of industrial products and services in the developing world.

The grand bargain at the WTO

In the run up to, and at the December WTO Ministerial meeting in Hong Kong, there is a danger that getting a deal – any deal – becomes more important than whether or not that deal will benefit the poor.

If a deal is done, it will no doubt involve some degree of agricultural reform in Europe. No doubt Peter Mandelson will go into spin cycle, claiming this as a massive victory for developing countries. Yet it will be quite possible for positive outcomes in agriculture to be far outweighed by negative outcomes in industrial goods or services liberalisation.

The EU has made it crystal clear that it wants developing countries to open their markets to European service multinationals and European industrial products in return for agricultural reform.

This ‘bargain’ is a false one.

Reforming Europe’s Common Agricultural Policy will not have a long-term impact on development policy options in Europe, nor will it affect the lives of most Europeans. If done properly, it could benefit the environment, protect the livelihoods of small farmers and it may also benefit consumers.

It is a policy change of a completely different magnitude to prohibiting developing countries using import taxes and investment regulations – policies critical for long term development. It is a disgrace that our politicians argue that these policies should be ‘given up’ so that Europe can be ‘compensated’ for the mythical economic ‘pain’ it is claimed Europe will suffer as a result of agricultural reform.

Fighting for trade justice

At September’s UN summit in New York, Tony Blair said that he would not accept failure in the trade talks without a ‘monumental struggle’. But the questions are: on whose behalf will Tony be struggling and what does he define as failure?

The Prime Minister and his ally European Trade Commissioner Peter Mandelson are using the language of ‘development’ and ‘trade justice’ to justify doing the bidding of European multinationals in pushing for sweeping liberalisation in developing countries in return for agricultural reform in Europe. So we, not they, are the ones faced with a monumental struggle; to challenge our government on what it does, rather than what it says.

"The exchange of reduced policy autonomy in the South for improved market access in the North is a bad bargain where development is concerned."

(Prof Dani Rodrik,

Harvard University)

"The outcome [of the negotiations] will be judged by the extent to which developing countries achieve greater market access without their policy options being restricted."

(Rubens Ricupero,

former Secretary General,

United Nations Conference on Trade and Development)

Timely Demise for Free Trade Area of the Americas

For the protagonist of free trade and those who champion development first, the fourth summit of the Americas, held earlier this month at Mar del Plata on the Argentinean coast, it was clearly a showdown. A recent report by Laura Carlsen of the US - based International Relations Center (IRC) sums up what happened. Based in Mexico City, she directs the Americas Program of the IRC. "The death of the FTAA opens up room for the nations of the region to explore alternatives to a model that has lost support both among governments and civil society," writes the author. Presented below is her recent article.

The stage was set for a showdown. When the Bush cabinet announced intentions to revive the moribund Free Trade Area of the Americas at the Fourth Summit of the Americas in Mar del Plata, the countries of the Southern Common Market closed ranks to prevent it. What followed was a diplomatic melee that reflects not so much divisions within Latin America, as a growing resistance to the current free trade model throughout the developing world.

The November summit was officially billed as a forum to discuss employment, and the issue of creation of a Free Trade Area of the Americas was not even on the agenda. However, well before landing in the Argentine beach town the Bush administration made clear its intentions to leave with a specific commitment to restart negotiations.

The U.S. government was determined to come out of the meeting with a revitalized FTAA because the administration feared that if the negotiations were left to languish, momentum could be lost for the initiative at a crucial time. The FTAA was first launched by George W. Bush’s father, but after ten years of inconclusive talks and significant differences between the countries, the goal of a hemisphere-wide NAFTA remained elusive.

Since the FTAA meeting in November of 2003, when the two co-chairs United States and Brazil failed to agree on a basic model, substantive talks have been suspended completely. Against the backdrop of the upcoming December meeting of the World Trade Organization in Hong Kong, where disagreements similar to those that have held back the FTAA will be prominent, the United States wanted a formal statement of common purpose from its own hemisphere.

The administration has also presented its pro-business trade strategy as an essential pillar for democratization and freedom in developing countries. Latin America has been moving to the center-left recently and upcoming elections point to an even further shift left. Venezuela’s Hugo Chavez has become a lightning rod in the region for criticism of the Bush government, which flared after the invasion of Iraq. In this context, Washington hoped for a clear affirmation of loyalties among nations of the Americas .

These hopes were dashed in Mar del Plata. Despite the efforts of Mexico’s President Vicente Fox to push through a commitment to FTAA talks, the 34 nations represented in the Organization of American States (OAS) failed to reach a consensus on renewed negotiations due to the firm resistance of the four nations of the Mercosur and Venezuela .

Given the impasse, in a last-ditch diplomatic move worked out after several presidents including Bush had already left the Summit, paragraph 19 of the final declaration split into two positions.

Twenty nine countries stood behind the resolution that they would "remain committed to the achievement of a balanced and comprehensive FTAA Agreement that aims at expanding trade flows …" These nations resolved to "instruct our officials responsible for trade negotiations to resume their meetings, during 2006, to examine the difficulties in the FTAA process, in order to overcome them and advance the negotiations within the framework adopted in Miami in November 2003."

The second position, put forth by the four nations of Mercosur—Brazil, Argentina, Paraguay, and Uruguay—plus Venezuela, states: "Other member states maintain that the necessary conditions are not yet in place for achieving a balanced and equitable free trade agreement with effective access to markets free from subsidies and trade-distorting practices, and that takes into account the needs and sensitivities of all partners, as well as the differences in the levels of development and size of the economies."

Mercosur’s Position

The nations of the Mercosur took a stand against renewing FTAA talks to declare their opposition to free trade agreements along the NAFTA model that do not take into account the needs of developing countries while locking in competitive advantages for developed nations. Since the WTO meeting in Cancun in 2003 the focal point for Brazil has been the question of agricultural subsidies. Brazil has called for elimination of all agricultural export subsidies in the United States and the European Union and a schedule for review and elimination of trade-distorting domestic subsidies. The United States has made it clear that it will not enter into a discussion of its agricultural subsidies in the FTAA, so Mercosur refused to agree to further negotiations.

Agricultural subsidies are not the only bone of contention. Other issues have also impeded progress and caused Mercosur members to question the long-term value of the FTAA. While the United States demands almost unhampered access to Latin American countries’ markets, it maintains protectionist barriers in many of the same products exported by their countries, including sugar and textiles. Unrestricted U.S. imports could destroy poor country sectors currently serving the domestic market. Intellectual property and the resulting barriers to access to life-saving medicines, government purchases, and investor guarantees are other areas that have been sticking points in negotiations and that are extremely sensitive to developing nations.

Both Brazil and Argentina announced before the summit that they did not want to discuss FTAA prior to the World Trade Organization meetings in December. Brazil, in particular, prefers the WTO for trade negotiations because there it can leverage the power it has built up since leading the still-strong Group of 20 developing countries at the WTO ministerial in Cancun in 2003. Alliances with emerging economies of India, China, Africa, and Latin America gives Brazilian trade negotiators a far broader base to confront the United States and the European Union on subsidies. As it plans to stage its battle at the WTO, Brazil did not want its hands tied by a commitment to an FTAA.

Dead, Dying, or Reincarnated?

Many analysts on both the right and the left have insisted in the FTAA post mortem that the patient is not dead.

At a time when the Bush administration is encountering serious problems—from the illegal exposure of a CIA agent to mounting opposition to the war—the last thing needed was to present Mar del Plata as a defeat. Although Sec. of State Condoleezza Rice was visibly upset at the refusal to commit to FTAA, the official U.S. press statement on the summit stressed agreement on a number of specific U.S. proposals and did not even mention the FTAA setback.

Despite Summit events, proponents cite the advance of bilateral free trade agreements as evidence that U.S. free trade strategy is still alive and kicking in Latin America. The model defined by NAFTA in 1992 continues to be the template for a growing number of free trade agreements. Central American nations and the Dominican Republic have entered into a free trade agreement (CAFTA-DR) and the Andean nations are now in the fourteenth round of difficult negotiations. Chile signed the U.S.-Chile FTA two years ago.

They also point out that in Mar del Plata 29 countries called for FTAA talks in 2006, and only five cited a lack of adequate conditions for negotiations. But the numbers argument is fallacious and masks hard realities. Calling for renewed talks is a far cry from agreeing with the FTAA model promoted by the United States and its free trade partners. In fact, many of the countries who called for talks to begin have had serious problems within there own bilateral negotiations due to differing views and a perceived U.S. intransigency. Even Panama , whose government presented the text to continue negotiating the FTAA, has been at an impasse in bilateral FTA talks with the United States since January of 2005. The sticking point is agriculture again—the demand of small Panamanian farmers to protect their internal markets from import surges in basic staple crops. Although this point is extremely important to the many smaller, largely rural-based economies of the continent, the United States has shown little flexibility.

Caribbean countries have also expressed major differences with the free trade model as expressed in the FTAA in other forums. The Caribbean Community (Caricom) has been concentrating its efforts on the World Trade Organization where it has received severe blows lately in banana and sugar rulings. In response, many of its leaders have formulated demands to take into account developing countries’ needs through exemptions and compensations that would go against the terms of a NAFTA-style FTAA. Tens of thousands of protestors against CAFTA and AFTA have filled the streets in Costa Rica and Ecuador, and if Evo Morales wins the presidency in Bolivia’s December elections, neither FTAA nor AFTA will have a prayer in that country.

The defeat of prospects for a hemisphere-wide agreement deals a heavy blow to Washington’s commercial strategy in the region. Since its inception in 1994, the FTAA has constituted the most ambitious forum for imposing a very specific model of free trade, dictated by U.S. interests and those of its transnational companies. Meanwhile, Latin American countries have expanded integration with Europe, and China has made major inroads into the region. What appeared a consensus among nations ten years ago has now become a focal point for deep-seated differences in perspectives on development and integration.

The death of the FTAA opens up room for the nations of the region to explore alternatives to a model that has lost support both among governments and civil society. Diversified trade, increased regional agreements, democratization, and policies oriented toward national development should be the guides along the new route.

The EU Corporate Trade Agenda

A just published policy paper by the Seattle to Brussels Network, which groups a number of well-known international and local NGOs, presents an interesting spotlight on the role and the interests of corporations and their lobby groups in Trade Policy-Making in the European Union. In the following extracts taken from the paper, the focus is on the three key segments of the WTO negotiations – agriculture, NAMA and services. Authored by Christina Deckwirth, the study finds that small-scale farmers are increasingly becoming dependent on a few agribusiness TNCs, and the liberalisation of trade in industrial goods may not only represent a barrier for the economic development of some of the poorest countries but could also further undermine environmental standards. And in the services sector, the TNCs are trying to conquer those areas that are not yet already under the realm of corporate control, often resulting in higher prices and a loss of democratic regulation.

Agriculture, goods and services: Corporations contra development and the environment

Three issues are at the forefront of the current round of WTO negotiations: agriculture, industrial goods and raw materials, and services. In all three areas, some European TNCs are amongst the largest global competitors. These companies are influential players in Brussels and closely involved in formulating the EU’s trade agenda. A closer analysis of the agendas of the European Commission and the corporate lobbyists reveals some striking similarities. Moreover, the impact of the EU corporate trade agenda on development and the environment is highly problematic.

Agriculture – the European corporate food regime

Although extremely important for food security in Europe, the agricultural sector in the EU only accounts for 2% of the GDP and about 5% of employment. It is the sector with the highest loss in economic importance in terms of GDP during the last decades. Yet agriculture has been the stumbling block in WTO negotiations for decades. There are some good reasons for this. Firstly, a functioning agricultural sector is of vital importance to maintaining food security. Besides this, in developing countries, an average of more than half of the population, i.e. more than 1.3 billion people, live from agriculture. Thus, agriculture is the sector where the world’s poorest in developing countries have either much to win from a fair trade regime – or much to lose. Secondly, and this is where the European TNCs come into play, agriculture is not just about farming. Farmers are dependent on both upstream firms, such as the chemical industry, which provides the pesticides, and even more so on the downstream economy, which deals with processing, trading and selling agricultural products, i.e. food processors, trading companies and retailers. These agribusiness TNCs are to a large extent concentrated in the hands of a few global operators. Highly influential European corporations in the agricultural sector include the chemical corporation Bayer, the food processing giants Unilever, Nestlé and Danone, and the retail sector’s Carrefour, Metro, Ahold and Tesco.

These agribusiness corporations also play a role in the WTO Agreement on Agriculture (AoA). The first draft of the AoA was written by Dan Amstutz, who after serving on the US government, returned to his job with Cargill, the largest global grain trading TNC. Thus, it is no surprise that the beneficiaries of the WTO Agreement on Agriculture are the agribusiness TNCs:

1. Accelerating the process of concentration: By further opening up markets, the WTO agricultural agreement allows TNCs to grow further, thus increasing the process of concentration on the food chain and raising the TNCs’ market power. Freer competition is likely to provide the greatest benefits to northern TNCs, as they are better equipped than local firms to take advantage of market opportunities. Many analysts have shown that increasing levels of concentration in the food sector will squeeze out poorer producers. "They are not bothered about receiving milk from those who sell little, they want those who produce a lot more to reduce their number of suppliers and make gain in volume", says Baldur Frederich, a dairy farmer from Rio Grande do Sul, Brazil, describing his experience of selling to Parmalat.

2. Loss of protection: Developing countries will be stripped of measures to protect their own markets. Oxfam calculations show that the current EU market access demands would lead to a further reduction in tariffs in 13 developing countries, including Panama, China, India and Nicaragua. This will lead to even more excessive imports, which will drive local family farmers into poverty and create further dependencies. Since anti-dumping measures are too expensive for most developing countries, such countries not only lose tariff revenues but also vital measures to effectively counter export dumping, as practiced by the EU.

3. High payments for agribusiness: The AoA does not stop detrimental dumping practices. On the contrary, through its complex classification system of agricultural payments, it legalizes high payments benefiting large-scale farmers and cooperatives and once again, the agribusiness TNCs. This will further foster intensive and rationalised farming with high use of pesticides. This allows the EU’s agribusiness to continue its devastating practices of export dumping.

EU Payments for Agribusiness

The EU and the EU corporate lobbyist play their role in maintaining this devastating system. The EU’s position in the WTO agricultural negotiations is quite complex since it depends on many conflicting parties. Lobby groups from the industrial and services sector pressure the EU for substantial concessions towards developing countries, so that their specific interests will not lose out in trade-offs: "The much more exciting question is how the non-agrarian market access will progress and what sort of offers will be tabled for the services sector," states the Federation of German Industries BDI with regard to the current standstill in the WTO agricultural negotiations. Germany’s and also the UK’s main ambitions in the WTO – backed by large industrial and services companies – are geared towards the NAMA and GATS negotiations. On the other hand, the large farmers’ lobby has asked for continuous financial support, accounting for the largest share of the total EU budget. This is especially true for farmers from those countries with a largely concentrated agricultural sector, such as France. The main umbrella organisation of European national farmers association is COPA-COGECA (Committee of Professional Agricultural Organisations in the European Union - General Confederation of Agricultural Co-operatives in the European Union). As one of the first European lobby organisations, it mainly represents the interests of large-scale industrial farmers and big cooperatives as the main beneficiaries of the European Common Agricultural Policy (CAP).

In the current trade negotiations, COPA-COGECA has defended export subsidies and sought to maintain domestic subsidies. A recent Oxfam analysis shows why: The European Commission’s own statistics show that the top 15% of French farming businesses consume a massive 60% of its direct payments. Most small French farmers – 70% of them – receive only 17% of the subsidies doled out by Paris. About 70% of EU agricultural payments goes to 20% of the largest farms in Europe. But not just largescale farmers benefit from EU payments. As Oxfam has shown, some of the EU’s largest TNCs, such as Nestlé, Campina and BASF, as well as the Dutch arm of Mars and Heineken, receive high payments out of the EU agricultural budget. At the same time, millions of farmers in the North – knowing that their products will be sold below the cost of production - had to leave their job, farm incomes in the UK have declined by 40% in recent years and France has lost half of its farmers over the past 20 years. It is these farmers that would require support in order to maintain a sustainable agriculture in Europe. However, they do not have much say in Brussels. Although COPA-COGECA’s role is not as important as it was in the 1970s, when it was regularly consulted by national government before each agreement, it is still a highly influential player in Brussels.

Market Access for EU Exporters – Without Protection

One issue that the Commission, including DG Trade and DG Agriculture, the largest farmers’ lobby, as well as the food and drink industry all agree on is market access for European exports. This stems from the fact that by the 1960s, the CAP had achieved self-sufficiency, at the same time that it was elaborating an agro-export policy to finance the dumping of surpluses of butter, milk, cereals and beef on the world market. In France, the slogan was "Produce to export: agriculture is France’s green petrol". This set of policies, by generating food surpluses, led to an intensifying competition for world market outlets via export dumping – with some devastating effects on family farmers in developing countries.

Since liberalisation in agriculture trade began in the 1980s, developing countries have increasingly become dependent on agricultural imports. Between 1979 and 2000, agricultural imports rose by 115%. Family farmers have lost their income and driven into poverty because they cannot compete with these imports. Coupled with shrinking commodity prices, some developing countries are now highly dependent on large food importers to cover their needs for food, the consequence are further dependencies and debts. According to UNCTAD, these chronic power imbalances in the structure of global commodity markets contribute to a cycle of economic stagnation and extreme, persistent poverty in commodity- dependent developing countries.

Thus, European agribusiness exporters benefit from structural imbalances to the disadvantage of the world’s poorest rural population in developing countries. Developing countries, such as the G-33, consisting of Indonesia, India and China, but also some ACP-countries and members of the LDC-group have promoted measures to protect their markets. But even these harmless trials to introduce more "balance" within the WTO system are, to a large extent, stripped or even blocked by the EU. But EU agricultural policy does not only have detrimental effects on family farming in the Global South. Only recently, the EU has again reformed its agricultural policy: But the much praised "decoupling"-policy, i.e. payments decoupled from production, leads to sinking prices within the EU, making it impossible for many European family farmers to live on selling agricultural products.

This new model allows downstream agribusiness, i.e. processors and supermarkets to buy products below production costs – which according to the European Farmers Coordination (CPE, Coordination Paysanne Européenne) "was probably the purpose number one of the CAP reform." The direct payment paid to the farmers therefore can be considered "as an indirect payment to agro-industry and supermarkets, far from the benefits for farmers and consumers claimed by the European Commission."

"Five-Star Treatment": The Food and Drink Industry

The largest industrial sector in the EU – the food and drink Industry – is naturally highly interlinked with the agricultural sector and thus has high stakes in the WTO agricultural negotiations. With a production value of over € 800 billion, the food and drink industry relies heavily both on exports (€ 44 billion a year) and imports of raw material to the EU, as the largest importer of agricultural raw materials globally. In Brussels, the food and drink industry join forces in the CIAA (Confédération des industries agroalimentaire de l’UE), a mixed trade association with Unilever, Danone and Nestlé among their most powerful corporate members.

The CIAA has two priorities: a very limited and conditioned reduction of support for the agricultural sector and market access for processed food. Regarding export subsidies, it states: "As these export refunds are a compensation for higher EU agricultural prices, their elimination will result in export being no longer viable in certain sectors of the food industry, if it does not go hand in hand with n ecessary internal market reforms and if there is no access to competitive agricultural raw materials".

In other words: No cuts to export subsidies, if prices and tariffs are not lowered within the EU, so that processed food can still rely on cheap input products to continue exports at low price. But most of all, CIAA demands "the opening up of new trade opportunities for food and drink industries and their products". The demand for high tariff cuts to open up new export markets is coupled with the blocking of developing countries’ efforts to introduce measures to protect their markets from cheap imports.

The agribusiness lobby is well respected by EU officials, as former trade commissioner Lamy clearly expressed to the CIAA: "With such five-star treatment, your industries naturally have – I hope I am right in saying – excellent relations with the Commission, and [...] it does have the merit of encouraging you to present well-defined positions on trade issues, in the knowledge that a united stand will increase your leverage [...]". Thus, when the CIAA offers to "provide information on products and countries for which improvement of market access will be key to obtain positive responses to food and drink industry offensive interests", this will most likely be taken into consideration by the Commission. And indeed, the EU’s priorities in the run-up to Hong Kong are to maintain its current Common Agricultural Policy (CAP), while at the same time pushing for market access in its export markets. Even the EU’s promise to eliminate all export subsidies will only be realised if the US makes some concession in its agricultural policy. Besides, the EU uses agricultural negotiations to exert pressure in other negotiating areas such as NAMA and GATS.

What has unofficially always been the case is now official: The November 2005 agricultural offer by the EU is conditional upon the stipulation for major concessions in NAMA and GATS to meet the demands of lobbies in the services and NAMA sector.

NAMA – a de-industrialisation agenda

Global Production Networks versus Deindustrialisation

Trade in industrial goods accounts for more than 75% of total world trade and is thus the largest sector that is currently being negotiated within the WTO. Since the 1990s, global production has increasingly been organised through large production networks that operate in various countries, either through direct affiliates or through contracting systems. These networks and "global supply chains" are dominated by a few "lead firms", i.e. the largest global TNCs with their headquarters in the U.S., Japan and, of course, Europe. The evolution of these global production networks resulted from technological developments but also from trade liberalisation that has increasingly allowed the TNCs to move their goods from one place to another without facing high transaction costs and to relocate their production to the regions with the lowest labour costs. In the current WTO Non-Agricultural Market Access (NAMA) negotiations, the TNCs are now asking for further elimination of any "barriers" they encounter. These include industrial tariffs which are still high in some countries of the developing world, as well as other measures such as export restrictions or environmental and social standards, the so-called non-tariff barriers (NTBs). The EU’s strongest export sectors are the following: chemical products with BASF and Bayer, pharmaceuticals with GlaxoSmithKline and the Swiss companies Novartis and Roche, the automotive industry with DaimlerChrysler, Volkswagen, Peugeot, Fiat, Renault and BMW, non-electrical machinery with ThyssenKrupp and Siemens and finally, paper products. The EU’s primary aim in the current round of NAMA negotiations is to gain market access through the broad and drastic tariffs cuts.

For their part, developing countries are not only highly dependent on state revenues derived from tariffs, but also on policy space to regulate their infant industries:

1. A large number of developing countries liberalised their import regimes in the 1980s as part of Structural Adjustment Programmes (SAPs) designed by the World Bank and the International Monetary Fund (IMF). In a sample of 40 countries, an UNCTAD analyst found that half have experienced de-industrialisation in the aftermath of trade liberalisation. Most of these are countries at low levels of development, such as Ghana, Zimbabwe, Paraguay, Barbados and Haiti. But many other countries, notably in Latin America, have also seen their industrial base shrink as their trade barriers have come down. These include Chile, the Philippines, Brazil and Venezuela. This not only cut development opportunities and it will also have major impacts on employment.

2. According to simulations undertaken by UNCTAD, some sub-Saharan African countries could, for example, see their tariff revenue cut by anywhere between 33 and 7 percent, depending on the tariff reduction formula adopted. In the case of South Asia, the estimated loss ranges between 26 and 5 percent. Debt-burdened and highly impoverished countries are dependent on tariff revenues. In some of the poorest sub-Saharan countries such as Benin, Gambia, Lesotho, Sierra Leone and Uganda, for example, tariff revenues account for more than 40% of all state revenues. Cuts to tariff revenue would result in even less government spending for education, health and social security or other services that are badly needed for development.

3. Beyond this, as in the agricultural sector, the global production networks are based on an international division of labour, in which the TNCs relocate their labour-intensive production to the poorest countries, while developed countries try to strengthen their position at the top end of the pyramid. The EU’s strength in the industrial sector is based on upmarket products, i.e. value-added products which sell at a higher price owing to quality, branding and related services, accounting for about half of European exports and a third of the world demand. Developing countries remain locked in their dependency on commodities as a recent study by UNCTAD clearly shows: Benin, Mozambique and Ghana are sad examples of how trade liberalisation decreased the chance to develop economic diversification. Benin increased its export specialisation in cotton – and thus the country’s dependency on one product – four times as the result of liberalisation.

The Nama Lobbyists

UNICE (The Union of Industrial and Employers Confederations of Europe) is certainly the strongest lobby group in the NAMA negotiations, since most national trade associations still have a strong industrial basis. "NAMA negotiations rank among UNICE’s highest priorities in the DDA. Ambitious tariff liberalisation and elimination of non-tariff barriers (NTBs) will be one of the main criteria by which UNICE determines its overall support for the final deal." This is also indicated by the fact that UNICE’s last lobby mission to Geneva before the General Council will have a focus on NAMA, as well as the fact that throughout the year 2005, it has been involved in a good deal of activity around NAMA in Geneva. Under the lead of the U.S. National Manufacturers Association (NAM), UNICE and representatives from national employers’ federations from Germany, the UK, France and Denmark in the EU, and Norway, Japan and Korea outside the EU jointly formed a "manufacturers’ fly-in to Geneva". In bilateral meetings with key negotiators, they asked for drastic tariff cuts and the elimination of non-tariff barriers in the current NAMA negotiations. UNICE already claims its first success story: The Council changed the Commission’s mandate from the original 25% maximum tariff line as a target in the current negotiations to what is now 15%.

Next to UNICE, some sectorial lobby groups are heavily involved in the NAMA negotiations. CEFIC (European Chemical Industry Council) not only rallies against the planned REACH regulation (Registration, Evaluation and Authorisation of Chemicals) but also pushes for zero tariffs in chemicals. In a survey conducted by Burson-Marsteller among senior Commission officials, the effectiveness of lobbying the chemical industry scores the highest. Among the most influential players within CEFIC is BASF. The European Automobile Industry ACEA has just opened a new office in China and thus its main interests in the WTO negotiations are focused on China’s implementation of the accession commitments. Nevertheless, the interest of the automobile industry in the WTO negotiations was apparent during the WTO Ministerial conference in Cancún in 2003, in which DaimlerChrysler organised a reception for the decision makers and delegates present.

According to a European Parliament report, one of the most effective actors at the European level is the European Federation of Pharmaceutical Industry Associations (EFPIA). While the focus of its ambitions lies in the TRIPs agreement, it also seeks the cut of – already fairly low – tariffs in the pharmaceutical industry through a sectoral initiative. The China textile dispute during the first half of 2005 was followed closely by the importers lobby. Eurocommerce, the Foreign Trade Association (FTA), fought for unlimited market access, while Euratex, the European trade associations of textile producers, made the case for further quotas in order to protect the European textile industry, especially in Italy.

Services/GATS – the EU’s growth sector

The European Services Sector and the Global Drive for Privatisation

The EU is the world’s largest exporter of services, accounting for nearly a quarter of the world’s total services exports. In the EU, services constitute "the single most dynamic economic activity", accounting for at least two thirds of the GDP and employment. As DG Trade puts it: "The EU therefore has much to gain from further opening of trade in services and it is consequently one of its key priorities in the Doha Development Agenda." In the same document, DG Trade names the services sector "as perhaps the EU offensive interest". Services have not always been of such high importance in the EU. Only over the past ten years have European services companies transnationalised by increasing their FDI activities. Most importantly, a large group of new TNCs has emerged – notably telecommunications, electricity and water. In all these sectors, emerging TNCs are former stateowned monopolies that developed into global players after the liberalisation of the EU internal market, i.e. France Telecom, Deutsche Telekom, Telecom Italia and Spain’s Telefónica in the telecommunications sector, Electricité de France and the two German companies RWE and E.on in the energy sector, and finally Suez, Veolia and again RWE for water. In two other sectors, European companies are challenging the US. European firms have taken the lead in both insurance and retailing. But according to the EU, the EU’s services sector, though strong, still faces "challenges" for the years ahead and thus it has a clear position for the GATS negotiations to come: "The EU […] should push negotiations in sectors where it has a comparative advantage and where little commitments have been made so far by third countries (maritime, environmental services, distribution are good examples)." Unlike the AoA and the NAMA negotiations, the GATS negotiations are still at the beginnings – and it is hard to show what the impacts have been so far. Nevertheless, the GATS will certainly accelerate some tendencies, such as privatisation and deregulation, which have had considerable impacts on livelihoods, development and the environment. Next to further market access, European TNCs will also endeavour to lock in existing liberalization imposed by other fora, such as IMF and World Bank.

1. Privatisation: The global expansion of service companies is often linked with privatisation processes forced or at least accelerated by the IMF, the World Bank and the telecommunications agreement as part of the GATS. Privatisation has led to an unprecedented process of commercialisation, in which formerly publicly-owned areas are now under the realm of corporate governance. The impact of such privatisation is already visible: The ILO has shown that privatisation and restructuring processes in water, electricity and gas utilities have in general resulted in a reduction of employment levels, often affecting up to 50% of the workforce. Finally, the poor may lose out from privatisation if it results in price increases, if illegal connections are abolished and non-payers are disconnected – as has been the case in South Africa and Nicaragua. Further liberalisation – as demanded by the GATS corporate lobbyists – would certainly increase these tendencies.

2. Deregulation: The GATS is not only a trade agreement, but unlike the AoA and the NAMA negotiations, also covers foreign direct investment. Besides, in the services sector, domestic regulations, such as social and environmental standards, are even more important than in the industrial and agricultural sector, since the national services sector is not protected by tariffs. Thus, with its aim to target domestic regulation at all levels, the GATS points right at the core of each communities right to regulate, be it on a national, but also on a regional or local level. Basic services such as water distribution, sewage or electricity in many countries are governed on a sub-national level – an essential pre-condition to ensure democratic control over basic strategic services.

From Uruguay and Beyond – Corporate Lobbyists Behind the Gats

The process to include services in the multilateral trade regime during the Uruguay Round was very much driven by corporations. As David Hartrigde, former director of the WTO’s Services Unit puts it: "Without the enormous pressure generated by the American financial services sector, particularly companies like American Express and Citicorp, there would have been no services agreement." At first, mainly US-American companies brought in the idea of an international agreement on services to the multilateral trade agenda. European companies took more time to join the intense business campaign that led to the GATS. It was the Commission which set up the European Community Services Group (ECSG) to represent business views during the Uruguay Round. The ECSG was mainly driven by the British financial sector, which was already well organised in the area of international trade through British Invisibles (BI), having set up its Liberalisation of Trade in Services (LOTIS) committee as early as 1981.

In 1999, just before the start of the new GATS round, the European Commission again took the initiative to form a renewed GATS lobby group. Trade Commissioner Leon Brittan initiated the founding of a European services lobby group, the European Services Forum (ESF), which has since developed into a strong voice within trade policy making in the EU. The ESF is the best example of a truly incestuous relationship between corporations and the Commission. Having invited business into EU policy-making, the co-operation between the Commission and ESF has stayed very close ever since. At the opening meeting of the ESF, Brittan’s invitation reads as follows: "You are the driving force of the consultation system which we have established, my door is open for any matters of concern […] I am in your hand to listen to what are your objectives, your priorities for the liberalisation [...] I count on your support and input, at the company, CEO and Chairman as well as at the European or National Federations levels, so that we can refine our strategy and set out clear, priority negotiating objectives which will make a difference in the international expansion of service business." The key idea behind setting up the European Services Forum (ESF) was to revamp the former services organisations, the ECSG and its successor the European Tradable Services Network (ETSN), which had "no proactive leadership, nor driving force, because it is composed of over-worked bureaucrats of a few European-level sector trade associations." The ESF now mainly represents the interests of large transnational service companies.

Through direct high level representatives from individual companies, the interests of transnational corporations are as well secured as in the ERT. The "European Service Leaders Group" within the ESF consists of CEOs from Europe’s largest services corporations. From its foundation in 1998 onwards, ESF members regularly go on "missions" to Geneva in order to directly lobby "reluctant" WTO delegates from both developing and developed countries. ESF members and secretariat staff meet Commission officials on a very regular basis, not to mention the very active e-mail correspondence which takes place on their joint agenda in the WTO services talks. E-mails obtained by the Corporate Europe Observatory reveal that the ESF is also in close contact with WTO staff. In September 2004, for example, they were encouraged by both Alejandro Jara, then Council of Trade in Services Chairman, and Hamid Mamdouh, WTO Services Division, "to make an assessment of the publicly available GATS Initial Offers, as to give the view of the private sector on the current state of play of the negotiations". The assessments were then personally discussed between DG Trade officials and the ESF. On an international level, the ESF is represented in the Global Services Coalition. The Coalition has conducted several joint advocacy missions to Geneva to press for greater progress in the WTO negotiations. In September 2005, for example, the ESF went on a lobby mission to Geneva together with services industry representatives from Australia, Chile, India, Japan and the United States. According to a report by the US Coalition of Services, the Global Services Coalition played a key role in ensuring the proper treatment of services in the 2004 WTO "July Package", which put the Doha Round back on track following the Cancún Ministerial.

The EU’s Priorities in the Current Round

The common goal of the European Commission and the European services companies was and still is "to liberalise services markets throughout the world and to remove trade and investment barriers for the European services sector", i.e. to create a market for the expansion of European services companies.

The ESF has repeatedly made clear that basic services such as the public water supply, healthcare, etc. all should be part of negotiations, just like all other services sectors: "Our understanding of public services is that they do something for the public, and the public are businesses that trade internationally" says one ESF representative. But especially these sectors, i.e. infrastructure including water distribution, energy, telecommunication, construction and retailing, which are of great interest for the EU and its TNCs, have largely been left outside negotiations by many WTO member countries.

The ESF and other services lobby organisations do not hide its disappointment with the current status of the negotiations: "A Round that ends with agriculture and goods agreements but no meaningful progress on services is unacceptable. Services are an integral part of the negotiations, and must be accorded the same stature, and addressed with the same negotiating intensity, as agriculture and goods."

Thus, at the end of the Doha Round, the EU is currently pushing for a new approach to tackle the impasse in the GATS negotiations. The EU aims to significantly reduce the current "request-offer approach" of the GATS negotiations, which allows WTO members to make liberalisation commitments to their own liking. With its new proposal on "complementary negotiating methods" (paper), the EU aims to introduce "quantitative targets" or "benchmarks" for new and revised liberalization commitments.

Additionally, the Commission is pushing for the launch of sectorial negotiations in construction, computer and related services, distribution, environmental services (including water distribution), financial services, telecommunications and maritime transport. WTO members would then need to sign on for a certain number of these sectorial agreements. The sectorial negotiations will be worked out in so-called "friends groups" comprising those countries with a specific interest in a certain sector. These sectorial negotiations will be preferred and probably easily accessible havens for corporate lobbyists – this was the case for the plurilateral negotiations on financial services and telecommunications. In the NAMA negotiations, such instances have, once again, only been revealed in the minutes from a plurilateral meeting on electronics. The ESF is among the strongest supporters of the new EU proposals.

Past Successes and more Services Lobbyists

The ESF is the strongest and most focussed Brussels lobby group in the GATS negotiations. Nevertheless, many companies and associations have also voiced their specific interests through additional channels. A DG Trade official names the maritime sector as one of the most vocal lobbyists and further adds other sectors, such as energy, telecommunications, insurance companies and postal services.

Past lobby successes are depicted in the GATS annexes that were concluded after the end of the Uruguay round but before the launch of the new GATS negotiations in 2000. Above all, financial services play a key role. A report by the US Coalition of Services notes that the 1997 financial services negotiations were "the first negotiations in which a multinational industry group, in this case the major financial services companies and associations of the U.S., Canada, the UK, and continental Europe, organized to advocate liberalization of services trade."

They formed the Financial Leaders Group (FLG) and the Financial Leaders Working Group (FLWG) to present a common agenda to their governments’ negotiators. This agenda included the presentation to negotiators of agreed lists of barriers in banking, insurance, securities, fund management and other financial services.

The USCSI further reports: "Industry representatives from as many as 40 companies and associations in Europe and North America regularly met jointly with the chief financial services negotiators of both the EU and the US, and with representatives of the EU member states. This remarkable industry/government cooperation resulted in a well sustained common position". The FLG and FLWG continue to actively advocate further liberalization in the Doha Round, and now include representatives of Japan, Hong Kong and Australia. It is now mainly the insurance lobby which is pushing for further GATS commitments.

Secondly, the Telecommunication Agreement became a reality through positive cooperation between EU officials and the telecommunications sector, represented both by the ESF and the telecommunication services trade association ETNO (European Telecommunications Network Operators’ Association). An ESF representative reports that the "positive" results in these negotiations were only made possible through direct involvement at the CEO level.

As a services lobbyist puts it: "If CEOs ring up Peter Mandelson or their national government – or even better – the respective government of the country where they are active and say we need that commitment or we need that regulation to be withdrawn otherwise we’ll leave the country, then this has weight. And this is what happened in the financial services and telecommunication negotiations."

In the current trade negotiations, it is also the rapidly globalizing retail sector, which has - next to world largest retail corporation Walmart (US) - a strong economic base in Europe. EuroCommerce, as a mixed trade association with individual members such as Metro and Tesco, and the European Retail Round Table (ERRT) have all made themselves heard and are welcomed with open arms: "European commerce fully supports the Commission’s ambitious strategy for improved market access to services markets worldwide, and we count on the continued support of both the Commission and the European Parliament in the forthcoming – decisive – negotiating phase."

The European Commission repeatedly mentions retailing as a priority sector and heavily relies on Eurocommerce’s inputs when drafting its GATS positions. It is mainly Metro and Royal Ahold that are involved in ESF lobby activities but the French Carrefour and the British Tesco also rank among the largest Global Players in the retail sector.

European companies have become very strong in some infrastructure services, such as energy and water services. After the privatisation backlash caused by some failures in developing countries and increasing resistance against privatisation, European TNCs have become very quiet in their lobbying activities. Suez has quit the ESF after a change of CEO, RWE has repeatedly spoken out against including water in the GATS and in November 2005, the company announced that it would sell Thames Water. Finally, Veolia is not vocal in the GATS debate either, although it remains a member of the ESF.

Nevertheless, the EU still has not withdrawn its requests on water distribution services to developing countries, so Suez and Veolia will probably continue their lobbying activities behind the scenes. Shortly before the Hong Kong WTO Ministerial, Suez’ CEO Gérard Mestrallet signed an international CEO statement in support of the current WTO round of negotiations. In the energy sector, the European trade association Eurelectric has lost Enron as a strong free trade proponent from the other side of the Atlantic to push for a re-classification of the GATS list to explicitly include energy services.

Internet Governance

The governance of the internet was and remains a controversial issue. Attempts to broaden the sphere of influence over the internet from the United States to other countries and regions met with stiff resistance. Even the United Nations Secretary General had to write to a leading US daily, saying the United Nations had no intentions to take over the internet. At the World Summit on the Information Society (WSIS) second phase held in Tunis (16-18 November, 2005), governments agreed on a number of related issues, notably the setting up of a new forum for multi-stakeholder policy dialogue - called the Internet Governance Forum (IGF). Following are some extracts from the outcome document ‘Tunis Agenda For The Information Society’ on Internet Governance.

29. We reaffirm the principles enunciated in the Geneva phase of the WSIS, in December 2003, that the Internet has evolved into a global facility available to the public and its governance should constitute a core issue of the Information Society agenda. The international management of the Internet should be multilateral, transparent and democratic, with the full involvement of governments, the private sector, civil society and international Organisations. It should ensure an equitable distribution of resources, facilitate access for all and ensure a stable and secure functioning of the Internet, taking into account multilingualism.

30. We acknowledge that the Internet, a central element of the infrastructure of the Information Society, has evolved from a research and academic facility into a global facility available to the public.

31. We recognise that Internet governance, carried out according to the Geneva principles, is an essential element for a people-centred, inclusive, development oriented and non-discriminatory Information Society. Furthermore, we commit ourselves to the stability and security of the Internet as a global facility and to ensuring the requisite legitimacy of its governance, based on the full participation of all stakeholders, from both developed and developing countries, within their respective roles and responsibilities.

32. We thank the UN Secretary-General for establishing the Working Group on Internet Governance (WGIG). We commend the chairman, members and secretariat for their work and for their report.

33. We take note of the WGIG’s report that has endeavoured to develop a working definition of Internet governance. It has helped identify a number of public policy issues that are relevant to Internet governance. The report has also enhanced our understanding of the respective roles and responsibilities of governments, intergovernmental and international organisations and other forums as well as the private sector and civil society from both developing and developed countries.

34. A working definition of Internet governance is the development and application by governments, the private sector and civil society, in their respective roles, of shared principles, norms, rules, decision-making procedures, and programmes that shape the evolution and use of the Internet.

35. We reaffirm that the management of the Internet encompasses both technical and public policy issues and should involve all stakeholders and relevant intergovernmental and international Organisations. In this respect it is recognised that:

a) Policy authority for Internet-related public policy issues is the sovereign right of States. They have rights and responsibilities for international Internet-related public policy issues;

b) The private sector has had and should continue to have an important role in the development of the Internet, both in the technical and economic fields;

c) Civil society has also played an important role on Internet matters, especially at community level, and should continue to play such a role;

d) Intergovernmental Organisations have had and should continue to have a facilitating role in the coordination of Internet-related public policy issues;

e) International Organisations have also had and should continue to have an important role in the development of Internet-related technical standards and relevant policies.

58. We recognise that Internet Governance includes more than Internet naming and addressing. It also includes other significant public policy issues such as, inter alia, critical Internet resources, the security and safety of the Internet, and developmental aspects and issues pertaining to the use of the Internet.

59. We recognise that Internet Governance includes social, economic and technical issues including affordability, reliability and quality of service.

60. We further recognise that there are many cross-cutting international public policy issues that require attention and are not adequately addressed by the current mechanisms.

61. We are convinced that there is a need to initiate, and reinforce, as appropriate, a transparent, democratic, and multilateral process, with the participation of governments, private sector, civil society and international Organisations, in their respective roles. This process could envisage creation of a suitable framework or mechanisms, where justified, thus spurring the ongoing and active evolution of the current arrangements in order to synergise the efforts in this regard.

62. We emphasize that any Internet Governance approach should be inclusive and responsive and should continue to promote an enabling environment for innovation, competition and investment.

63. Countries should not be involved in decisions regarding another country’s country-code Top-Level Domain (ccTLD). Their legitimate interests, as expressed and defined by each country, in diverse ways, regarding decisions affecting their ccTLDs, need to be respected, upheld and addressed via a flexible and improved framework and mechanisms.

64. We recognise the need for further development of, and strengthened co-operation among, stakeholders for public policies for generic top-level domain names (gTLDs).

65. We underline the need to maximise the participation of developing countries in decisions regarding Internet Governance, which should reflect their interests, as well as in development and capacity-building.

66. In view of the continuing internationalization of the Internet and the principle of universality, we agree to implement the Geneva Principles regarding Internet Governance.

67. We agree, inter alia, to invite the UN Secretary-General to convene a new forum for multi-stakeholder policy dialogue.

68. We recognise that all governments should have an equal role and responsibility, for international Internet governance and for ensuring the stability, security and continuity of the Internet. We also recognise the need for development of public policy by governments in consultation with all stakeholders.

69. We further recognise the need for enhanced cooperation in the future, to enable governments, on an equal footing, to carry out their roles and responsibilities, in international public policy issues pertaining to the Internet, but not in the day-to-day technical and operational matters, that do not impact on international public policy issues.

70. Using relevant international organisations, such cooperation should include the development of globally-applicable principles on public policy issues associated with the coordination and management of critical Internet resources. In this regard, we call upon the organisations responsible for essential tasks associated with the Internet to contribute to creating an environment that facilitates this development of public policy principles.

71. The process towards enhanced cooperation, to be started by the UN Secretary-General, involving all relevant organisations by the end of the first quarter of 2006, will involve all stakeholders in their respective roles, will proceed as quickly as possible consistent with legal process, and will be responsive to innovation. Relevant organisations should commence a process towards enhanced cooperation involving all stakeholders, proceeding as quickly as possible and responsive to innovation. The same relevant organisations shall be requested to provide annual performance reports.

72. We ask the UN Secretary-General, in an open and inclusive process, to convene, by the second quarter of 2006, a meeting of the new forum for multi-stakeholder policy dialogue—called the Internet Governance Forum (IGF).The mandate of the Forum is to:

a) Discuss public policy issues related to key elements of Internet Governance in order to foster the sustainability, robustness, security, stability and development of the Internet;

b) Facilitate discourse between bodies dealing with different cross-cutting international public policies regarding the Internet and discuss issues that do not fall within the scope of any existing body;

c) Interface with appropriate inter-governmental organisations and other institutions on matters under their purview;

d) Facilitate the exchange of information and best practices, and in this regard make full use of the expertise of the academic, scientific and technical communities;

e) Advise all stakeholders in proposing ways and means to accelerate the availability and affordability of the Internet in the developing world;

f) Strengthen and enhance the engagement of stakeholders in existing and/or future Internet Governance mechanisms, particularly those from developing countries;

g) Identify emerging issues, bring them to the attention of the relevant bodies and the general public, and, where appropriate, make recommendations;

h) Contribute to capacity-building for Internet Governance in developing countries, drawing fully on local sources of knowledge and expertise;

i) Promote and assess, on an ongoing basis, the embodiment of WSIS principles in Internet Governance processes;

j) Discuss, inter alia, issues relating to critical Internet resources;

k) Help to find solutions to the issues arising from the use and misuse of the Internet, of particular concern to everyday users;

l) Publish its proceedings.

73. The Internet Governance Forum, in its working and function, will be multilateral, multi-stakeholder, democratic and transparent. To that end, the proposed IGF could:

a) Build on the existing structures of Internet Governance, with special emphasis on the complementarity between all stakeholders involved in this process – governments, business entities, civil society and inter-governmental organisations;

b) Have a lightweight and decentralised structure that would be subject to periodic review;

c) Meet periodically, as required. IGF meetings, in principle, may be held in parallel with major relevant UN conferences, inter alia, to use logistical support.

74. We encourage the UN Secretary-General to examine a range of options for the convening of the Forum, taking into consideration the proven competencies of all stakeholders in Internet Governance and the need to ensure their full involvement.

75. The UN Secretary-General would report to UN Member States periodically on the operation of the Forum.

76. We ask the UN Secretary-General to examine the desirability of the continuation of the Forum, in formal consultation with Forum participants, within five years of its creation, and to make recommendations to the UN Membership in this regard.

77. The IGF would have no oversight function and would not replace existing arrangements, mechanisms, institutions or organisations, but would involve them and take advantage of their expertise. It would be constituted as a neutral, non-duplicative and non-binding process. It would have no involvement in day-to-day or technical operations of the Internet.

78. The UN Secretary-General should extend invitations to all stakeholders and relevant parties to participate at the inaugural meeting of the IGF, taking into consideration balanced geographical representation. The UN Secretary-General should also:

a) draw upon any appropriate resources from all interested stakeholders, including the proven expertise of ITU, as demonstrated during the WSIS process; and

b) establish an effective and cost-efficient bureau to support the IGF, ensuring multi-stakeholder participation.

79. Diverse matters relating to Internet Governance would continue to be addressed in other relevant fora.

80. We encourage the development of multi-stakeholder processes at the national, regional and international levels to discuss and collaborate on the expansion and diffusion of the Internet as a means to support development efforts to achieve internationally-agreed development goals and objectives, including the Millennium Development Goals.

81. We reaffirm our commitment to the full implementation of the Geneva Principles.

82. We welcome the generous offer of the Government of Greece to host the first meeting of the IGF in Athens no later than 2006 and we call upon the UN Secretary-General to extend invitations to all stakeholders and relevant parties to participate at the inaugural meeting of the IGF.

Agreement finalized on Trans-Asian Railway

Bangkok, 30 Nov -- (United Nations Information Services) -- Countries in the Asia-Pacific region finalized a draft Intergovernmental Agreement on the Trans-Asian Railway Network today at UNESCAP headquarters in Bangkok. The Agreement was finalized at the conclusion of an Intergovernmental meeting organized by UNESCAP from 28-30 November 2005.

The Agreement is the outcome of three days of constructive discussions among transport officials from across the region who agreed that it could play a catalytic role in the construction and upgrading of railway lines in Asia.

The Trans-Asian Railway Network constitutes a major step towards the identification of an integrated, international, intermodal network in the region. A similar agreement for the Asian Highway Network came into force in July 2005.

"Through the two agreements, UNESCAP wants to provide a solid basis for a regional approach to transport development, ushering in a new era of cooperation and creating a partnership for regional integration," said UNESCAP Executive Secretary Kim Hak-Su.

The Agreement will be presented to the 62nd session of the UNESCAP Commission for adoption in April 2006. A signing ceremony will be held at the Ministerial Conference on Transport later that year. Under the terms of the Agreement, a Working Group will be established and meet every two years. "It will be a forum within which transport policy makers and railway managers will define a common vision, adopt joint programmes of action, identify investment requirements and sources, and benchmark progress," noted Mr. Kim.

The Trans-Asian railway network comprises of over 80,000 km of rail routes of international importance linking 27 UNESCAP member countries in the region. The aim of the network is to offer efficient transport services for the movement of goods within the UNESCAP region and between Asia and Europe as well as provide improved access for landlocked countries to its major ports. The Trans-Asian Railway was initiated in the 1960s with the objective of providing a continuous 14,000-km rail link between Singapore and Istanbul, with possible onward connections to Europe and Africa. The link offered the potential to greatly shorten the distances and reduce transit times between countries and regions, while being a catalyst for the notion of international transport as a tool for trade expansion, economic growth and cultural exchanges.

The international events that punctuated the 1960s, 1970s and early 1980s influenced the momentum of the concept during these three decades. However, with the political and economic changes that took place in the region in the 1980s and early 1990s, the development of the TAR concept received new support and momentum.

Given the extent of the territory covered, the differences in standards, and differences in the levels of technical development between railways in the region, UNESCAP adopted a step-by-step approach to define the TAR network. The network was initially divided into four major components which were studied separately. These components included:

(1) A northern corridor connecting the rail networks of China, Kazakhstan, Mongolia, the Russian Federation and the Korean Peninsula;

(2) A southern corridor connecting Thailand and the southern Chinese province of Yunnan with Turkey through Myanmar, Bangladesh, India, Pakistan and the Islamic Republic of Iran, with Sri Lanka also part of the corridor;

(3) A subregional network covering the ASEAN and Indo-China subregions; and

(4) A north-south corridor linking Northern Europe to the Persian Gulf through the Russian Federation, Central Asia, the Caucasus region as well as across the Caspian Sea.

In close collaboration with concerned countries, UNESCAP’s Transport and Tourism Division has already started operationalizing the TAR network. Four demonstration runs of container block-trains have been successfully implemented along key segments of the TAR Northern Corridor between November 2003 and July 2004. Through these demonstration runs, the railways concerned have gained greater awareness of international trade patterns arising from globalization, and exercised new skills effectively to respond to the industry requirements for efficient transport and logistics services.

South Centre News

Executive Director

Prof. Yash Tandon, the Executive Director of the South Centre, participated in the following: Senior African Union Experts Meeting on Commodities and Second Extraordinary Session of the African Union Ministers of Trade in Arusha, Tanzania (21-24 Nov.); a SEATINI Workshop on Development Benchmarks for Hong Kong and Beyond in Arusha (21 Nov); and the meeting of ACP Ministers in Brussels (27-30 Nov).

Trade and Development Programme

- Recent research and publications

• TADP staff prepared negotiating briefs covering the various negotiating areas under the Doha Work Programme for the use of developing country delegates and ministers in the run up to and during the Hong Kong Ministerial Conference.

- Participation in conferences and in meetings outside the centre

• TAPD staff participated as a discussant in a panel presentation by Sandra Polaski of the Carnegie Endowment for International Peace (CEIP) on 22 November 2005 at the World Meteorological Organization (WMO) in Geneva. Ms. Polaski gave a presentation entitled "Modelling the Impact of Global Trade Scenarios on Developing Countries," using an econometric model developed by CEIP. The panel was also participated in by representatives from the World Bank, the WTO, and the Intenational Labour Organization (ILO), and was organized by the Geneva office of the Friedrich Ebert Stiftung (FES).

• The Services Team attended the UNCTAD Workshop on Insurance Services on 16 November, and a Quakers seminar on Services and Developing countries on 17 November which included a presentation by Richard Self, an ex US negotiator who has undertaken work on complemenary approaches and their implications for developing countries.

• The Services Team also attended a Quakers working lunch on 23 November as a part of the organising committee for a workshop to be held on 26 November for African Group and LDC delegates based in capitals and Geneva to discuss the latest draft text on services.

• On 25 November, South Centre participated in a meeting at TWN with other countries to discuss an alternative text on services

- Program of work with delegations in Geneva

• Staff from the TADP met with a delegate from an African developing country to discuss issues relating to new approaches relating to technical assistance and special and differential treatment in favour of developing countries.

• The TADP organized an informal meeting for some heads of delegations of developing countries to the WTO on 18 November 2005, to discuss the balance of the Doha negotiations and assess the extent to which the negotiations’ development objectives are being achieved. For this occasion, the TADP prepared a presentation that assessed such balance. Representatives from some Geneva-based NGOs were also invited to participate in the meeting.

-Meetings in South Centre

• On 16 November, Services Team held a meeting with some delegates to discuss the draft text on services and plurilateral approach, and on 22 November, it held a follow up meeting with delegates to discuss the draft text on services.


Development – A Fight Not a Right

If we believe in the sanctity of human rights - where the right to Development is also well enshrined – all this nagging concern about the increasing loss of policy space should not have come about in the first place. The so-called developed countries of today never had a similar problem when they were developing – they reserved the right to ban unwanted imports or simply make it not worthwhile, and employed all kinds of means to promote exports. And they could easily pursue the infant-industry case to shield off foreing competition. But now when the developing world is trying to improve the lot of its own people – most having emerged from the yoke of colonialism only in the last couple of decades – all kinds of barriers are being thrown around it. It stands to reason that developing countries are not strangling themselves, that the obstacles being thrown in their path are originating basically in the North. It is no secret that the industrially advanced countries have failed to keep their promises made at numerous world summits and conferences – the most obvious being not able to meet even the 0.7 per cent of GNP as official development aid after nearly 35! The barriers to the development of the South come mainly from the international arena – which globalization knits together – like the international trade rules dispensed at the World Trade Organization and the suffocating conditionalities that international financial institutions lay down for countries burdened already with massive foreign debts. Of course, now even bilateral trade deals between countries are laying down conditions that are more severe than those contained in the multilaterally agreed rules at the WTO.

On the eve of the Hong Kong Ministerial Conference of the WTO, and four years since its launch, the story of the Doha Development Agenda, perhaps provides the best example of how Development has slipped from being a right to becoming a fight. Frustrated by the attempts of leading trading powers to continue to demand more from developing nations in a Development Round, while giving in little themselves, has prompted a group of developing countries to ‘reclaim’ development in the current WTO round of trade negotiations. Argentina, Brazil, India, Indonesia, Namibia, Pakistan, Philippines, South Africa and Venezuela have together submitted a paper entitled ‘Reclaiming Development in the WTO Doha Development Round’ to the WTO on 25 November, 2005. They warn that the current proposals by developed countries would result in ‘an anti-developmental outcome with the hopes and aspirations of developing countries raised by the prospect of a Doha Development Round becoming dimmer and dimmer.’ With little tangible progress to show for development concerns, they argue that the outcome of these negotiations would be ‘totally unfair’ and exacerbate the crises of legitimacy of the WTO. In fact, the above prominent developing country members of the WTO have been explicit: "The recent proposals of some major developed countries have attempted to sow division among developing countries, re-interpret the framework and trajectory of the negotiations and, in a self-serving manner, narrow, limit and - ultimately - undermine the developmental objectives of the Doha Development Agenda. It is thus timely to reclaim the developmental objectives and trajectory of the negotiations."

That it is incumbent on the North to respect the Development Agenda, and not exact a price from the developing world for doing that was well conveyed by the Commonwealth Secretary-General Don Mckinnon on 23 November in Malta: The message we have been conveying - and still are - is: (a) that the membership of the WTO has increased and changed, so those old-style negotiating tactics from the Uruguay Round and before won’t work the same way any more. The old hands at the negotiating table need to know that; (b) that unless developed countries are willing to give more than they get, and offer real development dividends, there is a high risk that developing countries will walk away. They have already done so, as you’ll recall at Cancun, and they’ll do so again. For them, no deal is better than a bad deal - and I have a great deal of sympathy for that. Frankly, having talked to Pascal Lamy a few days ago and others close to the talks, there is now a high level of despondency and a low level of ambition for the Doha Round. The current WTO Round is unlike any Round before and the negotiations are in more serious trouble than ever before. But developing countries did not get a deal on agriculture in the Uruguay Round. We said at the end of that Round that we would attend to developing country needs and to agriculture next time. Now is the next time. And therefore developing countries should receive more than they are expected to give in the Doha Round, especially on agriculture, before trade-offs occur in the other areas such as services and rules."

Attached please find the latest issue of the South Bulletin no. 115 in pdf

and word formats. Focus on 'Fight for the right to Development.'

Best regards,

(See attached file: bull115.pdf)

(See attached file: South Bulletin 115 Word.doc)

Someshwar Singh

Senior Editor

South Centre

Ch. du Champ d'Anier 17

1211 Geneva 19




web site:

Latest issue of the South Bulletin no. 115


bull115.pdf (0.18 MB)

SouthBulletin115Word.doc (0.30 MB)

Wednesday, November 30, 2005